Kinder Morgan Misled Investors with Impossible Start Date for Trans Mountain, Analyst Charges

Kinder Morgan misled investors, Canadian politicians, and the general public by promising an impossible in-service date for its controversial Trans Mountain pipeline expansion, even though the Alberta and federal governments are now helping the Houston-based pipeliner blame the City of Burnaby for what’s really a non-existent project delay, senior economist Robyn Allan writes this week in a blistering critique for National Observer.

The analysis appeared just a day before British Columbia announced it was seeking a court ruling on whether it could institute a temporary ban on increased bitumen exports from Alberta, and Alberta responded by calling off its two-week boycott of B.C. wines.

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“Kinder Morgan has convinced almost everyone that the reason for Trans Mountain’s revised in-service date was the City of Burnaby’s permitting process, not Kinder Morgan’s flawed scheduling practices,” Allan writes. “Facts tell us that regardless of Burnaby’s process, Trans Mountain’s December 2019 in-service date was never a possibility.”

Allan digs into the details of Kinder Morgan’s successive submissions to the National Energy Board (NEB), a disgraced regulatory body “suffering from industry capture and steeped in controversy” that will be abolished once the government’s new environmental assessment process becomes law. She pinpoints specific steps in the regulatory review process that Kinder Morgan left out of a revised construction plan it filed with the NEB in May 2017, even though it must have known those mandatory elements would affect the project timeline. Kinder also “failed to incorporate the impact the NEB’s definition of construction would have on its project schedule.”

By the time the company submitted new schedules with in-service dates September, then December 2020, “Kinder Morgan had successfully marketed a false project timeline narrative to the ever-accommodating NEB, Ottawa, and the Canadian public,” she writes. “Investors were told that the project’s in-service date was December 2019, but Kinder Morgan did not advise them that it had failed to incorporate in that schedule an accommodation for an extensive route hearing process the company knew, at that time, it would be facing. The Board informed Kinder Morgan in early May 2017 that it had received 200 statements of complaint, each potentially triggering a hearing.”

But while Natural Resources Minister Jim Carr “continues to rely heavily on the tainted regulator and parrots its determinations,” Allyn says, “the Board’s basis upon which it concluded Burnaby’s review time to be the cause of Trans Mountain’s construction delay is without merit. There is no delay. It was a set-up to demonize the City of Burnaby and set the stage for the NEB to usher in a permit expediting process, exposing the Canadian economy and environment to more serious harm and loss than it already faces.”

In the Globe and Mail, meanwhile, columnist Margaret Wente echoes a tweet from B.C. Green leader Andrew Weaver and agrees with his argument that Trans Mountain will never be built.

“Why won’t it happen?” she asks. “Because despite the approval of the National Energy Board 15 months ago, opposition to the pipeline has only grown. That opposition comes not just from environmentalists and First Nations, but also from the new provincial government in British Columbia. Most of B.C.’s Lower Mainland population oppose it fiercely. Many people are willing to break the law to block it.”

That calculation means Prime Minister Justin Trudeau’s attempt to “balance” carbon reductions with pipeline expansions “has blown up in his face,” Wente writes, although “to be honest, I doubt that anyone could have squared this circle. The Prime Minister’s fundamental mistake was thinking that he could get to yes through logic, consensus-building, and grand bargains that would secure broad public approval, what he calls a ‘social licence.’ Maybe that would have been possible five years ago. It’s not possible today.”

Wente cites energy and climate analyst Mark Jaccard’s earlier Globe and Mail op ed, suggesting George Orwell “would have fun unpacking” the “black-is-white logic” by which Trudeau and Alberta Premier Rachel Notley are trying to vilify the B.C. government’s opposition to Trans Mountain—when Trudeau and Notley have also committed to greenhouse gas reductions.

“Mr. Trudeau and his advisers know that it makes no sense, indeed is economically and socially irresponsible, to build a pipeline today for expanded production that should not occur if we are to prevent devastating climate change. Fostering increased oil sands jobs in Alberta is inconsistent with global climate goals,” Jaccard writes.

“Which leads to Ms. Notley’s accusation that Mr. Horgan is attacking current Albertan jobs. Oil sands production facilities are long-lived investments that, once built, are viable for decades. The halt to oil sands expansion that is essential to achieve national and global climate goals does not eliminate current oil sands jobs in Alberta.”

He adds that “to say that Mr. Horgan’s resistance to fossil-fuel expansion is an attack on Albertan jobs is the biggest whopper of them all. But Ms. Notley has only a year before an election she will probably lose. Her political survival depends on her finding an issue that draws Albertans to her. As Orwell witnessed in the 1930s in Europe, politicians benefit if they are seen to be protecting their citizens from external threats, even if these threats are fictional.”