Construction on the Trans Mountain pipeline expansion is set to kick off - Canadanewsmedia
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Construction on the Trans Mountain pipeline expansion is set to kick off

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Hip hip hooray, Alberta, construction on the Trans Mountain pipeline expansion is finally set to restart.

On second thought, hold the big parade. There’s already plenty of cheerleading going on before substantive progress has been made.

In an event Wednesday at a pipeline contractor in Sherwood Park, Natural Resources Minister Amarjeet Sohi touted the news Trans Mountain Corp. has begun moving forward on construction to expand the federally owned pipeline.

The news conference was one part update and 10 parts politics. It came two months after Ottawa re-approved the stalled development, which is expected to nearly triple the amount of oil shipped from the Edmonton area to Burnaby, B.C.

The federal Crown corporation announced it has issued a notice-to-proceed directive to some of its construction contractors on the project, a key step that will eventually see the workforce swell from 650 today to about 4,200 by the fourth quarter.

Some work will begin immediately at the Burnaby Terminal and Westridge Marine Terminal in B.C., and then along the pipeline’s right-of-way.

Aside from the jobs, the most important news was the expanded pipeline should begin operating by the middle of 2022, if all outstanding regulatory approvals are received, as expected.

That’s fully three years away for a project that formally began with a regulatory application in 2013, and was initially expected to be in operation by this December.

“It’s a good day, come on, guys, smile,” Sohi exhorted at the start of his address. “We are very happy that people will be actually in the field, digging the ground and installing the pipe…

“I am very confident that the anticipated date for construction of mid-2022 will be met.”

Trans Mountain pipeline

Canada’s Minister of Natural Resources Amarjeet Sohi discusses the progress in expanding the government-owned Trans Mountain oil pipeline in Sherwood Park, Alberta, Canada August 21, 2019. REUTERS/Candace Elliott ORG XMIT: GGG-EDM107

But confidence is a funny thing. It was a little more than a year ago that such confidence backfired politically.

Last July, Sohi and then-premier Rachel Notley were part of a photo opportunity at the Enoch Cree Nation, donning shovels and hard hats to demonstrate progress was being made on the embattled project.

In an interview last August, Sohi felt assured the project — a development the federal government acquired from Kinder Morgan for $4.5 billion — would withstand a pending legal challenge from opponents.

“We are very confident that we have done extensive consultation,” he said at the time. “I think that puts us in a very strong position.”

Less than two days later, the federal Court of Appeal quashed the permit for Trans Mountain, in part because of inadequate consultation by Ottawa with affected Indigenous communities.

The point here is that feel-good events in the middle of an election cycle are more about symbolism — “Look everybody, headway is being made right before your very eyes” — than reality.

When it comes to building pipelines, nothing is simple.

Now, don’t get me wrong. It’s great news that hiring and construction work are set to begin, but it’s also way too soon to assume the project is bulletproof.

Trans Mountain still has to withstand other legal challenges of the government’s re-approval, while the prospect of civil disobedience by opponents in British Columbia looms.

“We have had subsequent governments over the last eight years say this project is going to move forward and giving new timelines, and it’s never met any of them,” said Greenpeace Canada’s Mike Hudema.

“This project still faces a litany of lawsuits, it still faces a mounting force on the ground.”

The province and the oil industry aren’t quite ready to hold a party, either.


Seven climbers from Greenpeace Canada suspended themselves from the Ironworkers Memorial Bridge in Vancouver on Tuesday, July 3, 2018, in what they called a blockade to impede oil-tanker traffic as an act of peaceful resistance to the Trans Mountain pipeline expansion to Burnaby, B.C., from Alberta.

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With Enbridge’s Line 3 replacement project in the U.S. delayed until next year and TC Energy’s Keystone XL venture up in the air, guarantees are a hard thing to come by.

“Nobody is popping champagne corks at this time. When the pipeline is complete, then there will be reason for celebration,” said Gary Mar, CEO of the Petroleum Services Association of Canada.

After watching the demise of the Energy East and Northern Gateway initiatives, and the ongoing delays affecting the three other projects, it’s only natural supporters are reluctant to get too exuberant.

“At the end of the day, it doesn’t hurt to be optimistic, (but) we have had our fair share of setbacks,” said Mark Scholz, president of the Canadian Association of Oilwell Drilling Contractors.

For many in the sector, the real question is whether the Trudeau government has the mettle to deal with opponents marching in the streets of Vancouver.

Construction is starting up in the middle of a federal election campaign. Every twist and turn will be politically charged and under an intense spotlight.

“The federal and local authorities must ensure the rule of law is enforced and that construction is not illegally blocked,” Premier Jason Kenney said in a statement.

Wednesday’s announcement also came just a day after the sobering news the Alberta government will extend its oil curtailment program into 2020 — instead of winding it down by the end of December — due to a lack of pipeline capacity.

Trans Mountain pipeline

Energy Minister Sonya Savage talks to the media regarding government of AlbertaÕs energy initiative at McDougall Centre in Calgary on Tuesday, August 20, 2019. Azin Ghaffari/Postmedia Calgary

Mark Oberstoetter of energy consultancy Wood Mackenzie believes it’s significant Trans Mountain work is starting in the summer, noting construction is estimated to take around 30 to 34 months.

“My issue with TMX is what do they do about protests?” he said. “It’s not so much can you get a shovel in the ground, but do you have line of sight towards actually completing that?”

