Canada's federal government will cover financial losses a pipeline builder might suffer if British Colombia's provincial government continues to obstruct the Trans Mountain pipeline expansion, the country's finance minister said Wednesday.
Finance Minister Bill Morneau also said that other investors would step in if Houston-based Kinder Morgan backs out of the expansion, which would triple the capacity of a line carrying oil from Alberta to a Pacific port.
Kinder Morgan has halted essential spending on the project and says it will cancel it altogether if the national and provincial governments cannot guarantee it. British Colombia's leftist premier has objected to the plan on environmental grounds. The company set a May 31 deadline.
The line would allow Canada to diversify and increase exports to Asia, where it could command a higher price. Canada has the world's third-largest oil reserves but 99 percent of its exports now go to refiners in the U.S., where limits on pipeline and refinery capacity mean Canadian oil sells at a discount.
FILE - Members of the First Nation Tsleil-Waututh, Squamish and Musqueam bands sing during a protest of the Trans Mountain pipeline expansion in North Vancouver, British Columbia, Oct. 14, 2013.
But the Trans Mountain pipeline expansion would dramatically increase the number of oil tankers traveling the shared waters between Canada and Washington state. Aboriginal leaders and environmentalists have pledged to do whatever necessary to thwart it, including chaining themselves to construction equipment. British Columbia's new government has launched legal challenges.
"This is an exceptional situation," Morneau said.
Morneau has been engaged in talks with Kinder Morgan.
"Discussions with Kinder Morgan continue — and we are striving to get to an agreement by the May 31 deadline," he said.