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Trudeau seeks talks with Kinder Morgan to build oil pipeline to Pacific
JUSTIN Trudeau plans to start financial talks with Kinder Morgan Inc on the Trans Mountain pipeline after failing to end a spat between Canadian provinces that has spiralled into a political crisis and put a vital project at risk.
"We are going to get the pipeline built. It is a project in the national interest," Mr Trudeau told reporters on Sunday after meeting with premiers of British Columbia and Alberta. He asked Finance Minister Bill Morneau to launch formal talks with the company to hedge risk over the project and said he was preparing legislation to underscore federal jurisdiction over the line.
"We will not have the discussions in public but this project will go ahead." The Prime Minister, after flying back to Canada from Peru to seek to end the impasse, wasn't able to dissuade British Columbia Premier John Horgan from his fight against the CAD$7.4 billion (S$7.6 billion) expansion of the Trans Mountain line linking Alberta's oil sands to the neighbouring province's Pacific Coast. Mr Horgan said they continue to disagree on energy and will proceed with a court battle against the project.
"My obligation is to the people of BC, and I will defend that until I am no longer premier," Mr Horgan said on Sunday after meeting in Ottawa with Mr Trudeau and Alberta Premier Rachel Notley.
The dispute has become one of Mr Trudeau's biggest challenges since winning a 2015 election promising to advance major energy projects while also protecting the environment. Canada could lose billions of dollars a year if new routes to overseas markets aren't developed to shrink a discount on crude from landlocked Alberta.
"In the absence of a swift resolution to this issue, foreign and domestic investors will be left to question whether Canada is a suitable place to invest, create jobs and grow their businesses," John Manley, president and chief executive officer of the Business Council of Canada, said in a statement on Thursday.
Kinder Morgan halted work on Trans Mountain a week ago and set a May 31 deadline for a resolution, after Mr Horgan's government said it was considering a fresh legal challenge. Shares of Kinder Morgan Canada Ltd fell 13 per cent on Monday after those developments, the biggest decline since its initial public offering last May.
"Our objectives are to obtain certainty with respect to the ability to construct through BC and for the protection of our shareholders," Kinder's Canadian unit said. "We do not intend to issue updates or further disclosures on the status of consultations until we've reached a sufficiently definitive agreement on or before May 31."
Ms Notley also said financial incentives will help meet the deadline, and the Alberta government will introduce legislation this week that could give powers to curb energy shipments to British Columbia. "I don't believe that it is in the best interests of the country to engage in esoteric jurisdictional debates for the purposes of harassing a project to death," Ms Notley said.
Mr Horgan, who argues the risk of a spill in waters off Vancouver is too great, has rejected evidence he has little legal power to block a federally approved project.
Canada's oil production growth could surpass pipeline capacity by the mid-2020s, according to the Canadian Association of Petroleum Producers. An outage on TransCanada Corp's Keystone system last year sent Western Canada Select crude's discount to West Texas Intermediate to the widest in four years.
Expanding Trans Mountain - in operation since 1953 - would move an additional 590,000 barrels a day from Alberta's oil sands to a terminal near Vancouver.
If maintained at current levels, discounts to Canadian crude caused largely by pipeline bottlenecks could cost the country roughly CAD$15.6 billion a year, Scotiabank said in a report in February.
Politically, the dispute pits New Democratic Party governments in Alberta and British Columbia against each other. Mr Horgan campaigned against Trans Mountain and, to pass major legislation, his government relies on three Green Party lawmakers who have taken an even harder line against Kinder Morgan. At the federal level, Mr Trudeau's Liberals hold 18 of 42 districts in BC, followed by 14 for the NDP.
The saga has had some passionate moments, with Alberta temporarily banning wine from BC earlier this year. Mr Trudeau, who speaks glowingly of his family's ties to Canada's West Coast, in February was repeatedly shouted down at a town hall there by pipeline opponents and asked police to remove hecklers. Elizabeth May, a federal Green Party lawmaker, is among people who have been arrested for demonstrating around pipeline work sites.
Mr Trudeau said strong action is needed because of less certain trade ties with the US, which buys almost all of Canada's crude oil, and to show global investors his country is a good place to do business. "We need to be able to demonstrate we can get it done" he said. BLOOMBERG