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Kinder Morgan cool to Ottawa's offer on the Trans Mountain pipeline

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OTTAWA—The Texas-based oil firm threatening to kill its planned expansion of an Alberta-B.C. pipeline reacted coolly to Ottawa’s offer Wednesday to compensate the company for any financial losses due to political opposition of the B.C. government.

But Steve Kean, chairman and CEO of Kinder Morgan, owner of the controversial project, did not rule out the possibility of reaching an agreement by the company’s May 31 deadline.

Finance Minister Bill Morneau has been consulting with Kinder Morgan about providing taxpayer-backed financial assurances to guarantee the pipeline goes ahead.  (Sean Kilpatrick / THE CANADIAN PRESS file photo)

“While discussions are ongoing, we are not yet in alignment and will not negotiate in public,” Kean said. He said the company is still determined to secure “clarity” for its construction plans along with “adequate protection” for its shareholders.

For his part, federal Finance Minister Bill Morneau said he too wasn’t negotiating in public. But after spending an hour on the phone with Kean the night before, Morneau called a news conference just hours before Kinder Morgan Canada’s annual general meeting of sharegholders, and laid out Ottawa’s promise to provide Kinder Morgan indemnity or insurance against financial losses he said may be caused by court challenges launched by B.C. Premier John Horgan’s government.

“We are willing to indemnify the Trans Mountain expansion against unnecessary delays that are politically motivated,” Morneau said.

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He would not reveal how much Ottawa is prepared to fork out, saying he didn’t want to go into “details of discussions.” The Liberal government says it won’t cover delays due to Indigenous or environmentalists’ court challenges, with Morneau saying those lawsuits are based on arguments made “in good faith.”

But Morneau raised the stakes for Kinder Morgan, saying if it bails on the project, federal financial assurances would be available to any company that steps in to take over what Morneau insisted is a “commercially viable” pipeline expansion. Nor did he rule out the possibility that Ottawa could take a financial stake in the project to ensure it becomes a reality. “We haven’t come to any conclusions yet,” he said.

“We think plenty of investors would be interested in taking on this project,” Morneau said.

Officials told the Star the federal government doesn’t have any hard offers but has clear indications of other investors’ interest in taking over the project even without the offer of indemnification. With it, said one official, “all of a sudden that’s an attractive packaging around that.”

However observers like Dennis McConaghy, a former executive with TransCanada Pipelines and now a visiting fellow at the public policy and energy studies schools at the Ivey Business School at the University of Western Ontario, said if the goal is get construction underway to complete the twinning of the Edmonton-Burnaby pipeline by 2020 as scheduled, it makes no sense for another investor or the federal or Alberta governments to take over. “The urgency here is to get home with Kinder,” said McConaghy.

“Of course they’re still doing the dance,” McConaghy said, adding he was encouraged by the language each side used Wednesday.

McConaghy said Morneau’s offer of a “completion risk” guarantee to cover costs that were unforeseen by the company was “reasonable, but I don’t think it is reasonable for the federal government to indemnify Kinder for what they’ve already spent or…for the profits that they are going to lose if they don’t do this project.”

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Morneau’s statements reverberated across the country, ratcheting up regional tensions exposed by the energy fight.

Alberta Premier Rachel Notley put the squeeze on B.C.’s Premier John Horgan, a fellow NDPer, saying her government was “ready and prepared to turn off the taps” on energy shipments to B.C.

The Alberta legislature was expected to pass Bill 12 on Wednesday, giving it new powers to curb transfers of energy resources to its western neighbour. Notley said only her government was ready to move on short notice “as needed.”

It all re-ignited Indigenous and environmentalists’ vows to oppose the project in court and on the ground in B.C., with one key litigant, the Tsleil-Waututh Nation, pointing out that any investor will face stiff opposition in the federal courts to expanding the pipeline.

Morneau insisted the government would act in a “fiscally responsible” way to ensure completion of a project it deems to be in the national interest, and he vented anger at what he called Horgan’s “deliberate attempts to frustrate the project.”

“Premier Horgan’s stated intentions are to do whatever it takes to stop the project which is unconstitutional,” Morneau said.

Horgan fired back, saying the “Toronto-based” finance minister was engaging in “rhetoric and hyperbole.”

“I’m doing what I said I would do. I’m defending the interest of British Columbia,” he told CBC News.

Read more:

Kinder Morgan faces $450M ‘wake-up call’ at shareholder meetings

Local environmentalists fighting pipelines and perceptions in the heart of oil country

Most Canadians agree Kinder Morgan brought pipeline conflict onto itself: Angus Reid poll

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Canada's forestry industry pushes back after Trump blames California fires on lumber imports

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A general view of the aftermath from a wildfire in McVicker Canyon, Calif., on Aug. 11, 2018.

SOCIAL MEDIA/X04130

Canada’s forestry industry is pushing back against comments by U.S. President Donald Trump that lumber imports are partially to blame for intense forest fires in California.

Trump said at a cabinet meeting Thursday that the U.S. should harvest fallen trees from the forest floor, which he says are making fires worse, rather than import wood when “Canada is charging us a lot of money to bring their timber down into our country.”

The comments were troubling and a bit ridiculous, said Forest Products Association of Canada CEO Derek Nighbor.

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“At a number of levels the president’s comments are just really off-base yet again.”

Lumber prices are higher in the U.S. because of the tariffs Trump has imposed on Canadian imports, said Nighbor.

“It’s his tariff regime that’s really provided a 20 per cent hike to consumer prices in the U.S. on softwood lumber.”

Susan Yurkovich, president of the BC Lumber Trade Council, said Trump has the option at any time to lower the premium on lumber prices that the U.S. National Association of Home Builders estimates is adding US$7,500 to the cost to build an average home.

