Keystone XL is canceled – what now?

Keystone XL is canceled – what now?

The announcement that TC Energy is canceling the troubled Keystone XL pipeline project came as no great surprise.

It seemed unlikely that the Calgary-based company could get out of US President Joe Biden’s decision last January to withdraw his cross-border license.

After weighing its options, it appears TC Energy came to the same conclusion on Wednesday.

But the decision to disconnect this week doesn’t end a few key issues hanging over the project – not just for Keystone XL, but for the Government of Alberta, environmental groups and other pipeline projects.

Can Alberta Still Get Money Back?

Last year, Alberta invested $ 1.5 billion, plus loan guarantees, in Keystone XL to help launch a project plagued by legal disputes and protests in the United States.

The money was to start construction on the Canadian part of the project, which he did for a while.

US President Joe Biden signs his first executive orders in the Oval Office of the White House on January 20, including one that cancels the license for Keystone XL. (Evan Vucci / The Associated Press)

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

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

This may mean starting the process of liquidating pipes and other assets to help offset some of the costs. But as CBC News reported Last week, the pipe already underground will remain there for the moment.

There might still be a market for what’s left, but how far that would recoup Alberta’s investment is another unknown at this point.

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

“The hose will come in handy,” he said. “Whether or not they can recoup the expenses they may have incurred on the pumps will depend on the ability of those specific types of pumps to find markets somewhere in the world. Eventually, it will likely happen.”

What is not recoverable are expenses paid for camps, engineering and labor, he said.

McConaghy has speculated that the formal termination of the project could help the company with some of its rescue or litigation activities – if that’s something it pursues.

WATCH | Expert explains why politics played a role in Keystone XL’s demise

Richard Masson of the University of Calgary says politics played a role in the death of the Keystone XL pipeline. The Government of Alberta and TC Energy today announced the end of the pipeline project. 3:38

What about legal proceedings?

Referring to its commitment to recoup its investment, the United Conservative Government of Alberta also noted “we are continuing to review all of our legal options regarding the termination of the Keystone XL project.”

Using the story as a guide, there are several ways he could try to do this.

TC Energy filed a lawsuit in the United States Federal Court in Texas against the Obama administration after the project was halted in 2015, claiming that then President Barack Obama decision to refuse the construction of Keystone XL exceeded its power under the US Constitution.

That trial was ultimately suspended after Donald Trump signed the building permit required to revive the project shortly after winning the White House.

James Coleman, associate professor of energy law at Southern Methodist University in Dallas, said he would monitor whether Canada and TC Energy were considering a challenge under the North American Free Trade Agreement (NAFTA ).

Although this trade agreement was replaced last year by the Canada-U.S.-Mexico agreement, Coleman said there is a three-year window where a claim can be made for an investment made under NAFTA.

“They could file a NAFTA complaint and say they were treated in a discriminatory manner,” Coleman said. “Having said that, no one has ever won a NAFTA lawsuit against the United States. So I think most people would say your odds of success are less than 50-50.”

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

On the same day news of the Keystone Project cancellation broke, Kenney also announced that a $ 1.3 billion hydrogen project was underway for Edmonton.

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

Alberta Premier Jason Kenney marked the start of construction of the Keystone XL pipeline in the province, in the town of Oyen, last summer. (Flickr / Government of Alberta)

When Kenney made his big bet on Keystone XL last year, it was in keeping with his campaign promise for jobs, pipelines and a better economy. It also came at a time when the oil field was hit hard by a sharp drop in crude prices.

The Alberta government upheld that decision on Thursday, as the NDP again asked it to release full details of the investment deal.

“There is total transparency,” Energy Minister Sonya Savage told the legislature. “We supported this pipeline because we believe it would have increased Alberta oil prices, increased oil sands production and earned us $ 30 billion a year in royalties.

Either way, this is another blow to a government priority.

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

“If you just take the energy issue – the whole ‘retaliatory’ strategy, the Allen inquiry, the war room, the Keystone investment, the fight against the carbon tax – there is no no wins there. “

Policy aside, the focus for the Alberta oil field will be the completion of the Trans Mountain expansion pipeline to Burnaby, B.C. and the Enbridge Line 3 replacement pipeline. connecting to Superior, Wisconsin.

“It’s really under the microscope,” said Thomas Kirk-Pearson, senior research associate at energy data analytics firm Enverus.

“Without these projects, you are going to have a pretty strict limit on the level of production that can reach western Canada.”

Opponents of the Keystone XL pipeline protest on the Dodge Street Pedestrian Bridge during rush hour in Omaha, Neb., In 2017. (Nati Harnik / Associated press)

Both projects face strong opposition over concerns over their impact on the environment and climate change – and this week’s news is expected to rally support for further protests.

“This is huge for people who have resisted new fossil fuel infrastructure and demanded alternatives, because this was the first major pipeline battle,” said Keith Stewart, senior energy strategist at Greenpeace Canada..

Beyond that, he said, Keystone also discussed how current and future environmental campaigns could be carried out.

“Keystone’s struggle represented a shift in strategy from the environmental movement and a growing recognition that we must work in partnership with, and often behind the leadership, Indigenous communities. “

There is no doubt that leaders in industry, government and the environment have learned a lot from Keystone XL’s long odyssey. And the lessons probably won’t be over after this week.

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