British Columbia throws wrench in Kinder Morgan pipeline plan

CALGARY, Alberta (Reuters) - British Columbia will not allow Kinder Morgan Canada Ltd to begin work on public land for its Trans Mountain pipeline expansion until it “meaningfully” consults aboriginal communities, provincial officials said on Thursday.

FILE PHOTO: Protesters hold a rally at City Hall before a march against the proposed expansion of Kinder Morgan's Trans Mountain Pipeline in Vancouver, British Columbia, Canada November 19, 2016. REUTERS/Chris Helgren

The $5.5 billion project through British Columbia, which secured federal government approval last year, would almost triple the capacity of the current Trans Mountain pipeline.

The project’s prospect has become more uncertain after a left-leaning government took power in British Columbia in June, although the administration has since softened its rhetoric.

British Columbia Environment Minister George Heyman told reporters in Vancouver it is unlikely that Kinder Morgan can begin work on public land by its September construction target.

British Columbia will also seek to participate in court cases against federal approval of the project, Heyman said.

Kinder Morgan said in a statement it takes the British Columbia government’s comments seriously and remains willing to meet with provincial officials. The company, which has scheduled most major work for next year, said Heyman’s announcement will not affect its timeline for Trans Mountain construction.

But shares in Kinder Morgan Canada and Houston-based parent Kinder Morgan Inc fell soon after the minister’s comments and ended down 3.7 percent and 1.8 percent respectively. The benchmark Toronto share index shed 0.9 percent.

Canadian crude producers say they need the expansion to access new markets and command better prices.

Heyman said the province has not accepted five of Kinder Morgan’s eight plans to mitigate the project’s environmental impact because they do not adequately address aboriginal consultation.

“Until those plans are completed, Kinder Morgan, with the exception of private land ... cannot put shovels in the ground,” the minister said. He did not specify the benchmark for consultation, a requirement under Canadian law, to be done “meaningfully.”

University of British Columbia law professor Jocelyn Stacey said, given the government’s stance on indigenous issues, it will likely have high standards.

The pipeline begins in Alberta, home to almost all of Canada’s oil production. Alberta Premier Rachel Notley said she does not think the British Columbia government will block the project as it no longer says it will “stop” it.

British Columbia’s Green Party, which props up the current government, said in a statement that to “stop” Trans Mountain was a key condition for its support.

The Canadian Association of Petroleum Producers industry group said British Columbia was “not unreasonable” in protecting its interests.

Reporting by Ethan Lou; Editing by Phil Berlowitz and Lisa Shumaker