By Nia Williams (NYSE:WMB)
CALGARY, Alberta, May 1 (Reuters) - The new Alberta government has enacted a law enabling it to restrict the flow of oil and gas to neighboring British Columbia, raising the stakes in a dispute between Canada's westernmost provinces over the Trans Mountain pipeline.
Alberta Premier Jason Kenney and his United Conservative Party Cabinet, which took office on Tuesday, proclaimed the "Preserving Canada's Economic Prosperity Act" as its first order of business, Kenney told reporters at a news conference on Wednesday.
The legislation, dubbed the "turn off the taps" act, was passed but not enacted by the province's previous, left-leaning New Democratic Party government last year in retaliation for British Columbia opposing the expansion of the Trans Mountain pipeline.
Trans Mountain carries crude from Alberta's oil sands to the British Columbia coast. The expansion would triple capacity to 890,000 barrels per day, but has been held up for years by regulatory delays.
Kenney, who won a landslide election victory last month after promising to champion Alberta's energy sector, said his government would not immediately cut oil and gas shipments but use the legislation as leverage in discussions with British Columbia Premier John Horgan.
"If needs be, we will do what is necessary to preserve the value of our resources and to stand up for our workers," Kenney said. "This does not mean energy shipments will immediately be reduced, but rather that our government will now have the ability to use the law should circumstances require."
Kenney said he had a "respectful" conversation with Horgan on Tuesday and would look to build a relationship and find common ground over the issue of Trans Mountain.
British Columbia government lawyers filed two court actions on Wednesday to strike down the bill.
"During the call with the premier, I made it clear to him that my job, as is his, is to protect and defend the interests of the province I represent," Horgan told reporters.
He also challenged Kenney's assertion that approving the Trans Mountain expansion would ease high gas prices in British Columbia. Horgan said there was no indication the expansion would boost refined product shipments to the province.
Last August, after a number of regulatory delays, the Canadian government bought the pipeline from Kinder Morgan (NYSE:KMI) Canada Ltd KML.TO for C$4.5 billion ($3.35 billion) to ensure it gets built.
The federal government will make a decision by June 18 on whether pushing forward with the expansion is in the public interest. if Ottawa was concerned about the dispute between the two provinces, Canadian Minister of Natural Resources Amarjeet Sohi said it was something British Columbia and Alberta would have to sort out between themselves. ($1 = 1.3446 Canadian dollars)