The Canadian subsidiary of Kinder Morgan Inc. (NYSE: KMI), Kinder Morgan Canada, announced Sunday that it is suspending “all non-essential activities and related spending on the Trans Mountain Expansion Project.” The project involves a near tripling of existing capacity on the Trans Mountain pipeline that transports crude oil from the oil sands of Western Alberta to the coast of British Columbia.

In the announcement, Kinder Morgan Canada CEO and Chairman Steve Kean noted that the project has the support of Canada’s federal government and the provincial governments of Alberta and Saskatchewan, “but faces continued active opposition” from British Columbia’s government.

Kean said:

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.

When Kinder Morgan announced quarterly results in January, the company clearly set out its plans for the first half of this year:

[T]he scope and pace of the permits and approvals received to date does not allow for significant additional construction to begin at this time. [Kinder Morgan Canada] also stated that it must have a clear line of sight on the timely conclusion of the permitting and approvals processes before it will commit to full construction spending.

Opposition to the pipeline expansion on which Kinder Morgan has already spent C$1.1 billion has intensified since British Columbia elected a new government last year that opposes the expansion project. Kinder Morgan Canada claims support from 43 indigenous (First Nations) communities, but that claim has been disputed by tribal leaders.

Thousands of opponents gathered last month in Burnaby, site of the pipeline’s existing terminal, to protest the expansion of the terminal that they say will result in a tanker-traffic increase from five to 25 a month, increasing the potential for spills and damage to wildlife.

Kean summed up Kinder Morgan’s position:

While we are prepared to accept the many risks traditionally presented by large construction projects, extraordinary political risks that are completely outside of our control and that could prevent completion of the project are risks to which we simply cannot expose our shareholders. … If we cannot reach agreement by May 31st, it is difficult to conceive of any scenario in which we would proceed with the Project.

The total project cost was recently estimated at C$7.3 billion and would expand the existing Trans Mountain pipeline system capacity from 300,000 barrels a day to 890,000 barrels a day.

Kinder Morgan stock closed down more than 2% Friday at $15.17, in a 52-week range of $14.69 to $21.85. Shares were inactive in Monday’s premarket trading session.

Shares of Kinder Morgan Canada closed Friday up about 0.2% at C$18.44 in Toronto, in a 52-week range of $15.17 to $20.00. The company came public last May at C$17.00 per share.

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