The Never-ending Saga For Keystone XL Pipeline
The never-ending saga continues for the Keystone XL pipeline.
CALGARY (Bloomberg) –Barack Obama tried to stop the Keystone XL pipeline. Donald Trump tried to revive it. If Joe Biden is elected, he says he’ll block it again — and the pandemic may help him kill the project for good.
Biden has pledged to rescind a key permit granted by Trump for the pipeline, a 1,210-mile (1,950-kilometer) project designed to take 830,000 barrels of crude a day from Alberta to Nebraska. Keystone XL has been on its death bed before, only to come back. But this time the politics are shifting at a moment when demand for oil is weak and other pipelines are moving toward completion more quickly.
“The question should be, is Keystone XL necessary?” said Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners LP in Toronto. “The answer to that is quite clearly no.”
The end of Keystone XL would bring down the curtain on a 12-year drama that has come to symbolize the clash between environmentalists and the oil industry.
A protracted battle over pipelines in Canada has led to some strategy shifts in the oil sector. Calgary-based Cenovus Energy Inc. said Sunday it will buy Husky Energy Inc. for C$3.8 billion ($2.9 billion) in stock. Cenovus executives said the acquisition will boost the company’s refining business, making it less exposed to pipeline problems that have depressed prices for Canadian heavy crude.
Rival Projects
The Keystone project has been fought over ever since it was first proposed in 2008 by Calgary-based TC Energy Corp. Canadian oil producers argue it will give U.S. Gulf Coast refineries access to much needed heavy crude to replace lost production from Venezuela and other Latin American countries. Opponents say the pipeline will allow the higher-carbon oil sands to grow, accelerating climate change.
After years of delays in making a decision, Obama rejected the project in 2015. Just over a year later, newly-elected President Trump granted TC Energy a permit to build, though court challenges have hindered construction.
The Canadian pipeline operator has focused its case on the economic impacts. More than 2,500 people are already working on the right-of-way for the pipeline, spokesperson Terry Cunha said in an emailed statement. “Keystone XL will generate substantial economic benefits to more stakeholders and strengthen North American energy security,” Cunha said.
But two other Canadian oil export pipelines, the Trans Mountain expansion to Vancouver and Enbridge Inc.’s new Line 3 to the U.S. Midwest, are under construction with fewer regulatory or legal hurdles ahead of them. They are being built as Alberta oil sands producers, reeling from the pandemic, have been cutting capital budgets and focusing on cash flow over growth. For now, they may be more than enough to alleviate pipeline shortages that existed before the pandemic