British Columbia files case, may delay Kinder Morgan pipeline

(Reuters) - British Columbia on Thursday asked a court to decide the province has the power to restrict increased heavy crude shipments to its coast due to oil spill fears and said it was “highly unlikely” the case would be resolved before the deadline for a controversial pipeline expansion.

The western Canadian province, which is opposed to Kinder Morgan Canada's KML.TO planned Trans Mountain pipeline expansion, said it had filed its so-called reference question in the B.C. Court of Appeal.

The case seeks “to confirm the scope and extent of provincial powers to regulate environmental and economic risks related to heavy oils like diluted bitumen,” British Columbia Attorney General David Eby told reporters.

Eby added that the matter was “highly unlikely” to be resolved by a May 31 deadline set by Kinder Morgan to decide if construction would proceed or not on the C$7.4 billion ($5.8 billion) project.

Kinder Morgan halted work on the expansion earlier this month, citing resistance from the Pacific Coast province, and said it would the scrap the project if it does not receive the certainty it needed by its deadline.

That has sent the federal government and the oil-rich province of Alberta scrambling to provide the company with financial and political support for the project, which would nearly triple capacity on an existing pipeline from Alberta to the B.C. coast.

The development is supported by Canadian energy producers, who face steep discounts on their product due to a lack of transportation capacity. It is opposed by B.C., some municipalities, some aboriginal groups and environmental activists, who worry about spills.

The province’s filing comes as Canada Environment Minister Catherine McKenna sent a letter to her B.C. counterpart, offering to work with the province to address concerns about the safety of expanding crude shipments through the pipeline.

Canada’s ruling Liberals have insisted that they have jurisdiction over project, which they approved in 2016.

The federal government said last week that it was still in talks with Kinder Morgan on financial support to help ensure the project goes ahead, even as the company warned that B.C.’s continuing opposition was making an investment untenable.

($1 = 1.2862 Canadian dollars)

Reporting by Julie Gordon in Toronto; Editing by Cynthia Osterman