Another pipeline debate kicks off as Kinder Morgan lines up shippers – by Carrie Tait and Nathan Vanderklippe (Globe and Mail – February 22, 2012)

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CALGARY— Oil producers have thrown their support behind the proposed Trans Mountain pipeline expansion to the West Coast, but the latest project aimed at providing much-needed shipping capacity for the oil sands industry now faces regulatory hurdles and growing resistance to pipelines.

Kinder Morgan Inc. $3.8-billion plan to double the amount of oil it can move from Alberta to the Pacific has garnered “strong” support from shippers and the company will now carry on with engineering and planning, it said Tuesday.

The momentum means the Trans Mountain pipeline expansion will attract greater scrutiny – something it has largely avoided as local communities and environmental groups turned Enbridge Inc.’s (ENB-T38.870.350.91%) proposed Northern Gateway pipeline into an international debate. The federal government supports greater access to the West Coast, but arm’s-length regulators must deliver their verdicts before the projects can proceed.

Kinder Morgan wants to build a twin pipeline on the existing Trans Mountain system, doubling its capacity to 600,000 barrels of oil a day. Trans Mountain already reaches Port Metro Vancouver in Burnaby, B.C., where most of the oil from the pipeline heads to California. But energy producers are desperate to send more oil westward to feed Asian markets, where their crude is in strong demand and can fetch higher prices. Cenovus Energy Inc., (CVE-T38.90-0.41-1.04%) for example, sold its first half-tanker full of bitumen directly to China earlier this month, after the raw crude was shipped through the existing Trans Mountain line. Kinder Morgan will make a final decision later this quarter whether to build the new line.

Environmental and political opponents are already lining up against the project. Kennedy Stewart, New Democratic MP for Burnaby-Douglas, called the Trans Mountain expansion “Enbridge south,” referring to the furor that has greeted the Enbridge’s pipeline proposal to Kitimat, B.C.

“I’ve called every household in my riding, talked to mayors and first nations, and everybody is against this,” he said in an interview.

While dissent is growing, it is not nearly as widespread as the opposition Northern Gateway faces.

“Trans Mountain flew under the radar because the line already existed,” said Chris Lee, head of Deloitte LLP’s national energy and resource group. “Now that they’ve announced shipper commitments, this thing becomes more of a reality.”

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/globe-investor/another-pipeline-debate-kicks-off-as-kinder-morgan-lines-up-shippers/article2345145/

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