The Supreme Court of British Columbia dismissed a pair of challenges to Kinder Morgan Inc.'s provincial permits to construct the C$7.4 billion Trans Mountain pipeline expansion.
In dismissing actions by the Squamish Nation and the city of Vancouver on May 24, Supreme Court Justice Christopher Grauer said the province's Ministry of Environment met its obligations in assessing the impacts of the line and consulting with First Nations, including the Squamish. "I cannot say, then, that the Ministers erred in law, mistook their ability to order a further assessment, or acted unreasonably," Grauer said in his judgement.
Grauer dismissed both actions and ordered Vancouver to pay Kinder Morgan's legal cost to defend the action. He did not order the Squamish Nation to pay the pipeline company's costs, although he suggested an application could be made if the parties cannot agree on their disposition. Although they were separate actions, Grauer heard and ruled on both.
The two challenges were part of a series of actions aimed at reopening the regulatory process and delaying the start of the construction of the project, which would boost the capacity of the Trans Mountain pipeline to 890,000 barrels per day from 300,000 bbl/d. Kinder Morgan has halted all but minimal spending on the project and gave Canada's governments until May 31 to provide assurances that the project can be built.
Kinder Morgan applauded the outcome of the court cases, but it has remained steadfast on the May 31 deadline. "We're pleased with the court's decisions affirming the level of review and consultation on this project," the company said in an emailed statement. In a separate emailed statement, the city of Vancouver said it was "disappointed" and will review the decision before deciding whether to appeal it.
Canada's federal government and the government of Alberta, the oil-producing province that borders British Columbia, have both offered financial backstops for the project if Kinder Morgan keeps it alive beyond the deadline. "While other decisions remain before the courts, the record in the courts of [Trans Mountain expansion] proponents is promising," Notley said in a statement. "This pipeline is unlike any other in that it has been rigorously reviewed, meaningful consultation has taken place, and it is paired with an effective climate protection plan."
Kinder Morgan Canada's Westridge Terminal loads oil from the Trans Mountain pipeline network onto tankers. Source: Kinder Morgan Canada |
Canada needs improved oil pipeline and export access to reach markets like Asia, where demand is forecast to grow, to bring oil-sands bitumen prices closer to other crude grades, economists at CIBC Economics, part of Canadian Imperial Bank of Commerce, said in a report. A widening discount on Western Canada Select, a bitumen blend, to U.S. benchmark crude "has cost the energy sector north of C$12 billion in forgone revenues over the past five years — on top of the actual cost of increased reliance on expensive rail transportation and reduced investment," the report said. The discount has been aggravated by pipeline bottlenecks, along with the bulk of Canada's export capacity being linked to the U.S., where demand is decreasing. "As for 2019, we expect forgone revenues to rise by a further C$3 billion to reach C$15 billion," the economists, led by Benjamin Tal, said in the report.
The court cases are Squamish Nation v. British Columbia [Environment], 2018 BCSC 844 and Vancouver [City] v. British Columbia [Environment], 2018 BCSC 843.

