[Editor's note: This story was updated at 8:13 a.m. CT April 19.]

Kinder Morgan Inc. (NYSE: KMI) said April 18 that recent events confirm an investment in the Trans Mountain pipeline expansion may be "untenable" and said Ottawa's pledge of financial support does not resolve political risk related to British Columbia's opposition.

The comments come as the British Columbia (B.C.) government pledged to file a legal challenge by month-end to determine whether it has the jurisdiction to stop the C$7.4 billion (US$5.9 billion) project, which was approved by the federal government in 2016 and would nearly triple capacity on the pipeline from Alberta to a Vancouver-area port.

Kinder Morgan Canada, a unit of Kinder Morgan, halted most spending on the expansion earlier this month and set a May 31 deadline to decide if it would scrap the project entirely, citing legal and jurisdictional issues.

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"As we said then, it's become clear this particular investment may be untenable for a private party to undertake. The events of the last 10 days have confirmed those views," CEO Steven Kean said on a conference call.

While Canadian Prime Minister Justin Trudeau has said Canada is prepared to offer financial aid to ensure the project goes ahead, Kean dodged a question about whether that support would ensure construction.

"They're really two separate things," he said. "Most of the investment is in British Columbia, where the government is in opposition to the project ... That is an issue that, in our view, needs to be resolved."

The Trans Mountain expansion is considered crucial for Alberta's oil industry which has been beset by transportation bottlenecks. It is fiercely opposed by some B.C. cities, some aboriginal groups, and environmentalists concerned about possible oil spills.

M&A On The Table

The company said while it is not in a position to move on takeovers until the uncertainty around Trans Mountain is resolved, it sees good opportunities in the western Canadian midstream space.

"There are some very capable players with good midstream assets,” Kean said, adding: “Intent is, and was, that KML would be the vehicle to invest in those opportunities.”

The company has a strong balance sheet and is well positioned for takeovers, especially if cash earmarked for capital projects is freed up, said M. Paul Bloom, an investment manager with Bloom Investment Counsel.

"I think you can expect if the Trans Mountain pipeline does not go ahead [Kinder Morgan] will be bidders for various assets here in Canada, and probably fairly quickly as well," he said.

Kinder Morgan Canada, which was spun off from parent Kinder Morgan in May last year, reported a net income of C$44.4 million (US$35.17 million) for the first quarter ended March 31, down from C$46.8 million for the same period last year.

Texas-based Kinder Morgan separately reported net income available to common stockholders of $485 million, or 22 cents per share, in the quarter to the end of March, compared with $401 million, or 18 cents per share, a year earlier.

Shares of Kinder Morgan were up 1.6% at $16.43 in after-hours trading. Canadian shares closed up 2.8% at C$17.99, while the broader energy index rose 3.57%. (US$1 = C$1.2624)