CALGARY, Alberta, Dec 7 (Reuters) - Canada's energy regulator ruled on Thursday in favor of Kinder Morgan Canada Ltd in its appeal seeking to sidestep some municipal permits needed for the company's C$7.4 billion ($5.8 billion) Trans Mountain pipeline expansion.

The ruling, which came three days after the regulator heard the case, could offset some of the construction delays afflicting the company, which said on Monday the project could be further set back if it could not get clarity about the permits. Kinder Morgan Canada stock fell as much as 4.7 percent on Tuesday.

The federally approved project has faced fierce opposition from environmentalists, aboriginal groups and some municipal governments. Kinder Morgan appealed to the regulator in October after it failed to obtained permits from the city of Burnaby, British Columbia.

Canada's National Energy Board said on Thursday the company, a unit of Houston-based Kinder Morgan Inc, could proceed with construction work without complying with certain bylaws from Burnaby, through which the pipeline passes.

Kinder Morgan and Burnaby did not immediately respond to requests for comment.

The expansion of the pipeline from Alberta's energy heartland to a port near Vancouver would nearly triple capacity to 890,000 barrels per day and significantly increase crude tanker traffic.

Canadian oil producers, whose landlocked product trades at a discount to the West Texas Intermediate benchmark, say they need more pipeline capacity to fetch better prices.

The expansion had an operational date of December 2019, but the company has pushed that back to September 2020 because of what it said was difficulty obtaining local permits.

The company's shares ended flat on Thursday at C$16.65.

(Reporting by Ethan Lou and Nia Williams; Editing by Peter Cooney)

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