Trans Mountain pipeline will proceed despite B.C. shakeup, Trudeau says
ROBERT FIFE AND SHAWN MCCARTHY
ROME, Italy AND Ottawa — The Globe and Mail
Published Tuesday, May 30, 2017 7:01AM EDT
Last updated Tuesday, May 30, 2017 9:40AM EDT
Prime Minister Justin Trudeau took a hard line Tuesday, saying the controversial Trans Mountain pipeline expansion should proceed despite political threats in British Columbia to kill the massive project.
Mr. Trudeau said the $7.4-billion expansion project benefits the entire country, which is why the federal cabinet gave its approval.
“The decision we took on the Trans Mountain pipeline was based on facts, evidence on what is in the best interest of Canadians, and indeed all of Canada,” Mr. Trudeau said during a joint news conference with Italian Prime Minister Paolo Gentiloni in Rome.
Mr. Trudeau said the pipeline should not be held hostage by a possible change in the B.C. government after the NDP and anti-pipeline Green Party announced a deal to oust the minority Liberals, casting the project’s future in doubt.
“Regardless of a change in government in B.C. or anywhere, the facts and evidence do not change,” Mr. Trudeau said. “We understand that growing strong economies for the future requires taking leadership on the environment and we have to do those two things together. That is what drives us and the choices we make and we stand by those choices.”
The Prime Minister did not say what Ottawa would do if the NDP-Green form a coalition government and attempt to stop the pipeline expansion.
The Trudeau cabinet approved the expansion last November, subject to Kinder Morgan satisfying mostly technical conditions imposed by the National Energy Board.
The recent B.C. election has raised the stakes as the Green Party and NDP vow to block it, even as Alberta Premier Rachel Notley argues the province has no right to do so.
Combined, the NDP’s 41 seats and the Greens’ three seats outnumber the Liberals’ 43 seats. An NDP government formed with the support of the Greens – the Greens have explicitly rejected a coalition government – would give the parties a single-seat majority.
In a statement Tuesday, Alberta Premier Rachel Notley said she would work with a government led by NDP Leader John Horgan. But she reiterated Alberta’s position that the federal government has ultimate authority over projects such as Trans Mountain.
“It’s important to note that provinces do not have the right to unilaterally stop projects such as Trans Mountain that have earned the federal government’s approval,” she said.
“This is a foundational principle that binds our country together. There are no legal tools available to provinces to stand in the way of infrastructure projects that benefit all Canadians.”
Last week, Houston-based Kinder Morgan vowed to move forward with the Trans Mountain expansion pending a successful completion of an initial public offering.
Shares in the company’s Canadian unit are expected to start trading as early as Tuesday on the Toronto Stock Exchange. However, the company and its bankers were forced to temper expectations, pricing the shares on offer at $17 apiece, down from a previous range of $19 to $22. Proceeds are still expected to be $1.75-billion, with the company offering more shares to make up for the lower price. But the stock could come under pressure as it begins trading.
Indeed, the lower issue price reflects uncertainty that Trans Mountain will actually be built on time and on budget, said Laura Lau, a senior portfolio manager at Brompton Funds in Toronto.
Investors are buying exposure to Kinder Morgan’s existing Canadian assets as well as a targeted annual dividend of 65 cents per restricted voting share. The pipeline expansion is effectively “gravy,” she said. “I think that’s how they tried to sell it.”
The company said it expects to start construction in September.
“It’s nearly June,” Ms. Lau said. “So we’ll see. Even if you start it in September, building through the mountains is not easy, and if you’re delayed a season, then it’s another year.”
The political threat to the pipeline comes as First Nations in B.C. mount a renewed campaign against the project. They have warned investors could be at risk as a result of Indigenous legal challenges to the mammoth project that would triple the existing line’s capacity to 890,000 barrels a day.
There are 19 separate lawsuits, including 12 from First Nations communities, challenging the NEB’s review process, the federal government’s consultations and the extent of provincial reviews. Some First Nations communities have court-recognized fishing rights in the coastal waters, while others are asserting title to land through which the pipeline crosses.
“I want to put a face and a name to the legal risk,” Tsleil-Waututh councillor Charlene Aleck said in a telephone interview Monday. “Through our aboriginal law, we’ve upheld and maintained the stewardship of our land and that’s got to be respected. And if we can’t do that through letting them know we’re opposed, we’ll use all legal means.”
Kinder Morgan acknowledged in its prospectus that the claims, if successful, “could result in the total stoppage of the Trans Mountain expansion project, which stoppage would have a material adverse effect on the business.”
More than 400 statements of opposition have been filed with the National Energy Board, raising the prospect of further delays should the company fail to reach an agreement with affected landowners.
With files from Jeff Lewis