Kinder Morgan pipeline means more to politicians than it does to the economy, University of Alberta professor says
Mon., May 28, 2018
EDMONTON–As Edmonton-area mayors met at city hall Monday to cheer on the Kinder Morgan pipeline, one law professor said the project has become more important for politicians than it is for the economy.
“It’s probably over-hyped when you look at it in the context of the entire economy or economic activity — certainly of Canada, and even I think in relation to Alberta,” said Eric Adams, an associate professor at the University of Alberta.
“That’s not to say it’s not an important project for the health of an important sector. But where I think it is clearly more important is in the political stakes that the project has been elevated to.”
Adams said the project is “absolutely crucial” for the credibility of Rachel Notley’s provincial government, and to a lesser extent for Prime Minister Justin Trudeau, as both have essentially guaranteed the pipeline will be built.
And it looks like the Canadian government will ensure that happens.
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Later Monday, The Canadian Press reported that Finance Minister Bill Morneau will make an announcement Tuesday morning regarding the federal government’s resolution.
Morneau will choose one of three options according to CP: buy and build the pipeline expansion, then sell it when it’s complete; buy the pipeline on an interim basis and sell it and leave investors to complete the construction; or leave Kinder Morgan in charge but cover any cost increases as a result of political interference.
Kinder Morgan has given Ottawa until Thursday to resolve the issue and calm investors in the face of the B.C. government’s legal challenge.
In Alberta’s capital, The Edmonton Metropolitan Region Board, made up of mayors representing 13 municipalities, met at city hall Monday to urge other orders of government to come to an agreement in time for the project’s deadline.
Board member and Spruce Grove Mayor Stuart Houston said elected officials in the region have a responsibility to their constituents to speak up in support of the project.
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“We’re at a crossroads in this country in regards to the transmission of our oil,” Houston said. “To get our oil to tidewater and to get a fair price for our oil, it’s absolutely critical that the capital region steps up like other municipalities have done in support of this.”
The board will advocate for the pipeline at the annual Federation of Canadian Municipalities convention starting Thursday in Halifax, N.S.
Edmonton Chamber of Commerce President and CEO Janet Riopel said she is optimistic an agreement will be reached.
Riopel called the pipeline “fundamentally important” for future investment in Canada.
“It’s not just about a pipeline. It’s about our ability in this country to get projects done, major infrastructure projects done,” she said. “Failing to build this pipeline is going to send really dangerous signals to investors.”
Kinder Morgan’s proposed $7.4-billion expansion of the Trans Mountain oil pipeline to Canada’s Pacific Coast stirred a heated dispute between the NDP premiers of Alberta and British Columbia.
In April, Kinder Morgan threatened to walk away from the project if the federal government cannot neutralize opposition from the B.C. government by May 31.
In early May, Alberta passed a bill giving Notley the authority to shut off the oil flow to B.C. The B.C. government retaliated by suing Alberta and calling the bill “unconstitutional.”
Adams said turning off the taps might be unrealistic.
The Alberta government would first have to proclaim Bill 12 into law, and then Energy Minister Margaret McCuaig-Boyd would have to restrict the flow of energy products through a licence with a set of conditions attached to it.
The process would take at least several days and likely miss the deadline.
Even after the fact, Adams said it would be hard to push through. He said the Alberta government would find itself in court “almost immediately” facing an injunction from B.C., and the courts would likely pause the manoeuvre until the case was resolved.
“B.C., I think, is on relatively strong footing in asserting that any steps taken to turn off taps is going to encounter constitutional difficulties for the Alberta government. Because it’s the relatively clear wording of Section 92A (2) of the Constitution Act which seeks to prevent provinces from punishing one another in precisely this kind of scenario,” he said.
“So turning off the taps is easy to say, and it may be effective sabre-rattling, but it is very likely difficult to achieve constitutionally.”
He said the added push from governments will probably tip the scales in favour of the pipeline going forward, but added that its completion is “by no means a certainty.”
Adams said it’s hard to know how committed Kinder Morgan is to the project and whether their threat to pull out has been a ploy to coax governments to the table.
“If that was the strategy then they probably got what they wanted, which was a greater set of protections from the federal government,” he said. “If they want out entirely, there’s nothing stopping them as private industry from saying this is no longer an effective use of our capital, and simply walking away.”
With files from The Canadian Press
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