UPDATE 1-Kinder Morgan halts most work on disputed Canadian pipeline

(Recasts lead, adds details from statement, background)

April 8 (Reuters) - Kinder Morgan Canada on Sunday suspended most work on a contentious C$7.4 billion ($5.80 billion) pipeline expansion project that has become the focus of protests and said it would decide by May 31 whether to press ahead.

The firm wants to nearly triple the capacity of its existing Trans Mountain pipeline, which takes crude from Alberta's oil sands to a facility in the Pacific province of British Columbia. It is currently carrying out preliminary work and has not yet started construction.

The project is considered crucial for Canada's oil industry, but is fiercely opposed by the British Columbia government, many municipalities, some Aboriginal groups, and environmental activists concerned about possible oil spills.

"We will be judicious in our use of shareholder funds. In keeping with that commitment, we have determined that in the current environment, we will not put KML shareholders at risk on the remaining project spend," Kinder Morgan Chairman Steve Kean said in a statement.

The announcement is a blow for the Liberal government of Prime Minister Justin Trudeau, which approved the project and says it is in the national interest.

Natural Resources Minister Jim Carr said in a statement that "with all our partners, we continue to consider all available options". He did not give details.

($1 = 1.2767 Canadian dollars) (Reporting by David Ljunggren in Ottawa, Julie Gordon in Vancouver and Bhanu Pratap in Bengaluru; Editing by David Gregorio)