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Kinder Morgan Halts Non-Essential Spending On Trans Mountain Expansion Project

Kinder Morgan Canada Limited (KML.TO) said that it is suspending all non-essential activities and related spending on the Trans Mountain Expansion Project. KML also announced that under current circumstances, specifically including the continued actions in opposition to the Project by the Province of British Columbia, it will not commit additional shareholder resources to the Project. However, KML will consult with various stakeholders in an effort to reach agreements by May 31st that may allow the Project to proceed.

"While we are prepared to accept the many risks traditionally presented by large construction projects, extraordinary political risks that are completely outside of our control and that could prevent completion of the project are risks to which we simply cannot expose our shareholders," said said KML Chairman and Chief Executive Officer Steve Kean.

Kean said, "However, given the importance of the Project to Canada and Alberta, to Indigenous communities, our shippers, our contractors, and working Canadians, we are committed to trying to find a way forward, working with stakeholders between now and the end of May on measures that may allow us to advance this critical project, but only if it does not subject KML shareholders to undue risk. If we cannot reach agreement by May 31st, it is difficult to conceive of any scenario in which we would proceed with the Project."

Trans Mountain has spent C$1.1 billion (approximately half of which has been spent since the KML IPO) and made unprecedented efforts to develop the Project since its initial filing with the National Energy Board in 2013. As a result of extensive engagement, a comprehensive regulatory process and detailed engineering and design, the Project has changed in several, substantive ways during the intervening five years, including: thicker wall pipe in environmentally sensitive areas such as watercourses and aquifers; avoidance of several fish bearing streams; changes to the detailed route of the pipeline in consideration of community needs and concerns and environmental impacts; Burnaby tunnel construction, to avoid neighbourhoods and minimize impacts; changes to Burnaby Terminal tank design in response to risk assessments; and, enhancements to marine safety that will benefit all marine users.

In addition, in an unprecedented negotiated commitment, Trans Mountain agreed to provide financial benefits from the Project, if completed, to British Columbia for a newly-formed BC Clean Communities Program to be accessed by communities for local projects that protect, sustain and restore BC's natural and coastal environments.

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