VANCOUVER/CALGARY (Reuters) - The prospect of a minority Liberal government in British Columbia heightened economic uncertainty on Canada's west coast on Wednesday, pitting the future of key energy projects against the ability of the Liberals to work with the third-party Greens.
A Liberal win threatens U.S. coal exporters that rely on British Columbia's ports to ship to Asia. The Liberals have threatened a levy, in retaliation for U.S. duties on softwood lumber.
Preliminary results showed the ruling right-of-center Liberals squeaked to victory with 43 seats but were one seat shy of a majority. The left-leaning New Democratic Party (NDP) took 41 seats. Absentee votes still need to be counted, a process that will take until May 24 and could change the outcome.
The province's nominal leader, the lieutenant governor, has requested the Liberal Premier Christy Clark continue to govern.
To keep power, the energy-friendly Clark needs to woo the tiny environmentalist Green Party, possibly making concessions as she tries to push forward with pipeline expansion plans and liquefied natural gas (LNG) projects.
On Wednesday, Clark said she was ready to work across party lines and hopes to meet Greens leader Andrew Weaver soon.
The Greens, which have three seats, could also ally with the NDP to form their own majority, resulting in an administration unfriendly to energy development.
When asked if that would happen, NDP leader John Horgan on Wednesday said he spoke to Weaver overnight and noted they had a range of issues in common.
Weaver told reporters he shares priorities with Horgan but said it was too premature to pick a side before some 176,100 absentee votes are counted.
Even if he allies with the Liberals, however, "the most immediate casualty could be the Kinder Morgan (KMI.N) Trans Mountain Expansion," Dejardins analysts said of the C$7.4 billion ($5.4 billion) federally approved pipeline project through British Columbia that both NDP and the Greens oppose.
Weaver opposes the Trans Mountain expansion, saying the danger of a heavy oil spill is too great and the economic benefits of the pipeline too small. He has also criticized the Liberals’ LNG development plans, saying it would almost double British Columbia’s greenhouse gas emissions.
George Hoberg, professor of environmental and natural resource policy at the University of British Columbia, said the situation could create uncertainties and makes building the project politically difficult.
"Constitutionally, the federal government might have the upper hand ... but the B.C. government could force significant delays," he said.
Kinder Morgan's Canadian unit said in a regulatory filing on Wednesday it is looking to raise up to C$1.75 billion ($1.28 billion) in an initial public offering to fund Trans Mountain.
When asked whether Kinder Morgan Canada is concerned about the British Columbia election, President Ian Anderson said its pipeline project continues to move forward.
The Canadian Association of Petroleum Producers industry lobby group, whose members depend on export routes such as Trans Mountain, said: "We're prepared to continue to advocate for our interests."
The coastal British Columbia is home to numerous pending LNG export terminals whose fates have now become uncertain, such as one $27 billion project of Malaysia's Petronas [PETR.UL] for which the NDP's Horgan has expressed reservations.
The Greens' Weaver said on Wednesday: "I don't know if I need any compromise on LNG."
Hoberg said, "LNG project approvals would be easier for the province to unilaterally reverse," compared with federally approved pipelines.
The BC LNG Alliance industry group said its members remain committed to their projects and look forward to working with the new government.
Reporting by Nicole Mordant in Vancouver, Andrea Hopkins in Ottawa and Ethan Lou in Calgary, Alberta; Editing by Bernard Orr and Lisa Shumaker