Timing of Kinder Morgan decision under question
Law professor believes energy giant may BE trying to ramp up the pressure
To take Kinder Morgan CEO Steven Kean at his word, Premier John Horgan’s British Columbia government is having success in its fight to stop the company’s $7.4-billion Trans Mountain oil pipeline expansion.
On a Monday conference call with investment analysts, after a surprise Sunday announcement suspending all but non-essential spending on the Trans Mountain expansion, Kean said Kinder Morgan has determined that the British Columbia government’s opposition is a key obstacle to constructing the project. He pointed to Horgan’s NDP government’s pledge, for example, to ban expanded bitumen shipments through British Columbia.
Horgan took the position in January, then stepped back from it in the face of an all-out trade war with Alberta, that had banned B.C. wine in response. Instead, Horgan said in February he would take a reference case to the courts on barring additional diluted bitumen shipments through B.C. until further scientific studies on how to clean up a spill.
“The (B.C.) government is vocally in opposition to this project which suggests that whatever jurisdiction there may be could be used in a way that undermines the project directly, or our ability to complete it, or casts uncertainty to the point that our investors can’t go forward,” Kean told analysts.
A drawn-out court battle and possibility of further actions by the B.C. government add to the uncertainty, said Kean.
“Prevailing eventually is not enough to support an investment of this size and duration, especially at this critical moment.”
Ramping up to full spending would amount to $200 million or $300 million per month, said Kean.
The NDP government, which came to power last year after 16-years of B.C. Liberal rule, has said it will proceed with other measures that involve consulting the public on additional environmental regulations around oil spill response and compensation for spill damage.
Horgan’s government has said it will do everything in its power to stop the project, a position it took in last year’s election.
On Sunday, Kinder Morgan announced it had imposed a May 31 deadline to get clarity that it could build the project through British Columbia and protect its investors, two measure that must be met before it ramps up spending significantly.
The company says it has already sunk $1.1 billion on the pipeline that would triple capacity and open up new markets in Asia for oil from the Alberta oilsands.
Asked by analysts whether Kinder Morgan had the potential to sue the B.C. government, should the project be cancelled, Kean said it was premature to discuss that issue.
The company said it had not determined yet exactly what is nonessential spending.
Local project officials, for example, could not say whether that meant work would stop on an expansion at Westridge Terminal in Burnaby to accommodate more tanker traffic. The terminal and a tank farm at Burnaby Mountain have been the site of numerous arrests of protesters.
National Energy Board hearings on the detailed route are scheduled to continue this month and into May and June.
University of Calgary law professor Nigel Bankes said he wasn’t entirely sure why Kinder Morgan had made the move other than maybe to put pressure on the federal government.
He noted that the company was not likely to ramp up spending anyway — for example, ordering all of its pipe — until it heard the outcome of key court decisions.
A Federal Court is expected to release a ruling before the summer on a challenge from some First Nations, including the Tsleil-Waututh, supported by the B.C. government, of the Trudeau government’s approval. A ruling on a challenge by the Squamish Nation at B.C. Supreme Court of B.C.’s environmental approval (under the former B.C. Liberal government) is expected to be released this spring.
And Bankes, chair of Natural Resources Law at the University of Calgary, said he didn’t see a clear way for the federal government to resolve British Columbia’s opposition.
Ottawa would have to be able to point to a specific delay, over a permit for example, that could be argued in a court or at the National Energy Board, noted Bankes.