Kinder Morgan Canada (KML) has decided to cease all non-essential activities and spending on the C$7.4bn ($5.8bn) Trans Mountain expansion project in the wake of opposition from various authorities, including the British Columbia (BC) Government.
This move casts doubts over the possibility of pipeline expansion at the site, but KML has decided to not commit additional shareholder resources to the project.
The company aims to reach agreements with various stakeholders by 31 May 2018 to ensure the project proceeds as planned. The objective of these negotiations will be obtaining clarity, particularly regarding the ability to construct through BC and obtain adequate protection for KML shareholders.
KML chairman and CEO Steve Kean said: “As KML has repeatedly stated, we will be judicious in our use of shareholder funds. In keeping with that commitment, we have determined that in the current environment, we will not put KML shareholders at risk on the remaining project spend.”
Though the project has the support of the Federal Government and the provinces of Alberta and Saskatchewan, it continues to be opposed by the Government of BC.
Kean further added: “While we have succeeded in all legal challenges to date, a company cannot litigate its way to an in-service pipeline amidst jurisdictional differences between governments.”
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By GlobalDataKML previously announced a primarily permitting strategy for the first half of this year. The company intended to advance the permitting process until better clarity was obtained on outstanding permits, approvals and judicial reviews.
The Trans Mountain pipeline has a capacity of around 300,000 barrels per day. Around C$1.1bn ($860.38m) has already been invested in the project.
The expansion is expected to triple the amount of oil flowing from Alberta to Burnaby, BC.
