Kinder Morgan: Recent Events Confirm Trans Mountain Expansion May be Untenable
(Reuters) - Kinder Morgan Inc said that recent events confirm an investment in the Trans Mountain pipeline expansion may be "untenable" and said Ottawa's pledge of financial support does not resolve political risk related to British Columbia's opposition.
The comments come as the British Columbia (B.C.) government pledged to file a legal challenge by month-end to determine whether it has the jurisdiction to stop the $5.9 billion project, which was approved by the federal government in 2016 and would nearly triple capacity on the pipeline from Alberta to a Vancouver-area port.
Kinder Morgan Canada, a unit of Kinder Morgan, halted most spending on the expansion earlier this month and set a May 31 deadline to decide if it would scrap the project entirely, citing legal and jurisdictional issues.
"As we said then, 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," Chief Executive Steven Kean said on a conference call.
While Canadian Prime Minister Justin Trudeau has said Canada is prepared to offer financial aid to ensure the project goes ahead, Kean dodged a question about whether that support would ensure construction.
"They're really two separate things," he said. "Most of the investment is in British Columbia, where the government is in opposition to the project ... That is an issue that, in our view, needs to be resolved."
The Trans Mountain expansion is considered crucial for Alberta's oil industry which has been beset by transportation bottlenecks. It is fiercely opposed by some B.C. cities, some aboriginal groups, and environmentalists concerned about possible oil spills.
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