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B.C. eyes surcharge on flow of Kinder Morgan oil

Environment Minister Terry Lake said an early regulatory hearing into the rates Kinder Morgan will charge users of its twinned pipeline may be an opportunity for B.C. to pursue the idea of an added surcharge. - File
Environment Minister Terry Lake said an early regulatory hearing into the rates Kinder Morgan will charge users of its twinned pipeline may be an opportunity for B.C. to pursue the idea of an added surcharge.
— image credit: File

Environment Minister Terry Lake says B.C. may pursue the idea of a per barrel levy on oil that would flow through a twinned Kinder Morgan pipeline at upcoming regulatory hearings into the project's business terms.

He said money raised from a levy on the oil could fund a much-enhanced oil spill prevention and response system.

"I've asked staff in our ministry and in energy to take a look at this," Lake said in an interview. "We want to make sure if there's a role for us, we look at that. We haven't landed on that decision yet."

Those National Energy Board hearings into Kinder Morgan's proposed rate structure with its customers would happen relatively soon – perhaps starting early next year – and are different from separate hearings on the actual pipeline twinning project, which are at least two years away following a formal application.

Federal NDP MPs last month said they will intervene in the upcoming hearings and raised the idea of asking the NEB to add a surcharge to the rates oil shippers pay Kinder Morgan to generate emergency response funds or perhaps to raise money to benefit First Nations.

Lake noted Washington State already has a levy for emergency response, collected on each barrel Kinder Morgan ships through a spur pipeline from Abbotsford to U.S. refineries.

He stressed the concept of a safety fund is separate from the idea of a legacy fund that brings B.C. more of the benefits that accrue from allowing the export of heavy oil through the province.

Premier Christy Clark has said benefits sharing with B.C. is one of five preconditions for the province to consider any new heavy oil pipeline – either Enbridge's Northern Gateway line or Kinder Morgan's twinning.

Alberta premier Alison Redford said her province won't share oil royalties with B.C.

But Alberta's Opposition leader suggested B.C. be compensated through a different mechanism, such as a $5 toll on each barrel of oil that moves through the pipeline.

A $5 toll on the 525,000 barrels that would flow daily through Enbridge's pipeline would generate $960 million a year.

The same rate charged on Kinder Morgan's post-expansion Trans Mountain pipeline, which would move 750,000 barrels daily, would raise close to $1.4 billion annually. Currently, Trans Mountain moves 300,000 barrels a day.

Lake said it's not yet clear if B.C. can participate in the first round of NEB hearings.

"If there's some way we can participate in a meaningful way that protects B.C.'s interests, we look forward to doing that."

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