Trans Mountain to start next year

CALGARY • Kinder Morgan Canada plans to break ground on its newly approved Trans Mountain pipeline expansion project in the latter half of next year, although chief executive Ian Anderson understands there will be obstacles.

“We are fully and acutely aware there are people prepared to oppose our project at all costs,” Anderson said Wednesday, the day after Prime Minister Justin Trudeau approved the $6.8-billion pipeline expansion. Opposition from environmentalists in B.C. have promised “direct action” to stop its construction.

Natural Resources Minister Jim Carr said federal politicians would continue to engage with protesters who have vowed to stop the project. “I’ve directly engaged with these folks since the time I was elected,” Carr said. “They’re perfectly entitled to disagree (with the government’s decision on Trans Mountain) as long as those disagreements are peaceful, then that’s what makes Canada great.”

Anderson said he expects opposition to the project and possible legal challenges, but “I don’t think I’d be sitting here today if I didn’t think we could continue on the path to building and executing on this project.”

The next steps include securing the necessary building permits and an environmental assessment in B.C. and providing producers in Alberta that have agreed to ship their oil through the expanded pipeline system to the West Coast with an updated cost estimate for the project early in 2017.

“We’re looking forward to getting from ‘Yes’ to starting to build,” Anderson said.

AltaCorp Capital analyst Dirk Lever called the decision on Trans Mountain, and the simultaneous decision on Enbridge Inc.’s $7.5-billion Line 3 replacement project, “approval, with clout.” He said in a research note that he expects Kinder Morgan and Enbridge will “get to work in short order.”

Both companies expect their pipeline projects to be exporting oil off the British Columbia coast — in Trans Mountain’s case by 2019, and in the case of Line 3 to Superior, Wis., by 2020. The two pipelines would add a combined 960,000 barrels of daily oil export capacity for domestic energy companies.

“We believe it will likely prove difficult to successfully oppose what will effectively become law — and we believe the federal cabinet approval effectively does just that, make the decisions law,” Lever said.

Enbridge spokesman Todd Nogier said the company is still waiting on regulatory approvals in the United States, but continues to prepare for a possible construction start.

“We are aligning our construction schedules to ensure a timely construction period once we receive that approval. That being said, we have been preparing by lining up resources to ensure we are able to initiate construction in a timely fashion,” Nogier said.

If both projects are built as planned, the pipelines could help reduce the discount Canadian oil producers are forced to accept for the oil exports, National Bank Financial said in a report.

Though the projects aren’t scheduled to ship Canadian oil for a few years, the report indicated “benefits to the Canadian economy could come sooner because work on Trans Mountain is scheduled to get underway as early as September next year.”

Larry Cann, a senior official with UA Canada, a union representing 56,000 Canadian workers in piperelated industries, said the collapse in oil prices over the past two years “has affected everybody and our trades.”

The projects will provide additional work for his members and the additional economic activity will provide “opportunities to make a decent living” in the future, he said.