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Scott: Kinder Morgan Buyout Shows All Major Pipelines in Precarious Condition

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The Trudeau government’s eleventh-hour rescue of the Trans Mountain pipeline using public funds demonstrates how far Canada is from a “just and equitable managed decline of existing fossil fuel production”—and how close that production is to collapsing under the weight of its own economic, ecological, and social liabilities, writes Oil Change International’s Adam Scott in a post for the non-profit Common Dreams.

While “Prime Minister Justin Trudeau’s decision to spend billions of Canadian citizens’ dollars on Kinder Morgan’s Canadian assets provides no certainty that the Trans Mountain expansion project will ever get built,” writes Scott, “it is an important reminder that energy markets are not the free, competitive, fair spaces they are assumed to be.”

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Rather, “government has its hand on the scale to advantage fossil fuels in nearly every aspect of their business,” from granting “absurdly low [2] royalty rates [and] tax deferrals”, to often assuming the total cost of the infrastructure needed to move fossils to market, or into a refinery.

Yet even with all these advantages, projects like Trans Mountain, Enbridge’s Line 3 pipeline, and TransCanada’s Keystone XL face a “grim” reality: the recent Trudeau buyout, far from reassuring the oil and gas industry, merely “underscores the strong likelihood that none of these projects is ever going to get built,” Scott says.

“Trudeau felt he had to buy out the project because Kinder Morgan couldn’t afford [3] to build it,” he writes. Facing “a massive and connected social movement working to affirm Indigenous rights, protect water, and fight climate change,” battling resistant local governments, and losing international investors left and right, “there was no light at the end of the pipe” for the Texas-based company.

He adds that Line 3 and KXL are in similarly dire condition. “More than a decade of unprecedented and fearless resistance has changed the game. Where pipeline companies once saw easy opportunities to make money, as time has dragged on, the business case has steadily evaporated.”

The latest obstacle for Line 3 was a judge’s recommendation [4] in April that the Minnesota Public Utilities Commission reject Enbridge’s preferred route for the pipeline. With the project already “expected to cost far more than originally planned,” Scott writes, “being forced into a new route, with renewed opposition, could break the project.”

And then there’s KXL. Ten years after “TransCanada picked the wrong state to mess with,” Nebraskans continue to fight hard against the pipeline, in a battle which “remains the sharpened edge of a continent-wide movement to stop tar sands expansion and other fossil fuel infrastructure from cooking the climate.”

And a win may be in sight, Scott predicts: Still feeling the aftershocks of having “to eat a $2.7-billion write-down on the project” after President Barack Obama denied [5] it an essential permit, TransCanada now seems distinctly reluctant to roll forward with the KXL, despite Trump’s recent attempts “to offer the project a new green light.”