Kinder Morgan Pipeline Expansion On Hold: Here's What You Need To Know | KNKX

Kinder Morgan Pipeline Expansion On Hold: Here's What You Need To Know

Apr 9, 2018

Opposition groups are applauding an announcement from Kinder Morgan Canada. The oil giant has put expansion of its Trans Mountain Pipeline on hold until the end of May as the company seeks clarity on a path forward.

This is the pipeline that ends near Vancouver, British Columbia, bringing Canadian tar sands oil to the region.

KNKX All Things Considered host Ed Ronco and environment reporter Bellamy Pailthorp break down what happened and what this means for the region.

What’s On Hold

The planned expansion of the Trans Mountain Pipeline would nearly triple its capacity by adding some new pieces and “twinning” the line along its existing more than 700-mile-long route, which starts in Edmonton, Alberta and ends in Burnaby, B.C., northeast of Vancouver. It was first built in 1953 and the company calls it “the only West Coast link for Western Canadian oil.”

If completed, the expanded line could carry as much as 890,000 barrels of oil a day, with the new capacity specially designed to handle a form of heavier tar sands oil,  diluted bitumen. Resulting oil tanker traffic through the Salish Sea could increase by as much as seven times to 34 per month. The waters they would frequent include western Washington, some narrow passages near the San Juan Islands and northern Puget Sound.

Why Was It Suspended?

Expansion of the Trans Mountain Pipeline was approved by Canada’s federal government in 2016. Prime Minister Justin Trudeau and his cabinet are backing that endorsement. Approval is conditional on a list of 157 regulatory requirements from Canada’s National Energy Board, which the company is working to fulfill.

The local government of British Columbia opposes the expansion, along with many municipalities and indigenous First Nations located near the pipeline. B.C. Premier John Horgan, a New Democrat elected in 2017, campaigned on a promise to stop the project.

In January, his environment minister proposed a ban on increased shipments of diluted bitumen until more studies could be done on how to clean up spills of this heavier form of oil. That ban was challenged on the federal level and is now in court. But it was cited as a key reason by Kinder Morgan’s CEO  in the decision to suspend work on the Trans Mountain expansion.

In addition, opposition and legal action against the project has come from environmental groups, municipalities and First Nations. A consolidated case with more than a dozen parties opposing the National Energy Board’s approval is awaiting decision. Concerns include constitutional indigenous rights as well as health and environmental concerns, including the fate of endangered orca whales in the event of an oil spill.

Company Perspective

Kinder Morgan Canada Limited (KML) announced the suspension in a press release on Sunday, April 8. Chairman and CEO Steve Kean held a conference call with analysts before markets opened Monday to explain the decision to investors. The webcast of that is archived on the company’s website

In it, Kean explains how the uncertainty created by opposition from British Columbia’s provincial government led to the decision to put the pipeline on hold. The company has spent CA$1.1 million on the project since 2013.  It's stock price has lost more than half its value since 2015. And Kean says full construction moving forward would cost an additional CA$200-300 million per month.

He says it was a tough decision to suspend investment, but not from the standpoint of investors. And with the weather and seasonal factors affecting when the company can build, Kean said waiting for more clarity from the courts is not an option.

“We can’t move the seasons in Canada,” Kean says.  “We don't have the ability to just kick the can down the road. We needed to make a decision and we made it," he said. He added that there will be no additional public statements from the company until it has reached a final conclusion about whether to move forward.

Opposition: Not Done Yet

Environmental groups and First Nations that have been staging mass protests against the pipeline celebrated the decision announced Sunday. But they say they’ll be keeping the pressure up over the next seven weeks as Kinder Morgan lobbies local and national government officials.  

Karen Mahon, international campaign director with Stand.earth in Vancouver, said she was fielding calls from allied groups all over Canada, asking how they could help. She said plans are coming together for a possible repeat of a national day of protest like the one that took place in March, with demonstrations in more than 50 cities across the country.

“So I think we’ll see an escalation in the coming weeks,” she said. “There’s a lot of interest, across the country.”