One of Ottawa and Alberta’s main arguments in defence of the Kinder Morgan Trans Mountain pipeline — that Alberta oil sold to Asian markets will command a higher price — is a myth, according to a new report released Wednesday by scientist and energy resources expert David Hughes.

Contrary to the common claim, Hughes’ research, conducted on behalf of the Canadian Centre for Policy Alternatives and the Parkland Institute, found “a ‘tidewater premium’ does not exist.”

“My research shows that Canada’s oil is not being unfairly discounted by the U.S.,” Hughes said.

“Oil prices internationally and in North America are now nearly identical. That means Canadian crude producers are likely to receive lower prices overseas than in the U.S. because of the higher transportation costs involved in transporting bitumen by pipeline to B.C.’s coast and then exporting it by tanker.”

Source: CCPA report, Will the Trans Mountain Pipeline and tidewater access boost prices and save Canada’s oil industry? 

The new report comes at a difficult time for Kinder Morgan, which is in the midst of a disappointing IPO for the Trans Mountain project. Investors were unenthused with the company’s offering, released amid a shifting political landscape in B.C. that could spell doom for the pipeline project.

The new report, published as part of the work of the Corporate Mapping Project, finds several assumptions used in the National Energy Board’s recommendation for the Trans Mountain were also faulty, including “overly optimistic projections of future oil supply” that “did not consider the Alberta government’s cap on oilsands emissions.”

No, Asian Markets Won't Fetch Better Prices for Canadian Oil: New Report https://t.co/Wnzijrhnme @carollinnitt @ParklandInst @ccpa #cdnpoli pic.twitter.com/aDRbprtP2e

— DeSmog Canada (@DeSmogCanada) May 31, 2017

Recently Greenpeace Canada asked the Alberta Securities Commission to investigate the details of Kinder Morgan’s IPO, saying the company failed to accurately characterize demand for Canadian oil in Asian markets and the financial impacts of climate policy.

As part of Alberta's climate plan, announced November 2015, oilsands emissions are capped at 100 megatonnes per year which eliminates growth of future production.

According to Hughes’ analysis, when considering restrictions placed on Alberta oil production under the province’s greenhouse gas emission cap, “Kinder Morgan overestimated oil supply by 43 per cent in 2038.”

Arguments for the necessity of the Trans Mountain pipeline have also been overstated, according to the new analysis, because of alternate pipeline approvals.

In addition to the Trans Mountain pipeline Prime Minister Justin Trudeau also approved the Enbridge Line 3 project and more recently President Donald Trump approved TransCanada’s Keystone XL pipeline.

“If these projects are built, which seems likely, there will be a 13 per cent surplus of export pipeline capacity without the [Trans Mountain pipeline].”

Source: CCPA report, Will the Trans Mountain Pipeline and tidewater access boost prices and save Canada’s oil industry? 

Independent economist Robyn Allan has also previous called out the NEB’s reliance on incorrect information about the Trans Mountain pipeline and oil production projections. According to Allan, the federal government was "dangerously misled" on the economic benefits of the pipeline project

“Given the incorrect assumptions used by the NEB in approving the Trans Mountain pipeline it is surprising that the federal government approved it,” Hughes said.

“The pipeline isn’t needed given recently approved pipelines, it will not mean a higher price for oil, and increased tanker traffic would place unnecessary risks on B.C.’s Lower Mainland and sensitive marine environments,” Hughes said.

This week the B.C. NDP and Green Party Leaders announced a power-sharing agreement as part of a plan to oust the B.C. Liberals from their minority government position.

The NDP and Greens have committed to using every available tool to cancel the pipeline project.

“The new B.C. government would be wise to withdraw the Province’s approval for this project,” Hughes said.

The new pipeline puts at odds Canada’s commitment to reducing carbon emissions, the report finds.

“Canada has no energy strategy beyond liquidating its remaining resources as fast as possible,” Hughes said.

“What we really need is a comprehensive energy strategy that addresses both the future energy security of Canadians and Canada’s commitments on climate change.”

Image: Oil tankers. Photo: CCPA report, Will the Trans Mountain Pipeline and tidewater access boost prices and save Canada’s oil industry? 

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This article originally appeared on Dogwoodbc.ca. 

It’s a rare dose of honesty from a company with a history of bending the truth. Kinder Morgan filed a final prospectus last week with securities regulators, setting the stage for a last-ditch attempt to raise enough cash to build its Trans Mountain expansion project.

