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Ottawa In Emergency Meeting Over Trans Mountain Pipeline

Transmountain pipeline

Canada’s federal cabinet is to hold an emergency meeting today after yesterday Kinder Morgan’s Chairman Steven Kean warned that the company will suspend work on the Trans Mountain oil pipeline at the end of May unless the problem with British Columbia’s opposition to the project is resolved.

The federal government has greenlit the project, but British Columbia’s new NDP government that won the vote last year has vowed to fight it with all legal means at its disposal. This put the province at odds with neighboring Alberta, and this fight escalated quickly.

Yesterday, Alberta PM Rachel Notley said that the province is preparing legislation that should be passed this week and that will penalize B.C. for its opposition to the project. In a string of tweets, Notley made sure to paint a very clear picture of Alberta’s unwavering determination to have the Trans Mountain expansion built.

The province has already decided to become an investor in the expansion and will now “move very aggressively” to neutralize B.C. by stopping the flow of oil and gas there. The federal government, for its part, could apply financial pressure by reducing or suspending the annual transfers from federal to provincial coffers. This year’s sum is US$5.44 billion (C$6.9 billion) in health system and social service transfers. B.C.’s government believes suspending payments would be unlawful, however.

Related: Higher Oil Prices Boost Saudi Credit Rating

Ottawa may be motivated to follow Alberta’s aggressive lead. As Notley said, "If the federal government allows its authority to be challenged in this way, if the national interest is given to the extremes on the left or the right, and if the voices of the moderate majority of Canadians are forgotten, the reverberations of that will tear at the fabric of Confederation for many many years to come."

The latest developments in the Trans Mountain saga highlight the many challenges of trying to juggle between a pro-environmentalist agenda and keeping an energy industry that employs tens of thousands alive and growing. The ball is now in Ottawa’s court.

By Irina Slav for Oilprice.com

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