Kinder Morgan CEO says pipeline project may be "untenable"
The events of recent days have reinforced Kinder Morgan’s concerns about the viability of the Trans Mountain oil pipeline expansion project.
“It’s become clear this particular investment may be untenable for a private party to undertake. The events of the last 10 days have confirmed those views,” said CEO Steve Kean on a conference call Wednesday. “We’ve pointed out there are significant differences between governments, and those differences are outside of our ability to resolve.”
Earlier that day, B.C. Premier John Horgan’s government announced it will file by the end of April a long-promised court reference to clarify questions around provincial authority over such inter-jurisdictional megaprojects.
In Edmonton, Alberta Premier Rachel Notley said her office was told by Kinder Morgan that Kean’s comments were directly tied to B.C.s court reference announcement and that the company’s broad commitment to the project remains unchanged.
“The message we’re getting back is that they (Kinder Morgan) are pleased with the high level of engagement that is happening between both us and the federal government,” Notley told Canadian Press.
Kinder Morgan, in a statement issued late Wednesday, echoed Notley’s comments, saying: “We are actively engaged with the federal and Alberta provincial governments and those conversations will continue in good faith. Nothing has changed in that regard.”
The $7.4-billion project remains in limbo as the political feud among Alberta, B.C. and Ottawa continues. The Trans Mountain pipeline would double the existing line from Alberta to Burnaby to get more oil to overseas markets and fetch a better price.
The project was approved by the federal government in 2016, but has since faced court challenges and permit delays in B.C. Horgan’s government says it still has concerns over the impact of the expansion on the potential for oil spills on its waterways and coastline.
Kinder Morgan announced April 8 it was scaling back construction, citing obstruction by B.C. that put the financial viability of the pipeline in question. It gave a deadline of May 31 for a clear signal the project can get built.
In the last 10 days Horgan and Notley have met in Ottawa with Prime Minister Justin Trudeau, and Trudeau has said Ottawa will join talks with Alberta and Kinder Morgan to work a financing arrangement to ensure the project gets built.
Notley, meanwhile, is facing criticism from political opponents for announcing last week that if necessary, Alberta will buy the whole project.
United Conservative Leader Jason Kenney said Notley has given away Alberta’s bargaining leverage with Kinder Morgan.
“I’d love to play poker with Premier Notley based on how she’s mishandled this whole thing,” Kenney told Canadian Press.
Alberta Party house leader Greg Clark added, “The premier was saying things for the sake of a headline where the thing to do would have been to play the cards close to the vest. “It’s very poor negotiations.”
Amidst all this, Notley has introduced legislation giving her government the power to intervene in the market to limit shipments of oil and natural gas, which could inflict financial hardship on B.C. by sending the price of gasoline soaring.
An ally for Notley in the fight with B.C., Saskatchewan Premier Scott Moe has said his government will bring in a similar law to stand by Alberta to get the pipeline built.
According to Canadian Press, Kean confirmed on the call that discussions with Ottawa and Alberta have begun on the finances, but said he was not going to make any details public until a definite agreement has been reached or the discussions have ended.
He said the company also continues to meet with stakeholders ahead of the May 31 deadline, and is looking for a way forward for the project. Kean said investment questions around the Trans Mountain pipeline shouldn’t be taken as a wider comment on investing in Canada.
“We have invested in Canada and British Columbia, as well as Alberta, and we expect to continue investing,” he said.