Trudeau meets urgently on pipeline crisis

Canada's government got just 24 hours notice that it would be thrust into a political and economic crisis by an ultimatum from a pipeline operator Kinder Morgan Canada.

Canada's Prime Minister Justin Trudeau meets with British Columbia Premier John Horgan and Alberta Premier Rachel Notley in Trudeau's office on Parliament Hill in Ottawa, Ontario, Canada, April 15, 2018.

Canada’s government got just 24 hours notice that it would be thrust into a political and economic crisis by an ultimatum from a pipeline operator, government sources said, leaving Prime Minister Justin Trudeau scrambling for options in a dispute that could damage his re-election chances.

The Kinder Morgan Canada pipeline issue has pitted Ottawa against the Pacific province of British Columbia and could turn into a constitutional crisis, derail Trudeau’s energy strategy and dent business confidence.

Trudeau broke off a foreign trip to hold an emergency meeting Sunday with the premiers of two provinces locked in a standoff over the pipeline after the company set a May 31 deadline to resolve the impasse or it would walk away.

Federal officials had been talking to the company since February when British Columbia’s left-leaning coalition, which includes the Green party, made clear it would delay the planned expansion of the Trans Mountain pipeline from Alberta’s oil sands to the coast.

But the government had no idea that Kinder Morgan Canada was about to drop a bombshell.

“Kinder Morgan’s announcement on Sunday was unexpected,” said a senior government official who declined to be identified given the sensitivity of the situation. “We had 24 hours’ notice.”

The move by Kinder Morgan Canada puts pressure on Trudeau to solve the problem without alienating voters in British Columbia or presiding over an investment failure ahead of 2019 elections.

A second federal government source said Trudeau and senior cabinet members had worked behind the scenes for weeks, pressing British Columbia to change its position.

“If we’re talking of things going awry, British Columbia knew this was federal jurisdiction,” said the source.

The operator wants to almost triple the capacity of the existing pipeline. Ottawa, which approved the project in 2016, insists it has jurisdiction. British Columbia’s government, elected in 2017, disagrees, citing the risk of a spill.

“I do believe we have a mandate to defend the coast,” provincial Premier John Horgan said on Friday.

Trudeau won power in 2015 partly thanks to extra seats his Liberals won in British Columbia as well as increased support from environmentalists. Cracking down too hard would cost him support in both camps, leaving him with a weak minority government in the October 2019 elections.

“It wouldn’t really take a lot to tip the government into minority territory,” said pollster Nik Nanos of Nanos Research.

“If you’re looking at hard political calculus, the prime minister realistically has to tilt in favor of the environment because if he doesn’t that will kill him in Quebec.”

During Sunday’s meeting, Trudeau was to lay out the various financial, regulatory and legal options, said the second government source.

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