- The Energy Mix - https://theenergymix.com -

Trans Mountain ‘Will Likely Be Scrapped,’ Analyst Predicts

NPCA Online/flickr

As it approaches its own self-declared deadline [1] to begin construction on its controversial Trans Mountain pipeline expansion, Kinder Morgan is again [2] drawing speculation on whether the project will go ahead—and what it will mean for the Houston-based company if it does not.

Kinder Morgan’s Trans Mountain Pipeline Expansion, which has already fallen behind schedule, will likely be scrapped, resulting in significant financial damage to the company,” writes analyst Jesse Donovan, in a post for the Seeking Alpha investment site. “Actions taken by the new provincial government in British Columbia, strategic litigation by various groups, and the spectre of Indigenous-led civil disobedience decimate the likelihood that the Expansion will succeed.”

Like this story? Subscribe to The Energy Mix and never miss an edition of our free e-digest.

That means investors “will likely see a shrunken share price and diminished dividend payments” while Kinder “deals with the financial carnage wrought by the massive, stranded investment that is the Expansion”. That analysis prompts Donovan to urge his readers to “avoid this risky company until after it scuttles the Trans Mountain Expansion.

While construction on the project was supposed to begin in September, Trans Mountain “is about to enter an immensely turbulent period,” he explains. “In June, I thought Kinder Morgan had a 50% chance of completing the Expansion project on schedule. After reassessing the threats to the Expansion, I believe that there is a minuscule chance of on-schedule completion.

And Donovan hastens to add that he isn’t alone in that risk assessment: “The development and construction of the Trans Mountain Expansion Project and other major expansion projects, are subject to significant risk and, should any number of risks arise, such projects may be inhibited, delayed, or stopped altogether,” Kinder Morgan told investors in its own investment prospectus [4] in May.

While Kinder Morgan and the company running the project, Kinder Morgan Canada, are two separate corporate entities, Donovan notes that the parent company owns 70% of the subsidiary. “Kinder Morgan is clearly exposed to what goes on in British Columbia during the next few months,” he writes. “Shareholders, therefore, should become familiar with this unique Canadian province and the threats to the Trans Mountain which lie within it.

22 Comments (Open | Close)

22 Comments To "Trans Mountain ‘Will Likely Be Scrapped,’ Analyst Predicts"

#1 Comment By Earl Richards On September 25, 2017 @ 6:42 AM

Kinder Morgan’s pipeline is a stupid idea from the start, because there is no equipment to clean-up a filthy, tar sands spill. This stupid idea is an insult to the intelligence of the British Columbian people. The dilbit is riddled with cancer-causing toxins. Remember the Kalamazoo. Also, the tanker corporations have no equipment to clean-up a dirty, tar sands spill. Remember the Exxon Valdez. Dump KM, to save beautiful BC.

#2 Comment By Chris Rose On September 25, 2017 @ 4:08 PM

The TransMountain pipe line should never proceed. The project is based on an old 19h century “Fossil Fuel Economy” which has to be replaced emmidiately with the 21st century “Clean Energy Economy” if for no other reason but our survival as Climate Change=GHG is starting to cause total distraction of our lifestyle.

#3 Comment By Susan Rankin On September 25, 2017 @ 8:12 PM

Instead of increasing the output of the Tarsands a more successful and forward looking company would be investing in geothermal, hydro, solar, tidepower and growing and processing of hemp. A dinosaur like Kinder Morgan deserves to lose value because they are still stuck in the ancient past of fossil fuels.

#4 Comment By Janice On September 26, 2017 @ 8:47 AM

Unfortunately, our need and dependence on fossil fuels will not be going away anytime soon. It is proven that transporting oil via pipeline is the safest route. This opportunity to use our own resources, rather than importing oil from other countries such as Venezuala, will be gone forever. Goodbye job creatiion, goodbye oil independence, and farewell to those working in this industry. Alternatives to oil is far reaching and extremely expensive. We are going to have to pay big time.

#5 Comment By Dave On September 26, 2017 @ 11:16 PM

What you say is only part of the story, true as it is. The course we’re on is already destructive, extremely costly and will be almost impossible to fix. If you think conversion to different energy sources will be expensive, just imagine what the cost will be continuing on the path we’re on right now. Just look around.

#6 Comment By P. S. On September 27, 2017 @ 3:22 AM

This pipeline has nothing to do with “using our own resources” – the unrefined dilbit is destined for tankers to ship it to Asian and other markets – not for use in Canada.! Those working in this industry will be wise to train for other employment soon.

#7 Comment By Margo On September 27, 2017 @ 5:37 AM

This pipeline does NOT bring product for our use, this product will go on tankers to China! So that kills part of you comment. Have you ever been to British Columbia? If you had you would be totally against this pipe, the tankers, and anything to do with this.

#8 Comment By Ann-Marie Hunter On September 27, 2017 @ 10:47 AM

Janice, have faith in innovation! We can’t keep on poisoning our Earth! Investing in sustainable, green energy has to happen NOW! No amount of fear-mongering about our dependence on fossil fuels will change the facts!

