Yesterday, Kinder Morgan Limited (KML) announced it will suspend all non-essential activities and related spending on the Trans Mountain Expansion Project until greater certainty is achieved which will protect shareholder resources. KML has stated that May 31st is the deadline by which they will take a final decision to continue the project. If associated risks of continued obstructionism by the province of British Columbia have not been mitigated sufficiently, through federal authority or otherwise, the company will cancel the project to protect its financial position and shareholders’ interest.
The ACC is deeply concerned by KML’s announcement and what it means for the Trans Mountain Expansion Project and its completion. Creating greater pipeline capacity to ship bitumen products is critical to Alberta’s and Canada’s economy. Furthermore, the tertiary implications to Canada’s economy resulting from Kinder Morgan’s announcement and another cancelled pipeline extend far beyond the Trans Mountain project in and of itself.
Without a completed Trans Mountain expansion, Alberta’s bitumen projects will face greater bottlenecks which will result in continued, if not greater, discounts and lost revenues to bitumen producers, Albertans and Canadians. Continuing to ship bitumen product because of insufficient pipeline capacity will also continue to hurt agricultural producers. Currently, agricultural products are competing with bitumen products for rail services and are suffering economic losses from not being able to transport their products to market.
The uncertainty motivating KML’s decision to suspend non-essential spending and to provide a hard deadline in making a decision to proceed rests solely with the Prime Minister of Canada, the Premier of British Columbia, and the Premier of Alberta. The uncertainty in this instance, along with many other recently proposed energy projects in Canada which have been cancelled, are a result of political interference in due process and political irresponsibility in upholding the rule of law in this nation.
“The Northern Gateway pipeline is but one example where regulatory approvals were superseded by political interests with the imposition of the federal Bill C-48 Oil Tanker Moratorium,” says Ken Kobly, ACC President and CEO. “Now, the Trans Mountain expansion project faces a similar existential threat as a result of inept political leadership. The federal government needs to take concrete steps to ensure this project proceeds. Furthermore, that the regulatory environment in this country provides a level of certainty which makes us a world leading jurisdiction for investment.”
Alberta’s Premier Rachel Notley has rightly championed the completion of the Trans Mountain expansion project. Indeed, the provincial government has staked the future fiscal stability and viability of Alberta on this project being completed and operational by 2021. In her statement following KML’s announcement yesterday, Premier Notley indicated that the province of Alberta may consider becoming an investor in the Trans Mountain Expansion Project to provide KML investors more certainty in their investment.
The ACC doesn’t have sufficient detail to comment on a provincial financial commitment to the project. However, if the Alberta government takes an equity position in the Trans Mountain Pipeline Expansion Project, in good faith and on principle, it is incumbent on the federal government to match the provincial government’s investment dollar for dollar.
“If expanded pipeline capacity through projects like Trans Mountain cannot be secured, investor confidence in the rule of law of this nation will continue to decline and, the ripple effects of restricted market access will continue to spread through the Canadian economy,” says Kobly. “The Prime Minister and his ministers have said this project will get built. That means they need to stand shoulder to shoulder with the Alberta government with whatever steps our province takes to ensure KML shareholders have the confidence needed to invest their money and complete this project.”
The ACC will continue to update community chambers and our business community as new information becomes available.
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