OTTAWA – One of President Biden’s first steps in taking office was to remove the approval for the Keystone XL pipeline, the long-debated project to move crude oil from Canada’s oil sands to the United States.
But Prime Minister Justin Trudeau and elected officials in Alberta, the Canadian province where the pipeline originated, are not giving up anytime soon.
The nearly 1,200-mile long Keystone XL was to transport crude oil from Canada to Nebraska, where it would be connected to an existing network to deliver the crude oil to refineries in the Gulf of Mexico.
With the pipeline cancellation, Mr Biden took some of his first steps to reverse the legacy of the Trump administration, which revived the project after it was rejected by President Barack Obama in 2015.
Mr. Trudeau has long supported the pipeline to balance its priority in fighting climate change with supporting Canada’s energy industries in Alberta and other western provinces.
Even before Mr Biden’s announcement, the Alberta Prime Minister sent out a statement saying he would object and swear legal action.
“This is more than just Keystone XL,” said Prime Minister Jason Kenney, an often fierce conservative critic of the Trudeau liberal government. “This is about Canada-US relations, this is about tens of thousands of jobs, this is about billions of dollars in revenue that governments have to pay for things like health care.”
Canada exports around 80 percent of its oil to the US, with most of it coming from the oil sands, which along with the energy industry is vital to Alberta’s economy. Even during the current drop in oil prices, the sector still provides around 140,000 jobs, and before the collapse in oil prices, oil and gas industry royalties represented around 20 percent of Alberta’s budget.
The oil industry had pushed the development of the pipeline in hopes that a direct route to the Gulf of Mexico, where refineries are equipped to process the heavy, low-quality oil found in Canada’s inland oil sands, would eliminate shipping bottlenecks and lower prices, Andrew Leach said , an energy and environmental economist from the University of Alberta at Edmonton.
However, the pipeline project has been fiercely rejected by environmentalists, American farmers and ranchers, and indigenous groups in the United States who feared it would change and potentially damage their land.
“President Biden’s decision to reject Keystone XL on its first day heralded a new era,” said Anthony Swift, director of the Canada Project at the Washington-based Natural Resources Defense Council, an environmental group that has long criticized the oil sands.
“New fossil fuel development projects are put through a kind of climate test that assesses whether these projects are in line with our international climate goals,” added Swift.
American environmentalists also targeted the pipeline to shut down the oil sands, which they believe is a particularly dirty source of energy. But even with Keystone’s death, that effort appears to be foiled.
In addition to the railways, there are numerous pipelines between the two countries through which Canada sends oil to American refineries. Two more Canadian pipelines for the US are currently being expanded, so production in the oil sands is likely to continue.
The question, however, said Mr Leach, is whether these other pipelines are also targets of the new US administration: is Mr Biden saying we basically don’t want cross-border pipelines, or we just don’t want this pipeline? “
One of the pipelines currently being expanded is in the American Midwest. Another connects the oil sands with a port in British Columbia that can ship refineries on the Pacific coast of the United States and that also has a branch line to Washington State. Both were attacked by protests.
There is another pipeline running from western Canada through the American Midwest that Michigan has proposed to withdraw for environmental reasons. This move could clog much of the pipeline route.
Mr Biden’s announcement to cancel the Keystone XL fulfilled a promise he had repeatedly made on the campaign trail as part of his climate change agenda, even though the president did not announce any future plans for the other pipelines shared by Canada and the United States.
In a statement released Wednesday prior to Mr Biden’s intervention, TC Energy, the company that owns Keystone, said it was disappointed with Mr Biden’s decision and would cease work on the pipeline pending its options check.
The termination will “result in the layoff of thousands of union workers and negatively impact industry’s pioneering commitments to use new renewable energies as well as historic equity partnerships with indigenous communities,” the company said.
Chris Bloomer, president and chief executive officer of the Canadian Energy Pipeline Association, said Keystone XL’s demise had more to do with opposition to the oil sands than with the project itself.
“It seems that regardless of the industry there is no basis for a middle ground or compromise,” he said from Calgary. “The environmentalists’ appetite to turn things off is insatiable.”
The likelihood of Mr. Kenney or TC Energy getting through litigation against Mr. Biden is slim, said Kristen van de Biezenbos, a law professor at the University of Calgary in Alberta.
Resolving challenges in American courts or through investor provisions on trade deals could take years, likely fail, and ultimately fail to restore the presidential approval required for the pipeline, she said.
And a Canadian win in court wouldn’t remove the Keystone Project’s other hurdles – legal challenges from environmental groups, regulatory barriers within states, and the adverse economic climate that has deterred investors and stalled construction.
“I am really amazed at the wisdom to pursue this further,” she said. “It would be faster to build a pipeline in Canada.”