By Canadian Press

Kinder Morgan CEO says political solution needed for Trans Mountain project

Apr 9, 2018 | 8:00 AM

CALGARY — Kinder Morgan is open to discussing an investment in its Trans Mountain pipeline expansion by the Alberta government if there’s clear assurance that the project can actually be completed, the company’s chief executive said Monday.

Alberta Premier Rachel Notley suggested Sunday the province could invest in the project to ensure it goes forward after the company said it has suspended all non-essential activities and related spending on the pipeline expansion that would carry Alberta bitumen to an export terminal near Vancouver.

Kinder Morgan has set a May 31 deadline for talks with “various stakeholders” to reach an agreement that could allow the project to proceed. Shares in the company closed down 12.58 per cent at $16.12 after dipping as much as 15 per cent Monday on the Toronto Stock Exchange.

CEO Steve Kean said on a conference call Monday that he’s open to Notley’s suggestion, but there needs to be a clear political signal that there won’t be additional delays to the project.

“There’s no magic formulation that’s been articulated by anyone, to us. This is what we’ll be devoting some attention to in the coming weeks,” Kean said.

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The company said B.C.’s opposition to the project was a key reason for suspending work. B.C. Premier John Horgan has launched legal challenges as part of a promise to do whatever his government can to stop the project.

Notley said Monday she had told Horgan that Alberta will be moving forward aggressively against B.C. including through legislation this week to give the premier power to reduce oil flows to B.C.

“I made sure that he knew our resolve and that he was aware of the fact that we believe time is of the essence,” Notley said in her opening remarks at a cabinet meeting.

Kinder Morgan’s Kean suggested that B.C. needs to change its position or the federal government must resolve the impasse.

“What we have is a government that is openly in opposition (to the project) and has re-affirmed that opposition very recently,” Kean said.

“It’s outside of our control.”

Kinder Morgan’s setting of a timeline escalates the intergovernmental conflict, and could require the federal government to flex political muscle by sending in RCMP protection to ensure the pipeline is built, analysts at Desjardins Capital Markets said in a report on Monday.

“The move significantly upped the stakes in the rapidly escalating intergovernmental squabble between the federal and British Columbia governments,” it said. 

The analysts, however, question the willingness of the federal Liberal government to exercise force as the next election cycle approaches.

“The bottom line is that the future of the TMX project remains cloudy, and yesterday’s announcement is only likely to further entrench opposition activists by providing a calendar target.”

They added that Alberta Premier Rachel Notley’s declaration that her province is prepared to invest in the project is comforting and suggests that the project might survive the company’s deadline.

Greenpeace campaigner Keith Stewart called the May 31 deadline a power play by Kinder Morgan, whose securities filings show that the B.C. government’s opposition is only one of many obstacles.

“Bad projects are bad projects, so if this redirects investment toward good projects that contribute to Indigenous reconciliation and meeting our climate commitments, then that’s a net benefit,” Stewart wrote in an email.

Kinder Morgan’s move to suspend the project 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.

Kean explained that part of the reason for the decision’s timing is because the company is about to ramp up investment and wants “final clarity” before it sinks more money into it. Kinder Morgan has spent about $1.1 billion on the $7.4-billion project so far.  

“We do not want to kick the can down the road, for example, until we have another $2 billion in the project…That is not a viable strategy, given the point in time where we find ourselves right now.”

Trudeau has argued it is possible to balance the interests of both the economy and the environment in pushing for the pipeline’s expansion.

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.

— With files from David Paddon in Toronto

Companies in this story: (TSX:KML)

Ian Bickis, The Canadian Press