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Trudeau Approves Kinder Morgan’s Trans Mountain Pipeline

Justin Trudeau, Canada's prime minister

Canadian Prime Minister Justin Trudeau approved pipeline proposals by Kinder Morgan Inc. and Enbridge Inc., while rejecting a third project in a series of decisions Tuesday aimed at balancing environmental protection with expanded market access for oil producers.

Trudeau, at a press conference in Ottawa, approved Kinder Morgan’s Trans Mountain pipeline with conditions, aimed at boosting crude shipments from Alberta’s oil sands to U.S. and Asian markets. Canada also approved Enbridge’s Line 3 with conditions, while killing the company’s separate Northern Gateway pipeline, which proposed to carry crude through the Great Bear Rainforest in northern British Columbia. The government will also enact restrictions on tanker shipments along that remote region’s pristine coastline.

Energy producers are facing increasing constraints on the pipeline network in western Canada as output expands, forcing oil onto more expensive rail cars. The bottleneck is depressing prices for the country’s crude: Heavy Western Canadian Select traded discount to West Texas Intermediate futures was $15.75 a barrel Tuesday, the widest since Feb. 1, data compiled by Bloomberg show.

Trudeau is due to meet with Alberta Premier Rachel Notley at 5:45 p.m. Tuesday.

Northern Gateway is a cautionary tale for proponents that won approvals Tuesday -- the pipeline had already been approved once by government, in 2014, only to be halted by a court ruling before being rejected by Trudeau.