Kinder Morgan Canada Ltd. plans to start construction on its $7.4-billion Trans Mountain oil pipeline expansion on time despite unceasing opposition, the pipeline operator’s chief executive officer says.
In the first financial report since Kinder Morgan Canada’s initial public offering of restricted voting shares less than two months ago, CEO Ian Anderson said on Wednesday the company is completing contracts needed to start work on the expansion anticipated by Canada’s oil patch.
That is in the face of uncertainty hanging over the project because of an approaching court case and a new government in British Columbia that is not in favour of the venture. There have also been warnings of demonstrations similar to the protests against the Dakota Access pipeline in the United States last year.
“We are on track to begin construction in September and expect to have the project in service at the end of 2019,” Mr. Anderson said in a statement. “We look forward to continuing to work with the provincial government in British Columbia to complete this project, which is critically important to Canada, providing jobs, opportunities and much needed market access.”
In the second quarter, Kinder Morgan Canada reported net earnings of $25.1-million, which includes $4.2-million or 11 cents a share available to the restricted-voting stockholders. That is about half the $51.7-million it reported a year earlier. Revenue was slightly higher at $168.7-million.
Houston-based Kinder Morgan Inc. floated the shares in its Canadian unit in May, raising $1.75-billion. It still owns 70 per cent. The stock sold for $17 a share, but has traded below that level since the offering, amid uncertainty over the fate of the marquee project. The stock closed at $15.98 on the Toronto Stock Exchange on Wednesday.
Besides Trans Mountain, Kinder Morgan Canada operates oil terminals in Alberta and British Columbia as well as the Cochin pipeline that carries condensate from Illinois to Alberta.
Despite winning federal approval last year, questions have swirled over the expansion project and Kinder Morgan’s ability to proceed in the face of environmental and First Nations opposition. Risks have only increased with the fledgling NDP government in B.C., led by Premier John Horgan, who has vowed to use “every tool in the toolbox” to try to stop the expansion. The BC Green Party, which now holds the balance of power in the legislature, also opposes the project.
“I’m not going to speculate on what an NDP government might do in British Columbia at this stage in order to advance their views,” Mr. Anderson said in a conference call to discuss the quarterly results. “We remain very confident in the federal decision that we have and the jurisdiction that the project has federally.”
He said he has worked co-operatively with several governments as the project has gone through its regulatory stages, and he expects to do the same with Mr. Horgan’s.
Prime Minister Justin Trudeau reconfirmed that Ottawa stands behind its approval, and Alberta Premier Rachel Notley asserted that no province should be able to blockade projects already deemed to be in the national interest.
The expansion would more than triple the capacity of the existing Trans Mountain pipeline to Burnaby, B.C., from Alberta to 890,000 barrels a day. It would offer vastly expanded access to Asia-Pacific markets for oil-sands-derived crude oil, which the industry says would mean higher per-barrel returns and free the country from having just one major export customer, the United States.
Several court challenges to the project’s approvals are in play, launched by First Nations, environmental groups and municipal governments, such as Vancouver’s. Those have been amalgamated into one big federal case to be heard in October.
Source:
JEFFREY JONES AND KELLY CRYDERMAN
CALGARY — The Globe and Mail