Pipeline projects in North America seem to come with built-in drama in the 21st century. We’ve just seen the latest installment in the Keystone XL saga.
U.S. President Joe Biden cancelled a key presidential permit for the pipeline border crossing on Jan. 20, his first day in office. It was one of his election promises, and his team warned leading up his inauguration that it would happen quickly.
The decision overturns former president Donald Trump’s 2017 approval of the $8-billion US cross-border pipeline expansion.
Trump’s approval, in turn, overturned the Obama administration’s 2015 rejection of the project.
When TransCanada (now called TC Energy) first proposed the project in 2005, Keystone XL wasn’t seen as a big deal. It was just one among thousands of pipelines across North America. The 1,947-kilometre pipeline was designed to carry 830,000 barrels a day of crude oil from Alberta’s oilsands to Nebraska, where another existing pipeline would take the oil to refineries on the Texas Gulf coast.
Then the project became a symbol in the fight against climate change. Grassroots organizations on both sides of the border — but especially in states along the pipeline’s proposed path — started campaigning against the project. Supporters also rallied, determined, even after Obama had rejected it, to keep fighting for the project and the jobs it would create.
And thus a pipeline project served up high drama and high stakes.
Since the 2017 approval, some 200 kilometres of pipe have been installed, including across the border. Construction also started on pump stations in Alberta and some U.S. states.
With approval pulled, TC Energy Corp. has suspended work on the project and plans to eliminate more than 1,000 construction jobs.
Without Keystone, B.C. is now the primary route for Alberta oil to access lucrative offshore markets, particularly Asia. The plan to twin the existing Trans Mountain line will triple its capacity to bring oil to an expanded terminal in Burnaby. As has been pointed out in these pages, if construction goes according to schedule, we’ll see many more tankers glide past our Island shores beginning in late 2022.
Trans Mountain has its own on-again, off-again, dramatic saga, as we know. Court challenges kept the project’s fate uncertain for years. When Texas-based Kinder Morgan pulled out in 2018 because of political and environmental opposition to the project, the Trudeau government purchased the pipeline. Then it fought off more legal and political challenges, including those from B.C.’s NDP government.
Last July, the Supreme Court of Canada dismissed an application for leave to appeal from a group of B.C. First Nations who sought to challenge the federal cabinet’s second approval of the project.
High-profile protests along the pipeline’s Lower Mainland route slowed work, too, as have pandemic-related restrictions.
The federal government says it bought the line because the expansion is essential to Canada’s economy. The purchase — at $4.5 billion — also short-circuited legal action against the governments involved by Kinder Morgan that may have been even costlier.
Under international trade agreements, such as NAFTA and World Trade Organization treaties, companies can sue for losses caused by governments’ policies and actions. Since 1994, Canada has been sued at least 39 times by foreign companies claiming Canadian policies have violated their rights under NAFTA. Canada has lost or settled eight cases and paid more than $215 million in compensation.
In 2016, in response to Obama’s rejection of the Keystone project, TC Energy launched legal action against the U.S., seeking $15 billion US in damages. It withdrew the claim after Trump was elected. Now that Biden has ended the project, the company may well undertake a similar trade appeal.
It may not win — the U.S. has not yet lost a single case or paid out a single dollar in compensation.
As for Alberta oil producers who’d looked forward to shipping crude via an expanded Keystone, six years of low oil prices and declining interest by investors have lowered their production expectations. They also have alternatives — the replacement of an Enbridge-owned Edmonton-Wisconsin pipeline, and the Trans Mountain expansion to the coast here, which will carry the bulk of Alberta’s crude to offshore markets.
But B.C. has more pipeline drama in the wings. Trans Mountain hasn’t yet been completed, and there’s the Coastal GasLink pipeline being built to carry natural gas from the Dawson Creek area to Kitimat to keep an eye on. We’re likely to hear more about both.
