Energy Business

Canada's Trudeau Says Trans Mountain Pipeline 'Will Be Built'

Paul Ausick

A week ago, Kinder Morgan Inc. (NYSE: KMI) and its Canadian subsidiary Kinder Morgan Canada called a halt to further work on the proposed C$7.3 billion expansion of the Trans Mountain pipeline system unless and until the political risks associated with the project are settled.

Yesterday, Canada’s Prime Minister, Justin Trudeau, Alberta’s Premier, Rachel Notley, and British Columbia’s Premier, John Horgan, met in Ottawa and the apparent conclusion was that neither side has wavered: Trudeau and Notley continue to support the Trans Mountain project while Horgan opposes it.

The project involves expanding the existing capacity of the Trans Mountain system from 300,000 barrels a day to 890,000. Trans Mountain transports diluted bitumen (essentially crude oil) from the oil sands region of western Alberta to the coast of British Columbia.

Both Trudeau and Notley have offered financial support to Kinder Morgan to ensure that the project is completed. At Sunday’s meeting, The Globe and Mail reports, Trudeau instructed his finance minister to begin talks with Kinder Morgan. Alberta’s provincial government also will be included in the talks.

Trudeau’s government plans soon to introduce legislation asserting federal government jurisdiction over the project, and the government of Alberta will begin considering legislation Monday that would allow it to cut off the flow of crude oil, gasoline and diesel fuel to British Columbia. Such a move would certainly drive up prices in British Columbia but might also send prices higher along the west coast of the United States.

Thousands of the project’s 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. Opposition to the Trans Mountain expansion also comes from Canada’s First Nations, although Kinder Morgan claims that 43 indigenous communities support the project.

According to The Globe and Mail, British Columbia’s Horgan said Sunday that if the province loses in court the provincial government will abandon its opposition to the project. He also noted that Trudeau assured him that the federal government would not seek to punish British Columbia for its opposition, although the implication is that there will be no punishment if the federal government wins. Presumably, all bets are off if it loses.