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TMX ownership at stake; Canada in talks with 75 Indigenous tribes
Gary Park for Petroleum News
With construction resuming on Canada’s Trans Mountain pipeline expansion, TMX, after a two-month shutdown, the pace of negotiations that could lead to a change of ownership in the project is quickening.
As well as opening talks to set the stage for possible sale of the 590,000 barrels per day new pipeline, in addition to the existing 300,000 bpd line, federal government officials are introducing consultants to provide a financial analysis of the eventual system.
Preliminary discussions started two years ago with Indigenous communities and prompted the Department of Finance to conclude that a form of revenue-sharing or the purchase of an equity stake in TMX would be the “preferred options” for First Nations.
That has since advanced to the prospect of outright ownership that led to a secretive workshop late last year with 120 participants representing about 75 Indigenous organizations.
The Canadian government purchased the existing Trans Mountain line from Kinder Morgan in 2018 and has since added the C$12 billion expansion to its holding.
Federal officials are now assessing the level of support in two leading Indigenous groups that have been the most aggressive in pursuing an ownership share. At the same time, the government is trying to determine whether other groups might emerge.
Two contenders Calgary-based Project Reconciliation, PR, said his membership, drawn from British Columbia, Alberta and Saskatchewan First Nations, believes TMX would generate funds for housing, roads, sewers and drinking water that are badly needed in First Nations communities, said spokesman Robert Morin.
But he admitted to concerns that the Canadian government could opt for an easier route and simply sell TMX to the private sector.
The other contender is the Western Indigenous Pipeline Group, based near Kamloops in southcentral British Columbia.
The Federal Court of Appeal estimated last year that of 129 Indigenous communities that are potentially impacted by TMX, 120 either support the venture or don’t oppose it.
The Department of Finance told the Canadian Broadcasting Corp. that the “government does not intend to be the long-term owner of Trans Mountain Corporation. It intends to launch a divestment process after the expansion is further de-risked.”
To date, more than 1,000 Indigenous people have worked on the TMX job, with contracts worth more than C$1.4 billion awarded to their communities.
The work was halted in December after a series of workplace safety hitches, but those have since been resolved.
Trans Mountain Corp. has declined to estimate the cost that delay in time or money.
Project Reconciliation PR said it is ready for a March launch of a sovereign wealth fund, hoping to raise C$750 million to C$1 billion, with the proceeds aimed mostly to its goal of buying Trans Mountain.
Revenues from the pipeline would flow into the fund, which would be used to invest in other infrastructure projects such as a C$475 million ethanol plant near Calgary that is being developed by Carbon Clean Energy. PR hopes to take a C$100 million stake in the facility that is designed to produce 5,500 barrels per day of ethanol, nitrogen fertilizer and a fairly significant quantity of renewable natural gas.
PR has also partnered with a First Nation to invest C$200 million into carbon capture sequestration technology.
PR managing director Stephen Mason said greener ventures are more palatable to some First Nations that want to be involved in large-scale investments, but not necessarily fully invested in an oil pipeline.
He said the current thinking is for PR to initially purchase a 30% ownership position in Trans Mountain.
“The pipeline is just the means to an end,” he told BNN Bloomberg. “You’re taking a rightful share, not tokenism, from the ownership and reinvesting it in a greener world with less carbon.”
- GARY PARK
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