A sign warning of an underground petroleum pipeline is seen on a fence at Kinder Morgan’s facility where work is being conducted in preparation for the expansion of the Trans Mountain Pipeline, in Burnaby, B.C., on Monday April 9, 2018. With just over a week remaining until the deadline set for abandoning the Trans Mountain pipeline expansion, no suitors have emerged to step into builder Kinder Morgan Canada’s shoes. THE CANADIAN PRESS/Darryl Dyck

No suitors emerge for pipeline project stake as Kinder Morgan deadline looms

Analysts and observers remain perplexed by Finance Minister Bill Morneau’s comment last week that “plenty of investors would be interested in taking on this project”.

With just over a week remaining until the May 31 deadline set for abandoning its Trans Mountain pipeline expansion, no suitors have publicly emerged to step into builder Kinder Morgan Canada Ltd.’s shoes.

Analysts and observers say they remain perplexed by Finance Minister Bill Morneau’s comment last week that “plenty of investors would be interested in taking on this project,” after the federal government said it would offer an “indemnity” or insurance to guarantee it is built.

Kinder Morgan said Monday it has nothing to add to last week’s statement from CEO Steve Kean in which he repeated the May 31 deadline and said that discussions are ongoing but “we are not yet in alignment.”

It’s difficult to guess who might take Kinder Morgan’s place without knowing what guarantees or deals are being offered by the federal government and possibly the province of Alberta, said Samir Kayande, a director with RS Energy Group in Calgary.

He pointed out that the richer the deal, the longer the list of potential replacements for Kinder Morgan, which could include pension or private equity funds.

Related: Horgan says B.C. defending its interests in Trans Mountain pipeline

Related: Rachel Notley to skip premiers conference to focus on pipeline deal

“There is still time to get something done around a guarantee of some sort that will satisfy Kinder Morgan,” he said in an interview on Monday.

“It really depends on the scope of the federal and provincial guarantees that are going to be offered. The governments are in kind of a tough spot here because if anyone does step in, it’s going to take them months or longer, potentially, to ramp up the whole effort.”

The federal government has said its indemnity and suggestion of the entry of a third party gives it an advantage as it negotiates with Kinder Morgan but Dennis McConaghy, a former TransCanada Corp. executive and industry analyst, said he disagrees.

He said it would be a ”political disaster” for both Morneau and Alberta Premier Rachel Notley if the pipeline in-service date is delayed beyond 2020 because both governments have staked their reputations on it being built.

“I’ve been very skeptical about the advent of third parties,” said McConaghy. “This deal has to get done with Kinder if the focus is to get the pipeline in service by 2020.

“This project is essentially an expansion and a debottlenecking of an existing pipeline so it’s very difficult to build the project without selling the original Trans Mountain asset, which is of course a very complicated prospect.”

He said the cost and delays involved in bringing in a third party makes it clear that the federal government’s best bet is to reach an agreement with Kinder Morgan.

Meanwhile, finance officials had no new details to report in an email received Monday.

Trans Mountain has been operating since the 1950s, carrying as much as 300,000 barrels a day of oil and refined fuels from Edmonton to the Vancouver area, where it connects with a line carrying crude to refineries in Washington state.

The planned tripling to 890,000 barrels a day could give Canada access to alternative markets as booming production from U.S. shale plays reduces Canada’s biggest customer’s need to import northern oil.

B.C. is fighting the pipeline in the federal Court of Appeal and in B.C. Supreme Court. It has also referred to the B.C. Court of Appeal its own proposed legislation to cap oil shipments across the province.

Enbridge Inc., North America’s biggest crude pipelines operator, has denied it is negotiating to take over the Trans Mountain expansion project. Rival pipeline company TransCanada Corp. didn’t respond to a request for comment on Monday.

Oilsands producer Cenovus Energy Inc., a company hit hard by oil price discounts in the first quarter and a committed shipper on the project, refused comment when asked if it is interested in buying a stake in the project.

Kinder Morgan says it has already spent $1.1 billion of estimated $7.4 billion price of the project.

Related: Alberta passes bill that could cut oil to B.C

Companies mentioned in this story: (TSX:KML, TSX:ENB, TSX:TRP)

Dan Healing, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Surrey council approves free two-hour parking at city hall, around hospital

Although council gave its blessing to offer the free parking Monday (Nov. 19), it was already made free last week

Surrey School District says it needs 7 new schools in next decade

Surrey council endorsed the district’s 2019-20 capital plan on Monday, Nov. 19

Surrey Fire Service to provide non-emergency dispatch services for Port Moody

It’s said the move will bring in more than $9,000 a year for the City of Surrey

Second person dies following head-on collision in Surrey

Paige Nagata of Abbotsford was in crash on Nov. 4 that also killed Sarah Dhillon

Man still in hospital after struck by car in Surrey last week

The man was airlifted to hospital with “potential life-threatening” injuries after the incident

White Rock pier light show

Dancing lights highlighted off the water front

Judge bars US from enforcing Trump asylum ban

Protesters accused the migrants of being messy, ungrateful and a danger to Tijuana; complained about how the caravan forced its way into Mexico, calling it an “invasion.”

Ottawa Redblacks defensive back Jonathan Rose suspended for Grey Cup

Rose was flagged for unnecessary roughness and ejected for contacting an official with 37 seconds left in the first half following a sideline melee after a Tiger-Cats reception.

Mistrial declared in Dennis Oland’s retrial in father’s murder

The verdict from Oland’s 2015 murder trial was set aside on appeal in 2016 and a new trial ordered. Richard Oland, 69, was found dead in his Saint John office on July 7, 2011.

VIDEO: Young hockey players meet legends in Langley

Eight- and nine-year-olds have close encounter with Dionne, Lafleur and Palmateer

Laine scores 3 as Jets double Canucks 6-3

Injury-riddled Vancouver side drops sixth in a row

Deportation averted for Putin critic who feared return to Russia

Elena Musikhina, a vocal critic of the Kremlin, has been granted a two-year visitor’s permit in Canada

B.C. to allow Uber-style ride hailing services to operate in late 2019

Fee will be applied to fund options for disabled people

Auditor general takes aim at Liberals’ fighter-jet plan

Suditor general Michael Ferguson is about to release a new report on Canada’s attempts to buy new fighter jets

Most Read