A Canadian flag is pictured at a demonstration against the expansion of Texas-based Kinder Morgan's Trans Mountain pipeline project in Burnaby, British Columbia, Canada on March 10, 2018
Ottawa (AFP) - Canada pledged Wednesday to compensate the builder of a controversial oil pipeline in British Columbia for any losses that may result from political delays.
The announcement comes amid ongoing talks between Ottawa and pipeline builder Kinder Morgan over fierce opposition from westernmost British Columbia to its Trans Mountain pipeline (TMX) and investor fears over political risks to the project.
Kinder Morgan, whose investors were to meet later in the day on the issue, had given a May 31 deadline to clear up political uncertainty surrounding the project.
“We are prepared to indemnify the project against any financial loss that derives from (British Columbia) Premier John Horgan’s attempts to delay or obstruct the project,” Finance Minister Bill Morneau told a news conference.
“If Kinder Morgan decides at some stage not to proceed with TMX, the indemnification against financial loss would still be in place for another party who might wish to take over the project,” he said.
Morneau explained that it’s up to the federal government, not Kinder Morgan, to settle the current disputes arising over the project, which Ottawa has deemed to be in the national interest.
He declined, however, to provide details of his proposal.
Ottawa approved in 2016 the Can$7.4 billion (US$5.8 billion) twinning of the pipeline, originally built in 1953, to move 890,000 barrels of oil per day from landlocked Alberta to the Pacific coast, for shipping to new overseas markets.
In exchange for the new 1,150-kilometer (715-mile) conduit that would allow Alberta to diversify its markets and get a better price for its resources, the province agreed to impose curbs to carbon emissions on its oil sands, which is the largest single pollution emitter in Canada and key to the nation meeting its Paris climate target.
Ninety-nine percent of Canada’s oil exports go to the United States, which is increasing its own domestic production.
But British Columbia’s new social democratic government recently joined environmental activists’ fight against the pipeline, provoking an Alberta boycott of its wines and threats to devastate the British Columbia economy by restricting oil and gas supplies to its neighbor.
Opponents of TMX are concerned about the risk of oil spills along Canada’s pristine Pacific coast impacting fisheries and tourism.
- Investor fears -
The row reached a boiling point last month with nearly 200 protesters arrested, and concerns raised that British Columbia’s opposition to TMX risked provoking a constitutional crisis and was scaring away international investors.
At that time, Prime Minister Justin Trudeau interrupted a trip to Peru, France and Britain to return home to try to mediate the disagreement.
Backing for the project, meanwhile, has risen since the feud erupted with a majority – including in British Columbia – now in favor of the project.
Still more protests were planned in Calgary and Vancouver on Wednesday, including at Kinder Morgan’s Pacific Coast tank farm that will see indigenous activists don hazmat suits to highlight the potential health risks from fumes, for example, that nearby residents could face if a wildfire or earthquake struck.
Activist Aurore Faucet with 350.org vowed to step up the fight, saying the “desperate play to bail out a pipeline violates Justin Trudeau’s own promises on climate change and indigenous rights.”
Mike Hudema of Greenpeace urged the government to reverse its approval of TMX, highlighting legal challenges also from indigenous tribes, environmental activists and municipal governments bent on stopping the project.
“Signing a taxpayer-backed blank cheque with Kinder Morgan’s name on it is the definition of throwing good money after bad and Canadians shouldn’t be on the hook for the big losses this project will likely incur,” he said.
Federal opposition parties on both sides of the issue railed against Trudeau’s “failed energy policies,” while Horgan rejected Morneau’s accusations and Alberta Premier Rachel Notley renewed her threats “to turn off the taps” on British Columbia if it didn’t back down.
In a statement, Kinder Morgan said it “appreciates (Morneau)’s recognition that a private company cannot resolve differences between governments.”