A corporate clash has flared up between Canadian oil giant Suncor Energy Inc. and the Canadian unit of Houston-based Kinder Morgan Inc. over a proposed pipeline expansion in British Columbia. The latest dispute is indicative of the oil transport infrastructure shortage in the region, which has caused consternation for major oil companies seeking access to more profitable markets via the west coast.

Kinder Morgan's proposed $5.5 billion expansion of its Trans Mountain pipeline is currently under review from the National Energy Board (EnergyWire, Jan. 14). Several oil companies, including BP PLC and Imperial Oil Ltd., have already signed on to the project, which would add 890,000 barrels per day of capacity to the line between Edmonton and Burnaby, British Columbia. But Suncor is accusing Kinder Morgan of charging excessive tolls that would allow the pipeline operator unprecedented returns on equity.

Suncor said it is "disturbed" by how pipeline firms such as Kinder Morgan are "exerting market power that flows from the infrastructure shortage and need and necessity of take-away capacity."

For its part, Kinder noted that the unlevered rates of return expected for the pipeline expansion, while higher than average, are not exorbitant at 12 to 15 percent. The company warned it will not follow through with the project if it can't meet its targets (Nathan VanderKlippe, Toronto Globe and Mail, Jan. 16). -- BS