Keystone XL is cancelled — so now what?

Decision to End Pipeline Project Still Leaves Some Big Questions

The announcement that TC Energy is canceling the problem-ridden Keystone XL pipeline project was no big surprise.

It looked like the Calgary-based company could dig a way out of US President Joe Biden’s decision last January to seek cross-border permits.

After evaluating its options, it appears that TC Energy reached the same conclusion on Wednesday.

But this week’s decision to pull the plug hasn’t quelled some of the key questions that hang over the project — not just for Keystone XL, but for the Alberta government, environmental groups and other pipeline projects.

Can Alberta still get some money back?

Last year, Alberta invested $1.5 billion, as well as loan guarantees, in Keystone XL to help launch a project mired in legal disputes and protests in the US.

The money was aimed at starting construction on the Canadian phase of the project, which it did for some time.

On Wednesday, the province said the cost of materials to the government was $1.3 billion, but it was not giving up on getting what it could.

“As stated, we are committed to recoup the government’s investment in the project on behalf of Albertans,” a government spokesman said in an email.

This may mean starting the liquidation process of pipes and other assets to help offset some of the costs. But as Granthshala News reported Last week, the pipe which is already underground will remain there for now.

There may still be a market for what’s left, but how far it will go toward offsetting Alberta’s investment is another unknown at this point.

Dennis McConaughey, a former TC Energy executive who has written books on energy issues, believes there will be a market for spare parts.

“The pipe would be useful,” he said. “The question of whether they will be able to save on any expense they incur on pumps will depend on whether those specific types of pumps can find a market somewhere in the world. Ultimately, that’s probably what will happen.”

He said that what is not recoverable is the expenses incurred on the camps, engineering and workforce.

McConaughey speculates that the formal termination of the project could help the company with some of its defense activities or litigation — if that’s something it pursues.

look | Experts Explain Why Politics Played a Role in the Death of Keystone XL

What about legal action?

Referring to its commitment to recover its investment, the United Conservative Government of Alberta also stated that “we continue to examine all of our legal options regarding the termination of the Keystone XL project.”

It may attempt to do this in a few ways, using history as a guide.

TC Energy filed suit in US Federal Court in Texas against the Obama administration in 2015 after stopping the project, saying that then-President Barack Obama Keystone XL . decision to refuse to build exceeded its power under the US Constitution.

That litigation was eventually suspended after Donald Trump signed the required construction permits to move the project forward again shortly after winning the White House.

James Coleman, an associate professor of energy law at Southern Methodist University in Dallas, said he will be looking to see whether Canada and TC Energy are weighing up a challenge under the North American Free Trade Agreement (NAFTA).

Although that trade deal was succeeded by the Canada-US-Mexico agreement last year, Coleman said there is a three-year window where investments made under NAFTA can be claimed.

“They can bring a claim under NAFTA and say they were treated discriminatory,” Coleman said. “With that said, no one has ever won a NAFTA lawsuit against the United States. So I think most people would say your chances of success are less than 50-50.”

What does this mean for Jason Kenny’s UCP government?

On the same day that the cancellation of the Keystone project was reported, Kenny also shared that a $1.3 billion hydrogen project for Edmonton is in the works.

But only one of those stories made news in the Wall Street Journal, the New York Times, and CNN.

When Kenny placed his big bet on the Keystone XL last year, it was in line with his campaign promise of jobs, pipelines and a better economy. This also comes at a time when Oilpatch was badly hit by a sharp fall in crude oil prices.

The Alberta government stuck to that decision on Thursday, as the NDP called on them to release full details of the re-investment agreement.

“There is complete transparency,” Energy Minister Sonya Savage told the legislature. “We supported this pipeline because we believe it will drive higher prices for Alberta oil, increase oil and production and bring us $30 billion a year in royalties.”

Regardless, this is another setback on the priority of the government.

“It’s just another cumulative thing,” said Duane Bratt, a political scientist at Mount Royal University in Calgary.

“If you remove the energy file – the whole ‘fight back’ strategy, the Allen inquiry, the war room, the investment in Keystone, the carbon tax fight – there is no victory.”

Putting politics aside, the focus for Alberta’s oilpatches will be the completion of the Trans Mountain expansion pipeline connecting Burnaby, BC, and Enbridge’s Line 3 replacement pipeline to Superior, Wis.

“It really is the house in the magnifying glass,” said Thomas Kirk-Pearson, a senior research associate at the energy data analytics firm Enverus.

“Without those projects, you’ll have a very hard limit on how high production can happen in Western Canada.”

Both projects face some strong opposition over concern about their environmental and climate change impact – and this week’s news is expected to rally support for further protests.

“This is huge for people who are protesting new fossil fuel infrastructure and demanding alternatives, as this was the first major pipeline battle,” said Keith Stewart, a senior energy strategist at Greenpeace Canada..

In addition, he said, Keystone also outlined how current and future environmental campaigns could be carried out.

“The Keystone fight represents a change in strategy from the environmental movement and a growing recognition that we have to work with and often in partnership with the leadership of Indigenous communities.”

Undoubtedly, industry, government and environmental leaders have learned much from Keystone XL’s long journey. And the lessons probably won’t end after this week.

Mail Us For  DMCA / Credit  Notice

Recent Articles

Stay on top - Get the daily news in your inbox

Related Stories