Updated: Trans Mountain will be built, Trudeau says

Horgan remains unmoved, but Trudeau says Ottawa will provide financial, legislative assurances

Provincial and federal backstopping of the Trans Mountain pipeline expansion won't do anything to prevent ongoing protests. | BIV Archives

B.C. Premier John Horgan emerged from an emergency summit Sunday April 15 with Prime Minister Justin Trudeau and Alberta Premier Rachel Notley unmoved on his position on the Trans Mountain pipeline expansion.

But the pipeline expansion project will be completed, the prime minister vowed today. He confirmed Ottawa will provide Kinder Morgan Canada (TSX:KML) with financial assurances to reduce the company's risks on the $7.5 billion project.

“I have instructed the minister of finance to initiate formal financial discussions with Kinder Morgan, the result of which will be to remove the uncertainty overhanging the Trans Mountain pipeline expansion project,” Trudeau said. “We will not have these discussions in public, but construction will go ahead.

“I have also informed premiers Notley and Horgan today that we are actively pursuing legislative options that will assert, plus reinforce, the Government of Canada's jurisdiction in this matter, which we know we clearly have.”

Horgan said he will continue to defend B.C.'s interests, which includes fighting the project in court, and Notley said her government plans to introduce legislation later this week that will give Alberta more tools to control exports, including oil and reined fuel products -- something it could use as a trade tool against B.C.

However, she expressed confidence that the project will be completed, which would avert a trade war with B.C.

"Today in the meeting, one of the things we discussed was the fact that the federal government, along with the Government of Alberta, has commenced discussions with Kinder Morgan to establish a financial relationship that will eliminate investor risk," Notley said.

"I am quite confident that the nature of the conversation we are having at this point will get the job done in terms of eliminating the uncertainty that's caused the May 31 deadline."

Horgan said he still plans to move ahead with a court reference to determine if B.C. has the authority to restrict the flow of diluted bitumen from Alberta through B.C. via pipeline or rail.

“At the end of the day, we agreed that there may well be an opportunity for us to have officials address some of the gaps that we perceive to be in the Oceans Protection Plan,” Horgan said in a press conference. “However we remain committed to ensuring our jurisdiction in this regard.”

Horgan said Trudeau made no threats to “punish” B.C. It has been suggested Ottawa could use financial pressure, like withholding transfer payments, as a means to pressure B.C. to back off.

“I felt no threats or intimidation,” Horgan said. “It was a collegial meeting among peers.”

Trudeau reiterated that the Trans Mountain pipeline expansion is in the national interest, saying it is needed to provide markets for Alberta oil, which is heavily discounted due to the fact Alberta has but one customer for its oil -- the U.S.

Without that access to other markets, Trudeau said that that the billions being lost to fund things like health care "is not something we can accept as a permanent anchor on our national prospects.

The Trans Mountain pipeline was approved by both the federal and B.C. governments. But when the NDP took power last year in B.C., Horgan's government announced a series of measures aimed at halting the project, saying the risk to B.C.'s coast from increased movement of diluted bitumen were too great.

Although the federal government has ultimate authority over pipelines, provincial governments do have some authority over environmental matters, and B.C.'s opposition has been enough to give Kinder Morgan second thoughts.

On April 8, the company announced it planned to stop all but essential work on the project, and gave the Canadian government until May 31 to give it the "clarity" it needs, or it would cancel the project.

Alberta's response has been to threaten retaliation, possibly by throttling the flow of oil and refined fuel products to B.C., triggering concerns that both a trade war and constitutional crisis may erupt.

"I don't think we would be in this current situation if the British Columbia government hadn't continued to emphasize its opposition to the project," Trudeau said.

On April 13, the provincial government provided an update on the permits Trans Mountain needs from the province. A total of 1,187 permits are needed from various government ministries and agencies.

To date, the government says Trans Mountain has submitted 587 permit applications, of which 201 have been approved and issued. The remainder are still under review. Another 600 permits have yet to be requested by Trans Mountain.

Reacting to Sunday's announcement, Green Party Leader Andrew Weaver said providing financial assistance to Kinder Morgan was a troubling precedent.

“It is deeply troubling that the Prime Minister is considering using public funds to absorb investor risk in this project," he said in a press release. "The message this sends to investors is that if they issue ultimatums for projects based on fundamentally faulty economic rationale, the Prime Minister will put taxpayer dollars on the line to bail them out."