OTTAWA – Natural Resources Minister Jim Carr says he knew almost the moment he heard Kinder Morgan was pressing the pause button on the Trans Mountain pipeline expansion on April 8 that the federal government was likely going to have to buy the whole thing.
Although the final decision to purchase took more than seven weeks of secret negotiations with the company — many of which even Carr was not in on as they were handled by Finance Minister Bill Morneau and a very small team of finance officials — Carr says when he got a phone call in his hotel room during a business trip to New York City he knew what the final outcome was likely to be.
“When that phone call came, I knew that there was a reasonable chance that they would pull out and at the same time there was a possibility Canada would step in,” Carr said.
Carr says he wasn’t really expecting the April announcement that Kinder Morgan was halting all non-essential spending on the project pending proof from the federal government the political risks to the project had been erased. However, he was well aware Kinder Morgan was getting “skittish” because of the B.C. government’s threats to stop the pipeline.
Carr met Kinder Morgan president Ian Anderson a month earlier. Lobbying reports say Carr or his chief of staff met Anderson nine times in the previous year. In the 12 months leading up to the decision to hit pause, Anderson had 23 meetings with members of cabinet, deputy ministers, policy directors, chiefs of staff in finance, environment and natural resources, and the prime minister’s office.
“We were following it very carefully and we were in continuous conversation with senior executives at Kinder Morgan, but it was not clear until that Saturday that their board had actually made a decision to establish the deadline,” said Carr.
Carr, 66, is normally very measured and careful in interviews. He has been in and around politics almost all of his adult life and is skilled at delivering guarded messages.
But he can occasionally be caught off guard.
It happened last week, when during an interview with The Canadian Press, he was asked if when he became the minister of natural resources on Nov. 4, 2015, he had any inkling that he’d eventually become the de facto owner of a pipeline.
He threw back his head and laughed.
“Pipeline politics are not straight,” Carr said as he regained his composure. “So what you may think on Monday can be completely different by Friday. And then you may get the weekend to think about it and reflect and then the following Monday is completely different.”
The Trans Mountain expansion will build a new pipeline roughly parallel to the existing, 1,150-km line that carries refined and unrefined oil products from the Edmonton area to Burnaby, B.C. It will nearly triple the capacity to 890,000 barrels a day. It is the only pipeline carrying Alberta crude to the West Coast and the hope is that most of the oil will end up in tankers bound for Asia.
Ottawa approved it in November 2016 and the B.C. Liberal government followed suit two months later. But four months later, the provincial Liberals were replaced by NDP Premier John Horgan, who has a coalition of sorts with the Greens, with an agreement to oppose the expansion in every way possible.
Conservative party Leader Andrew Scheer believes Horgan’s election in May 2017 should have sent the Liberals into overdrive on the expansion. He says legislation to confirm federal jurisdiction should have come last summer.
But Carr says federal jurisdiction was never in doubt and Horgan was never really clear what he was going to do, which meant Ottawa was at a loss about how to soothe Kinder Morgan’s nerves.
“It was elusive because (B.C.) hadn’t done anything concrete,” said Carr. “They had talked about their opposition and then they began to talk about framing questions to courts, but we didn’t know which courts.”
It wasn’t actually until the end of April that Horgan filed his court challenge over jurisdiction, several weeks after his threats caused Kinder Morgan to hit the brakes. By then, Carr acknowledges, the reality that Canada was going to have to buy it to build it, was already sinking in.
At a parliamentary committee last week, Conservative natural resources critic Shannon Stubbs tried to get Carr to explain how buying the pipeline had changed anything and she remains unconvinced it has accomplished much.
The actual sale won’t happen until later this summer, after Kinder Morgan shareholders vote on the deal. For now, Kinder Morgan is still in charge. In the month since the purchase announcement, B.C. government records show the company hasn’t applied for a single new permit. It needs more than 1,100 construction permits and has applied for 756. B.C. has only approved 221, one more than was approved as of May 29.
Still Carr says he is not lying awake at night worrying about when the digging is going to start.
“We expect before too long, within weeks rather than months, that there will be much more construction than there has been,” he said.