U.S. president-elect Donald Trump is raising the prospect of restoring his approval for the long-dead Keystone XL oil pipeline – the focus of environmental, legal and political battles for more than a decade – as he pushes his agenda of promoting more fossil-fuel use in the United States.
Mr. Trump pointed to Keystone XL during a presidential election debate with opponent Kamala Harris, saying that President Joe Biden’s move to kill a key permit for the project was proof that the Democrat administration was weak and ineffective. And he wants to revive the pipeline project on his first day back in the White House, according to a report from Politico, despite the fact no companies are trying to build it any more.
Keystone XL was long a target of climate change activists in Canada and the United States, and was subject to years of protests, studies and court challenges, as well as presidential approvals and rejections.
Calgary-based TC Energy Corp., which first proposed the massive project in 2008, scrapped it in 2021 after Mr. Biden revoked a presidential permit issued by the previous Trump administration. Besides forcing the company to declare a writedown of $2.2-billion, it also meant a $1.3-billion loss for Alberta taxpayers a year after former premier Jason Kenney’s government bought an equity stake in the project and provided loan guarantees.
TC Energy’s US$15-billion Keystone XL claim thrown out by trade tribunal
This year, TC Energy spun off its Canadian and U.S. oil pipeline operations into a new company called South Bow Corp. Asked on Thursday if the company would consider resurrecting Keystone XL, South Bow spokesperson Katie Stavinoha did not answer directly.
“South Bow supports efforts to transport more Canadian crude oil to meet U.S. demand. South Bow’s long-term strategy is to safely and efficiently grow our business,” Ms. Stavinoha said in an e-mail.
Energy economist Peter Tertzakian, the managing director of ARC Financial Corp., is not convinced that any company would stomach the political and legal risks of bringing the project back from the dead without abundant political reassurances and guarantees.
“The corporate world is so jaded by what happened,” Mr. Tertzakian said in an interview.
It’s not the business case for another pipeline south that he has a problem with. He believes that case is easily made given that oil demand is projected to remain strong for years and Canadian crude is used in a vast array of products, not just gasoline and diesel.
“It’s the more the case that, if I spend hundreds of millions of dollars again ramping up to build this pipe, what is the risk that another government is going to come in and stand in my way? Or court challenges?” he said.
“They’ve seen this movie before and it didn’t end well at all. So why would they rerun it?”
Keystone XL would have shipped up to 830,000 barrels of crude a day along a 1,947 kilometre route to Steele City, Neb., from Hardisty, Alta. The idea was to give Alberta oil companies a long-sought direct route for their crude to refineries on the U.S. Gulf Coast.
Both TC Energy and the Alberta government launched legal actions to recoup their costs after Mr. Biden scrapped a key permit, effectively killing the project. In July, an international trade tribunal threw out TC Energy’s US$15-billion claim.
Alberta Energy Minister Brian Jean told media on Monday that he believes Mr. Trump has been convinced by the positive economics of the project.
“It would be a great move by the Americans,” he said. “We’re waiting for a private-sector investor, and we believe that they’ll move forward on that.”
However, the recent start of the expanded Trans Mountain pipeline system has reduced pressure on the industry to spending billions on new oil pipelines in the near future.
Alberta Premier Danielle Smith last week signed on to an energy pact with a dozen American states, the province’s first step in positioning itself in preparation for a Trump administration in the new year.
Established in September, the Governors Coalition for Energy Security aims to shore up energy security, lower energy costs, increase reliability and bolster sustainable economic development. Alberta is the first non-U.S. jurisdiction to enter into the agreement.
Ms. Smith’s office said last week that pipelines would be among the topics she would raise at meetings with the group, but her office did not respond to whether she would support using taxpayer dollars to back another pipeline headed south of the border.
During the election, Mr. Trump promised a universal tariff of between 10 per cent and 20 per cent on all imports to the U.S., which could include oil and gas.
Such tariffs would play havoc with Alberta’s fossil fuel-dependent finances. The province is hoping to avoid them, and being part of the coalition means it could potentially leverage a network of influential governors should Mr. Trump follow through with his promise.