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 its 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.
Plans to revoke the permit for the $8 billion pipeline on Inauguration Day 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.
Calgary company warns of thousands 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.”
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.”
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.
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