Political Shake-Up Fuels Debate Over Kinder Morgan Pipeline Plans
May 30 2017 - 12:51PM
Dow Jones News
By Paul Vieira
Kinder Morgan Inc.'s plans to expand its Trans Mountain
crude-oil pipeline faced fresh risks as Canadian Prime Minister
Justin Trudeau and the premier of oil-rich Alberta added to a
debate fueled by the possibility a new political alliance in the
country's west.
Comments Tuesday from Mr. Trudeau and Alberta Premier Rachel
Notley could set the stage for a fierce national debate pitting the
need to develop Canada's commodities to help foster growth against
the growing influence of the environmental movement.
Mr. Trudeau approved the Trans Mountain expansion late last year
as part of a compromise on pipeline development that included
blocking the more controversial Northern Gateway pipeline proposed
by Enbridge Inc.
Kinder Morgan now faces a setback after two anti-pipeline
political parties in British Columbia -- the left-leaning New
Democratic Party, or NDP, and the environment-focused Green Party
-- said they had reached a tentative cooperation agreement that
would let the NDP form a government in Canada's third-largest
province. An election earlier this month left the Liberal Party,
which has governed the province since 2001, one seat short of a
majority in the British Columbia legislature. The Greens have
pledged to support the NDP over a four-year period.
Details of the pact were expected to released later Tuesday, and
the Green Party said the agreement reflects its opposition to Trans
Mountain. In a statement, British Columbia Premier Christy Clark
said she is considering her next steps amid the new political
alignment.
Mr. Trudeau said Tuesday that the Trans Mountain project remains
in the best interest of Canadians. "Regardless of a [possible]
change of government in British Columbia or anywhere, the facts and
evidence do not change," he said at a press conference in Rome,
where he met with Italy's prime minister. He added he stands by his
earlier decision to approve the expanded energy corridor.
Mr. Trudeau has had to perform a balancing act as he tries to
fulfill his pledge to fight climate change, while trying to stoke
growth in a country that depends on the energy sector for nearly
10% of economic output.
Ms. Notley warned the NDP-Green alliance Tuesday that it has no
legal right to delay or block the Trans Mountain expansion, given
Mr. Trudeau's previous approval. As envisaged by Kinder Morgan, the
expansion would triple capacity to 890,000 barrels of crude oil a
day on an existing 714-mile pipeline that carries crude from
landlocked Alberta to British Columbia's Pacific coast.
Alberta's economy has suffered in recent years amid the slump in
commodity prices, and energy producers in the province regarded the
Trans Mountain expansion as a way to boost sales of crude oil to
Asia and reduce its dependence on the U.S. market, where Canadian
crude sells at a discount to global prices.
"We will use the means at our disposal to ensure that the
project is built," Ms. Notley said in a statement.
Major energy companies, such as Royal Dutch Shell, have decided
in recent months to exit from the Alberta oil sands, which has come
to symbolize the risks in high-cost, carbon-intensive sources of
oil amid lower prices and tougher environmental regulations.
Houston-based Kinder Morgan intends to proceed with
construction, a spokesman said, adding, "We have all the necessary
approvals."
Political developments, however, are weighing on the newly
listed shares of Kinder Morgan's Canadian assets, which were priced
at C$17 apiece as part of an initial public offering. The shares,
which began trading Tuesday on Toronto's main stock market, fell as
low as C$15.75 before recovering to C$16.25 at midday.
In its prospectus filed with Canadian securities regulators,
Kinder Morgan said the pipeline expansion could be delayed or
stopped due to government intervention, or by the courts as
opponents such as aboriginal groups attempt to thwart the
project.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
May 30, 2017 13:36 ET (17:36 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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