FILE PHOTO – The entrance for the Kinder Morgan Tank Farm is pictured in Burnaby, British Columbia, October 6, 2014. REUTERS/Ben Nelms
December 8, 2017
CALGARY, Alberta (Reuters) – Canada’s energy regulator ruled on Thursday in favor of Kinder Morgan Canada Ltd’s appeal to sidestep some municipal permits for its Trans Mountain pipeline expansion, a major victory for the C$7.4 billion ($5.8 billion) project.
The ruling, which came just three days after the regulator heard the case, could offset some of the construction delays afflicting the company, which said on Monday the project could be further set back if it could not get clarity about the permits.
The fight for Kinder Morgan is not over, as the federally approved project still faces opposition from environmentalists, aboriginal groups, the province of British Columbia and some municipal governments.
But the ruling does provide “a measure of visibility” that the company can overcome other such disputes if they arise, Royal Bank of Canada analyst Robert Kwan said in a research note.
Canada’s National Energy Board (NEB) said on Thursday the unit of Houston-based Kinder Morgan Inc could proceed with construction work without complying with certain bylaws from the city of Burnaby, British Columbia, through which the pipeline passes.
It said it would give its reasons for the decision later.
Kinder Morgan Canada President Ian Anderson said in a statement the company was pleased with the decision, but still awaited the regulator’s decision on a related request to set up a process to consider such cases in the future.
Burnaby did not immediately respond to requests for comment.
Kinder Morgan appealed to the regulator in October after it failed to obtained permits from Burnaby. The city’s mayor is publicly opposed to the project, although he has maintained that municipal civil servants treated the company impartially.
The expansion of the pipeline from Alberta’s energy heartland to a port near Vancouver would nearly triple its capacity to 890,000 barrels per day.
Canadian oil producers, whose landlocked product trades at a discount to the West Texas Intermediate benchmark, say they need more pipeline capacity to fetch better prices.
The energy sector and government of the crude-producing Alberta province welcomed the ruling.
“It gets us another step closer to shovels in the ground,” said Alberta Premier Rachel Notley, who was publicly hailed last month by Anderson as an “unwavering supporter.”
The project had an operational date of December 2019, but in October the company pushed that back to September 2020 because of what it said was the difficulty in obtaining permits.
The company’s shares ended Thursday flat at C$16.65.
(Reporting by Ethan Lou and Nia Williams; Editing by Peter Cooney and Richard Chang)