Kinder Morgan Clears Pipeline Hurdle With Billion-Dollar Pledge

2017-01-12 09:57:17

Kinder Morgan Clears Pipeline Hurdle With Billion-Dollar Pledge

By Natalie Obiko Pearson, Bloomberg News

Kinder Morgan Inc.’s proposal to expand an oil pipeline in western Canada cleared its final major regulatory hurdle, winning environmental approval from British Columbia after it promised to share part of the spoils with the province.

The provincial government has granted the Trans Mountain project an environmental assessment certificate along with 37 conditions, according to a government statement. Kinder Morgan has also agreed to pay the province as much as C$1 billion ($760 million) over 20 years in a revenue-sharing agreement, British Columbia Premier Christy Clark said.

“Every penny of that will go into environmental protection,” Clark, whose Liberal Party will seek re-election in May, told a news conference in Victoria.

Trans Mountain will pay between C$25 million and C$50 million a year, depending on shipments in excess of contracted volumes, Kinder Morgan said in an e-mailed statement. The next step will be a final investment decision by the company’s board, it said.

Canadian Prime Minister Justin Trudeau gave the federal government’s green light to the project in November. The expansion was first proposed more than four years ago and has faced strident opposition from environmental activists and indigenous groups.

Spill Response

British Columbia’s conditions include requirements to report and offset greenhouse gases and to enhance emergency oil spill response measures. Those are additional to the 157 conditions imposed earlier on the project by Canada’s National Energy Board.

Kinder Morgan plans to triple the 1,150-kilometer (715-mile) pipeline’s capacity to 890,000 barrels a day. That will allow Canada to ship more crude from Alberta’s oil sands to Asia through British Columbia, the nation’s Pacific gateway.

The company plans to begin construction on its pipeline in September and expects to ship oil by late 2019, according to its statement.

Court challenges could still ensnare the project, as has been the case with another major crude pipeline proposal in the western province, Enbridge Inc.’s Northern Gateway. It was approved in 2014 only to have a court rescind its permits last year.

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