Kinder Morgan Canada Ltd (KML.TO) said on Wednesday that its Trans Mountain oil pipeline expansion project was facing "unquantifiable risk" due to the British Columbia government's continued opposition and reported a 5.1 percent drop in first-quarter earnings.

British Columbia said on Wednesday that it would file a legal challenge in the province to determine whether it has the jurisdiction to stop the $7.4 billion expansion, which was approved by the federal government in 2016.

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

The company, which earlier this month suspended work on its expansion of the Trans Mountain pipeline, moved 289,000 barrels per day (bbl/d) of crude and refined products through the pipeline down from 307,000 (bbl/d) a year earlier.

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

Shares of Kinder Morgan were up 2 per cent at US$16.60 in after-hours trading.