Kinder Morgan Canada shareholders on Tuesday backed the pipeline operator’s decision to pause most work on its Trans Mountain expansion, while Alberta’s Premier Rachel Notley pledged to buy the pipeline project if necessary to see it to completion.
The company said on Sunday it would scrap plans to nearly triple the capacity of its existing Trans Mountain pipeline, which extends from Alberta to British Columbia’s coast, unless various legal and jurisdictional challenges could be resolved by May 31.
Meanwhile, Alberta doubled down Tuesday on its pledge to financially support a troubled pipeline expansion, saying the province could buy the project outright from Kinder Morgan Canada Ltd as Canada’s federal government reiterated it was “100 per cent” behind the build.
“We are considering a number of financial options to ensure that the Trans Mountain expansion is built, up to and including purchasing the pipeline outright if it was to come to that,” said Notley in a statement provided to Reuters.
Notley was not immediately available to clarify whether she was referring to both the existing pipeline operations and the $7.4 billion expansion project or just the latter. She had previously said Alberta could take a stake in the project.
The project was approved by the federal government in 2016, but that approval is being challenged in court by First Nation groups and local municipalities, and British Columbia is eyeing whether it has jurisdiction to block increased oil shipments through its territory.
The Trans Mountain expansion, backed by Canadian oil producers, had an operational date of December 2019, but in October the company pushed that to September 2020 because of what it said was the difficulty in obtaining permits.
A survey by Reuters of four analysts and investors showed Kinder Morgan Canada’s fair value without the project to be around $13.50, or 20 per cent lower than the stock’s closing price of $16.71 on Tuesday. Yet, Kinder Morgan’s move found support among shareholders.