“They have an instant remedy available to them, and that’s to rescind the tariffs that we believe were unjustly placed on lumber and that would provide an immediate discount to American consumers.”

Nighbor said there is a conversation to be had about managing dead wood and fire threats, but that harvesting such wood is a complicated affair.

“Even if they would be able to get all that wood, they wouldn’t be able to process it.”

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The U.S. has seen increased investments in milling capacity, but still only supplied about 34 billion of the 48 billion board feet of lumber it consumed in 2017. The country won’t be able to close that gap any time soon, said Yurkovich.

“The gap between domestic demand and domestic supply is between 14- and 15-billion board feet. Putting that much production onin my view, that’s going to take years and years and millions and millions of dollars.”

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NDP pressured by Seattle mayor to stop logging near BC-Washington state border

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Seattle Mayor Jenny Durkan has written to B.C. Premier John Horgan asking that logging be stopped near the headwaters of the Skagit River, which is supposed to be protected by a more than 30-year-old agreement.

"The proposed logging in the Silverdaisy area is inconsistent with the spirit and intent of the 1984 [United States-Canada High Ross Treaty]," she wrote.

The area where logging is occurring is known as the "donut hole," and is close to the western border of E.C. Manning Provincial Park and eastern border of Skagit Valley Provincial Park.

It was set aside, without protections, more than 30 years ago due to mining claims.

A statement from B.C.'s Ministry of Forests says B.C. Timber Sales [BCTS] — the government agency which awards logging licences for Crown land — approved 39,000 cubic metres of timber to be cut in an area of 67.2 hectares or 0.672 square kilometres in 2015.

Durkan wrote to Horgan in early August saying the logging goes against the Skagit Environmental Endowment Commission [SEEC] struck between British Columbia and the City of Seattle in 1984.

Sixteen commissioners, appointed by both countries, manage a $500,000 US budget to conserve and protect wilderness and wildlife habitat and enhance recreational opportunities in the Skagit Valley among other things.

'Jeopardizes Salish Sea'

Durkan says the BCTS needs to consult with the City of Seattle and the SEEC, "before authorizing any activity that would impact the ecological integrity and recreational resource value of the Silverdaisy area."

She said in her letter the area provides more than 30 per cent of  the freshwater flowing into Puget Sound.

Her letter also says the watershed is home to large and diverse fish and wildlife populations such as bull trout, steelhead and chinook salmon. 

"Failure to protect the ecologically and economically valuable fish populations and clean water quality of the Skagit River risks many millions of dollars in ongoing investment in salmon recovery," she wrote.

"And jeopardizes the biodiversity of the Salish Sea on both sides of our shared border."

She also says logging in the area will impact its use as a recreational site.

'B.C. values relationship'

The Ministry of Forests says the timber licence was awarded under the previous B.C. Liberal government and it cannot stop logging once a licence has been issued, but that "B.C. values its relationship with Seattle and Washington State."

The statement says the area being logged does not contain fish-bearing streams and that roads and ditches have been constructed to minimize the impacts of the logging.

Cutting on the licence is expected to finish in the fall and future logging plans are on hold pending consultations with the Skagit Environmental Endowment Commission.

The Wilderness Committee has also been critical of the logging, saying it's being done with, "no care for wilderness of wildlife."

The committee wants efforts to buy out the mining tenures in the "donut hole" sped up, so that the area can be protected from logging.

Meanwhile, Durkan asks in her letter that a call be set up between her and Horgan to discuss the issue.

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Forestry industry pushes back on Trump blaming fires on Canadian lumber imports

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Canada's forestry industry is pushing back against comments by U.S. President Trump that lumber imports are partially to blame for intense forest fires in California. President Donald Trump speaks to members of the media before boarding Marine One on the South Lawn at the White House in Washington, Friday, Aug. 17, 2018, for a short trip to Andrews Air Force Base, Md., and then on to Southampton, N.Y., for a fundraiser.


Andrew Harnik / THE ASSOCIATED PRESS

Canada’s forestry industry is pushing back against comments by U.S. President Trump that lumber imports are partially to blame for intense forest fires in California.

Trump said a at cabinet meeting Thursday that the U.S. should harvest fallen trees from the forest floor, which he says are making fires worse, rather than import wood when “Canada is charging us a lot of money to bring their timber down into our country.”

The comments were troubling and a bit ridiculous, said Forest Products Association of Canada CEO Derek Nighbor.

“At a number of levels the president’s comments are just really off-base yet again.”

Lumber prices are higher in the U.S. because of the tariffs Trump has imposed on Canadian imports, said Nighbor.

“It’s his tariff regime that’s really provided a 20 per cent hike to consumer prices in the U.S. on softwood lumber.”

Susan Yurkovich, president of the BC Lumber Trade Council, said Trump has the option at any time to lower the premium on lumber prices that the U.S. National Association of Home Builders estimates is adding US$7,500 to the cost to build an average home.

“They have an instant remedy available to them, and that’s to rescind the tariffs that we believe were unjustly placed on lumber and that would provide an immediate discount to American consumers.”

Nighbor said there is a conversation to be had about managing dead wood and fire threats, but that harvesting such wood is a complicated affair.

“Even if they would be able to get all that wood, they wouldn’t be able to process it.”

The U.S. has seen increased investments in milling capacity, but still only supplied about 34 billion of the 48 billion board feet of lumber it consumed in 2017. The country won’t be able to close that gap any time soon, said Yurkovich.

“The gap between domestic demand and domestic supply is between 14- and 15-billion board feet. Putting that much production on…in my view, that’s going to take years and years and millions and millions of dollars.”

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