Now all the Texas pipeline barons can hope is that investors don’t read the fine print.

The company is essentially trying to crowdfund $1.75 billion through an initial public offering. Kinder Morgan executive Ian Anderson sounded confident in a press release announcing the IPO: “Our approvals are in hand and we are now ready to commence construction activities this fall,” he said.

But the approvals are not in hand, and a mandatory risk analysis accompanying the share offering makes clear how difficult it will be to start construction. Provincial politics, lawsuits, blockades by First Nations – any one of these could kill the Trans Mountain pipeline project, the company admits.

Even if Ottawa sends in the army to get the thing built, all sorts of events over the coming decades could leave investors stranded: oil spills, Aboriginal title claims, shifting market conditions, earthquakes and yes, global warming.

Publicly, Kinder Morgan’s top Canadian executive has questioned the reality of climate change. But in these disclosure documents, the company admits rising sea levels could actually disable its Burnaby oil tanker terminal.

“An investment in Restricted Voting Shares,” the prospectus soberly declares, “should only be made by persons who can afford a significant or total loss of their investment.”

Kinder Morgan’s lawyers identify five major pitfalls for shareholders, any of which could wipe out their hopes of a return.

1. “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.”

This is where the prospectus contradicts Kinder Morgan’s Ian Anderson, who claimed “our approvals are in hand”. According to the document, risks to the Trans Mountain expansion include “inabilities to overcome challenges posed by or related to regulatory approvals by federal, provincial or municipal governments, difficulty in obtaining, or inability to, obtain permits (including those that are required prior to construction such as the permits required under the Species at Risk Act), Land Agreements, public opposition, blockades, legal and regulatory proceedings (including judicial reviews, injunctions, detailed route hearings and land acquisition processes), delays to ancillary projects that are required for the Trans Mountain Expansion Project (including power lines and power supply), increased costs and/or cost overruns, inclement weather or significant weather-related events (including storms and rising sea levels (potentially resulting from climate change) impacting the Business’ marine terminals) and other issues.”

Quite a paragraph.

The prospectus continues: “To the extent the Business is not able to acquire land rights through negotiated agreements for the sections of the Trans Mountain Expansion Project that require new land rights, the Business will need to seek right of entry orders from the NEB, which could result in delays and increased cost.”

Translation: People may fight us when we show up to expropriate their homes.

The company also acknowledges the 19 separate lawsuits it faces, any one of which could halt the project. “In addition to the judicial reviews of the NEB recommendation report and Governor in Council’s order, parties have also commenced judicial review proceedings at the Supreme Court of British Columbia seeking to quash the Environmental Assessment Certificate that was issued by the BC Environmental Assessment Office. In the event that an applicant for judicial review is successful, among other things, the Environmental Assessment Certificate may be quashed, provincial permits may be revoked […] or the Trans Mountain Expansion Project may be stopped altogether.”

1. “The debt levels of the Business, including increases in such debt levels, could have significant negative consequences for the Business.”

This is an issue flagged by investment blog The Motley Fool, which calls this IPO “a dog with fleas” and warns readers “under no circumstances should you buy any shares.”

Will Ashworth writes: “Take a look at the balance sheet for Kinder Morgan’s Canadian business, and you’ll see that it’s got $159 million in cash and $1.4 billion in debt; that’s net debt of $1.2 billion. Assuming the over-allotment is exercised, the IPO will raise $2 billion, leaving Kinder Morgan with $800 million in net cash and $6.6 billion short of what its projected needs are to complete the Trans Mountain pipeline expansion.”

Sure enough, the prospectus says more cash infusions will be required if the company actually decides to build: “The Business is expected to incur substantial additional indebtedness to fund capital expenditure requirements related to the Trans Mountain Expansion Project.”

#KinderMorgan Warns #TransMountain Investors Pipeline May Never Be Built https://t.co/AWTkf7lKQX #IPO via @dogwoodbc @kainagata #bcpoli

— DeSmog Canada (@DeSmogCanada) May 29, 2017

Company-wide, Kinder Morgan is groaning under $35.1 billion in debt. With its credit downgraded as a result, the pipeline giant admits that rising interest rates could pose a problem: “The growth plans for the Business, including the Trans Mountain Expansion Project, require access to significant amounts of external capital. Limitations on the ability of the Company or the Business to access external financing sources could impair the ability of the Business to complete these significant projects, including the Trans Mountain Expansion Project.”

