Rules to restrict oilsands exports a potential setback for Trans Mountain pipeline.
British Columbia’s government wants to restrict shipments of oilsands crude in pipelines and on railways cars in the province through proposed new rules that would create additional uncertainty for Kinder Morgan Canada’s $ 7.4- billion Trans Mountain pipeline expansion.
The rules would also open B.C. up to jurisdictional challenges and have already exacerbated a spat with Alberta Premier Rachel Notley, who called the proposals “both illegal and unconstitutional.”
B. C. Environment and Climate Change Strategy Minister George Heyman announced Tuesday rules to limit “the increase of diluted bitumen transportation until the behaviour of spilled bitumen can be better understood and there is certainty regarding the ability to adequately mitigate spills.”
To that end, B. C. will establish an independent scientific advisory panel to make recommendations on if and how heavy oils can be safely transported and, if spilled, cleaned up.
Tuesday’s announcement did not specifically mention Kinder Morgan’s Trans Mountain expansion, which will boost the shipments of oil from Alberta to Burnaby, B. C. from 300,000 barrels per day to 890,000 bpd, but the B.C. NDP had promised to block the pipeline’s construction during an election campaign last year.
In an interview, Heyman said B. C.’s Environmental Management Act “gives us the right, in addition to our responsibility, to defend B. C.’s vulnerable coastline, our inland waterways, our economic and environmental interests and that’s what British Columbians expect us to do.”
He acknowledged the potential for a legal challenge to the new rules, as railways and pipelines that cross provincial borders are federally regulated.
“We’ ll deal with a legal challenge when and if it happens,” Heyman said. He added that B.C. will consult with its citizens on the proposals ahead of implementing the rules as law “later this year or in early 2019.”
John Brussa, a Calgarybased energy lawyer and a director of several oil and gas companies, including Baytex Energy Corp., said the new rules “sounds like it set it up for a huge constitutional fight.”
“I think intra- provincial commerce is clearly the purview of the federal government,” said Brussa, a partner and chair at Calgary- based Burnet, Duckwor t h and Palmer.
For its part, Alberta immediately blasted the proposals and indicated the federal government should step in to enforce the constitutional division of powers.
“The B. C. government has every right to consult on whatever it pleases with its citizens. It does not have the right to rewrite our constitution and assume powers for itself that it does not have,” Premier Rachel Notley said, adding that Heyman’s an- nouncement was “political game- playing and political theatre.”
The B.C. proposal comes as Ottawa is expected to announce sweeping reforms that governs energy projects.
Kinder Morgan Canada shares tumbled two per cent to $ 16.83 on the announcement, reversing some of the gains the stock had made following a National Energy Board ruling earlier this month that allowed the company to seek local permits directly from the regulator rather than opposed municipalities like Burnaby.
“Kinder Morgan is aware of the government’s announcement today and will actively participate in their engagement and feedback process,” Trans Mountain spokesperson Ali Hounsell said in an email, adding there was no update to the project’s expected 2020 inservice date.
“The Expansion project’s approval by the government of Canada followed a rigorous and lengthy regulatory process that included a thorough examination of the pipeline and products being shipped and there are conditions on the project from both the National Energy Board and the B.C. Environmental Assessment Office related to diluted bitumen,” she said.
Environmental activists immediately called the announcement a setback for the pipeline, which is currently under construction.
“Today’s announcement by British Columbia officials of plans to restrict new shipments of tar sands crude oil is a major setback for Kinder Morgan’s pipeline,” Stand.ear t h campaigner Sven Biggs said in a release, adding that it could eliminate the company’s ability to ship oilsands crude across the province even if the pipeline is built.
Greenpeace campaigner Mike Hudema also called the announcement “a major blow to Kinder Morgan” and would result in a moratorium on new bitumen exports.