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Kinder Morgan frustrated by 'opaque' Trans Mountain permitting process

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Kinder Morgan frustrated by 'opaque' Trans Mountain permitting process

Canada's National Energy Board is mulling a request by Kinder Morgan Inc.'s Canadian unit to use its constitutional authority to speed the municipal permitting process for the C$7.4 billion Trans Mountain pipeline expansion.

Two days of hearings wrapped up in Calgary, Alberta, Dec. 4 with lawyers for Kinder Morgan Canada Ltd and the City of Burnaby, British Columbia making arguments for and against the municipal government's permitting process. The board, known as the NEB, has not set a date for its decision. Construction of the project was approved by Canada's federal government in 2016 and was supposed to begin in September but has been held up by permitting and legal issues. Its most-recent in-service date is the third quarter of 2020.

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Kinder Morgan Canada's Westridge Terminal in Burnaby, British Columbia, where construction work has been delayed by a lack of municipal permits.

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Kinder Morgan claims that Burnaby, where politicians including the mayor have voiced strong opposition over the plan to almost triple the capacity of the Eisenhower-era line, is deliberately slowing the issuance of construction permits in an effort to stall the start of construction. Lawyers for the city blamed Kinder Morgan for the delays. The NEB released a transcript of the hearing Dec. 5.

"We have, in good faith, engaged Burnaby in the municipal regulatory process, but after more than six months, we do not have a single approval," lawyer Maureen Killoran told the board Dec. 4. "We have no idea what comes next or when it might come. The process remains opaque and confusing, as does what remains to be done from the regulator's perspective."

In her summary Killoran pointed out that during the hearing Burnaby's lawyer instructed a municipal official not to answer when asked exactly what remains to be done on Kinder Morgan's permits and which applications are deficient. She said the municipality has a duty to act as an unbiased regulator, regardless of the position of its political leaders.

Gregory McDade, the lawyer representing Burnaby, blamed Kinder Morgan for the delays. He claimed the delays have been caused because Kinder Morgan's staff are experienced in pipeline issues, not municipal permitting.

"It is our position that the time for permit processing here has been primarily driven by the incompetence, or the ineptness perhaps, or at least the inexperience of the consultants for Trans Mountain in complying with basic municipal approval processes," McDade said. "Trans Mountain has failed to put in a minimally viable application that almost any experienced developer in the City of Burnaby or other major cities would have known to put in, and that they failed to use anyone in consulting with them who had any experience in municipal approval processes."

In an Oct. 26 affidavit in support of its application, Kinder Morgan said delays in building the Trans Mountain pipeline expansion are costing it between C$30 million and C$35 million a month and jeopardizing shipping contracts. The project would boost the capacity of the 1950s-vintage line linking Canada's oil sands region with the West Coast to 890,000 barrels per day from 300,000 bbl/d.

Each month the in-service date of the expansion project is delayed is estimated to cost C$90 million in revenue, Kinder Morgan Canada's Vice President of Operation Michael Davies said in an affidavit.

Trans Mountain "requires the project to be completed by the in-service date to increase capacity and meet shippers' contractual firm service requirements," the document said. "These shippers include some of Canada's largest oil sands developers. Without the project in-service, there is significant potential for continuing service interruptions and curtailments."