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Ottawa can't start work on Trans Mountain until deal closes


June 27, 2018  


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Ottawa would like to see construction accelerate on the Trans Mountain pipeline expansion, but has no control over decisions to resume or start new work until it takes ownership of the major crude oil pipeline project.

“We think that construction and staying on a schedule is important, but that will be up to Kinder Morgan as long as they are the owner of the pipeline,” Natural Resources Minister Jim Carr said in an interview with Reuters in Washington, D.C. where he is attending the World Gas Conference.

Carr said he expects the deal to close in “mid to late summer.”

The Canadian government agreed to buy Kinder Morgan Canada Ltd’s Trans Mountain pipeline and project for $4.5 billion in late May, promising the deal would allow work on the massive expansion to begin immediately.

Kinder Morgan halted all non-essential work on the $7.9 billion project earlier in May, citing regulatory uncertainty and opposition from the province of British Columbia.

The Trans Mountain pipeline runs from Edmonton, Alberta to a deepwater port in the Vancouver area. The expansion would nearly triple its capacity, giving Canadian producers greater access to Asia and other world markets.

“We know that expanding export markets is a good idea and that has been reinforced by recent events,” said Carr, noting that 99 per cent of Canada’s oil and gas exports go to the United States.

Canada’s oil producers, who currently sell their crude at a steep discount to the North American benchmark, are desperate for construction to begin. Some aboriginal groups and the province of British Columbia fiercely oppose the expansion.

On Wednesday, Kinder Morgan said it is seeking permits to start work on its Burnaby Terminal expansion, a major component of the project. It has previously said that work is underway at its Westridge Marine Terminal. It did not provide an updated construction schedule.

Under the current schedule, terminal construction should already be well underway with pipeline construction starting in July. The anticipated in-service date is December 2020, though it was unclear if that was still attainable.

“We think that there’s value in having the construction schedule accelerate, but until we own the project we can’t control that,” Carr told Reuters.

(Reuters)