1. “The failure by the Business to resolve issues relating to Aboriginal rights and title and the Crown’s duty to consult could have a material adverse effect on the Trans Mountain Expansion Project.”

This is an important one. Here’s what the company’s own lawyers say: “In some cases, respecting Aboriginal rights may mean regulatory approval is denied or the conditions in the approval make a project economically challenging or not feasible.”

They’re also worried about First Nations along the route proving title to the land, like the Tsilhqot’in did in 2014. That could force Kinder Morgan to dig up and reroute the existing pipeline, not to mention the expansion.

Even with First Nations leaders that have tentatively signed impact benefit agreements, the prospectus anticipates Kinder Morgan could find itself back in court: “Future disagreements with Aboriginal groups could result in legal challenges by Aboriginal groups alleging breach of contract.”

1. “Changes in government, loss of government support, public opposition and the concerns of special interest groups and non-governmental organizations may expose the Business to higher costs, delays or even project cancellations.”

The part about “changes in government” seems particularly relevant now that the Green Party holds the balance of power in the provincial legislature. The Greens and the NDP have sworn to fight the project with all legislative tools available. Kinder Morgan acknowledges in this document that the province does indeed have the power to stop the pipeline.

Construction of the Trans Mountain expansion could also be abandoned “due to increasing pressure on governments and regulators by special interest groups including Aboriginal groups, landowners, environmental interest groups (including those opposed to oil sands and other oil and gas production operations) and other non-governmental organizations, blockades, legal or regulatory actions or challenges.”

In addition, “market events specific to Kinder Morgan, the Company or the Business could result in the deterioration of Kinder Morgan’s reputation with key stakeholders,” the prospectus warns.

“In particular, Kinder Morgan’s reputation could be impacted by negative publicity related to pipeline incidents, unpopular expansion plans or new projects and due to opposition from organizations opposed to energy, oil sands and pipeline development and particularly with shipment of production from oil sands regions that are considered to increase GHG emissions and contribute to climate change.”

On the bright side, if climate activists are successful, perhaps Kinder Morgan can salvage its marine terminal.

1. “The Business is subject to significant operational risks, including those relating to the breakdown or failure of equipment, pipelines and facilities; releases and spills; operational disruptions or service interruptions; and catastrophic events.”

This last section is pretty scary. It confirms everything intervenors tried to raise during the biased NEB review (that Prime Minister Trudeau and Premier Clark both rubber-stamped).

“There are a variety of hazards and operating risks inherent in the transportation and storage of crude oil, such as: leaks; releases; the breakdown or failure of equipment, pipelines and facilities (including as a result of internal or external corrosion, cracking, third party damage, material defects, operator error or outside forces); the compromise of information and control systems; spills at terminals and hubs; adverse sea conditions (including storms and rising sea levels) and releases or spills from vessels loaded at the Business’ marine terminals; and catastrophic events including but not limited to natural disasters, fires, floods, explosions, earthquakes, acts of terrorists and saboteurs, cyber security breaches, and other similar events, many of which are beyond the control of the Company, the Business and Kinder Morgan.”

“Some climatic models indicate that global warming may result in rising sea levels, increased intensity of weather, and increased frequency of extreme precipitation and flooding. To the extent these phenomena occur, they could damage physical assets, especially operations located near rivers, and facilities situated in rain susceptible regions. In addition, the Business may experience increased insurance premiums and deductibles, or a decrease in available coverage, for its assets in areas subject to severe weather.”

“The occurrence or continuance of any of the risks set out above could result in serious injury and loss of human life, significant damage to property and natural resources, environmental pollution, impairment or suspension of operations, fines or other regulatory penalties, and revocation of regulatory approvals or imposition of new requirements, any of which also could result in substantial financial losses.”

“For pipeline and storage assets located near populated areas, including residential areas, commercial business centers, industrial sites and other public gathering areas, the level of damage resulting from these risks may be greater. In addition, the consequences of any operational incident (including as a result of adverse sea conditions) at the Business’ marine terminals or involving a vessel receiving products from one of its marine terminals, may be even more significant as a result of the complexities involved in addressing leaks and releases occurring in the ocean or along coastlines and/or the repair of the Business’ marine terminals.”

In other words, there is no technology to clean up diluted bitumen once it spills into seawater. Kinder Morgan makes clear that it bears no responsibility for the oil tankers once they leave the dock at Westridge – but warns that a tanker spill could still hurt the company’s reputation, halt its operations and wipe out its investors’ profits.