#9 Comment By Gene Logan On September 28, 2017 @ 10:19 PM

This fear mongering might have had a footing 10 years ago but today the field has shifted considerably. Witness Elon Musk’s bold bet in Australia and the Bullit building in sunny Seattle, a building capable of producing more energy than it uses. The old saw that counters pipeline opposition with – well you drive don’t you, invites a similar – Well you breathe don’t you, and depend on a stable climate to allow agriculture to flourish. We are headed for a climate threshold that scientists believed the world would have turned back from years ago. We can’t keep on anymore like we had in the past and you don’t fight climate change by building more fossil fuel infrastructure. We cannot play at being fossil fools anymore, even ones like Janet that would have us believe that the recent fire season in BC and the hurricanes in the Caribbean are insignificant

#10 Comment By R. Langkamer On September 29, 2017 @ 1:14 AM

It has been proved the transport of oil by truck and train is far safer than pipelines, because pipe spills typically run in the hundreds of thousands of Litres and often spill for days, see Kalamazoo !
That trope is a false equivalency, Lac Megantic notwithstanding.

#11 Comment By Howard On September 30, 2017 @ 10:33 PM

The premise of continued addiction, or dependence, on fossil fuels is a purely political decision, so it will go away soon if our political will demands that we end it.

#12 Comment By Sammy Liang On September 26, 2017 @ 12:45 PM

Watch out where your investment funds put your money into. Read their latest portfolio holdings. Especially “infrastructure funds” or Income funds. If it includes Kinfer Morgan , better sell now. Too much risk.

#13 Comment By jeany On September 26, 2017 @ 4:06 PM

Kinder Morgans pipeline must be stop completely.. BC will be in a very worst situation if this will continue.
What will you choose,, a clean fresh water coming from our beloved nature or desalinated water if Kinder Morgans continue to be done?

This is happening already in other countries. I have seen the effects already.

Don’t let other people harm our Mother Nature.
Don’t sacrifice our sea to sky nature to what they call technological advance economy.

#14 Comment By 1Seasand On September 26, 2017 @ 7:55 PM

Good news on so many fronts. Now, how about that Site C?

#15 Comment By Mitchell Beer On September 26, 2017 @ 8:16 PM

Ha! Stay tuned. We’ll just have to see about that…

#16 Comment By Alan On September 27, 2017 @ 1:21 AM

I agree that fossil fuels will be around for a long time. But their need will continue to become less and less all the time. The dilbit planed for this pipeline is not oil in the conventional sense, but rather diluted bitumen. It is a “bottom of the barrel” product. Canadian bitumen is actually tied for “first place” as the highest green house polluting crude oil in the world. And the world is awash with much lighter and better quality products than bitumen. So why would anyone want this, unless it is really really cheap, which it is not. Also, prices will continue to stay low of oil as demand falls. Bitumen will not be economic and will eventually fail. I highly doubt this pipeline will be built as it will make no economic sense. But if it is built, the dilbit would be destined for China, and they will only buy, it as mentioned, if it is priced super low. It will not help make Candada self sufficient. We have not way to process it into useable crude oil here. We will continue to need to import oil from other countries. So your argument holds no water. Sorry, but this is how it is…

#17 Comment By Mitchell Beer On September 27, 2017 @ 8:27 AM

Just adding to that — China is in the midst of considering, not *whether* to ban internal combustion engines, but what date the ban should take effect. So if Kinder is counting on a multi-decade market thereabouts, or anywhere else in the world, they’re in for a nasty shock. China is engaged on climate change because their leadership recognizes both the threat, and the opportunity to assume global leadership as Trump pulls the U.S. back. But remember that their original motivation here wasn’t primarily about climate — they’re facing a horrible crisis of air, water, and soil pollution, and air pollution in cities is made incrementally worse every time someone buys a car that has a tailpipe.
Janice, if you’re so inclined, check out the Energy Mix archive, starting with the China and Health and Safety headings. This story has been developing for years, and it’s not inconceivable Kinder Morgan will end up selling off its pipeline in bankruptcy court at 8¢ on the dollar if it’s ever built.
I’ve long thought the Kinder Morgans, Enbridges, and TransCanadas of the world owe pipeline campaigners a big debt of gratitude for holding up and ultimately ending projects that will kill their businesses if they ever actually go ahead. Not that anyone should be holding their breath for a thank you note.

#18 Comment By Gene Logan On September 28, 2017 @ 10:29 PM

Actually a smarter choice might be to focus on electric boats as a considerable portion of the planet’s cities will be underwater long before we make any progress in reining in our CO2 emissions

#19 Comment By Douglas Tingey On September 29, 2017 @ 7:25 AM

There is evidence that Kinder Morgan intends to deliver large quantities of dlbit to US refineries on the West Coast.

#20 Comment By Mitchell Beer On September 29, 2017 @ 11:32 AM

Douglas, do you have any details you can share? *That’s* a story we’d probably want to pick up on in The Mix!