Canada's Trudeau ready to offer aid to
ensure pipeline is built
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[April 16, 2018]
By David Ljunggren
OTTAWA (Reuters) - Canadian Prime Minister
Justin Trudeau on Sunday moved to end an escalating crisis over a Kinder
Morgan Canada Ltd <KML.TO> oil pipeline, saying Ottawa was prepared to
offer financial aid to ensure the project went ahead.
Trudeau cited investor confidence as one reason to help Kinder Morgan
Canada, part of Kinder Morgan Inc <KMI.N>, which plans to almost triple
the capacity of its Trans Mountain line from Alberta to the Pacific
province of British Columbia.
The company, unhappy about moves by the British Columbia government to
impede the C$7.4 billion ($5.9 billion) project on environmental
grounds, is threatening to walk away unless it receives sufficient
clarity about the path ahead by May 31.
"I have instructed the minister of finance to initiate formal financial
discussions with Kinder Morgan, the result of which will be to remove
the uncertainty overhanging the Trans Mountain pipeline expansion
project," Trudeau told reporters, calling the line "a vital strategic
interest to Canada."
Trudeau, speaking after an emergency summit with the premiers of Alberta
and British Columbia, said "we are actively pursuing legislative options
that will assert and reinforce the government of Canada's jurisdiction
in this matter."
He declined to give details on exactly what the ruling Liberals had in
mind to end an impasse that is prompting investor unease and could
threaten his political future.
Both the federal and Alberta governments have already suggested they
could take a stake in the project.
Speaking before the meeting, a federal government source said past
examples of help included a bailout of the auto industry in 2009,
federal loan guarantees for a hydro-electric project and Ottawa's
investment in an offshore energy project.
"Construction will go ahead," said Trudeau, who is under increasing
pressure from the business community and opposition politicians to take
action amid fears the dispute could hit already flagging foreign
investment.
Kinder Morgan Canada said it would not comment on Trudeau's remarks
"until we've reached a sufficiently definitive agreement on or before
May 31 that satisfies our objectives."
Many in the energy industry are concerned about whether quarrels over
jurisdiction and increasingly vehement protests mean any new pipelines
can be built in Canada, which sits on the world's third-largest proven
reserves of crude and is the single largest exporter of energy to the
United States.
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Canada's Prime Minister Justin Trudeau speaks during a news
conference about the state of the Kinder Morgan pipeline expansion
in Ottawa, Ontario, Canada, April 15, 2018. REUTERS/Chris Wattie
The lack of pipeline capacity means Canadian crude trades at a
discount to the U.S. oil benchmark <CLc1>.
Environmentalists and aboriginal activists frequently demonstrate at
Trans Mountain facilities and British Columbia police have arrested
about 200 people since mid-March.
"The federal government can't buy off the opposition to this failing
pipeline ... the resistance continues to grow," said Mike Hudema of
Greenpeace Canada.
Although Trudeau's Liberal government could invoke emergency powers
to ensure the project goes ahead, that would most likely anger
voters in British Columbia and cost the Liberals support in a
federal election in October 2019.
Alberta Premier Rachel Notley, who also attended the talks in
Ottawa, said she was convinced the expansion would be built if the
financial assistance deal could be worked out.
British Columbia Premier John Horgan said after the meeting he had
not changed his position that the risks of a spill from the pipeline
were too great.
Horgan wants Ottawa to refer the matter to the Supreme Court but the
Liberals are not interested, saying it is already clear the federal
government has jurisdiction over the project.
Horgan also said he would ask the courts in British Columbia to make
clear how much powers the province had to protect the provincial
environment. Federal officials complain this is a time-wasting
tactic.
($1=1.2598 Canadian dollars)
(Reporting by David Ljunggren; Editing by Nick Zieminski and Lisa
Shumaker)
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