All the skepticism is well earned, although it shouldn’t overshadow the fact people are about to be hired and bulldozers are set to start moving.

It’s a far sight better than being stuck in legal limbo.

But the reality is the Trans Mountain expansion still has a long way to go before oil starts flowing, and the machinery to make that happen is only beginning to shift back into gear.

Let’s put off the celebratory parade for another day.

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Hudson’s Bay Company agrees to taken company private

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Hudson’s Bay Co. will go private in a deal valuing the Canadian retailer at $1.9 billion in a bid by a group of investors led by executive chairman Richard Baker to try their hand at reinvigorating the fading 349-year-old department-store chain.


Hudson Bay Company executive chairman Richard Baker

The board of Hudson’s Bay said it entered into an agreement with investors led by Baker after the group raised its offer price to $10.30 a share, up from $9.45 a share. It approved the offer after a recommendation by a committee of independent directors.

Hudson’s Bay shares rose 7 per cent to $10.11 at 9:35 a.m. in Toronto.

Attention will now turn to minority shareholders who came out against Baker’s earlier proposal. The company needs a majority of them to approve the new deal for it to go through.

Catalyst Capital Group and other investors had said Baker’s original offer undervalued a company that’s rich in real estate holdings. Representatives for Catalyst and for Jonathan Litt, an activist investor who’s also been critical of Baker, were not immediately available for comment.

“The special committee is confident that this transaction represents the best path forward for HBC and the minority shareholders,” David Leith, head of the special committee, said in a statement.

Baker and his investment group want full control of the retailer, which also owns Sak’s Fifth Avenue, to turn the business around outside the glare of public markets. While Saks has been the group’s bright star of late, the Canada-based Hudson’s Bay chain, the oldest company in North America, is removing 300 “unproductive” brands and bringing in another 100 in a turnaround effort.


Mannequins sit on display inside a Saks Fifth Avenue.

Daniel Acker/Bloomberg News

A number of traditional retailers are struggling and closing stores as consumer preferences change and shoppers increasingly migrate online to competitors like Amazon.com Inc.

Department stores in particular have struggled to attract new consumers and maintain sales.

Luxury focused chains haven’t been exempt from the fallout: Barneys New York Inc. filed for bankruptcy protection in August amid rising rent costs and a decline in visitors. A consortium led by Authentic Brands Group LLC has been selected as its initial bidder, with the group planning to open Barneys shops inside Saks Fifth Avenue stores owned by Hudson’s Bay, Bloomberg reported on Oct. 16, citing people with knowledge of the matter.

Hudson’s Bay has been trying everything to lower debt and stop its stock’s slide, most recently selling selling the operations of its Lord & Taylor department store chain to clothing rental subscription company Le Tote.

Chief executive Helena Foulkes, who was brought in last year, also sold flash-sale e-commerce site Gilt and cashed out of European operations.

The stock traded as high as $10.72 in August on expectations the bid would be raised. It was back at $9.45, the original offer price, at the end of last week. Over the last five years, the stock has lost about half of its value.

“It’s good to see that there’s a resolution with a good, formal take-private offer and a cash bid, and I think that should be a good resolution for a lot of people,” Greg Taylor, chief investment officer at Purpose Investments, said on BNN Bloomberg.

“Certainly a lot of people would have wanted a lot more from this but in the current dynamics around department stores in North America, I think this is probably as good as they could have hoped.”

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Energy regulator says crude-by-rail shipments fell to 310000 bpd

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The Canada Energy Regulator says exports of crude oil by rail from Canada fell slightly in August to 310,000 barrels per day from 313,000 bpd in July.

The August number is up 35 per cent from 230,000 bpd reported in August of 2018 but still well below the record high of 354,000 bpd set last December.

The small change in crude-by-rail shipments came despite a threat by Imperial Oil Ltd. CEO Rich Kruger to throttle back the company’s rail movements in August and September to protest the ongoing Alberta oil production curtailment program.

He says the program damages the economic case for crude-by-rail by artificially lowering the difference in oil prices between Alberta and the end market on the U.S. Gulf Coast.

Imperial reported moving 80,000 bpd by rail in June. It co-owns an oil shipping rail terminal at Edmonton with capacity to load 210,000 barrels of crude per day.

Alberta has gradually eased the curtailment program designed to better align production with tight pipeline capacity from an initial withholding of about 325,000 bpd last January to 125,000 bpd in September.

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Hudson Bay Company agrees to pay more to shareholders for takeover bid

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Hudson Bay Company

The board of Hudson Bay Co. has agreed to a sweetened offer by a shareholder group led by executive chairman Richard Baker.

The retailer says the group has agreed to pay $10.30 per share in cash to take HBC private. The bid is up from an earlier offer of $9.45 per share.

The agreement values HBC at about $1.9 billion.

HBC says the price offered represents a premium of 62 per cent compared with where its shares were trading before the shareholder group’s initial privatization proposal in the summer.

The Baker-led group holds a 57 per cent stake in the retailer and includes Rhone Capital, WeWork Property Advisors, Hanover Investments (Luxembourg) and Abrams Capital Management.

The deal is subject to the approval by a majority of the minority of HBC shareholders, excluding the shareholder group and its affiliates, and approval by a 75 per cent majority vote at a special meeting of shareholders.

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