Politicians react to Trans Mountain suspension

Natural Resources Minister Jim Carr responds to a question during question period in the House of Commons on Parliament Hill in Ottawa on Tuesday, May 10, 2016. Photo by Adrian Wyld/The Canadian Press

CALGARY, A.B. – The future of the Trans Mountain pipeline expansion was cast in doubt on Sunday as Kinder Morgan Canada suspended all non-essential 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.

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“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 t proceed, adding it needs “clarity” on its ability to do construction in B.C. and protect its shareholders.

“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 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.

There is also another legal challenge in the Federal Court of Appeal, where the federal government’s approval and B.C.’s environmental assessment certificate for the project are being challenged.

A federal government official speaking on background told The Canadian Press the timing of the announcement has more to do with construction schedules than a specific event in recent days. Kinder Morgan has to get construction of the pipeline underway by the end of May or it will likely lose out on another construction season, which adds significant costs and threatens to further fray investor nerves.

Carr said the government was given a heads up Saturday afternoon that the decision was coming, which prompted him to return to Ottawa from New York.

He said it wasn’t expected, but his office was aware the delays and uncertainty posed by British Columbia’s threats were having an impact.

“We knew that their investors were getting nervous,” said Carr in an interview.

He criticized British Columbia, saying the province’s “threat of prolonged court action has consequences” not just for Canada but for B.C. as well.

He noted the B.C. economy is heavily dependent on natural resource, be it oil, natural gas, wood products or mining and scaring off Kinder Morgan investors could have long-term consequences on British Columbia’s ability to attract investment elsewhere.

“It is not in the interests of the B.C. government for investors to think B.C. is not a good place to invest,” Carr said. “There are consequences to those actions and we’re seeing those consequences.”

The project has become a major irritant in the relationship between Alberta and B.C., with Alberta going as far as banning the import of wines from its neighbour for a period of time.

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.

Trudeau has argued it is possible to balance the interests of both the economy and the environment in pushing for the pipeline’s expansion. The prime minister made that argument on Friday when he visited Fort McMurray, Alta.

Still, protesters have said the expansion would increase the risk of oil spills in the Burrard Inlet, and that completing it would mean the federal government will not be able to meet its commitments to cut greenhouse gas emissions by another 200 million tonnes per year by 2030.

Opposition to the pipeline has ramped up in recent weeks, with about 200 people arrested near the Burnaby marine terminal in the last month.

Groups opposed to the project said Sunday’s announcement should be the beginning of the end of the pipeline expansion.

“Clearly, investors have lost confidence in this project and are waking up to the reality that the Kinder Morgan pipeline will never be built,” said Sven Biggs, energy and climate campaigner for Stand.earth.

Mike Hudema, a climate and energy campaigner for Greenpeace Canada, said opposition to the pipeline is working.

“Investors should note that the opposition to this project is strong, deep and gets bigger by the day. This announcement shows that this widespread opposition has reached critical mass,” he said in a statement.

“We encourage Kinder Morgan to shelve this project before the litany of lawsuits, crumbling economics, and growing resistance against the pipeline does it for them.”

(THE CANADIAN PRESS)

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