Canada says LNG ruling has no bearing on Kinder pipeline decision

Wed Sep 28, 2016 3:58pm EDT
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By David Ljunggren and Nia Williams

OTTAWA/CALGARY (Reuters) - Canada's approval of a natural gas plant is not a sign it will automatically let Kinder Morgan Inc KMN.I expand a crude pipeline, a top official said on Wednesday, amid what sources say is uncertainty inside the government over the project.

In its first major energy decision since taking power last November, the Liberal government on Tuesday granted a permit to Malaysia's Petronas [PETR.UL] to construct the liquefied natural gas plant in the province of British Columbia.

The federal cabinet has promised that by Dec. 19, it will announce whether Kinder Morgan can more than double the capacity of its Trans Mountain pipeline from the oil sands of Alberta to the British Columbia coast.

The case is complex, pitting the energy industry's interests against a series of differing opponents, and if mishandled, could hurt the Liberals in a part of the country where they gained more support than expected in last year's election win.

Environmentalists and aboriginal activists strongly oppose the expansion while the British Columbia government - wary of possible spills - has imposed a series of conditions on any pipeline crossing its territory.

"Kinder Morgan will be decided on its own merits. There is no linkage between these projects," Natural Resources Minister Jim Carr told reporters when asked what message markets should take from the Petronas decision.

Analysts are skeptical about the Petronas project's prospects given low gas prices and cost-cutting at the Malaysian oil giant.

Several sources familiar with the file dismissed the idea Ottawa had approved the Petronas plant to give it cover to reject the Trans Mountain expansion, insisting that ministers were not close to making a decision and had ruled nothing out.   Continued...