A sign warning of an underground petroleum pipeline is seen on a fence at Kinder Morgan’s facility where work is being conducted in preparation for the expansion of the Trans Mountain Pipeline, in Burnaby, B.C., on Monday April 9, 2018. With just over a week remaining until the deadline set for abandoning the Trans Mountain pipeline expansion, no suitors have emerged to step into builder Kinder Morgan Canada’s shoes. THE CANADIAN PRESS/Darryl Dyck

A sign warning of an underground petroleum pipeline is seen on a fence at Kinder Morgan’s facility where work is being conducted in preparation for the expansion of the Trans Mountain Pipeline, in Burnaby, B.C., on Monday April 9, 2018. With just over a week remaining until the deadline set for abandoning the Trans Mountain pipeline expansion, no suitors have emerged to step into builder Kinder Morgan Canada’s shoes. THE CANADIAN PRESS/Darryl Dyck

No suitors emerge for pipeline project stake as Kinder Morgan deadline looms

Analysts and observers remain perplexed by Finance Minister Bill Morneau’s comment last week that “plenty of investors would be interested in taking on this project”.

With just over a week remaining until the May 31 deadline set for abandoning its Trans Mountain pipeline expansion, no suitors have publicly emerged to step into builder Kinder Morgan Canada Ltd.’s shoes.

Analysts and observers say they remain perplexed by Finance Minister Bill Morneau’s comment last week that “plenty of investors would be interested in taking on this project,” after the federal government said it would offer an “indemnity” or insurance to guarantee it is built.

Kinder Morgan said Monday it has nothing to add to last week’s statement from CEO Steve Kean in which he repeated the May 31 deadline and said that discussions are ongoing but “we are not yet in alignment.”

It’s difficult to guess who might take Kinder Morgan’s place without knowing what guarantees or deals are being offered by the federal government and possibly the province of Alberta, said Samir Kayande, a director with RS Energy Group in Calgary.

He pointed out that the richer the deal, the longer the list of potential replacements for Kinder Morgan, which could include pension or private equity funds.

Related: Horgan says B.C. defending its interests in Trans Mountain pipeline

Related: Rachel Notley to skip premiers conference to focus on pipeline deal

“There is still time to get something done around a guarantee of some sort that will satisfy Kinder Morgan,” he said in an interview on Monday.

“It really depends on the scope of the federal and provincial guarantees that are going to be offered. The governments are in kind of a tough spot here because if anyone does step in, it’s going to take them months or longer, potentially, to ramp up the whole effort.”

The federal government has said its indemnity and suggestion of the entry of a third party gives it an advantage as it negotiates with Kinder Morgan but Dennis McConaghy, a former TransCanada Corp. executive and industry analyst, said he disagrees.

He said it would be a ”political disaster” for both Morneau and Alberta Premier Rachel Notley if the pipeline in-service date is delayed beyond 2020 because both governments have staked their reputations on it being built.

“I’ve been very skeptical about the advent of third parties,” said McConaghy. “This deal has to get done with Kinder if the focus is to get the pipeline in service by 2020.

“This project is essentially an expansion and a debottlenecking of an existing pipeline so it’s very difficult to build the project without selling the original Trans Mountain asset, which is of course a very complicated prospect.”

He said the cost and delays involved in bringing in a third party makes it clear that the federal government’s best bet is to reach an agreement with Kinder Morgan.

Meanwhile, finance officials had no new details to report in an email received Monday.

Trans Mountain has been operating since the 1950s, carrying as much as 300,000 barrels a day of oil and refined fuels from Edmonton to the Vancouver area, where it connects with a line carrying crude to refineries in Washington state.

The planned tripling to 890,000 barrels a day could give Canada access to alternative markets as booming production from U.S. shale plays reduces Canada’s biggest customer’s need to import northern oil.

B.C. is fighting the pipeline in the federal Court of Appeal and in B.C. Supreme Court. It has also referred to the B.C. Court of Appeal its own proposed legislation to cap oil shipments across the province.

Enbridge Inc., North America’s biggest crude pipelines operator, has denied it is negotiating to take over the Trans Mountain expansion project. Rival pipeline company TransCanada Corp. didn’t respond to a request for comment on Monday.

