Energy giant Kinder Morgan has blinked in the face of relentless opposition from British Columbia to its plans to build a major oil pipeline.

The Texas multinational energy company announced on Sunday that it was suspending all non-essential spending on its Trans Mountain expansion project, threatening to cancel it if it fails to reach an agreement with B.C. and other stakeholders over how to proceed.

The company says it has already spent $1.1 billion, since 2013, to advance the project that would triple the capacity of its existing Trans Mountain pipeline, up to 890,000 barrels of oil per day. But it said it doesn't want to spend any more without knowing if the project, linking Alberta's oil producers to an oil terminal in metro Vancouver, can be completed.

"As KML has repeatedly stated, we will be judicious in our use of shareholder funds. In keeping with that commitment, we have determined that in the current environment, we will not put KML shareholders at risk on the remaining project spend," said the Texas-based company's chairman and chief executive officer Steve Kean in a statement.

Natural Resources Minister Jim Carr speaks to reporters on Parliament Hill in Ottawa on April 8, 2018. Facebook video by Mike De Souza

The remarks came one day after a protest by Indigenous leaders and environmental activists drove the company to suspend activities for the day. Close to 200 people have been arrested at the site of a Kinder Morgan terminal in the metro Vancouver suburb of Burnaby, B.C., in an attempt to stop construction activity from proceeding.

The statement noted that the company had support from the federal government and the provinces of Alberta and Saskatchewan, but that it was facing "active opposition" from the government of British Columbia.

"A company cannot resolve differences between governments," Kean added. "While we have succeeded in all legal challenges to date, a company cannot litigate its way to an in-service pipeline amidst jurisdictional differences between governments."

If built, the Trans Mountain expansion would dramatically increase oil tanker traffic off of the coast of British Columbia.

The pipeline would help producers in Canada's oilsands, the world's third largest reserves of crude oil after Saudi Arabia and Venezuela, get increased access to the Pacific coast. Oil companies believe this would allow them to reach new markets in Asia that would spur expansion.

Detractors say it would push the country's climate change goals out of reach and increase the risks of catastrophic spills. The latest developments on the Trans Mountain project also coincided with news that a leak from the fall of 2017 on the Keystone pipeline, operated by TransCanada, was twice as large as previously reported.

No time to be 'reckless,' says Jim Carr

Apart from the ongoing protests in Burnaby, B.C. Premier John Horgan's NDP government has also stated its staunch opposition to the project, pledging to use all legal tools available to block it.

The company has estimated that nearly 30 per cent of the pipeline expansion project would be built on a brand new route, separate from the existing path of the Trans Mountain pipeline.

But news that the project was in jeopardy prompted warnings from Prime Minister Justin Trudeau's Liberal government and Alberta Premier Rachel Notley's NDP government.

Speaking at an early evening news conference in Ottawa, Natural Resources Minister Jim Carr said that the prime minister had made it clear, in recent appearances in B.C. and Alberta, that the federal government is determined to get the pipeline built with "all options" on the table to make it so.

Jim Carr, Natural Resources Canada, Ottawa, Kinder Morgan, Trans Mountain expansion, pipeline
Natural Resources Minister Jim Carr speaks to reporters on Parliament Hill in Ottawa on April 8, 2018. Photo by Alex Tétreault

He said that the B.C. government's actions would cause uncertainty that would discourage investors from investing in the province and elsewhere in the country.

“This is no time for any provincial government to be reckless with the financial well-being of Canadians and for the fabric of the federation itself," Carr said.

"There’s only one Government of Canada, and the Canadian government reminds Canadians again that this pipeline was approved in Canada’s interests, because of the jobs that it creates, because of the better price we’ll get for our resources, because of the expansion of our export markets. Ninety-nine per cent of our exports in oil and gas go to one country, the United States. This pipeline will open up the Asian market.”

'They cannot mess with Alberta,' Notley says

At a separate news conference, Notley raised the stakes, threatening new legislation in the coming days to punish B.C.'s economy, while pledging to invest the money of Alberta taxpayers to take a new ownership stake in the Trans Mountain project.

