TC Energy Corp. called an immediate halt today to work on Keystone XL (KXL) as President Biden was expected to keep an election promise to revoke the U.S. construction permit for the $8 billion oil pipeline on Wednesday.
“Advancement of the project will be suspended,” said the Calgary firm. Unless attempts to recover costs to date succeed, the halt “could result in a substantive, predominantly noncash after-tax charge to earnings in first quarter 2021,” said TC.
While Alberta Premier Jason Kenney said only days ago that a strong legal claim existed for damages from the U.S. government, the pipeline company’s management team made no predictions and stopped short of declaring a commitment to launch a lawsuit.
Instead of specifying next steps, “TC Energy will review the decision, assess its implications and consider its options” the company said in announcing the KXL stoppage.
The company echoed an outpouring of regret from Kenney and the Canadian fossil fuel industry over the potential loss of the proposed 830,000 b/d growth enabler for the nation’s top natural gas user, Alberta thermal oilsands production.
A decision by President Biden to revoke the presidential permit “would overturn an unprecedented, comprehensive regulatory process that lasted more than a decade and repeatedly concluded the pipeline would transport much needed energy in an environmentally responsible way while enhancing North American energy security,” TC said.
“The action would directly lead to the layoff of thousands of union workers and negatively impact ground-breaking industry commitments to use new renewable energy” for power pipeline pumps, “as well as historic equity partnerships with Indigenous communities.”
TC unveiled an agreement to ensure KXL could be powered by renewable resources. The agreement with the North America’s Building Trades Unions as structured would allow the system’s pumps to run entirely on renewable supplies with $1.7 billion in net-zero power stations.
Industry analysts called the possible Keystone permit cancellation “collateral damage” to the Biden administration’s declared policy of promoting energy transition off fossil fuels as well as the need for the president to keep support from his party’s environmental activists.
U.S. Chamber of Commerce’s Marty Durbin, president of the Global Energy Institute, said the business group was opposed to Biden’s decision to revoke the permit.
“The pipeline — the most studied infrastructure project in American history — is already under construction and has cleared countless legal and environmental hurdles,” Durbin said. “This is a politically motivated decision that is not grounded in science. It will harm consumers and put thousands of Americans in the building trades out of work.
“Halting construction will also impede the safe and efficient transport of oil, and unfairly single out production from one of our closest and most important allies.”
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