Canadian leaders are vowing to rescue TC Energy Corp.’s Keystone XL (KXL) — or sue for damages — from a plan for incoming President Biden to cancel the U.S. presidential permit for the $8 billion oil export pipeline project.
KXL stands out as an 830,000 b/d growth enabler for Canada’s top natural gas user, Alberta thermal oilsands operations, with a 1,688 kilometer (1,013 mile) leg to heavy crude refineries on the Texas coast. TC now is gauging interest to add up to 80,000 b/d of new oil capacity to the system.
The Alberta premier has reacted swiftly to a Biden transition team agenda item set to be enacted by the new president on Wednesday, his first day in office, to revoke the permit granted by President Trump. Last May, Biden had pledged to revoke the KXL permit after pressure from Indigenous tribes, farmers and climate activists.
“Should the incoming U.S. administration abrogate the Keystone XL permit, Alberta will work with TC Energy to use all legal avenues available to protect its interest in the project,” said Alberta Premier Jason Kenney.
“Doing so would kill jobs on both sides of the border, weaken the critically important Canada-U.S. relationship, and undermine U.S. national security by making the United States more dependent” on future oil imports from the Organization of the Petroleum Exporting Countries.
Canadian Ambassador Kirsten Hillman in Washington, DC, added diplomatic support to a request by Kenney and Saskatchewan Premier Scott Moe for government talks on KXL before Biden translates his election platform into action.
Hillman pointed out that since KXL’s launch 12 years ago Alberta has cut greenhouse gas emissions from its oil production and Canada’s Liberal federal government has adopted a national 2050 net-zero target that will drive further reductions.
“Underpinned by a crucial and long-standing trade and security partnership, there is no better partner for the U.S. on climate action than Canada as we work together for green transition,” Hillman said.
Biden and Canadian Prime Minister Justin Trudeau, who discussed KXL in a telephone conversation in early November after the election, remained silent about the presidential transition team’s pipeline agenda item following its disclosure over the weekend. TC also withheld comment.
Electric Power Stations
Even as the new administration signaled it will cancel the system, TC unveiled an agreement to ensure KXL could be powered by renewable resources. The agreement with the North America’s Building Trades Unions (NABTU) as structured would allow the system’s pumps to run entirely on renewable supplies with $1.7 billion in net-zero power stations.
NABTU President Sean McGarvey said the agreement would “help to meet KXL’s commitment to achieving net-zero emissions by 2023, create the power capacity required to operate the pipeline from renewable energy sources and create thousands of jobs between now and 2030 — jobs for the highly skilled women and men of the building trades.”
TC has committed that the KXL operations are to be powered by renewable energy sources by 2030. KXL also has committed to achieving net-zero emissions across the pipeline’s operations when placed into service in 2023.
“At a time of economic uncertainty, this will create thousands of jobs on both sides of the border, creating opportunities for underrepresented groups, including Indigenous peoples, all along the KXL route,” said Strickland.
Tudor, Pickering, Holt & Co. said Tuesday TC’s renewables plan is unlikely to change the plan by the new president.
“We do not expect the company to proceed with seeking new permits in the face of a Biden presidency for at least the next four years,” analysts said. However, analysts “expect a legal appeal” similar to when then President Obama rescinded the KXL permit in 2015.
On top of royalties earned as owner of the oilsands resource, the Alberta government interest in KXL includes a C$1.5 billion ($1.1 billion) ownership share and a C$6 billion ($4.2 billion) loan guarantee. The aid supported construction of 200 kilometers (120 miles) of the project’s Canadian leg last year.
Canadian anxiety raised by the KXL affair spread to voices of larger economic sectors that rely on trade with the United States.
The 150-year-old Canadian Manufacturers & Exporters (CME) described the pipeline uncertainty as a foretaste of a Biden commitment to enforce the 1933 Buy American Act, especially on supply and service procurement by the U.S. government.
“The right path is for the Canadian and U.S. government to adopt a ‘Buy North American’ plan,” said the CME. “Canada, Mexico, and the United States don’t trade with each other anymore — we build things together. Excluding each other from our government procurement markets could seriously hurt our precarious economic recovery.”
The Montreal Economic Institute, a Quebec-based force for cross-border trade and industry, urged Trudeau to convince Biden to set aside demands by environmentalist Democrats to kill KXL as “solely motivated by politics and ideology.”
Keep It In the Ground’s campaign manager Kendall Mackey said the pending cancellation of KXL was a strong signal that the new administration would take action to combat climate change.
“The Biden administration halting the Keystone XL pipeline is a momentous sign that he is listening, taking action and making good on his promises to people and the planet,” Mackey said. “This decision to halt the Keystone XL pipeline on Day One in office sets a precedent that all permitting decisions must pass a climate test and respect Indigenous rights. We expect the administration to make similar announcements” regarding Enbridge Inc.’s oil pipeline systems Dakota Access Pipeline and Line 3.
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