“Investors in Houston may or may not ultimately have the stomach for this fight and maybe the government of B.C. feels they can mess with Texas, and who knows? Maybe they can," she told reporters in Edmonton. "But let me be absolutely clear. They cannot mess with Alberta. If we have to, Alberta is prepared to do whatever it takes to get this pipeline built, including taking a public position in the pipeline.

"Put another way, Alberta is prepared to be an investor in the pipeline and let me be clear, if we take that step, we will be a significantly more determined investor than B.C. has dealt with up to this point. Never count Alberta out. This pipeline will be built.”

Notley said she spoke Sunday with Trudeau, and she understood that both he personally and his government are committed to the project. But she said it was time for them to step on the gas.

“(Trudeau) reaffirmed that he understands the absolute need for this pipeline to be built. They are focused on getting it done,” said Notley, about her conversation with the prime minister. “And I said, ‘That’s great. We need to speed this up.’”

The Trudeau government has a range of options that it can use to build off of its jurisdictional role and its approval of the project, Notley argued.

“They have been working on this. They have been seized of it. Worthwhile conversations and discussions have been underway,” she said. “We know that they are committed to this project. What they need to do, I’d suggest, is speed up the work that’s underway.”

Asked what kind of action she wanted to see, Notley said the government should consider punishing B.C. for its opposition to the pipeline.

"You can speculate as to the kinds of options that the federal government has. They’ve been using a lot of carrots with the B.C. government. At a certain point, maybe the stick ought to come into play," she said.

"There's also issues around how they engage with the pipeline proponent directly, and then there's also different means of seeking greater clarity, in terms of the jurisdictional issues so that we don't have constant legal fronts opening up over and over again."

Rachel Notley, Alberta, Edmonton
Alberta Premier Rachel Notley speaks to reporters in Edmonton on April 8, 2018. Government of Alberta photo

Alberta's opposition leader Jason Kenney pounced on Kinder Morgan's statements, using it to attack Notley and Trudeau for fumbling on the file.

"The Alberta NDP government’s weakness, fumbling and incompetence has given strength to the enemies of our biggest source of jobs and prosperity," said United Conservative Party Leader Jason Kenney, who leads the Opposition in the Alberta legislature. "And now our vital economic interests are hanging by a thread."

Kenney, a former minister in the Stephen Harper government, also blamed Trudeau for not doing enough to support pipelines, accusing the prime minister of killing other pipeline projects, Enbridge's Northern Gateway project and TransCanada's Energy East project, and proposing new environmental legislation that would make it tougher to get future pipelines approved.

However, Kenney's remarks failed to mention that the Enbridge pipeline approval was overturned by a court decision which found that the Harper government had failed to adequately consult First Nations about the project.

Kenney also failed to mention that the former Harper government had appointed members of the federal pipeline regulator, the National Energy Board, who derailed hearings on the Energy East project by participating in a private meeting with a company representative. This January 2015 meeting would force the NEB members to recuse themselves after admitting, more than a year later, that they appeared to be biased.

The criticism from Carr and others failed to sway B.C. Premier John Horgan, who told reporters in Victoria that he would continue the fight against the pipeline, noting that his constituents expected his government "to stand up for their interests" and do everything possible to protect the province's land, waters, coastal communities and local economies.

“The federal process failed to consider B.C.’s interests and the risk to our province," Horgan added.

“We believe we need to grow the economy, while protecting the environment. We want to work to address these challenges together. But we will always stand up for British Columbians, our environment and the thousands of jobs that depend on our coast.”

Meanwhile, Kinder Morgan executive Kean said time was running out.

"Given the importance of the project to Canada and Alberta, to Indigenous communities, our shippers, our contractors, and working Canadians, we are committed to trying to find a way forward, working with stakeholders between now and the end of May on measures that may allow us to advance this critical project, but only if it does not subject KML shareholders to undue risk," Kean said.

"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 time period for reaching a potential resolution is short, but necessarily so because of approaching construction windows, the time required to mobilize contractors, and the need to commit materials orders, among many other imperatives associated with such a large project."

