Analysis

5 things to know about the Trans Mountain pipeline battle

Kinder Morgan has set the stage for two months of high drama. Here are five things you need to know about the company's decision to suspend "non-essential activities" and related spending for the Trans Mountain pipeline project, citing ongoing opposition from the B.C. government.

Kinder Morgan has hit pause on the controversial pipeline and issued an ultimatum, now what?

Kinder Morgan said Sunday it is suspending non-essential activities and related spending for the Trans Mountain pipeline expansion, casting a cloud over the future of the $7.4-billion project. (Erin Collins/CBC)

Kinder Morgan has set the stage for two months of high drama.

The company announced it is suspending non-essential activities and related spending for the Trans Mountain pipeline expansion, casting a cloud over the future of the $7.4-billion project.

It said it would still try to get agreements that would see the project advance, but would need to do so by May 31 or "it is difficult to conceive of any scenario in which we would proceed."

The news quickly spurred the leaders of the Alberta, British Columbia and federal governments to issue statements of resolve, positioning themselves for a tense few weeks.

Opponents of the pipeline must also feel victory within their grasp. 

So with billions of dollars of development and political fortunes at risk, here are five things to know from Sunday's announcement on Trans Mountain.
A row of demonstrators last month opposing Kinder Morgan's Trans Mountain pipeline expansion. In B.C., there has been strong opposition to the project. (Rafferty Baker/CBC)

Kinder Morgan wants less risk

It has become a bit of a cliché in these days of Brexit and Donald Trump to say that the market hates political uncertainty — but it doesn't mean that it isn't true.

It seems Kinder Morgan's biggest concern with the Trans Mountain pipeline is the political risk posed by B.C. and its legal challenges to it.

"While we are prepared to accept the many risks traditionally presented by large construction projects, extraordinary political risks that are completely outside of our control and that could prevent completion of the project are risks to which we simply cannot expose our shareholders," Steve Kean, CEO of Kinder Morgan Canada, said in a statement.

What Kean wants is agreements by May 31 that remove any undue risk. Simply put, he wants "clarity on the path forward," particularly the ability to construct through B.C. and adequate protection of its shareholders.

Those seem like big goals — and even the company acknowledges the time period is short.

Alberta willing to buy in

Premier Rachel Notley announced during her news conference on Sunday that the Alberta government was prepared to do whatever it takes to get the pipeline built. 

That "whatever" might mean Alberta becoming an investor in the pipeline.

"If we take that step, we will be a significantly more determined investor," Notley told reporters. "This pipeline will be built."
Premier Rachel Notley said Alberta 'is prepared to be an investor in the pipeline.' (Jason Franson/Canadian Press)

Her comments perhaps demonstrate just how badly the province needs the pipeline. Her government's path to balanced budgets is built on hopes for construction of three new pipelines, including Trans Mountain.

But even one of Notley's fiercest critics, Alberta United Conservative Party Leader Jason Kenney, backed the idea.

"I believe the government of Alberta must be prepared, along with the federal government, to step up and provide financial certainty to the investors of Kinder Morgan," said Kenney.

'Serious economic consequences' ahead?

Notley once hit B.C. with a wine ban over Trans Mountain. Now, the premier is warning of more.

She said the Alberta government is bringing forward legislation in the coming days that would give it the power to impose "serious economic consequences on B.C." if its leadership didn't change course.

"Premier [John] Horgan believes he can harass this project without economic consequences for his province. He is wrong." 

Notley has already said her government will refine and update existing legislation that gives Alberta the ability to limit oil and gas exports, indicating it could stem the flow to B.C.

Asked if Alberta might proceed with another wine ban or something else in the coming days, Notley would only say there are other tools the government is looking at.
B.C. Premier John Horgan has not changed his position on the Trans Mountain pipeline. 'We believe the risk is too great and there is no evidence to indicate that that risk has been diminished.' (CBC)

B.C. wants less risk, too

On Sunday, B.C. Premier John Horgan sounded much as he has throughout the Trans Mountain debate, stating the concerns his government has about protecting the environment and disagreeing with the notion that the pipeline is in the national interest. 

Furthermore, he rejected the notion that the project had been unnecessarily harassed by B.C.

"My views on this have been consistent for the past year," said Horgan. "We believe the risk is too great and there is no evidence to indicate that that risk has been diminished."

Horgan is pursuing a reference case in the courts to determine if his government can control the shipment of oil through the province on environmental grounds.

"I profoundly believe in the rights of British Columbians to stand up and make sure that we're doing everything we can to protect the interests of our province," he said. 

"I don't want to do that in a provocative way. I don't want any threats. I don't want any ultimatums."
Prime Minister Justin Trudeau, speaking to the media after touring Suncor's Fort Hills oilsands facility last week, continues to insist the expansion will be built. (CBC)

What will Ottawa do?

What is Prime Minister Justin Trudeau's next move? That's a big question and there's a lot riding on the answer, whether you're a pipeline supporter or opponent.

Notley is now calling on the government to go from using "carrots" to maybe a "stick" to get the pipeline to move ahead. 

Alex Pourbaix, CEO of Cenovus Energy, also called on the federal government to take "immediate, clear and decisive action" to ensure that the project does not suffer the same fate as the Energy East project.

"If the rule of law is not upheld and this project is allowed to fail, it will have a chilling effect on investment not just in British Columbia, but across the whole country," he said in a statement.

Trudeau was in Saskatchewan on Sunday for a vigil for the Humboldt Broncos following Friday's fatal bus crash. But in regards to the pipeline issue, he said on social media that "Canada is a country of the rule of law, and the federal government will act in the national interest." 

He also added once again that the pipeline expansion "will be built." 

However, what steps he's prepared to take still seem unclear. 

About the Author

Tony Seskus

Senior Producer Western Digital Business Unit

Tony Seskus is senior producer with CBC's Western Business unit in Calgary. He has written for newspapers and wire services for more than 25 years on three continents. In Calgary, Tony has reported on the energy sector and federal politics.

With files from The Canadian Press

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