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Keystone XL getting edgy ahead of election
Despite warnings from Democratic campaign officials, it’s not clear whether Biden would halt Keystone XL construction; Alberta Premier Jason Kenney is counting on moderation
Gary Park for Petroleum News
If Joe Biden wins the White House you may hear an inward sucking sound north of the 49th parallel in Alberta and Saskatchewan.
That will reflect the state of high anxiety among a majority of residents in those two Canadian provinces as they face a threat issued earlier this year by Biden campaign officials that a new president would move swiftly to cancel permits allowing TC Energy to complete work on its US$11.5 billion Keystone XL pipeline.
KXL, as it’s better known, is designed to carry 830,000 barrels per day of oil sands bitumen over 2,690 miles from northern Alberta to Steele City, Nebraska, with the option of continuing to Houston and Port Arthur refineries on the Texas Gulf Coast.
The project has been in the works for 12 years and has been the source of costly legal and regulatory squabbles, culminating in a showdown when U.S. President Barack Obama ordered a halt to KXL, ignoring pleas from the Canadian and Alberta governments, followed by President Donald Trump’s removal of Obama’s roadblock.
Original in business for 10 years The original Keystone pipeline has for the past 10 years been delivering up to 590,000 bpd of the same crude bitumen as that planned for KXL to U.S. Midwest refineries. TC Energy plans to add 50,000 bpd to the system next year after signing new 20-year contracts with shippers.
It was built at a cost of US$7 billion and initially escaped the attention of fossil fuel opponents until environmentally minded supporters of Obama seized their opportunity to win over a president who was looking to demonstrate his commitment to tackle climate change.
Although Biden has yet to declare outright his intention to revoke the KXL permits, he partly showed his hand five months ago - at the same time the U.S. Supreme Court ordered a halt to all KXL work until a circuit court and the Supreme Court deliver their final rulings - by calling the “tar sands a very high pollutant.”
But exactly where he stands on KXL adds to confusion he has spread over his intentions for hydraulic fracking.
In the last 15 months he has presented a series of fracking options, from “making sure it is eliminated,” to insisting no fracking would be permitted on federal lands only - uncertainty that has troubled an estimated 21 states which use fracking to develop their oil and natural, notably Pennsylvania.
Backlash following debate Since the second Biden-Trump debate there has been a backlash in Pennsylvania, Ohio, Oklahoma and New Mexico against any bans they say could cripple their resource industries.
In a move to clarify his position, Biden said on Oct. 24 there would be “no ban on fracking in Pennsylvania, or anywhere else.”
Especially for Alberta, KXL is a vital underpinning of the province’s belief that it can still grow its oil production, heavily weighted to the oil sands, to 5 million bpd from the current 3 million bpd by 2030.
In a recent research note, Goldman Sachs said the lack of cross-border pipeline capacity poses a long-term challenge for getting Canadian production to market, although it did not rule out greater use of rail and barges.
James Rajotte, Alberta’s envoy in Washington, D.C., is reported to be lobbying hard in Congressional circles, selling lawmakers on an industry commitment to achieve net-zero carbon emissions by 2050 and negotiations to obtain an ownership stake in KXL for Indigenous communities.
Looking for moderation Clinging to every shred of hope, the Alberta and Saskatchewan governments believe Biden might live up to his reputation for moderation and openness to negotiation, but that doesn’t make much allowance for those who would help shape his strategy on climate change.
Oil sands leaders base a key element of their case on estimates that the oil sands generate only 0.15% of global greenhouse gas emissions.
“We are working with many people in the United States who support (KXL), including many people in the Democratic Party,” Alberta Premier Jason Kenney told reporters.
“We’re in constant contact with American senators and congressmen on both sides of the aisle, as well as governors and state legislators.”
Kenney said a number of U.S. trade unions and Indigenous groups in the U.S. and Canada are ready to speak in favor of KXL if there is a change in the U.S. administration.
“It would send a very, very negative message should a future U.S. administration cancel a project that’s partly owned by the Canadian government,” he said. “It would undermine the single most important trade relationship that the United States has in the world.
“The U.S. refineries on the Gulf Coast require huge amounts of heavy crude and, if it’s not coming from Alberta, then it’s coming from the socialist dictatorship and OPEC country of Venezuela.”
Kenney said that whoever is elected in the U.S. “we’ll be making these points as strongly as we possibly can.”
Ted Morton, a former energy and finance minister in Alberta, said a veto of KXL “would be another body blow to investor confidence in Western Canada.”
Saskatchewan Premier Scott Moe said he has made a case for KXL with U.S. governors along the KXL route and he expects Prime Minister Justin Trudeau to join that effort if Biden wins.
He said Trudeau should be an aggressive advocate for the Western Canadian energy industry and “more specifically the workers in that industry.”
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