Kinder Morgan stepping back

TRANS MOUNTAIN PIPELINE ON HOLD AS PRESSURE MOUNTS ON B.C. TO DROP OPPOSITION

The future of the Trans Mountain pipeline expansion was cast in doubt on Sunday as Kinder Morgan Canada suspended all nonessential activities and related spending on the project in the face of mounting opposition from British Columbia. With the company citing its decision largely on the B.C. government’s legal challenges to the pipeline and the need to protect its shareholders, the federal and Alberta governments pushed Premier John Horgan to abandon his promise to do whatever his government can to stop the project.

“The government of Canada calls on Premier Horgan and the B.C. government to end all threats of delay to the Trans Mountain expansion,” federal Natural Resources Minister Jim Carr said in a news release. “His government’s actions stand to harm the entire Canadian economy.”

In Edmonton, Premier Rachel Notley said Alberta would consider taking on an equity stake in the pipeline if Kinder Morgan investors are considering backing away.

“If we have to, Alberta is prepared to do whatever it takes to get this pipeline built,” said Notley, without discussing the dollar value of such an investment. “Alberta is prepared to be an investor.” Kinder Morgan’s move will be seen as a blow to Prime Minister Justin Trudeau, who has insisted the pipeline will be built. The expansion, which would triple the amount of oil flowing from Alberta to Burnaby, B.C., was approved by the federal government in 2016.

The company said it will consult with “various stakeholders” to try and reach an agreement by May 31 that might allow the project to proceed, adding it needs “clarity” on its ability to do construction in B.C. and protect its shareholders.

We should protect the value that KML has, rather than risking billions of dollars on an outcome that is outside of our control. Steve Kean Kinder Morgan Canada

“As KML has repeatedly stated, we will be judicious in our use of shareholder funds. In keeping with that commitment, we have determined that in the current environment, we will not put KML shareholders at risk on the remaining project spend,” Steve Kean, the company’s chairman and CEO, said in a statement.

“A company cannot resolve differences between governments. While we have succeeded in all legal challenges to date, a company cannot litigate its way to an in-service pipeline amidst jurisdictional differences between governments.”

Kean said the uncertainty around the company’s ability to finish the project “leads us to the conclusion that we should protect the value that KML has, rather than risking billions of dollars on an outcome that is outside of our control.”

Kinder Morgan has spent about $1.1 billion on the $7.4-billion project so far.

Horgan said he spoke with Kinder Morgan president Ian Anderson, who told him the project has been “unnecessarily harassed” by British Columbia. “I told him I disagreed,” Horgan said. The B.C. premier said he also spoke to Trudeau and planned to speak to Notley, but his position on the pipeline hasn’t changed.

“I want to say to all Canadians that I profoundly believe in the rights of British Columbians to stand up and make sure that we’re doing everything we can to protect the interests of our province,” he told a news conference in Victoria Sunday. “I don’t want to do that in a provocative way. I don’t want any threats, I don’t want any ultimatums and I believe other governments should follow suit.”

Horgan is pursuing a reference case in the courts to determine if his government can control the shipment of oil through the province on environmental grounds, which Kinder Morgan mentioned as a factor in its decision.

“Rather than achieving greater clarity, the project is now facing unquantifiable risk,” the company said in its statement.

On Sunday, Notley also described the B.C. government’s position as short-sighted.

“If I was a resident of B.C., I would be very worried about what this says about the investment climate in British Columbia,” she told a news conference at the Alberta legislature in Edmonton. “How can the economy of British Columbia be built when every private investor considering a project must weigh the risk that the provincial government will conduct itself in the way that it has on this matter?”

Notley called on Trudeau to take more “concrete action” to get the pipeline built, adding that legislation is coming in the next few days to give her the power to turn down the taps on oil headed to B.C. Other retaliatory actions, such as a renewed ban on B.C. wine, are also being contemplated, she said.