Kinder Morgan Pipeline Won't Get Built, Vancouver Mayor Says

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(Bloomberg) -- Kinder Morgan Inc.’s proposed expansion of an oil pipeline to Canada’s Pacific Coast will never happen because local opposition to the project that’s dividing the nation is only going to intensify, according to the mayor of Vancouver.

"I don’t think this project will go -- I really don’t -- based on the resistance on the ground," Gregor Robertson said in an interview Tuesday at Bloomberg’s headquarters in New York.

Kinder Morgan has threatened to walk away from the C$7.4 billion ($5.7 billion) project, setting a May 31 deadline for the federal government to neutralize opposition from a British Columbia government that’s vowed to use "every tool" to block it. Prime Minister Justin Trudeau, who’s staked his economic and environmental agendas on the pipeline, has pledged to get it completed to ensure landlocked Canadian crude flows to Asian markets.

The Canadian government is "determined that the pipeline will be built," Natural Resources Minister Jim Carr reiterated to reporters in Ottawa Tuesday.

Legislation to push the project ahead remains an option, he said, without elaborating. The federal government, along with the province of Alberta, are considering financial support for the project, which would almost triple capacity on a line that ends in a terminal near Vancouver.

“I’m confident there will be a solution,” Carr said.

Opposition Mounts

That solution shouldn’t count on local opposition giving way, according to Robertson, whose decade-long tenure as mayor of Canada’s third-biggest city ends in October.

“I don’t think the resistance on the west coast is going to fade -- I think it will only intensify," he said. "Escalation looks likely."

Indigenous groups opposing the project addressed Kinder Morgan’s annual meeting in Houston Wednesday, warning of more resistance ahead.

"No matter what the Canadian government does to address political or financial risk, it will not change our resolve to oppose the project," Chief Judy Wilson of the Neskonlith First Nation, part of the Secwepemc people whose territory is the largest indigenous tract of land that the proposed expansion seeks to pass through. "This will result in more delay, risk and uncertainty."

A Nanos Research poll released this week indicated that while six in 10 Canadians want the project to proceed, an equal proportion are concerned that the dispute challenges how Canada functions as a federation.

British Columbia has sought an opinion from the province’s court of appeal on whether it has jurisdiction to interfere with the federally approved project. Saskatchewan intervened in that so-called reference case Wednesday, arguing British Columbia’s efforts are unconstitutional.

Meanwhile, Alberta has threatened trade sanctions against neighboring British Columbia, arguing that the pipeline bottleneck is costing Canada about C$15 billion a year in discounted crude, according to an estimate by Bank of Nova Scotia economists.

British Columbia announced Wednesday it would seek a court opinion on whether it has jurisdiction to interfere with the federally approved project. The so-called reference case will be filed by April 30 at the B.C. Court of Appeal, the highest court for questions of this kind.

Kinder Morgan Canada Ltd. didn’t immediately respond to a message seeking comment.

Global Warming

For Robertson, 53, who presides over a city of 600,000 people where half the population takes transit, walks or rides a bike to work, the issue goes beyond a single pipeline in the fight against global warming.

“I think there’s a much bigger question here," Robertson said. "We have to get off of fossil fuels. It’s really a question of how we implement that transition."

Alberta’s oil and gas sector “represents such a tiny fraction of the overall economy and a job count," whereas cities like Vancouver and Toronto are driven by newer technology and innovation-related sectors, he said.

The most strident opposition to the project has been centered in Vancouver and Victoria, British Columbia’s biggest cities, according to polls. There is broad support in British Columbia outside the two urban centers. Two members of federal parliament were arrested in March for defying a court injunction banning protesters from disrupting construction at Kinder Morgan’s facility near Vancouver.

Asked if he was ready to be arrested to halt the project, Robertson said, "Potentially."

"But I’d much rather see things de-escalate and a cooler heads prevail, which is why I haven’t -- yet," he said.

©2018 Bloomberg L.P.

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