Offshore Technology

Daily Newsletter

09 August 2023

Daily Newsletter

Canada looking to sell stake in Trans Mountain pipeline

The government plans to initiate talks with indigenous groups along the pipeline’s route and shipping corridor.

The Canadian Government, through a special-purpose vehicle, is considering divesting its stake in the Trans Mountain oil pipeline to indigenous groups, reported Bloomberg News.

The government will provide access to capital to help the indigenous groups participate in the project, reported the news agency, citing a letter from Canada Deputy Prime Minister Chrystia Freeland's office.

According to the letter, the equity interest in the project will provide the communities with cash flows. It will also allow them to jointly exercise governing rights.

Furthermore, the indigenous groups with a stake in the special purpose vehicle will be allowed to participate in future rounds that could offer additional stakes in the pipeline project.

The government is considering opening talks with the indigenous groups along the pipeline’s route and shipping corridor.

In 2018, the Canadian Government acquired the Trans Mountain pipeline system and its expansion project from Kinder Morgan Canada for C$4.5bn ($3.3bn).

Recently, the government provided a loan guarantee of C$10bn to Trans Mountain Corporation, the holding company of the oil products pipeline, for the expansion project, reported Reuters.

The cost of the Trans Mountain expansion project has more than quadrupled to C$30.9bn due to construction setbacks and repeated delays.

The expansion project, which involves twinning the existing Trans Mountain pipeline, was initially budgeted at C$7.4bn in 2017.

Upon completion, the pipeline expansion project is expected to nearly triple the crude flow from Alberta's oil sands to Burnaby, British Columbia, to 890,000 barrels per day.

Construction of the project is close to 80% complete with commissioning scheduled in the first quarter of 2024.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.