Editor's note: This article was updated at 8:50 p.m. ET on April 8 with additional background and reaction from Alberta Premier Rachel Notley, Opposition Leader Jason Kenney, federal Natural Resources Minister Jim Carr, and B.C. Premier John Horgan.

Jim Carr, Natural Resources Canada, Ottawa, Kinder Morgan, Trans Mountain expansion, pipeline
Reporters crowd around federal Natural Resources Minister Jim Carr near the Centennial Flame on Parliament Hill in Ottawa on April 8, 2018. Photo by Alex Tétreault

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Comments

It seems our 'National Interest' as dictated by our Prime Minister, Environment Minister and Natural Resources Minister is dictated by our Finance Minister and Bay Street and NOT by peer reviewed science.

Science says 85% of tar sands bitumen MUST stay in the ground to have any chance of staying below 2 deg temperature increase and catastrophic global warming.

The outrage of politicians and their allies in the oil industry is palpable. One can see and hear the gnashing of teeth with every statement. Frustrated that First Nations, environmentalists,and everyday citizens have fought Kinder Morgan at every turn, including the courts, they now impose their threats and bs on the rest of us. Paper tigers all of them. Jim Carr, late of the Fraser Institute (but still connected) pretends that people don't have a choice or a say in the matter. I guess he likes his own press too much. No one, from Prime Minister Trudeau, to Jim Carr, to Rachel Notley has made the case for the pipeline to the ocean. Where is this bitumen going? Not to China, as has been repeated over and over...China already gets processed crude from lots of other countries, why would they buy our bitument (which has to be refined)???? The most likely answer is that since the Keystone Pipeline is being held up, that shipping it down the west coast of the United States to refineries there is the most likely solution, and then refining it there and selling it at quite a nice profit...to China, or Canada or anywhere they like...I feel the hand of the Koch brothers in all of this. I'd like to be proven wrong, but Notley appears ready to invest Albertans' money in to it, instead of getting on with renewables which will have a better financial and environmental impact then the tired old fossil fool industry. We can do better. We are so far behind the rest of the Paris agreement signees, that we are a joke, but then again, we have the most climate deniers in the country...what a surprise!!

Albertans can climate deny all they want. It's a free country. But Mom Nature is a stern parent, and she will continue to throw object lessons in their way....every season now brings its pleasures. How about all those icy roof floods that have damaged so many homes in Calgary? And who knows what wake up call is coming next?

Time to suck it up and get on with transforming our province into the light show it could be. We have more sun on average than anyplace in Canada. Too bad so many choose to put their resources into where the sun don't shine!!! LOL

The law of rule prevails Jason! Consent of aboriginals, provincial domain over the environment, the TOTAL failure of the federal government to meet its environmental obligations (as documented by the federal auditor). What can I say Jason. What is the difference between Jason and Rachel - I do not know, except that John Horgan is making the decisions these days. Or at least forcing Kinder Morgan to make decisions. A very good decision for KM shareholders.

Actually, the people of British Columbia are making the decisions these days.....and more and more of them will continue to do so in the days ahead. Rule of Law???

What are the pipeline proponents going to do? Call in the National Guard?

I fear the headline of this article is a little too optimistic.
KM is simply notifying other stakeholders that they need to double down ASAP. The fight has only just begun.

"Meanwhile, Kinder Morgan executive Kean said time was running out." Well, for KM perhaps. The fossil fuel reserves are not going anywhere. Perhaps our descendants will find a more environmentally benign way to benefit from them, preferably without letting the 1% dictate to the rest of us how it will happen.

I do think there is a way out of this dilemma, but it would take too much space to describe. As I read this, I am proud to be a citizen in a country where ordinary people can still have an effective voice in issues of great concern to them. Harper made a serious and tragic mistake when he undercut core democratic principles in an attempt to ram through approval of pipelines by appointing cronies, and announcing his support to build the pipelines BEFORE the NEB had even concluded their work (biased as it was proven to be). I'm not so sold on Trudeau either, but at least he has the good sense to understand the core democratic principles that are at play here.

This is no time for any government to be reckless with the environmental well-being of Canada and for the fabric of the people of the federation itself.

This is no time for any government to be reckless with the environmental well-being of Canada and for the fabric of the people of the federation itself.

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