The company also admits that it may not have enough insurance to cover a serious incident: “The Business is covered by an insurance program which is renewed annually and has $1 billion worth of financial capacity for spill events in accordance with the Pipeline Safety Act. However, the Business’ insurance program may not cover all operational risks and costs and/or may not provide sufficient coverage in the event a claim is made against the Business.”

In 2010 an Enbridge pipeline carrying diluted bitumen burst into the Kalamazoo River in Michigan. Cleanup costs sailed well north of $1 billion – a fact that can’t have escaped Kinder Morgan.

Finally, the pipeline company comes close to acknowledging that its entire business model may be on the way out. A piece of infrastructure like the new Trans Mountain pipeline is supposed to last for at least 40 years. But the company doesn’t sound confident that the world will still be burning heavy oil in the late 2050s.

“Changes in the overall demand for hydrocarbons, the regulatory environment or applicable governmental policies (including in relation to climate change or other environmental concerns) may have a negative impact on the supply of crude oil and other products. In recent years, a number of initiatives and regulatory changes relating to reducing GHG emissions have been undertaken by federal, provincial, state and municipal governments and oil and gas industry participants (including, for example, the decarbonization targets set forth in the Paris Agreement). In addition, emerging technologies and public opinion has resulted in an increased demand for energy provided from renewable energy sources rather than fossil fuels. These factors could not only result in increased costs for producers of hydrocarbons but also an overall decrease in the global demand for hydrocarbons.”

What’s the point?

So why go through this whole song and dance to raise cash for a project that even Kinder Morgan agrees is a long shot? The answer may lie in an investor call held just before the B.C. election.

Financial blogger David Alton Clark asked Kinder Morgan reps what would happen if the project were abandoned. “It would certainly be a major setback, but with ground not broken yet, KMI could direct most of the cash we would use for this project to other projects,” Clark reports them saying.

“The investor relations team indicated only $600 million in sunk costs on TMEP presently,” Clark writes. So, how much cash will Kinder Morgan Canada net if next week’s IPO goes to plan? Somewhere between $500 million and $750 million.

I’ll give the last word to Grand Chief Stewart Phillip.

“This company was founded from the ashes and rubble of Enron, a company synonymous with scandal, corporate fraud and bankruptcy,” said the President of the Union of B.C. Indian Chiefs in a news release.

“Today these same reckless cowboys are trying to convince gullible investors to plow cash into a pipeline they know will never be built.”

Image: Burnaby Mountain protest. Photo: Mark Klotz via Flickr

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Kinder Morgan Canada’s president Ian Anderson may have misled potential investors in a statement released Thursday that claimed “execution planning is complete, our approvals are in hand” for the Trans Mountain pipeline, according to Ian Stephen, resident of Chilliwack B.C. and campaign director at the Waterwealth Project.

“We are now ready to commence construction activities this fall,” Anderson told the public this week during Kinder Morgan Canada’s $1.75 billion initial public offering — one of the largest offerings in Canada’s history — expect to close May 31.

But according to Stephen, Kinder Morgan is “misleading potential investors,” because the company has yet to receive National Energy Board approval for the Trans Mountain pipeline route through Chilliwack.

The company’s current plan routes the pipeline directly over the city’s aquifer, a source of drinking water for over 90,000 residents in Chilliwack and Yarrow.

“The key thing for me, and for most people in Chilliwack, is the aquifer. It’s our sole source of drinking water for one of the fastest growing communities in B.C.,” Stephen told DeSmog Canada.

Stephen said the original Trans Mountain pipeline was built in 1953, long before detailed knowledge of the aquifer was available. But now Kinder Morgan wants to add a second pipeline along the same corridor that falls within the city’s groundwater protected zone, Stephens said.

“But there are other issues too — the fact that the pipeline crosses two school yards and goes through dense residential neighbourhoods,” he said.

Majority of Statements of Opposition Filed with NEB from Chilliwack

More than 400 statements of opposition have been filed with the National Energy Board in response to the most recent Trans Mountain filing.

A total of 188 of those statements came from Chilliwack, including those from local residents, City Hall, the Chilliwack Chamber of Commerce and local First Nations.

“A high proportion of those letters of opposition came from Chilliwack,” Jason Lum, Chilliwack city councillor, told DeSmog Canada.

“People are paying close attention to this issue,” he said, adding alongside the city’s submission to the NEB, he submitted a personal letter requesting Trans Mountain consider alternate routes that don’t threaten the city’s aquifer as well as sensitive ecosystems such as the Brown Creek wetlands.

