Pipeline project looks iffy again

For a pipeline that the federal Liberals have anointed as the right and only answer for bringing Canadian oil to new markets, the Trans Mountain expansion project from Edmonton to Burnaby, B.C., sure looks like it’s faltering from a thousand pokes.

The latest came via Burnaby’s mayor, Derek Corrigan, who has made life as miserable as possible for proponent Kinder Morgan

Canada Inc. and who has precipitated another provincial standoff before the National Energy Board.

The exasperated company asked the NEB last week to intervene so it can proceed with work to expand its Burnaby and Westridge terminals to accommodate more oil storage and more tankers. It also asked the regulator to set up a process to make an “expedited determination” about similar complaints in future.

At issue is who’s in charge — the federal government, which approved it, or the city of Burnaby, which has given the $7.4-billion project the runaround for years and still refuses to issue municipal permits for such vital things as removing trees.

The Alberta government, which wants to see the pipeline built as payback for implementing tough carbonreduction rules, said Thursday it would stand behind Kinder Morgan at the NEB.

“The Trans Mountain pipeline expansion is critical to the national economy, and it’s critical to Alberta. It has federal approval and it will be built,” Alberta Premier Rachel Notley said in a statement.

But also Thursday, the B.C. government said it would take Burnaby’s side as part of its promise “to use every tool available to defend B.C.’s coast, and that is what we’re doing,” Environment Minister George Heyman said in a statement, where he also warned “we will continue to explore other legal ways to defend the interests of British Columbians against this damaging project.”

Burnaby’s stalling tactics are in a league of their own.

A 44-page affidavit by Michael Davies, vice-president of operations at Kinder Morgan Canada, says to avoid issuing permits the city’s bureaucrats have complained about “insufficiencies” in the company’s applications, being “too busy,” needing more time for reviews, not having enough resources, even disliking the company’s tree-cutting plan.

The result is that “to date, Burnaby has yet to approve any of the PPA applications, provide any further zoning comments, issue any permits or exemption requests in relation to the project or the terminal work,” Davies writes.

The firm warns the financial harm of delaying the project is “enormous.”

It includes: direct costs ranging from $30 million to $35 million a month related to corporate support, salaries, professional fees, third party fees, travel, office and overhead, suspension or cancellation of vendor or supplier contracts, management and security of materials already ordered and insurance or financing; plus an additional projected loss of revenue for Trans Mountain alone of about $90 million for every month of delay.

Kinder even raises the possibility of the project’s collapse: “A delay of an indeterminate nature will create uncertainty regarding the project’s future and the in-service date of the project, potentially resulting in the failure of the project.”

Kinder has already said that the project’s startup could be pushed back by as much as nine months due to delays in permits and regulatory approvals.

For his part, Corrigan has told The Canadian Press that Burnaby needs to complete its due diligence.

The jurisdictional dispute opens a new battlefront in what has already been an absurd permitting process, including: A protracted, then expanded (by the federal Liberals) NEB regulatory review that involved five years of stakeholder engagement with Burnaby residents and its municipal government; a challenge by Burnaby, Vancouver, several B.C. First Nations and two environmental groups at the Federal Court of Appeal to reverse the NEB permit; the NEB’s ongoing hearings to determine the pipeline’s detailed route, whose B.C. portion will begin in 2018, providing yet another platform for the project to be put through the wringer.

If this never-ending regulatory environment is the best it can do, the federal government has a problem shaking off perceptions that Canada is no longer able to get an energy project built.

Then again, Ottawa can always blame yet another costly collapse on a change in business conditions, as it did with the cancellation of TransCanada Corp.’s Energy East last month, rather than the permitting environment it has encouraged.