‘Political risk’ still seen as a hurdle in pipeline expansion
Despite promises by Ottawa and Alberta to backstop the $7.4-billion Trans Mountain pipeline expansion, proponent Kinder Morgan Canada Ltd. said Wednesday the project now faces “unquantifiable risk” because of British Columbia’s increased opposition.
Kinder Morgan Inc. CEO Steve Kean said on an earnings call the company is now in discussions with Alberta and the federal government after both pledged financial support to the pipeline project that runs through B.C.
Kean said those offers of financial assurances help to alleviate the financial risk, but the project still faces political risk from B.C. “Most of the project and most of the investment is in British Columbia,” Kean said, adding there were still operational concerns about proceeding in B.C. even with Alberta’s and Canada’s financial support.
Kean’s are the first public comments on the project since the company announced it was suspending all non-essential spending on the pipeline two weeks ago. “The events of the last 10 days have confirmed those views,” Kean said.
The company indicated in a release the risks have increased with the B.C. government’s continued opposition. “Rather than achieving greater clarity, the project is now facing unquantifiable risk,” Kinder Morgan Canada said in a release.
“Unfortunately, B.C. has now been asserting broad jurisdiction and reiterating its intention to use that jurisdiction to stop the project,” the company said, adding that Kinder Morgan would not resume spending on the project as a result.
The concerns over heightened risks come as a war of words between lawmakers in British Columbia and Alberta escalated, even after Prime Minister Justin Trudeau tried to resolve the dispute in an emergency meeting on Sunday.
B.C. Environment Minister George Heyman announced Wednesday that his government would file a reference case with the B.C. Court of Appeal by the end of the month to test whether the province has the constitutional authority to limit imports of diluted bitumen from Alberta.
The issue has now escalated to the point where Alberta has introduced legislation of its own to retaliate and send gasoline prices higher in Vancouver.
Alberta Energy Minister Marg McCuaig-Boyd threatened Wednesday to use her government’s soon-to-bepassed law to throttle back oil shipments to B.C.
“It’s a federally approved project and yet they continue to throw legal challenges all the time and enough is enough. That is why we’ve introduced Bill 12 and we’re prepared to pass it and use it,” McCuaigBoyd said.
Saskatchewan’s government has vowed to match Alberta’s actions in retaliating against B.C. as it supports the project.