Alberta
A Trump Effort To Revive Keystone XL Would Likely Be Purely Symbolic
From the Daily Caller News Foundation
Of all the destructive actions President Joe Biden took related to energy policy during his four years in office, his stroke-of-a-pen decision on his first day in office to cancel the cross-border permit for the Keystone XL pipeline system as a political payoff to his environmentalist campaign funders was perhaps the worst.
It was bad enough that Biden took that action to cancel the $8 billion project absent any finding that operator Trans-Canada (now TC Energy) was in violation of any law or regulation of the United States. It was even worse that he took that action despite the fact that Trans-Canada had already spent over $3 billion building much of the project with hundreds of miles of pipe already in the ground by January 2021.
Worse still are the realities that, along with cancelling the project, Biden canceled as many as 10,000 high-paying American jobs during the construction of the project, left America more dependent on oil imports from hostile nations like Venezuela and Iran due to lost imports from Canada and even cost the province of Alberta an estimated $1.3 billion it stood to gain from the project’s completion.
But the most damaging impact of all emanating from Biden’s craven act of crony politics was the loss of trust in the consistent, fair application of American law and regulations it caused. The cancellation of Keystone XL made it vastly harder for big companies to secure financing for big projects that take years to permit and develop because funders could no longer assume U.S. laws would be applied based on merit rather than political fiat. That advantage over other parts of the world that the United States has always enjoyed was severely damaged.
Last week, we saw a flurry of stories by major media outlets that the Trump transition team is working on plans to reverse Biden’s ill-considered order and trying to revive the Keystone XL project. While that is certainly a laudable goal, developments that have taken place since 2021 will likely limit it to a purely symbolic act.
First, TC Energy no longer even owns the rights to the project or its remaining assets. Those assets, along with the rest of the previously existing Keystone Pipeline system, were spun off into a new entity named South Bow Energy in June of this year. A spokesperson for that company was reluctant to comment when asked about possible revival of Keystone XL, saying, “As a new company, our focus and priority at this point is to continue to deliver energy safely and efficiently. Part of South Bow’s long-term strategy is to grow our business.”
Second, a few months after Biden’s destructive action, TC Energy announced it had cancelled the project and would not be seeking to carry on the fight. As a result of the cancellation, TC Energy then removed the hundreds of miles of pipe that had already been installed into the ground so that it could be repurposed for use in other projects.
Third, the rights-of-way for the Keystone XL project are no longer in effect. Nor are the permits for the project. Thus, any effort to revive it by South Bow would necessitate a repetition of the painstaking, years-long process of reacquiring all those miles of rights-of-way and local, state and federal permits.
This brings us back to the most damaging aspect of Biden’s political payback: Any such effort would without doubt extend into the next presidential term to begin in 2029. Who is going to be willing to commit billions of now-inflated dollars (thanks largely to Biden and his team’s policies) to a pipeline project that might well end up being cancelled should voters decide to elect another Democrat to the presidency in 2028?
So, while the desire by the Trump team to restart Keystone XL is commendable, the facts on the ground almost certainly mean it would be a purely symbolic gesture.
This current presidency cannot end soon enough.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
Alberta
Alberta Premier Danielle Smith Discusses Moving Energy Forward at the Global Energy Show in Calgary
From Energy Now
At the energy conference in Calgary, Alberta Premier Danielle Smith pressed the case for building infrastructure to move provincial products to international markets, via a transportation and energy corridor to British Columbia.
“The anchor tenant for this corridor must be a 42-inch pipeline, moving one million incremental barrels of oil to those global markets. And we can’t stop there,” she told the audience.
The premier reiterated her support for new pipelines north to Grays Bay in Nunavut, east to Churchill, Man., and potentially a new version of Energy East.
The discussion comes as Prime Minister Mark Carney and his government are assembling a list of major projects of national interest to fast-track for approval.
Carney has also pledged to establish a major project review office that would issue decisions within two years, instead of five.
Alberta
Punishing Alberta Oil Production: The Divisive Effect of Policies For Carney’s “Decarbonized Oil”
From Energy Now
By Ron Wallace
The federal government has doubled down on its commitment to “responsibly produced oil and gas”. These terms are apparently carefully crafted to maintain federal policies for Net Zero. These policies include a Canadian emissions cap, tanker bans and a clean electricity mandate.
