Kinder Morgan Canadian Pipeline Expansion Faces Setback
May 29 2017 - 7:57PM
Dow Jones News
By Paul Vieira
The future of Kinder Morgan Inc.'s proposed Trans Mountain
pipeline expansion was dealt a setback Monday after a political
party in the Canadian west-coast province of British Columbia that
opposed the project looked set to form a new government.
The leaders of British Columbia's left-leaning New Democratic
Party, or NDP, and the province's Green Party said they had reached
a tentative agreement on cooperation that would let the NDP govern
Canada's third-largest province for the next four years.
An election in British Columbia earlier this month left the
governing Liberals, which approved of the Trans Mountain expansion,
one seat short of a majority, with 43 out of 87 seats up for grabs
in the provincial legislature. The NDP won 41 and the Greens won
three.
Details of the political agreement were to be unveiled Tuesday
-- but Green Party leader Andrew Weaver told reporters in Victoria,
British Columbia the pact "reflected" the Greens' opposition to
Kinder Morgan's plan. "The issue of Kinder Morgan is one that I
have been heavily invested in and was critical to us," said Mr.
Weaver, who is a scientist by training.
John Horgan, the NDP leader, said he was confident his party
would ratify the cooperation deal on Tuesday. He also opposed the
pipeline project, valued at 7.4 billion Canadian dollars (about
$5.50 billion) which would triple capacity to 890,000 barrels of
crude oil a day on the existing 714-mile pipeline that carries
crude oil from Alberta to British Columbia's Pacific coast.
The political developments in British Columbia reflect the
growing amount of influence the environmental movement is wielding
over energy policy in many industrialized-world countries.
It also a marks a blow for Canada's energy industry, which eyed
the Trans Mountain expansion as a way to boost sales of crude oil
to Asia and reduce its dependence on the U.S. market, which
Canadian crude sells at a discount to global prices.
A representative for Kinder Morgan wasn't immediately available
for comment. The company was looking to raise C$1.75 billion
through an initial public offering of shares of its Canadian unit
to be listed this week. Kinder Morgan said in a statement last week
it was proceeding with the IPO even though the "political climate
was not ideal."
In its prospectus filed with Canadian securities regulators,
Kinder Morgan said the pipeline expansion could be delayed or
stopped due to government intervention, or by the courts as
opponents such as aboriginal groups attempt to thwart the
project.
Kristopher Zack, an analyst at brokerage Desjardins Securities
in Calgary, said in a note to clients a few weeks back Kinder
Morgan could be the "most immediate casualty" of the changing
political landscape in British Columbia. "Opposition to the TMX
expansion could be yet another headwind mostly for Canadian heavy
oil producers that have been eager to expand market access," he
said.
Major energy companies, such as Royal Dutch Shell, have decided
in recent months to exit Canada's oil sands, a region that has come
to symbolize the risks in high-cost, carbon-intensive sources of
oil amid lower prices and tougher environmental regulations.
Canadian Prime Minister Justin Trudeau approved the Trans
Mountain expansion late last year as part of a compromise on
pipeline development that included blocking the more controversial
Northern Gateway pipeline proposed by Enbridge Inc.
Mr. Trudeau has had to perform a balancing act as he tries to
fulfill his pledge to take meaningful action to fight climate
change, while trying to stoke growth in a country that depends on
the energy sector for nearly 10% of economic output.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
May 29, 2017 19:42 ET (23:42 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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