'Pick up those tools, folks, we have a pipeline to build,' Alberta premier says

A jubilant Alberta Premier Rachel Notley thanked the federal government for making a deal to buy the Trans Mountain pipeline and get the expansion underway this summer.

Jubilant Rachel Notley says construction on Trans Mountain expansion will resume this summer

Alberta Premier Rachel Notley was applauded by her staff and caucus after a news conference Tuesday on the federal government's purchase of the Trans Mountain Pipeline. (Jason Franson/Canadian Press)

A jubilant Alberta Premier Rachel Notley thanked the federal government for making a deal to buy the Trans Mountain pipeline and get the expansion underway this summer.

"We said we would get the pipeline built and we are getting it built," Notley said at a news conference in Edmonton as members of her staff and caucus cheered.

"We will not stop until the job is done and in the meantime, to all Albertans: 'Pick up those tools, folks, we have a pipeline to build.' "

Earlier Tuesday, federal Finance Minister Bill Morneau announced Ottawa would buy the existing pipeline from Kinder Morgan for $4.5 billion and take over construction of the expansion which would triple the amount of bitumen shipped from Edmonton to Burnaby, B.C. 

Alberta will provide up to $2 billion to an indemnity pool that will be paid only once oil begins to flow through the expanded pipeline. That amount will be converted into an equity stake in the project, Notley said.

"The people of Alberta will invest up to $2 billion, no more. Very possibly not one dollar of that," she said. "Whatever amount that we do invest we would get an equity stake in a project that we would know was commercially viable, and more than viable, but commercially profitable and likely to be successful."

The deal was reached two days before the deadline set by Kinder Morgan for making a decision on whether to proceed with the $7.4-billion expansion. 

While Notley is confident construction will resume this summer, a case before the Federal Court of Appeal could turn that timetable upside down. 

B.C. First Nations and environmental groups have challenged the National Energy Board and federal cabinet's approvals of the project. The ruling is expected any day. 

B.C. Premier John Horgan has referred a question to his province's court of appeal, seeking an answer on whether Alberta has the constitutional authority to limit the flow of bitumen through the province.

Notley said the reference case, which she sees as a delaying tactic, will have less relevance now.

Horgan said he intends to carry on with the case, but Notley believes having the project in federal hands limits the effect of provincial legislation.

That raises questions about Bill 12, the turn-off-the-taps legislation, passed by the Alberta legislature earlier this month.

Notley said she isn't sure the bill will be used now that the crisis seems to have passed.

When asked whether the powers in that bill could still be used against B.C. once Trans Mountain is in federal hands, Notley suggested they could because it deals with permits which are within provincial jurisdiction.

No plans for long-term ownership

Jason Kenney, leader of the official Opposition United Conservative Party, said his caucus is prepared to support the $2 billion indemnification, as long as information doesn't come to light suggesting they shouldn't. 

He criticized Prime MInister Justin Trudeau for putting taxpayers in this position by failing to assert federal jurisdiction in the face of B.C.'s delay tactics.

"We find ourselves in a situation where the prime minister is willing to buy out a private sector company in order to effectively nationalize a pipeline but this does not get us any closer to the certainty that we need," Kenney said. 

Morneau said the government does not intend to be a long-term owner and, at the appropriate time, the government will work with investors to transfer the project and related assets to a new owner or owners.

"I have a set of mixed emotions about this," said Dennis McConaghy, former executive vice president at TransCanada PipeLines Ltd.

It's a "bittersweet moment" that the federal government was required to take out a private sector company to salvage a project, said McConaghy on CBC Radio's Edmonton AM Tuesday.

He described the purchase as an "enormous" intervention on the part of the federal government to get the project done.

The move is "fundamentally positive for Alberta's overall interests," he added.

The key short term issue is when construction will resume, and in the long term there are questions around the details of how the transaction will unfold, he said.

He doesn't expect any third parties to step in by purchasing the project before it's completed. It makes more sense to let the government take on all the completion risk, he said.

"I think most private owners are going to be happy to buy this thing once it's been built," McConaghy said.

Ottawa is expected to funnel billions of dollars into the controversial pipeline expansion, which has an overall estimated price tag of $7.4 billion.

Kinder Morgan issued an ultimatum to the federal government, threatening to abandon the project completely if a clear path forward for pipeline construction wasn't found by May 31.

With files from Edmonton AM