Kinder Morgan is suspending all non-essential activities and related spending on the Trans Mountain pipeline expansion project.
The company says its decision is based on the British Columbia government’s opposition to the project, which has been the focus of sustained protests.
Kinder Morgan says it will consult with “various stakeholders” to try and reach an agreement by May 31 that might allow the project to proceed.
The move will be seen as a blow to Prime Minister Justin Trudeau, who has insisted that the pipeline would be built, despite the angry protests and the B.C. government’s continued battle against the project in the courts.
The expansion, which would triple the amount of oil flowing from Alberta to Burnaby, B.C., was approved by the federal government in 2016.
Kinder Morgan says it will make a decision about the project’s future based on whether it can get “clarity” on its ability to do construction in B.C. and protect its shareholders.
“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,” Steve Kean, the company’s chairman and chief executive officer, said in a statement.
“A company cannot resolve differences between governments. 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.”
Kean said the uncertainty around the company’s ability to finish the project “leads us to the conclusion that we should protect the value that KML has, rather than risking billions of dollars on an outcome that is outside of our control.”
Kinder Morgan has spent about $1.1 billion on the $7.4-billion project so far.
British Columbia Premier John Horgan is pursuing a reference case in the courts to determine if his government can control the shipment of oil through the province on environmental grounds.
Kinder Morgan said that test case is a factor in the company’s decision.
“Rather than achieving greater clarity, the project is now facing unquantifiable risk,” the company said in its statement.
There is also another legal challenge in the Federal Court of Appeal, where the federal government’s approval and B.C.’s environmental assessment certificate for the project are being challenged.
The project has become a major irritant in the relationship between Alberta and B.C., with Alberta going as far as banning the import of wines from its neighbour for a period of time.
Trudeau has argued it is possible to balance the interests of both the economy and the environment in pushing for the pipeline’s expansion.
The prime minister made that argument just two days ago when he visited Fort McMurray, Alta., where he suggested the remaining opposition to projects like the Trans Mountain expansion comes from a legacy of the previous Conservative government dismissing the concerns of environmentalists.
Still, protesters have said the expansion would increase the risk of oil spills in the Burrard Inlet, and that completing it will mean the federal government will not be able to meet its commitments to cut greenhouse gas emissions by another 200 million tonnes per year by 2030.
Opposition to the pipeline has ramped up in recent weeks, with about 200 people arrested near the Burnaby marine terminal in the last month.
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