News / Vancouver

Courts, cashflow and election campaigning: what lies ahead for Kinder Morgan pipeline

With both B.C. and the feds on board with $7-billion Trans Mountain expansion, the road ahead isn't entirely clear of obstacles yet.

A tanker sits in Vancouver harbour on Jan. 12, 2016. Kinder Morgan's Trans Mountain expansion proposal would see tanker traffic — and Aframax vessels several times this size — increase sevenfold in the Burrard Inlet.

Jennifer Gauthier / Metro Order this photo

A tanker sits in Vancouver harbour on Jan. 12, 2016. Kinder Morgan's Trans Mountain expansion proposal would see tanker traffic — and Aframax vessels several times this size — increase sevenfold in the Burrard Inlet.

Texas energy giant Kinder Morgan no doubt breathed a sigh of relief this week.

That's because on Wednesday, the B.C. government gave it the OK for its $7-billion pipeline expansion, toppling yet another obstacle to it ramping up the flow of diluted bitumen to the West Coast.

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For the company, that was the "culmination of many years of work to demonstrate to British Columbians that our project meets both the regulatory requirements and the B.C. Government’s Conditions to move forward,” said president Ian Anderson in a press release. “We believe this represents a positive outcome for our company, customers and for British Columbians and all Canadians who will benefit from the construction and operation of an expanded pipeline.”

Coming six weeks after Ottawa granted its own nod of approval to the controversial Trans Mountain project — which has galvanized protests and stirred opposition from mayors and First Nations of the region — the company cleared its final regulatory hurdle, and the last of Premier Christy Clark's 2012 "five conditions" for heavy oil pipelines, which were investigated by Metro in our recent five-part Pipelandia series.

"We set the bar high to stand up for B.C. to protect our coast and environment, ensure opportunities for First Nations participation, and secure a fair share of economic benefits for all British Columbians," Premier Christy Clark told reporters.

The plan to expand the existing 64-year-old pipeline would triple the flow of diluted bitumen oil from Alberta’s oil sands to a terminal in Burnaby, increasing oil tanker traffic through the Burrard Inlet seven-fold.

But does that actually mean Kinder Morgan has a clear road ahead this year? Not so fast, some observers suggest.

Looming on the near horizon is a provincial election in May, in which the New Democrats and Greens have staked their campaigns to the Kinder Morgan opposition. And unlike in the 2013 election, when the BC Liberals successfully painted NDP leader Adrian Dix as "flip-flopping" on the project, this time the Opposition is hoping to paint Clark in the same light for approving the project after expressing so many concerns about it in recent years.

Georgia Strait Alliance executive director Christianne Wilhelmson told Metro their key push during the election will be to put the question to voters about what they value.

"We're still in our planning stages, but it's really important for people to really understand that climate issues can no longer be something governments can put off for someone else to deal with … and there's no such thing as an effective spill response or clean up."

Southern resident orcas, which are threatened with extinction and only live in the Salish Sea, will feature prominently in the Alliance's electioneering, Wilhelmson hinted.

"I've heard people say we should just accept this, but I don't think that southern resident orcas have that luxury. We're literally talking about the extinction of a species that's important to the region and our way of life."

Another group, Dogwood Initiative, is planning on door-knocking, phoning and emailing its 260,000 B.C. supporters as aggressively as any political party this May.

"Frankly, people are not very excited yet about this election, but I think (Kinder Morgan) will be a big motivating issue now Christy Clark has come down squarely in favour of the project," communications director Kai Nagata said.

Dogwood has a backup plan. It's preparing to kickstart a Citizens' Initiative to force anti-pipeline legislation into the Legislature, which requires one tenth of voters' signatures.

"We've met with our legal team today to begin drafting the legislation," he said Thursday. "We'll take that to Elections B.C. before the May election to tee up a summer canvassing drive if Christy Clark wins again and tries to push the project forward."

A bulk carrier passes under the iconic Lion's Gate bridge across the Burrard Inlet on Jan. 12, 2016, as a container ship approaches the narrows behind it.

Jennifer Gauthier / Metro

A bulk carrier passes under the iconic Lion's Gate bridge across the Burrard Inlet on Jan. 12, 2016, as a container ship approaches the narrows behind it.

Greatest challenges legal — and economic?

But likely the greatest key hurdle comes from First Nations opposed to the project. Kinder Morgan has benefit agreements with some along its route, but others are unwavering.

Vancouver lawyer Bruce McIvor, with First People's Law Corporation, said court challenges rooted in Canada's constitution are most likely to succeed.

"The next step will be for court challenges to work their way through the system," he told Metro. "Those court challenges will likely be brought both by First Nations and non-indigenous groups to the decision itself."

But aboriginal rights-based cases are the strongest, McIvor argued, because they hinge on constitutional rights.

"Actual constitutional rights are the most important rights you can have in law in Canada," he explained.

But unlike Enbridge, whose approval was overturned by a court, Trans Mountain saw greater consultation efforts, McIvor said.

"It's going to be a real challenge for them … because a duty-to-consult (case) is difficult to win if there's a record of consultation," McIvor cautioned. "The argument will be about whether that consultation was adequate enough."

McIvor proposed that other avenues, other than a judicial review, could be more promising for First Nations — for instance, filing aboriginal land claims to areas affected by the proposal, or even trying to accuse the company of  "interfering and creating a public nuisance."

That presumes, however, that Kinder Morgan's board of directors itself wants to keep spending on the project amidst collapsed oil prices.

Much has changed since the company first pitched its vision to the National Energy Board in 2013. At that time, oil's benchmark price was more than $100 a barrel; today, it's less than half that.

"Kinder Morgan is like the dog that caught the car," Nagata quipped, "and now they don't know what to do with it.

"They've pushed for five years for approval, but now they're billions in debt … Kinder Morgan is in a bit of a bind — they're giving away money to keep their project moving forward, everybody's looking for their cut of a rapidly shrinking pie."

He cited recent indications from the firm that it would seek a joint venture partner for the $7-billion expansion, a company to share in its costs — but also its profits.

"These people don't get out of bed planning to poison rivers or spill their product, they're there to make money," he said. "The day this project becomes uneconomical is the day we'll see Kinder Morgan walk."

But according to the company, a timeline for completion is in place and it's shovel ready.

"Next steps will include a final investment decision by the Kinder Morgan Board of Directors," the company acknowledged. If it does go ahead, the firm said it hopes to begin construction as early as this September.

Correction: In an earlier version of this story, Metro incorrectly identified aboriginal rights as in the Charter of Rights and Freedoms. In fact they are under Section 35 of the constitution, not the Charter. 

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