While Ottawa was announcing it will backstop the $7.4 billion Trans Mountain pipeline expansion Wednesday May 16, Alberta Premier Rachel Notley was reiterating her threat to “turn off the taps” of oil and gas to B.C.
Later today, her government will pass Bill 12, which includes a regulatory wrench that Notley has vowed to use to turn the screws on B.C.
“Albertans, British Columbians and all Canadians should understand that, if the path forward for the pipeline through B.C. is not settled soon, I am ready and prepared to turn off the taps,” she said.
Citing concerns about the risk of a spill from increased flows of diluted bitumen through B.C., the NDP government in B.C. has threatened to restrict the flow of diluted through B.C. by pipeline or rail.
The government has asked the BC Court of Appeal for a declaration on whether or not it has the constitutional power to do so.
But the government has also been trying to put up other regulator and legal obstacles – a manoeuvre that appears to be working.
Kinder Morgan Canada (TSX:KML) has stopped all but essential work on the project and has given the B.C. and federal governments until May 31 to give assurances that the pipeline can be built.
Despite an offer from the federal to indemnify any cost overruns resulting from delays, Kinder Morgan today stated that may not be enough.
“While discussions are ongoing, we are not yet in alignment and will not negotiate in public,” the company said in a prepared statement.
Notley welcomed the federal government announcement’s offer of a financial backstop and said she is confident that the expansion will happen. But she reiterated that her government is prepared to retaliate against B.C. with Bill 12, which will give her government the power to control energy exports through licensing.
Though she refused to discuss how quickly Bill 12 might be invoked or how it will be used, it’s conceivable her government could try to use the new bill to allow for increased flows of diluted bitumen through the existing pipeline, forcing the refined fuels that flow to B.C. to be forced onto rail and truck, which would increase gas prices in B.C.
“With pipeline capacity stretched to the limit, Albertans have the right to choose how our energy is shipped so that Alberta gets the best return possible,” Notley said. “Bill 12 gives us that power.