Morneau pledges to meet Kinder Morgan’s deadline for Trans Mountain

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Finance Minister Bill Morneau pledged Wednesday that Ottawa will meet the tight deadline to provide a rescue plan for the Trans Mountain pipeline expansion, including possible financial support, so that construction can proceed this summer.

Earlier in the week, Alberta Premier Rachel Notley said her province was looking into an outright purchase of the pipeline, which would transport oil sands bitumen through Vancouver, to ensure it gets built – despite a looming court challenge from British Columbia.

After an hour-long meeting in Toronto, neither Mr. Morneau nor Ms. Notley would provide details of an emerging plan which is being negotiated by the two governments and Kinder Morgan Canada Ltd.

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The government of British Columbia, meanwhile, indicated it is prepared to proceed with a reference to the federal court to determine whether it can restrict the flow of oil sands bitumen through the province.

Kinder Morgan announced on Sunday that it was halting all non-essential work on the $7.4-billion project, because the legal uncertainty around it posed an unacceptable risk to shareholders.

The company said it would move forward only if it could be assured by May 31 that it will not face further legal challenges, and if the government could remove the financial risk to shareholders that the political battle poses.

Mr. Morneau met with the Alberta Premier after Liberal ministers emerged from a federal cabinet meeting on Tuesday to proclaim the government would consider all options – financial, legal and regulatory – to get the project back on track.

“Our approach is to engage with provinces to understand those risks; engage with the project proponent to understand what the financial hurdles are from their standpoint, and get to an answer that ensures the project moves forward in a very short timeline, meaning we can get on with something we know is going to be very positive for our economy,” the Finance Minister said.

He added the May 31 deadline “is a reasonable one to work with.”

Ms. Notley went into the Toronto meeting urging the Trudeau government to impose penalties on British Columbia for its tactics, and to offer some financial protection for Kinder Morgan shareholders against political risk that could further disrupt the project.

Ms. Notley also reiterated her government’s willingness to diminish some of the investor risk related to the project, and put public dollars into it. “If it is B.C.’s intent to exhaust Trans Mountain’s investors into submission, that strategy will not work. Alberta is prepared to take a public position in the company if it becomes necessary,” she said.

“No matter how hard the B.C. government may try, they cannot scare off our government or our province.”

The Alberta government will introduce legislation on Monday designed to put pressure on B.C., including the right to cut shipments of oil and gasoline, driving up pump prices. The Trudeau government appears reluctant to cut payments to B.C., due to the potential for political backlash there. However, Mr. Morneau insisted no option has been taken off the table.

After the meeting, Ms. Notley said she was not absolutely satisfied with Ottawa’s response but “a little bit more convinced that we are going to see something specific from them, in the relatively near future.”

The British Columbia government remains unbowed by the pressure on it from Ottawa, Alberta and the business community.

B.C. Attorney-General David Eby said his government’s legal counsel is still working on framing a question to put to the courts to define the province’s ability to restrict any increase in the transportation of diluted bitumen. The question is expected to be released in the next few weeks.

“What we are looking for is certainty around this,” he told reporters Wednesday in Victoria. “These things do take some time to prepare, but we’re working as quickly as we can because we do understand the importance of having the question, and the information, to the public as well to the court as soon as we can.”

Mr. Eby said no decision has been made yet on which court B.C. will choose to file its reference question, and he said the province could ask an open-ended question inviting the courts to define the province’s jurisdiction, or it could file a set of draft regulations and seek the court’s opinion.

“We are ensuring that we respect the rule of law in determining the extent of provincial jurisdiction,” he said. He maintained that provinces do have some powers of authority even in areas of federal jurisdiction such as interprovincial pipelines.