April 9 (UPI) — Citing risk to its shareholders from regional opponents, pipeline company Kinder Morgan said it may pull the plug on its Trans Mountain oil pipeline expansion.
The consortium behind the project planned to expand the Trans Mountain network to the western coast of Canada, tripling its design capacity to 890,000 barrels per day. It’s already spent about $860 million on the project since petitioning the National Energy Board, a Canadian regulator, in 2013.
“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,” Steve Kean, the CEO at Kinder Morgan’s Canadian subsidiary, said in a statement.
Two years ago, leaders in Burnaby, a city in British Columbia, filed an appeal in federal court against the approval of Kinder Morgan’s plans. The city said it and its residents were concerned about the risks from more oil, the 13 planned storage tanks in its community and the increase in oil tanker traffic along the western Canadian shore.
The provincial government of British Columbia in January considered new regulations on bitumen, a heavier type of oil found in Canada. Included among the proposals was a restriction on transportation until the government determined what would happen if there was a spill of the thicker type of oil.
In response to regional opposition, provincial leaders in Alberta said those in British Columbia were putting the nation’s economy at risk. Alberta’s government estimated that pipeline projects like Kinder Morgan’s could’ve stimulated economic growth by as much as 2 percent by 2023.
Alberta Premier Rachel Notley said jobs and the economy depend on the Trans Mountain expansion project, accusing her counterpart in British Columbia, John Horgan, of undue harassment.
“Alberta is prepared to do whatever it takes to get this pipeline built, including taking a public position in the pipeline,” Notley said in a statement during the weekend. “Alberta is prepared to be an investor in the pipeline.”
Horgan, for his part, said he would continue to do “everything we can” to protect the regional environment and local economies. Kinder Morgan, meanwhile, said the controversy over the Trans Mountain expansion “has escalated into an inter-governmental dispute.”
The NEB has issued permits for Trans Mountain, but regulatory approval is a multi-layered process. It issued decisions in February that could let the pipeline group start work on a tunnel entrance at Burnaby Mountain in British Columbia, provided it gets permits from three different levels of government.
Kinder Morgan said it still felt the expansion project was a national interest and would consult with stakeholders on how to proceed.
“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 company’s CEO said.
Nearly all of the exported Canadian oil heads south to the United States and the expansion of Trans Mountain would help break a North American land lock. An accelerated rate of crude oil production in North America, meanwhile, started straining existing pipeline capacity at least four years ago, forcing the industry to turn to rail transport to take up the slack.
NEB data show the November average for exports by rail was the highest for that month in four years. In July 2013, 47 people died in Lac-Megantic, Quebec, when a train carrying oil from the Bakken shale formation derailed and exploded.