Canadian Senate steps up to support Kinder Morgan pipeline

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By Peter Kennedy

Senator Doug Black.

The Canadian Senate says it is moving to protect jobs and the economy by adopting a Bill designed to ensure that Kinder Morgan Canada’s [KML-TSX] stalled Trans Mountain pipeline expansion project will eventually get built.

With the adoption of the Trans Mountain Pipeline Project Act, the Senate said it is demonstrating its confidence in the National Energy Board’s rigorous review and approval of the $7.4 billion project.

“The purpose of the Bill, is to ensure that the Government of Canada has unfettered legal ability to ensure the pipeline is built, that the rule of law is respected, and that Canada affirms to the world that projects can be development in our country,” the Senate said in a press release, Wednesday April 25.

The announcement comes after Prime Minister Justin Trudeau indicated that Ottawa would consider loan guarantees and other mechanisms to support development. The Alberta government has also said it would be prepared to buy the project outright.

Trudeau’s comments were in response to the Kinder Morgan announcement on April 8, 2018, that it is suspending all non-essential activities and related spending on the Trans-Mountain Expansion Project due to continued opposition in British Columbia and a lack of clarity about the way ahead.

Kinder Morgan said it will consult with various stakeholders in an effort to reach agreements by May 31, 2018, that may allow the project to proceed.

“A company cannot resolve differences between governments,” said Kinder Morgan Chairman and CEO Steve Kean. “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,” he said.

Alberta Senator Doug Black has said the project should proceed on the basis that it is in the national interest. The construction plan follows requests form oil companies to help them reach new markets by expanding the capacity of North America’s only pipeline with access to the West Coast.

The original Trans Mountain Pipeline was built in 1953 and continues to operate today. The proposed expansion is essentially a twinning of the existing 1,150-kilometre pipeline between Edmonton, Alberta and Burnaby, British Columbia.

Expected to cost approximately $7.4 billion, it will create a pipeline system with a nominal capacity rising from 300,000 barrels per day to 890,000 barrels per day.

“Completing the Trans Mountain Pipeline Expansion will give Canada an opportunity to show the world we can get large infrastructure projects done and the massage of my bill is a big step towards that goal,” Senator Black said.

“The completion of this project is good for Canada, good for Canadians, and good for the economy,” he said.

However, it remains unclear whether or not Kinder Morgan will proceed as the project faces lawsuits that will not be resolved until well after the May 31 deadline. The B.C. government, for example, is seeking court authority to regulate the flow of heavy oil through the province.

In its press release on Wednesday, the Senate underlined its view of the importance of Trans Mountain and pipelines in general to the Canadian economy, noting that:

  • Pipeline operations added $11.5 billion to Canada’s gross domestic product in 2015, sustaining 34,000 full-time jobs.
  • Twinning the Trans Mountain Pipeline will inject $7.4 billion into Canada’s economy through project spending and help our country export these resources by moving oil to the West Coast for marine transport to markets around the world.
  • Combined government revenue impact for construction and the first 20 years of expanded operations is $46.7 billion.

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Filed in: Business, Oil & Gas, Resources

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