Canada backs Kinder Morgan pipeline appeal as related hearings start

CALGARY, Alberta (Reuters) - Canada’s federal government on Wednesday backed Kinder Morgan Canada Ltd’s second appeal to the country’s energy regulator over local permits for its planned Trans Mountain oil pipeline expansion, as related public hearings began.

Helmets line a shelf in a control room at Kinder Morgan's Westridge Terminal on Burrard Inlet in Burnaby, British Columbia, Canada November 17, 2017. REUTERS/Chris Helgren

The government’s response in a rare case put before the regulator comes as Kinder Morgan pushes its C$7.4 billion ($5.9 billion) pipeline in an increasingly public way. Since its federal approval last year, the project has run into increased roadblocks with lower governments and environmentalist and aboriginal opposition.

But while the National Energy Board (NEB) regulator comes under the government’s authority, the quasi-judicial body renders its decisions independently.

Canada’s minister of natural resources, Jim Carr, said in a statement on Wednesday his government has told the NEB it supports Kinder Morgan’s request this month to set up a process to resolve potential disagreements with provinces or municipalities over the pipeline to the west coast.

Kinder Morgan did not immediately respond to a request for comment, while the NEB said it will consider the government’s input.

The company, a unit of Houston-based Kinder Morgan Inc, made its appeal this month, following a similar one last month after the company failed to obtain local permits from the city of Burnaby, British Columbia.

“We’d hate to see the federal government get behind (this),” Greenpeace senior energy strategist Keith Stewart said of Wednesday’s statement. “Approvals that bypass municipalities or indigenous communities would be a mistake.”

Kinder Morgan last month also asked the regulator to allow it to bypass Burnaby, a request for which the NEB held oral hearings on Wednesday in Canada’s oil capital of Calgary, Alberta.

Burnaby’s lawyer, Greg McDade, who had objected to the hearings entirely, reiterated his concerns, saying they allow the company to effectively introduce arguments beyond what it filed.

Kinder Morgan argued it worked for many months and in “good faith” with Burnaby, yet was unable to obtain permits, resulting in potential delays to the expansion and millions in losses.

The expansion of the current Trans Mountain pipeline from Alberta would nearly triple its capacity to 890,000 barrels per day.

Canadian oil producers, whose landlocked product trades at a discount to the West Texas Intermediate benchmark, say they need additional pipeline capacity to fetch better prices.

Kinder Morgan Canada President Ian Anderson made an unannounced appearance last week at a Calgary event by Alberta Premier Rachel Notley, who has been crisscrossing the country to champion pipelines. Both are scheduled to appear in Vancouver on Thursday.

Reporting by Ethan Lou; editing by Leslie Adler, G Crosse