Finance Minister Bill Morneau says that in return, Kinder Morgan will go ahead with its original plan to twin the pipeline this summer while the sale is finalized, which likely won't happen until August.
The federal government and the Houston company were in talks for over a month about saving the project, which Kinder Morgan threatened to abandon as of Thursday unless federal officials remove political.
Morneau said there'd be no fiscal impact of the plan - suggesting he doesn't expect to make or lose money on the deal.
The project faces fierce opposition from the government of British Columbia (BC) and environmentalists.
Once the sale is complete, Canada will continue the construction on its own, with a goal to sell the pipeline once market conditions will allow it to get the best price. The move will be a key test of Trudeau's bid to balance the environment and the economy by backing the $7.4 billion pipeline expansion while pushing a national carbon price to reduce greenhouse gas emissions. However, at present, there is only one pipeline from the tar sands region to the port in Vancouver and that pipeline was built in 1953.
"At the appropriate time, Canada will work with investors to transfer the project and related assets to a new owner or owners, in a way that ensures the project's construction and operation will proceed in a manner that protects the public interest", reads a release.
The Trans Mountain expansion would nearly triple capacity to 890,000 barrels of oil on a line running from Alberta to a terminal near Vancouver.
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"This is an investment in Canada's future", he said.
The B.C. government is carrying on with its reference case against the Trans Mountain pipeline expansion, Premier John Horgan told Prime Minister Justin Trudeau in an early-morning phone call Tuesday.
The deal was approved by cabinet on Tuesday morning and is now subject to approval by Kinder Morgan stockholders.
"The Indigenous-led, people-powered movement that led Kinder Morgan to abandon ship on this project is stronger than ever and will not back down". The 980-kilometer (600-mile) expansion is seen by the oil industry as a crucial link to Asian markets, allowing producers to diversify away from the USA, which takes the vast majority of Canadian oil exports.