Ottawa believes another proponent could step forward if Kinder Morgan bails on Trans Mountain

The federal government says other energy companies might be willing to champion the Trans Mountain pipeline expansion if Kinder Morgan decides to walk away from the project, according to two senior officials directly involved in the pipeline file.

Trudeau government willing to offer political and financial support to another company, if necessary

Pipes are seen at the Kinder Morgan Trans Mountain facility in Edmonton, Alta., Thursday. A spokesman for refiners in Western Canada says any move by the Alberta government to shut off the flow of refined fuel to B.C. could negatively affect the province's four refineries in the Edmonton area. (Jonathan Hayward/Canadian Press)

The federal government believes other energy companies might be willing to champion the Trans Mountain pipeline expansion if Kinder Morgan decides to walk away from the project, according to two senior officials directly involved in the pipeline file.

The officials say finding a path forward with Kinder Morgan is still the preferred option. But this week, the company's CEO said the political squabbles over the pipeline could make the project "untenable." Federal officials believe other companies might want to pick up the project if Kinder Morgan walks away.

"There's a lot of options in that case," said one senior official.

A second official expressed confidence that another major energy company — or a consortium of companies — could be interested in acquiring and developing the project. This official said that if Kinder Morgan's "untenable" comments were designed to create leverage in talks with Ottawa and Alberta, it wouldn't work.

"There's no advantage to be gained in saying you don't want an asset anymore after you've sunk a billion dollars into it," the official said.

A senior official said the test was whether Kinder Morgan "had the stomach" to forge ahead. Ottawa would likely put the same political and financial support behind another proponent that it has given Kinder Morgan.

It comes a day after the CEO of Kinder Morgan Canada told reporters that internal Canadian political squabbles over the future of the Trans Mountain pipeline are suggesting that the project may be "untenable."

"It's become clear this particular investment may be untenable for a private party to undertake," Steve Kean, Kinder Morgan Canada's CEO, said in a conference call with reporters Wednesday. "The events of the last ten days have confirmed those views."

Political instability around the pipeline expansion project prompted Kinder Morgan to suspend all non-essential spending on the project last week. The company has given the federal government until May 31 to deliver concrete assurances that the expanded line will get built.

Meeting the May 31 deadline

The officials concede there is some frustration with Kinder Morgan over the way it announced the potential drop-dead date of  May 31. Kinder Morgan issued its decision while the country was in mourning over the Humboldt Broncos tragedy. Prime Minister Justin Trudeau was driving from a hospital in Saskatoon to a vigil in Humboldt when the news broke.

In an effort to meet the deadline, Trudeau announced on Sunday that federal and Alberta governments have entered into talks with Kinder Morgan to come to a financial arrangement that would "remove the uncertainty overhanging" the project.

In laying out his plan, Trudeau stopped short of saying his government would take a financial stake in the pipeline but said that when he has more details of the financial arrangement he would release them to Canadians.

Trudeau and Alberta Premier Rachel Notley also said on Sunday that they would introduce legislation to ensure the pipeline gets built.

Taking legislative action

The Alberta provincial government followed through on that commitment on Monday when it introduced Bill 12. Titled Preserving Canada's Economic Prosperity Act, it would give Alberta the ability to retaliate against B.C. over any delays to the expansion by driving up gas prices or restricting shipments of other energy products.

On Wednesday, the B.C. provincial government said it was filing a legal challenge in the provincial Court of Appeal to determine if it has jurisdiction over the Trans Mountain expansion project.

Speaking Thursday in London, England, where he is attending the Commonwealth leaders meeting, Prime Minister Trudeau reaffirmed his pledge to see the pipeline expansion through to completion.

"I have asked the finance minister to engage in financial discussions with Kinder Morgan and that is exactly what is going on," he said. "We will ensure that this pipeline gets built in a way that upholds and protects the interests of Canadians, but this pipeline will get built."

With files from Peter Zimonjic

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