Lum added the pipeline route, as currently proposed, runs atop the water systems for both Chilliwack and Yarrow.

“What I hear predominantly from people, even from people staunchly supportive of the pipeline, is that it’s not a good idea to run a pipeline through a drinking water source.”

For Stephen, the large amount of statements of opposition from the community in Chilliwack, which Trans Mountain has yet to formally respond to, conflicts with Ian Anderson’s statement that “approvals are in hand.”

“The pipeline route has not been approved by the National Energy Board,” Stephen said. “And I’m quite confident it won’t be in Chilliwack.”

Chilliwack Residents Among Most Vocal Opponents of Trans Mountain

Residents of Chilliwack featured prominently in a November 2016 report released by a Trudeau-appointed ministerial panel tasked with conducting public hearings along the Trans Mountain pipeline route.

“I do not understand how the pipeline could have been allowed to be built across the aquifer in the first place,” Chilliwack resident Cary Stephen wrote in a submission to the panel.

“Perhaps they simply did not have knowledge of the aquifer in the 1950s. Perhaps they chose to believe that pipelines would never spill. In any case, it would be unthinkable to allow that mistake to be repeated now.”

The panel noted residents of Chilliwack and Abbotsford raised significant complaints about Trans Mountain’s performance managing the existing pipeline and preparation for the proposed expansion.

“Where ranchers from the Interior had praised Trans Mountain staff for being respectful and responsive, farmers in the Fraser Valley — many of whom said they support the pipeline in principle — posted a long list of complaints about the pipeline and the company’s general attitude,” the panel wrote.

The Collaborate Group of Landowners Affected by Pipelines (CGLAP) told the panel the current Trans Mountain pipeline “creates access and drainage problems, that it is frequently outside the legal right-of-way and is not always buried to the designated 60-centimetre depth, which makes it a hazard to cross with farm equipment.”

Despite these ongoing problems with the historic pipeline, in its efforts to secure a new pipeline route, Trans Mountain has “threatened and bullied” landowners, applying pressure to sign one-time bonuses in exchange for route access, according to Delwen Stander CGLAP legal counsel.

Trans Mountain Failed to Follow Procedure, May Face Delays

In addition to charged relationships with local residents in Chilliwack, Trans Mountain also failed to follow its own schedule for public comment periods, Stephen said.

Following submissions to the National Energy Board, Trans Mountain is legally required to make information available to the public as well as post schedules for public comment periods.

“Here in Chilliwack they were handing out these big full-page, colour flyers, delivered door to door just before the detailed route process and it said that other route locations are no longer under consideration,” Stephen said.

“People got the impression from that flyer the route is set and can’t be changed. That’s simply not true.”

“It’s aggravating that people would be misled like that just before a regulatory process starts up.”

Compounding that issue, Stephen said, Trans Mountain filed a schedule for public comment periods with the NEB but then failed to follow that schedule.

“So people may have filed late thinking they had more time than they did, or they thought they missed the deadline.”

Waterwealth filed a motion with the National Energy Board asking them to require a correction from Trans Mountain.

Depending on how the board rules, the period for public comment may reopen after new notices are published between May 29 and June 6, Stephen said.

“I expect the NEB will rule on that today, before the weekend,” he said.

Image: Mychaylo Prystupa/Vancouver Observer

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Kinder Morgan is providing potential investors with shoddy information, according to a complaint filed with the Alberta Securities Commission by Greenpeace Canada last week.

The formal complaint contends the company’s draft prospectus — a legal document prepared for investors ahead of its massive $1.75 initial public offering (IPO) — failed to properly disclose future Asian oil demand and the financial impacts of climate policy.

It turns out that Kinder Morgan used demand forecasts that assume “business as usual” for oil consumption, which effectively means no serious attempt to keep global warming below two degree celsius.

“There are other demand forecasts that they haven’t used which aren’t as rosy,” says Keith Stewart, head of Greenpeace Canada’s climate and energy campaign. “The International Energy Agency has two other scenarios where governments actually do more to try to meet keeping warming below two degrees. In both of those, demand for oil drops significantly.”

In other words, Kinder Morgan is telling potential investors that it doesn’t expect Canada and the world to try to meet their Paris Agreement targets.

Suncor Climate Report Concluded 2 Degree Scenario Means No New Pipelines

The funny thing is that the 148-page Kinder Morgan document did disclose a number of others risks to investors. Those included government regulations, permits, public opposition, blockades, injunctions, judicial reviews, cost overruns, significant increase in debt and even bad weather.

