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Canada Government Set to Approve Trans Mountain Expansion

The federal government of Canada is set to approve the highly controversial Trans Mountain pipeline expansion project this week, unnamed sources have told Reuters.

The project, which would boost the current capacity of the Trans Mountain pipeline from Alberta to the coast of British Columbia three times, to 890,000 bpd, pitted against each other Canada’s oil heartland Alberta and neighbor B.C. whose government is strongly opposed to new oil projects.

Ottawa bought Trans Mountain Pipeline (TMP), the Trans Mountain Expansion Project (TMEP), and related assets for US$3.35 billion (C$4.4 billion) from Kinder Morgan, which was beginning to get exasperated with all the delays B.C. was putting in its way. The deal was pretty much as controversial as the project with certain groups, namely environmentalists, the British Columbian government and some First Nations. Other First Nations, however, continue to staunchly defend the project and its benefits for Alberta and even have plans to buy into it when Ottawa puts it up for sale, as was the original idea.

Trans Mountain was the only new oil pipeline project the Liberal government of Justin Trudeau has approved, using the argument that Alberta’s rising oil production needs a bigger outlet to international markets. However, this support and the purchase of the project are unlikely to do the government any favors in the upcoming parliamentary vote later this year.

As Reuters notes, Trudeau came to power on the environmental wave, and with the exception of the Trans Mountain affair, he has been generally consistent in this respect. Now, if the government indeed approves the project, the energy lobby will be happy--but an important group of voters will not be: the green lobby.

Unfortunately, Trudeau does not have a winning move: if the government for some reason rejects the project, the energy lobby would be alienated. If the election results in Alberta are any indication of popular sentiment, this decision could contribute to the Liberals losing the election in October.

By Irina Slav for Oilprice.com

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