Kinder Morgan says it will begin construction of the Trans Mountain Expansion pipeline this month, despite a warning to not put “shovels in the ground” from the British Columbia government, which this week had its own troubles in court where it is trying to permanently stop construction of the $7.4 billion (US$5.9 billion) project.
“We are confident we will satisfy the National Energy Board’s compliance requirements to begin construction activity in September 2017,” spokesperson Ali Hounsell told Hart Energy in an email.
An update last week from the NEB to Natural Resources Minister Jim Carr suggested Trans Mountain Expansion still has a long way to go before it satisfies enough conditions for construction on the 610-mile pipeline, which starts in Edmonton, Alberta, and will terminate in Burnaby, B.C. For instance, “Trans Mountain has satisfied 27 of the 49 conditions necessary to begin construction at the Westridge Marine Terminal,” according to the NEB update by president and CEO Peter Watson.
But Kinder Morgan is confident conditions will be met on schedule, which calls for a September start to preparation on a number of sites along the route, including the Westridge tunnel in Lower mainland BC, pump stations in the BC interior, where the new pipeline will run alongside the old one, which dates from the early 1950s.
“The Trans Mountain Expansion Project is in an ongoing process to meet the conditions required by the NEB to begin construction,” said Hounsell. “This process will continue in-step with our activities into the future, keeping in mind that the construction of the project is phased and condition compliance will be ongoing as construction is underway.”
Just a few weeks ago, the new B.C. government held a press conference where it discussed the provincial development plans and permits that it said must be issued before Kinder Morgan begins any work. The left-leaning NDP also said that it would seek intervenor status in a judicial review brought before the Federal Court of Appeal by the Tsleil-Waututh Nation and almost two dozen other applicants, mostly indigenous communities and environmental groups.
Justice J.A. Stratas ruled on the government’s application Aug. 29. While he granted the request, he had a number of uncomplimentary things to say about B.C. Attorney General David Eby’s department handling of the application.
“British Columbia does not appear to understand the basic ground rules of the complex proceeding it is seeking to enter. Its representations in chief show no understanding of the March 9, 2017 order and the strong public interest in the hearing going ahead as scheduled,” Stratas wrote in his decision. “It was unaware of other important orders made in the proceedings relating to the manner of service and the style of cause. To enter complex proceedings—especially at a very late date—a party must intimately understand the proceedings and to the extent possible work within existing strictures, doing its best to minimize any prejudice. Here, this did not happen.”
James Coleman, a professor at the Dedman School of Law at Southern Methodist University and an expert on North American energy law, speculated that the B.C. government’s troubles with the Appeals Court stems from a weak case and fear of opening itself up to a lawsuit from Kinder Morgan that could amount to hundreds of millions of dollars.
“My best guess is that B.C.’s tardy application and its lack of clarity can be explained by the B.C. government finding it genuinely difficult to come up with arguments for stopping the pipeline that don’t look like a bad faith effort to frustrate federal authority or B.C.’s previous assessment of the pipeline,” he wrote in an email. “If it looks like the government is acting in bad faith, it will increase the chance that the federal government overrides provincial objections or that Kinder Morgan may win compensation for the B.C.’s reversal on the pipeline.”
The dithering may prove to be costly for the government. Justice Stratas refused to grant additional time, which means its complex and tricky “memorandum of fact and law” had to have been filed by Sept. 1. British Columbia is also restricted from introducing new issues in its motion, further diluting its influence at the hearing, which is scheduled for mid-October.
The second Kinder Morgan pipeline—which will boost Trans Mountain system capacity from 300,000 barrels per day (Mbbl/d) to 900 Mbbl/d—has been highly controversial, opposed by indigenous communities and eco-activists on the West Coast, the epicenter of the Canadian environmental movement. Opponents fear pipeline leaks into sensitive fish and animal habitat, a seven-fold increase in oil tanker traffic (from three or four a month to approximately 34), and the potential for a major release in the City of Burnaby (home to the Westridge Terminal).
The pipeline is critical to the Alberta oil sands industry, which has an output forecast to grow by 1.3 MMbbl/d over the next decade. The Canadian pipeline system is already operating near capacity and the only alternative is shipping crude oil by rail, which can double or triple transportation costs.
Prime Minister Justin Trudeau gave final approval to Trans Mountain Expansion last November and has been adamant the project will be built. The BC Liberal government of Christy Clark supported the project, but did not garner a majority of seats in the May election and was replaced in July by a minority government headed by the B.C. NDP, supported by the B.C. Green Party.
Both parties opposed Trans Mountain Expansion and have vowed to use “every tool available” to stop construction. Inter-provincial pipelines are the exclusive jurisdiction of the Canadian government, which can overrule provincial objections, but the new BC government is hoping legal challenges based upon constitutional requirements to consult indigenous peoples over resource development may force Kinder Morgan to abandon the project.
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