Oilsands producer Cenovus Energy Inc., a company hit hard by oil price discounts in the first quarter and a committed shipper on the project, refused comment when asked if it is interested in buying a stake in the project.

Kinder Morgan says it has already spent $1.1 billion of estimated $7.4 billion price of the project.

Related: Alberta passes bill that could cut oil to B.C

Companies mentioned in this story: (TSX:KML, TSX:ENB, TSX:TRP)

Dan Healing, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

That’s Houston physician Dr. Stefanie Steel receiving her first dose of the Pfizer vaccine Jan. 19, 2021 from RN nurse manager Cindy Cockle. (Northern Health photo)
First Houston vaccinations take place

Long term care residents, health care workers on list

This BC Hydro map shows some of the power outages across Northern BC. Many were caused by high winds. (BC Hydro Website)
Power out across much of Northern BC

BC Hydro anticipates some may be without power overnight

Administering naloxone to a person experiencing a benzo-related overdose event won’t help. Naloxone is used to neutralize opioids. (Jenna Hauck/The Progress file photo)
Northern Health warning drug users of potential benzo contamination

The drug does not respond to naloxone, and is being included in street drugs

COVID-19 exposure reported at Houston Secondary. (Houston Today photo)
COVID-19 exposure reported at Houston Secondary School

Self-monitoring for symptoms encouraged

Silverthorne Elementary School
Students staying at home would not receive special treatment

Know that our schools are safe and clean. We are very diligent in our COVID protocols.

Maj.-Gen. Dany Fortin, vice-president of logistics and operations at the Public Health Agency of Canada, speaks at a news conference on the COVID-19 pandemic in Ottawa, on Friday, Jan. 15, 2021. THE CANADIAN PRESS/Justin Tang
B.C. records 500 new COVID-19 cases Wednesday, 14 deaths

Outbreak at Surrey Pretrial jail, two more in health care

Vancouver Canucks’ Travis Hamonic grabs Montreal Canadiens’ Josh Anderson by the face during first period NHL action in Vancouver, Wednesday, Jan. 20, 2021. THE CANADIAN PRESS/Jonathan Hayward
Horvat scores winner as Canucks dump Habs 6-5 in shootout thriller

Vancouver and Montreal clash again Thursday night

A woman writes a message on a memorial mural wall by street artist James “Smokey Devil” Hardy during a memorial to remember victims of illicit drug overdose deaths on International Overdose Awareness Day, in the Downtown Eastside of Vancouver, on Monday, August 31, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. paramedics respond to record-breaking number of overdose calls in 2020

On the front lines, COVID-19 has not only led to more calls, but increased the complexity

Eighteen-year-old Aidan Webber died in a marine accident in 2019. He was a Canadian Junior BMX champion from Nanaimo. (Submitted)
Inadequate safety training a factor in teen BMX star’s workplace death in 2019

Aidan Webber was crushed by a barge at a fish farm near Port Hardy

Southern resident killer whales in B.C. waters. Research shows the population’s females are more negatively influenced by vessel traffic than males. (Photo supplied by Ocean Wise Conservation Association)
Female orcas less likely to feed in presence of vessel traffic: study

Research the southern resident population raises concerns over reproduction capacity

(Black Press Media files)
Transport Canada not budging on enclosed deck rules, despite calls from BC Ferries union

There have been at least 23 cases of the U.K. variant detected in Canada, four of which are in B.C.

The Elk Valley Hospital is adapting to meet the needs of patients in the Elk Valley.
1-in-5 COVID tests coming back positive in and around Fernie, sparking concern

Dr Ron Clark of Elk Valley Hospital said one in five tests was returning positive for COVID-19

Throughout December, RCMP conducted CounterAttack road checks as police worked to keep roads free of impaired drivers. (BLACK PRESS file photo)
‘You can’t make this stuff up’: Stories from the B.C. CounterAttack campaign

Amusing, yes, but a reminder impaired driving affects ability to drive and to make good decisions

(Thesendboys/Instagram)
Video of man doing backflip off Vancouver bridge draws police condemnation

Group says in Instagram story that they ‘don’t do it for the clout’

Most Read