TC Energy says it’s suspending work on the Keystone XL (KXL) pipeline — backed by Alberta taxpayers to the tune of at least $1.5 billion — in anticipation of incoming U.S. President Joe Biden revoking the presidential permit on Wednesday.
Biden is expected to revoke the permit for Calgary-based TC Energy’s pipeline in a flurry of executive orders after being sworn in as the 46th U.S. president on Wednesday.
- Alberta Premier Jason Kenney is expected to respond at 4 p.m. MT on Wednesday. CBC News will carry the news conference live in this file and on Facebook.
Plans to revoke the permit for the $8 billion pipeline were first revealed by CBC News on Sunday and sent shock waves through Alberta.
The Alberta government agreed last year to invest about $1.5 billion as equity in the project, plus billions more in loan guarantees. As a result, the Canadian leg of the project has been under construction for several months with about 1,000 workers in southeast Alberta.
The move was expected as Biden issues sweeping orders tackling climate change and begins the process of re-entering the Paris climate accord.
Warning of layoffs
In a statement released Wednesday morning, TC Energy said it was disappointed in the move and warned it would lead to the layoffs of thousands of unionized workers.
“TC Energy will review the decision, assess its implications and consider its options,” the statement reads. “However, as a result of the expected revocation of the presidential permit, advancement of the project will be suspended.”
The company said the decision would “overturn an unprecedented, comprehensive regulatory process that lasted more than a decade.”
The Calgary-based company struck a deal with four labour unions to build the pipeline and has an agreement in place with five Indigenous tribes to take a roughly $785 million ownership stake.
The Progressive Contractors Association of Canada said in a news release it is disappointed that Biden is “putting politics before reason.”
“We’re disappointed that the new president has lost sight of the huge economic and strategic advantages of this project,” said PCAC president Paul de Jong.
“Pulling the plug on a major project, hours after taking office, is a rocky starting point for re-setting Canada/U.S. relations.”
The association, whose member companies employ thousands of Alberta and B.C. construction workers, said the pipeline would have generated as many as 60,000 direct and indirect jobs in Canada and the United States.
If completed, the 1,897-kilometre pipeline, first announced in 2005, would carry 830,000 barrels of crude a day from the oilsands in Alberta to Nebraska. It would then connect with the original Keystone pipeline that runs to U.S. Gulf Coast refineries.
Canadian producers, who have struggled for years from low prices partly related to sometimes-congested pipelines, have long supported Keystone XL.
In a statement, Suncor Energy said it backed expanding market access to the U.S. through pipelines like KXL, which would provide responsibly sourced oil to U.S. refineries for the benefit of U.S. consumers.
But a Canada Energy Regulator report in November said western Canadian crude exports are expected to remain below total pipeline capacity over the next 30 years if KXL and two other projects proceed, prompting environmental groups to question the need for all three.
Biden signalled plan for months
For months, Biden had said he intended to cancel the project if elected.
Prime Minister Justin Trudeau said he raised the issue with Biden prior to the inauguration and reaffirmed Canada’s support for the project.
Alberta Premier Jason Kenney, meanwhile, has said revoking the permit would damage the U.S.-Canada relationship, and he thinks Alberta could have legal options to recoup taxpayer money should the permit be cancelled.
Kenney said Sunday that, should the U.S. repeal the permit, “Alberta will work with TC Energy to use all legal avenues available to protect its interest in the project.”
Greg Anderson, a political scientist at the University of Alberta, says Canadians tend to look at narrow trade conflicts as a sort of barometer for the larger relationship with the U.S. but added “that just isn’t the case.”
He also says the province faces bigger challenges than the loss of one pipeline.
“I think a lot of Albertans were hoping that maybe this could just kind of slide by and the pipeline would get built,” said Anderson.
“But the Keystone pipeline is not the Alberta economy. You know, it’s not going to save Alberta or solve Alberta’s problems. It might have helped on the margins, but Alberta has bigger fish to fry.”
The pipeline has become emblematic of the tensions between economic development and curbing the fossil fuel emissions that are causing climate change.
The Obama administration rejected it in 2015, prompting TC Energy in 2016 to launch a lawsuit and a multibillion-dollar North American Free Trade Agreement claim against the U.S. government.
The company changed course after Donald Trump revived it once he became president four years ago and gave it strong support. Construction has already started in the U.S.
TC Energy could now take similar action in order to prevent walking away from Keystone XL empty-handed after a dozen years of setbacks, billions of dollars spent and thousands of pages of filings.