Indemnification and the building of Canadian pipelines

DeVries, Megan (2020) Indemnification and the building of Canadian pipelines. Masters thesis, Memorial University of Newfoundland.

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Abstract

The Canadian Federal Government’s purchase of the Trans Mountain pipeline in 2018 was seen by many as a singular action to support the pipeline industry. However, this research will contend that this is not the case because this thesis will show that the federal government has indemnified the oil and gas pipeline industry in Canada over the past 60 years. This will be shown by focusing on three large-scale positive examples of Federal Government indemnification, they are the modern Trans Mountain pipeline expansion, the 1970’s building of Line 9 and the initial construction of the TransCanada pipeline project in the 1950’s. All of these cases relied on direct government fiscal and political support to indemnify the projects so that they could obtain financing and eventually be constructed. By using process tracing this thesis shows how the Canadian federal government has in essence been indemnifying all large-scale pipeline projects throughout a large part of Canada’s history. Explanations for why this support has existed are then explored through a lens of industry structure, and the thesis posits that the pipeline industry’s structure (using the metric of industry size, firm size, profit rate, market concentration and geographical dispersion) is one explanatory factor as to why this policy of indemnification has existed in Canada for such a long period of time.

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