Canada talking to pipeline company about aid to solve crisis

By David Ljunggren

OTTAWA (Reuters) - The federal government and the province of Alberta have opened talks with Kinder Morgan Canada Ltd about possible financial aid to end a crisis over a planned pipeline project, Alberta Premier Rachel Notley said on Sunday.

Notley spoke after an emergency meeting with Prime Minister Justin Trudeau and the premier of British Columbia, who opposes plans to almost triple the capacity of the Trans Mountain pipeline from oil-rich Alberta to the west coast.

"The federal government, along with the government of Alberta, has commenced discussions with Kinder Morgan to establish a financial relationship that will eliminate investor risk," Notley told reporters, but gave no details. Trudeau was due to address the media later on Sunday.

Kinder Morgan Canada, part of Kinder Morgan Inc, is threatening to abandon the project unless it receives sufficient clarity about the path ahead on May 31.

Both the federal and Alberta governments have already suggested they could take a stake in the project.

British Columbia premier John Horgan said after the meeting he had not changed his position that the risks of a spill from the pipeline were too great.

Although Trudeau's Liberal government could invoke emergency powers to ensure the project goes ahead, that would most likely anger voters in British Columbia and cost the Liberals support in a federal election in October 2019.

But Trudeau is under increasing pressure from the business community and opposition politicians to take action amid fears the dispute could hit already flagging foreign investment.

"There are enough determined parties that a solution will be reached. It won't be easy - it's not an easy issue, none of this is," a senior government official said ahead of the meeting.

Horgan wants Ottawa to refer the matter to the Supreme Court but the Liberals are not interested, saying it is already clear the federal government has jurisdiction over the project.

He also said he would ask the courts in British Columbia to make clear how much powers the province had to protect the provincial environment. Federal officials complain this is a time-wasting tactic.

(Reporting by David Ljunggren; Editing by Nick Zieminski and Lisa Shumaker)