Trudeau Mountain Pipeline

It is a good and bad deal for Ottawa to buy Kinder Morgan’s Trans Mountain Pipeline (TMP).  The bad news is that it will cost Canada short term; money it does not have.  If the protesters continue their tactics trying to delay the pipeline it will mean higher costs to the Canadian taxpayer, including the protestors.

The destructive B.C. Premier, literally minutes after the takeover announcement, told the world he will continue to try and stop the TMP.  Indirectly, he was telling investors do not invest in B.C. or Canada for that matter.  By never talking to Kinder Morgan management, it was obvious he refuses to talk to anyone who supports the TMP. He only represents the job destroying protesters.

We have held pipeline shares in our portfolio for over a decade.  Pipelines are regulated by governments and must get permission for rate increases.  Since governments, led by Ottawa, refuse to build new pipelines, energy companies have no major means to ship their liquids to market, except by rail, which obviously the Greens believe to be safer than pipelines even though it is not.  “Specifically, based on petroleum product transport data from 2004 to 2015, pipelines were 2.5 times less likely than rail to result in a release of product when transporting a million barrels of oil (Fraser Institute).” While incidents are more frequent by pipeline, the amount spilled by rail is nearly three times larger. 

Oil is still going to continue to be shipped by Kinder Morgan.  The company not only ships liquids by pipeline, but by rail and trucks.  Most oil companies in Alberta are forced to ship their oil via trucks to the U.S. border, where it is then put into U.S. pipelines. 

The outcome of not building enough pipelines is already visible.  Imperial Oil wanted to expand one of their tar sand operations by 50,000 b/d.  A month ago Imperial cancelled the project because they “had no means to ship the oil”.   This is the loss of thousands of high paying jobs.

Ironic to their stance on the environment, Quebec, mostly from Montreal, dumps raw sewage into the St. Lawrence River every day.  At the same time they help defeat the West to East Pipeline so they can continue to buy oil from their friends in Saudi Arabia, Nigeria, Algeria and other dictator run countries.  Our Fairy Tale Prime Minister also likes these countries and gladly killed the pipeline to their benefit.  It should be noted that everyday Quebec happily accepts money transfers from Alberta but refuses to buy Alberta oil.

Ottawa created the TMP mess.  When they first passed the pipeline they could have legally issued all necessary permits.  Instead, they passed this onto the province and cities, which is the problem today.  At the time the Prime Minister hoped the protesters would stop the TMP.  Make no mistake about it; he did not want the TMP built and still does not today.  He obviously never thought of the consequences he would face.  The Canadian economy badly needs more pipelines to supply the world with oil and Ottawa with much needed tax revenue.  This is the sole reason the Prime Minister okayed the TMP today.

The good news is that the TMP, for six decades, has made money and will continue to do so, just as all other Canadian pipelines do.  The oil will also continue to be shipped from Vancouver waterways without incident.  TMP will be a constant source of growing dividends for Ottawa.  Many mutual and pension funds will be buying into TMP for the dividends to come.  We may also one day.