But climate policies were only mentioned once, almost in passing: “Change in the regulatory environment or governmental policies (including in relation to climate change) may have an impact on the supply of crude oil and other products.”

That’s a serious understatement.

In Suncor’s 2016 climate report concluded the “450 ppm” scenario required to keep temperatures below two degrees of warming would result in a situation in which “new oil sands growth projects are challenged and unlikely to proceed” and “no new export pipelines are built out of the Athabasca Oil Sands region.”

The report was created in the wake of an approved shareholder resolution that called on Suncor to more transparently address the challenges of a low-carbon economy for energy producers.

“What we want to do is have companies have to confront the fact that our business model only works if the world fails to act on climate change,” Stewart says.

“Particularly for long-lived infrastructure like pipelines. If you’re going to spend $7 billion now and you’re planning to recoup that over the next 40 years, you’re banking on the world not reducing oil demand. And that’s increasingly risky.”

Business NotAsUsual: What #KinderMorgan Isn’t Telling Investors https://t.co/eCKyPNlEAi @dogwoodbc @Sierra_BC @PipeUpNetwork @NorthShoreNOPE pic.twitter.com/6pxQ8O10hu

— DeSmog Canada (@DeSmogCanada) May 25, 2017

Canadian Securities Regulators Currently Conducting Review of Climate Risk

Laura Zizzo — lawyer and CEO of Zizzo Strategy, which specializes in climate risk disclosures and carbon-informed investments — said in an interview with DeSmog Canada that the Greenpeace challenge is the first she’s aware of that involves direct interaction with a securities regulator with respect to climate change in Canada.

But that doesn’t mean it arrived out of nowhere.

“This all comes on the heels of a lot more shareholder and stakeholder activism with respect to securities disclosure and climate risk,” Zizzo says. “There’s lots happening in this space right now generally.”

For instance, there’s the recent vote by BlackRock — the largest asset manager in the world — to require Occidental Petroleum to disclose climate risks.

And Bank of England governor Mark Carney recently launched a task force on climate-related financial disclosures chaired by former New York City mayor Michael Bloomberg.

In December 2016, Carney and Bloomberg wrote in a column for the Guardian: “We believe that financial disclosure is essential to a market-based solution to climate change. A properly functioning market will price in the risks associated with climate change and reward firms that mitigate them. As its impact becomes more commonplace and public policy responses more active, climate change has become a material risk that isn’t properly disclosed.”

In late March, the Canadian Securities Administrators — which includes the Alberta Securities Commission — announced it was conducting a review of climate risk disclosures by public companies.

It’s why Zizzo says the Greenpeace challenge makes sense, noting it’s a legal requirement to disclose material information to investors and “if you’re an oil and gas company, climate-related issues are likely material.”

“I personally think Greenpeace’s claims were valid,” she says.

“The question is: ‘Do we think we’re going to meet the Paris targets? Do we think we’re actually going to do something about climate change?’ Kinder Morgan, in their projections, are kind of saying ‘no.’ They don’t think they will.”

Requiring Kinder Morgan to Re-Submit Would Be ‘Serious’

Stewart admits he doesn’t know exactly what’s going to happen next. After all, this is reportedly the first time this has happened in Canada.

In response to e-mailed questions a spokesperson from the Alberta Securities Commission told DeSmog Canada: “We have received Greenpeace’s submission and we will give it the consideration we deem appropriate.”

The regulator could ask Kinder Morgan to effectively resubmit its prospectus with more disclosure, which would be “pretty serious in a Canadian context,” Zizzo says.

Stewart says Kinder Morgan still has to put out a final prospectus before the IPO is marketed (to TD Bank and RBC, before being sold off to large institutional investors) and that Greenpeace will be watching to see what kind of changes are made in the language of that document.

In addition, the formal challenge might increase the chances of a class-action lawsuit from shareholders in the future because Kinder Morgan was advised to disclose risks and they chose not to, or may result in climate risk getting “priced in” and make the project less attractive to investors.

“It’s basically trying to use the discipline of market regulation to work in favour of action on climate change, whereas traditionally it has not,” Stewart concludes.

“This is a way to move things forward by entrenching some of these rules and actually making sure that investing in fossil fuel infrastructure isn’t just a bad thing to do, it’s a money-losing thing to do.”

Kinder Morgan didn’t respond to a request for an interview.

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