Plenty of Opposition Remains to Kinder Morgan Canadian Pipeline Expansion

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The National Energy Board of Canada (NEB) on Thursday recommended the planned expansion of the Trans Mountain oil pipeline system be approved. The existing pipeline is owned by Kinder Morgan Inc. (NYSE: KMI), which first proposed the expansion plan in 2012.

The Trans Mountain system transports crude oil from Edmonton, Alberta, to the west coast of British Columbia near the city of Vancouver. The existing pipeline transports 300,000 barrels a day of crude oil 1,150 kilometers (more than 710 miles).

The expansion project nearly triples the capacity to 890,000 barrels a day by adding a second pipeline along the existing right of way for around 73% of the distance. About 930 kilometers of the pipeline will be newly built and another 193 kilometers that are currently idled will be returned to service. The cost of the project is currently estimated at $6.8 billion and if the final approval is given in December, the expanded pipeline is expected to enter service in December 2019.

Reaction in Canada has been mixed, and for the most part, predictable. The interim CEO of the British Columbia Chamber of Commerce said:

This project is a big economic win for B.C. and for Canada. This project will bring construction, operations and other indirect jobs to B.C., while enabling our national oil resources to reach Asian markets.

A Sierra Club spokesperson said, “This is exactly what we expected from the National Energy Board, an industry-captured regulator that never met a pipeline it didn’t like or environmental impact it couldn’t ignore.”

Opposition from the country’s First Nations has been vigorous, and not just to the Trans Mountain plan. Rueben George, spokesman for the Tsleil Waututh, told CBCNews, “First Nations are winning 97 per cent of our court cases around resource extraction. That’s 170 legal cases in the last couple years. That’s a lot of veto power right there.”

As the result of a Canadian Supreme Court decision in 2014 and Canada’s adoption of the U.N. Declaration on the Rights of Indigenous People, provincial and national governments and corporations must not just consult with First Nations on projects of this kind that affect their lands and life, but First Nations must consent to the project. That is a much tougher barrier to overcome.

Regardless of the outcome of the expected December decision, the one near-certainty is that it won’t be the final word on the Trans Mountain expansion.

Kinder Morgan’s shares closed up 1.3% on Thursday and traded up nearly 2% in the noon hour Friday, at $17.58 in a 52-week range of $11.20 to $42.86.