(Reuters) - The British Columbia government said on Monday it will formally oppose the expansion of Kinder Morgan Inc’s Trans Mountain pipeline to Canada’s west coast, another blow to oil sands producers already reeling from a global crude price crash.
Kinder Morgan wants to nearly treble Trans Mountain’s capacity to carry 890,000 barrels per day of crude from landlocked Alberta, to Burnaby, British Columbia, where it can be loaded on to tankers and shipped to lucrative Asian refining markets.
Alberta’s carbon-intensive oil sands producers are desperate for improved access to international markets for their heavy crude, which is among the cheapest in the world and was priced at about $16.50 a barrel outright late Thursday afternoon.
But the C$5.4 billion ($3.79 billion) project has run into fierce environmental and aboriginal opposition.
British Columbia Environment Minister Mary Polak said Kinder Morgan had failed to provide the National Energy Board (NEB), a federal regulator, with an adequate plan to prevent or respond to an oil spill.
In 2012 the province’s premier, Christy Clark, outlined five conditions that any company wanting to build pipelines in British Columbia would need to meet to win approval from her Liberal government. These included a “world-leading” marine and land oil spill prevention, response and recovery practices.
“We have not seen evidence that convinces us that those five conditions have been met,” Polak told reporters.
The British Columbia government did not entirely rule out the possibility of Kinder Morgan meeting their requirements in future, adding that it will continue to evaluate the project.
“It does not close the door on them meeting that test in the future,” Polak said.
Kinder Morgan is confident that it will be able to satisfy British Columbia’s conditions by the time the regulatory process is complete, it said in a statement.
It could not meet all the requirements such as Aboriginal treaty rights alone and needed “multiple parties” to work together, the company said.
Kinder Morgan filed a final written argument for the Trans Mountain pipeline expansion project with Canadian regulators in December.
The opposition to Trans Mountain’s expansion comes after U.S. President Barack Obama in November rejected TransCanada Corp’s Keystone XL pipeline in a victory for environmentalists.
The same month, Canada’s recently elected Liberal government said it will impose an oil tanker ban on British Columbia’s northern coast, effectively slamming the door on Enbridge Inc’s Northern Gateway pipeline.
($1 = 1.4230 Canadian dollars)
Reporting by Sneha Banerjee in Bengaluru, Nicole Mordant in Vancouver and Nia Williams in Calgary; Editing by Sriraj Kalluvila and Richard Chang