With the federal government in Canada taking over the Trans Mountain oil pipeline effort, critics and investment analyst warned of credit implications.

On Tuesday, the federal government announced plans to purchase Kinder Morgan's pipeline and terminal assets for $3.5 billion, two days before the company was set to shelve the project. Kinder Morgan has been steering efforts to triple the capacity of a pipeline to Canada's west coast amid bitter provincial divisions.

Ahead of the federal intervention, Moody's Investors Service said oil-rich Alberta could face a significant loss in revenue if the project were cancelled. Alberta's budget forecast is pegged to an average price of West Texas Intermediate, the U.S. benchmark for the price of oil, at $63 per barrel by 2020.

WTI was trading around $69 per barrel on Friday, but at a steep discount to the global benchmark, Brent. Without more pipeline capacity, much of the extra oil coming from North America would be landlocked, leaving WTI at a discount.

Moody's warned that if Alberta's price forecast for WTI could be a source of risk. Alberta Premier Rachel Notely said not moving ahead with the project could cost the Canadian economy around $30 million (USD) per day.

For Kinder Morgan, Moody's said the federal decision was credit positive because it removes "significant risk" for the company and eliminates the need for another $4.9 billion in costs "and the uncertainty of construction scheduling and completion given the opposition to the project from the province of British Columbia, environmentalists and some First Nations."

Amid concerns about Kinder Morgan's loan package for Trans Mountain, and given the federal intervention, advocacy group Rainforest Action Network said major pipeline projects are risky investments.

"This debacle should prove once and for all that tar sands oil is an unbankable sector," Patrick McCully, the group's climate and energy director, said in a statement emailed to UPI.

British Columbia Premier John Horgan said his government, which has moved to thwart the project, would continue to defend provincial interests. For the western province, projects like Trans Mountain present a source of environmental concern.

Related Links
All About Oil and Gas News at OilGasDaily.com

Tweet

Thanks for being here; We need your help. The Space Media Network continues to grow but revenues have never been harder to maintain. With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords. Our news coverage takes time and effort to publish 365 days a year. If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceMediaNetwork Contributor $5 Billed Once credit card or paypal		SpaceMediaNetwork Monthly Supporter $5 Billed Monthly paypal only

'Mission impossible' for US cities that want to respect Paris climate deal
Philadelphia (AFP) June 1, 2018
When President Donald Trump announced the US exit from the Paris climate deal one year ago, the mayor of Philadelphia was among those who vowed to keep carrying the torch. "Philly is committed to upholding at (the) local level the same commitment made by the US in the Paris climate agreement," tweeted the sixth largest US city's mayor, Jim Kenney, a Democrat. Since then, the City of Brotherly Love has cut energy consumption in municipal buildings, started replacing street lamps with LED lights, ... read more