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Kinder Morgan will suspend its Trans Mountain pipeline expansion project entirely if the legal issues surrounding it cannot be resolved by May 31, Chairman Steve Kean said, adding the company would not continue risking shareholder funds on the project unless the clouds over it clear.
The US$5.8-billion project should see the capacity of the Trans Mountain crude pipeline from Alberta to the western Canadian coast in British Columbia triple, but this has sparked outrage in B.C., especially after a government change last year, with the new NDP government vowing to oppose the pipeline with all legal means available.
The project even started a trade war of sorts between B.C. and Alberta, with the latter resorting to threats in the end, hinting it might turn the tap off on gas exports to B.C., which enjoys healthy transit fees in addition to its own gas use.
What makes Trans Mountain particularly important, however, is the fact that it was granted the go-ahead by the Liberal federal government, unlike other pipeline projects. Canada is panting under a crude oil pipeline shortage as crude oil production grows and at least one expansion project is vitally necessary.
Now, industry insiders are beginning to worry that Canada’s federal government doesn’t have what it takes to get the job done and soothe the B.C. government, whose opposition Kean cited as the reason for the suspension of non-essential spending on Trans Mountain and the May 31 deadline.
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Meanwhile, Alberta’s OM Rachel Notley once again reiterated the province’s support for Trans Mountain, saying shortly after Kean’s statement that Alberta is ready to go all the way, up to and including becoming co-owner of the pipeline, in order to get it built. She also said that Alberta was preparing legislation that would, to put it bluntly, make B.C. suffer.
Federal PM Justin Trudeau last week also noted the federal government’s support for the pipeline during a visit in western Canada. "Canada is a country of the rule of law, and the federal government will act in the national interest. Access to world markets for Canadian resources is a core national interest," he said yesterday in a tweet, after Kean’s statement.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.