Canada PM To Unveil Pipeline Decisions, Kinder Morgan May Get OK

Reuters

OTTAWA, Nov 29 (Reuters) - Canada will announce decisions on new pipelines on Tuesday that could clear Kinder Morgan Inc's hotly contested plan to double the capacity of its Trans Mountain project but reject Enbridge Inc's Northern Gateway.

Canadian Prime Minister Justin Trudeau is set to reveal his government's verdict at 4:30 p.m. EST (2130 GMT). Political sources say the Liberal government will address the fate of two Enbridge proposals.

Canada's energy sector, hit hard by a two-year slump in oil prices, wants more pipelines to help ease bottlenecks getting crude out of Alberta. Canada, home to the world's third largest oil reserves, wants to diversify away from its reliance on the United States and into Asian markets.

Ottawa is widely expected to veto the Northern Gateway line from Alberta's oil sands to the Pacific province of British Columbia while allowing Enbridge to replace the Canadian sections of its aging Line 3 from Alberta to Wisconsin.

Trudeau, who successfully courted the green vote in the 2015 election while also promising to get Canada's resources to market, had long opposed the Northern Gateway project because of its route through the Great Bear Rainforest.

Although environmentalists and aboriginal groups oppose the Kinder Morgan proposal, they nonetheless expect the government to approve it by a Dec. 19 deadline. Kinder Morgan plans to build a second pipeline alongside the existing Trans Mountain line, which runs from Alberta to British Columbia.

The C$6.8 billion ($5.06 billion) Trans Mountain project would build a pipeline parallel to an existing line and nearly triple capacity to 890,000 barrels a day.

Environmentalists say the risk of a spill is too great and opponents have promised not to give up the battle against the expansion if it is approved as they expect.

The government said earlier this month it will toughen its response to oil spills at sea, which some saw as a signal Trans Mountain will be approved.

The Liberals have taken a number of measures recently to shore up their environmental credentials, including speeding up plans to virtually eliminate coal-fired electricity, promising to bring in a minimum price on carbon emissions by 2018 and revamping the national energy regulator.

After making his announcement Trudeau will meet Alberta premier Rachel Notley, a political ally, who says the province needs a new pipeline to help overcome supply bottlenecks.

But saying yes to the pipeline could be politically damaging for the Liberals, who won power in 2015 in part due to strong support in British Columbia.

(Reporting by David Ljunggren; Editing by Chris Reese)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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