Canadian province moves to temporarily block increased oil shipments

VANCOUVER (Reuters) – British Columbia proposed new rules on Tuesday to temporarily block increased shipments of crude oil through the Pacific Coast province, a move that puts more hurdles in the way of Kinder Morgan Canada’s planned C$7.4 billion ($6 billion) Trans Mountain pipeline expansion.

The western Canadian province’s environment ministry said it is proposing new rules around oil spill preparedness and response, and setting up an independent scientific advisory panel to study whether diluted bitumen spilled in water can be effectively cleaned up.

The province plans to bar any increase in heavy oil shipments – by rail or pipeline – while the panel completes its work. The government did not provide a timeline for the process, though the environment minister, George Heyman, told Reuters it could take “a couple of years” to do a thorough job.

The move comes as Kinder Morgan Canada is pushing to secure permitting to start construction on its Trans Mountain pipeline expansion, which will nearly triple capacity on the existing 1,147-kilometer (712 mile) line to 890,000 barrels per day.

Greenpeace called Tuesday’s measures a “major blow” to Kinder Morgan, while Alberta Premier Rachel Notley lashed out at her western neighbor on social media, saying British Columbia was “grasping at straws” in its attempt to overrule federal jurisdiction.

“Rash actions like these send a message to the world that in BC and in Canada the rules are not what they might seem, and therefore jeopardize investment decisions,” Notley said.

The expansion of the Trans Mountain pipeline, which runs from Alberta’s energy heartland to a port in suburban Vancouver, was approved by the Canadian government in 2016 and met the previous British Columbia government’s conditions for oil export pipelines.

Kinder Morgan Canada said in a statement it will participate in the province’s feedback process on the measures, but noted the project was approved by regulators and Canada following an extensive review, and must already meet conditions related to diluted bitumen.

The company earlier this month delayed the start up of the expanded pipeline to December 2020, due to continued difficulty obtaining permits.

Kinder Morgan Canada shares closed down 2.38 percent at C$16.80, while the Canadian energy index shed 2.87 percent.

Canadian oil producers support the Trans Mountain expansion, which they say will give them access to international markets allowing them to fetch better prices for their product. But the project is opposed by numerous local municipalities, many Aboriginal groups and environmental activists.

Reporting by Julie Gordon; Editing by Tom Brown and Chris Reese

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