Following meetings in Saskatoon in early June between Prime Minister Mark Carney and Canadian provincial and territorial leaders, the federal government expressed renewed interest in the completion of new oil pipelines to reduce reliance on oil exports to the USA while providing better access to foreign markets. However Carney, while suggesting that there is “real potential” for such projects nonetheless qualified that support as being limited to projects that would “decarbonize” Canadian oil, apparently those that would employ carbon capture technologies. While the meeting did not result in a final list of potential projects, Alberta Premier Danielle Smith said that this approach would constitute a “grand bargain” whereby new pipelines to increase oil exports could help fund decarbonization efforts. But is that true and what are the implications for the Albertan and Canadian economies?
The federal government has doubled down on its commitment to “responsibly produced oil and gas”. These terms are apparently carefully crafted to maintain federal policies for Net Zero. These policies include a Canadian emissions cap, tanker bans and a clean electricity mandate. Many would consider that Canadians, especially Albertans, should be wary of these largely undefined announcements in which Ottawa proposes solely to determine projects that are “in the national interest.”
The federal government has tabled legislation designed to address these challenges with Bill C-5: An Act to enact the Free Trade and Labour Mobility Act and the Building Canada Act (the One Canadian Economy Act). Rather than replacing controversial, and challenged, legislation like the Impact Assessment Act, the Carney government proposes to add more legislation designed to accelerate and streamline regulatory approvals for energy and infrastructure projects. However, only those projects that Ottawa designates as being in the national interest would be approved. While clearer, shorter regulatory timelines and the restoration of the Major Projects Office are also proposed, Bill C-5 is to be superimposed over a crippling regulatory base.
It remains to be seen if this attempt will restore a much-diminished Canadian Can-Do spirit for economic development by encouraging much-needed, indeed essential interprovincial teamwork across shared jurisdictions. While the Act’s proposed single approval process could provide for expedited review timelines, a complex web of regulatory processes will remain in place requiring much enhanced interagency and interprovincial coordination. Given Canada’s much-diminished record for regulatory and policy clarity will this legislation be enough to persuade the corporate and international capital community to consider Canada as a prime investment destination?
As with all complex matters the devil always lurks in the details. Notably, these federal initiatives arrive at a time when the Carney government is facing ever-more pressing geopolitical, energy security and economic concerns. The Organization for Economic Co-operation and Development predicts that Canada’s economy will grow by a dismal one per cent in 2025 and 1.1 per cent in 2026 – this at a time when the global economy is predicted to grow by 2.9 per cent.
It should come as no surprise that Carney’s recent musing about the “real potential” for decarbonized oil pipelines have sparked debate. The undefined term “decarbonized”, is clearly aimed directly at western Canadian oil production as part of Ottawa’s broader strategy to achieve national emissions commitments using costly carbon capture and storage (CCS) projects whose economic viability at scale has been questioned. What might this mean for western Canadian oil producers?
The Alberta Oil sands presently account for about 58% of Canada’s total oil output. Data from December 2023 show Alberta producing a record 4.53 million barrels per day (MMb/d) as major oil export pipelines including Trans Mountain, Keystone and the Enbridge Mainline operate at high levels of capacity. Meanwhile, in 2023 eastern Canada imported on average about 490,000 barrels of crude oil per day (bpd) at a cost estimated at CAD $19.5 billion. These seaborne shipments to major refineries (like New Brunswick’s Irving Refinery in Saint John) rely on imported oil by tanker with crude oil deliveries to New Brunswick averaging around 263,000 barrels per day. In 2023 the estimated total cost to Canada for imported crude oil was $19.5 billion with oil imports arriving from the United States (72.4%), Nigeria (12.9%), and Saudi Arabia (10.7%). Since 1988, marine terminals along the St. Lawrence have seen imports of foreign oil valued at more than $228 billion while the Irving Oil refinery imported $136 billion from 1988 to 2020.
What are the policy and cost implication of Carney’s call for the “decarbonization” of western Canadian produced, oil? It implies that western Canadian “decarbonized” oil would have to be produced and transported to competitive world markets under a material regulatory and financial burden. Meanwhile, eastern Canadian refiners would be allowed to import oil from the USA and offshore jurisdictions free from any comparable regulatory burdens. This policy would penalize, and makes less competitive, Canadian producers while rewarding offshore sources. A federal regulatory requirement to decarbonize western Canadian crude oil production without imposing similar restrictions on imported oil would render the One Canadian Economy Act moot and create two market realities in Canada – one that favours imports and that discourages, or at very least threatens the competitiveness of, Canadian oil export production.
Ron Wallace is a former Member of the National Energy Board.
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