UPDATE 2-Regional tensions flare over fate of Canada pipeline project

(Recasts; adds comments, reaction)

TORONTO/CALGARY, Alberta, May 30 (Reuters) - Canada's energy-rich province of Alberta on Tuesday warned its neighbor not to block a Kinder Morgan Inc pipeline project, ratcheting up political tension that helped undermine the stock market debut of the firm's Canadian unit.

Kinder Morgan plans to more than double the capacity of its Trans Mountain pipeline from Alberta to the Pacific province of British Columbia, where two political parties which oppose the project on Monday struck a deal to take power.

British Columbia Greens and New Democrats - seeking to unseat Liberal premier Christy Clark - will unveil details of their plans for Trans Mountain at 2 p.m. Pacific (2100 GMT) on Tuesday.

The project would increase Pacific exports of Canada's landlocked crude, a move that would help the country's large oil industry. It has met opposition from environmentalists and aboriginal groups in British Colombia who are worried about oil spills from the increase in tanker traffic it will cause. Alberta Premier Rachel Notley, noting that the federal government has already approved the project, said no one province could unilaterally block the pipeline.

"We will use the means at our disposal to ensure that the project is built," she said in a statement, without giving further details.

While there is some dispute over whether British Columbia has a formal veto right, it can raise multiple hurdles - like denying local construction permits - that could effectively make the pipeline impossible to build.

Canadian Prime Minister Justin Trudeau, whose government approved Trans Mountain last year, stood by the project.

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


Prolonged fights over Trans Mountain and other crude pipelines raise questions over other oil and gas projects in the Pacific province.

John Horgan, leader of the British Columbia New Democrats, has also expressed reservations about a $27 billion liquefied natural gas terminal that Malaysia's Petronas wants to build in northern British Columbia. Petronas declined to comment.

Royal Dutch Shell also plans to build an LNG export terminal in the province.

"At this point we're in a wait and see mode. We don't even actually know if the NDP and Greens can form a government," Shell Canada President Michael Crothers told Reuters on the sidelines of an industry event in Toronto.

"We are hopeful that support for our LNG project will continue regardless of which government takes power in B.C."

The Greens have criticised the Liberals for being "fixated" with LNG plants, which they say will employ very few people when operational.

Shares in Kinder Morgan Canada Ltd fell as much as 7.4 percent on their debut in heavy trading on Tuesday before recovering ground to trade at C$16.19. Kinder Morgan spun off the unit to help finance the expansion of its Trans Mountain.

It was the top traded stock in Toronto, with 5.7 million shares changing hands by early afternoon. The firm raised C$1.75 billion ($1.30 billion) in the initial public offering at C$17.00 per share last week.

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 was "not ideal".

Kinder Morgan said on Tuesday that 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.

Clark was to meet legislators from her Liberal Party on Tuesday to discuss her next steps. NDP leader Horgan told a televised meeting of his own caucus that he hoped to be able to form a government in the next few days.

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