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UPDATE 1-Kinder Morgan Canada shares drop on debut amid pipeline worries

(Adds comments, background, updates shares)

TORONTO/CALGARY, Alberta, May 30 (Reuters) - Shares in Kinder Morgan Canada fell as much as 7.4 percent on their debut in heavy trading on Tuesday, a day after political upheaval in the province of British Columbia cast doubt over the firm's plans to expand a key pipeline.

The stock dropped to C$15.75, while the Canada stock exchange benchmark was down 0.3 percent. Kinder Morgan Canada was the top traded stock in Toronto, with 3.6 million shares changing hands in the first hour of trading.

The firm raised C$1.75 billion ($1.30 billion) in an initial public offering at C$17.00 per share last week.

Parent company Kinder Morgan spun off its Canadian unit to help finance the expansion of its Trans Mountain pipeline from oil-producing Alberta to the Pacific province of British Columbia, a project that now appears in doubt.

The expansion would nearly triple the pipeline's capacity.

British Columbia's minority Green Party on Monday struck a deal with the left-leaning New Democrats to govern the province. Both parties oppose increasing the capacity of pipeline, saying the risk of a spill outweighs any economic benefit.

The two parties - which declined to say on Monday what exactly they intended to do about Trans Mountain - are to unveil details of the agreement in the provincial capital Victoria at 2 p.m. Pacific (2100 GMT) on Tuesday.

While there is some dispute over whether British Columbia can actually formally block the project, it can raise multiple hurdles - like denying local construction permits - that could effectively make the pipeline impossible to build.

Prime Minister Justin Trudeau, whose federal government approved the expansion last November, said Ottawa's decision had been based on facts and the best interest of Canadians.

"Regardless of a change in government in British Columbia or anywhere, the facts and evidence do not change," he told reporters during an official trip to Italy.

Kinder Morgan said in a statement the completion of the public offering removes the final condition of its investment decision on Trans Mountain, and that the expansion remains on track to start service at the end of 2019.

In a note to clients, Desjardins analysts said the Greens and NDP in British Columbia appeared to be "somewhat less business-friendly" than the Liberal government of premier Christy Clark.

"Our primary concern is the future of the Trans Mountain expansion, which has been a major flash point in the province and the subject of criticism from both parties," they said.

Kinder Morgan's C$17 per-share target was a revision from its original projected range of C$19 to C$22. The company said last week that the political climate is "not ideal".

Clark was to meet legislators from her Liberal Party on Tuesday to discuss her next steps.

($1 = 1.3469 Canadian dollars) (Writing by David Ljunggren; Additional reporting by Leah Schnurr in Ottawa and Nicole Mordant in Vancouver; Editing by Nick Zieminski and Dan Grebler)