VANCOUVER/WINNIPEG, Manitoba (Reuters) - As a hard deadline set by Kinder Morgan Canada Ltd (KML.TO) for scrapping a key pipeline expansion looms, there is growing doubt among investors, contractors and government officials about reaching a deal to save the C$7.4 billion ($5.7 billion) project.
The company, a unit of Houston-based Kinder Morgan Inc (KMI.N), set a May 31 deadline to decide if it will proceed with the expanded line from Edmonton, Alberta to a port in the Vancouver area, which would give landlocked Canadian crude greater access to foreign markets.
The project’s fate will create political ripples in Ottawa, where Justin Trudeau’s Liberals have promised the pipeline will be built one way or another, and sway investor confidence in Canada’s oil sands, which already produce far more oil than can move on pipelines.
Building more pipelines was a cornerstone of Trudeau’s energy policy. But the federal government is increasingly convinced that any assurances Ottawa gives Kinder Morgan will be rejected, said two sources with direct knowledge of the matter. They are not authorized to speak publicly.
Investors and project contractors are also increasingly pessimistic.
“I can’t walk out of my office or have a beer with someone where a conversation around this doesn’t occur,” said Rafi Tahmazian, senior portfolio manager at Canoe Financial, which manages shares of several Canadian oil producers.
“I’m worried - very worried - that (Kinder) will walk away.”
Kinder Morgan Canada declined to comment.
If Trans Mountain fails, it would be the third major Canadian export pipeline project to stall in two years, putting greater
