Trans Mountain

One broke parent company, one pipeline on the dole

Delores Broten

Kinder Morgan building in Houston, Texas

As people of conscience continue to line up in Burnaby and as the police dutifully arrest them (some days one or two, some days many), the Kinder Morgan pipeline drama winds toward a May 31 deadline. The company set that deadline to encourage the government(s) to save it from First Nations legal rights and fiscal disaster.

Seven First Nations have filed legal challenges to the pipeline, which are slowly inching toward court, but in the meantime, Indigenous opposition remains strong. In May, First Nation Chiefs from across Canada, gathered at the Assembly of First Nations, said that “without consent from local First Nations in British Columbia, there will be no Kinder Morgan pipeline,” whether with public or private money.

With around a hundred First Nations in BC affected by the pipeline, only thirty have agreements with the company and more than two-thirds have not provided any form of consent. In addition, 150 Indigenous nations in Canada and the U.S. have signed the Treaty Alliance Against Tar Sands Expansion in opposition to the Kinder Morgan pipeline and all other attempts to facilitate more tar sands production, including Enbridge’s Line 3 and TransCanada’s Keystone XL pipelines.

The Tsleil-Waututh Nation is now asking the Federal Court to admit new evidence that the Trudeau government had instructed its bureaucrats to find ways to approve the pipeline even before First Nations consultations had occurred.

But ultimately it may be money that determines the pipeline expansion’s fate. One indicator of fiscal distress was the Canadian company’s request to the National Energy Board (NEB) for relief from its required $500 million standing loan with parent Kinder Morgan for short-term accident response. The company wanted to replace that immediate-access cash with credit from Canadian banks, thus relieving the parent company of the obligation. The NEB said no. The decision also sealed the parent company’s financial liability for a potential spill.

In May 2017, Kinder Morgan sold 30% of its Canadian assets in a public offering. The $1.7 billion raised was used to pay off debt for the Texas parent, which retained 70% ownership. The Canadian company was to then become responsible for raising its own capital, which it has partially accomplished with Canadian banks. Those banks continue to campaign in the media to support the pipeline.

But the most significant financial issue is contained in four questions raised repeatedly by reporter Paul Mackay, who is sounding the alarm over both media malpractice and a forthcoming “bitumen bubble.” Mackay charges that if media were doing its job, the following questions would be asked:

• “What proof is there that Asian refiners have signed contracts to purchase vast volumes of Alberta raw bitumen for decades to come? If these do not exist, there is no demand.

• “What proof is there that Asian refiners are willing to contractually commit to a much higher price than U.S. refiners will pay for raw Alberta bitumen? If such contracts do not exist, there is no price certainty to support oilsands expansion.

• “What proof is there that Alberta bitumen ranks high in global comparisons of oil quality, price, and ocean supertanker access, shipping costs and speed?

• “Which private Big Oil players have recently placed big bets buying new, undeveloped oil sand properties, which would underpin Alberta’s expansion plans?

“Tellingly, the working assumption seems to be that such business case certainty must exist, even though there is no evidence of it. That there isn’t a bitumen bubble, because no reporters have dared to ask if Alberta’s oilsands ambitions really amount to a bright and shining lie.”


Sources:

National Observer (1, 2, 3)
Sightline Institute
West Coast Environmental Law
Treaty Alliance Against Tar Sands Expansion

 

 

 

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