TC Energy considers selling steel among next steps after Keystone XL cancellation
Company expects 'substantive' charge after U.S. permit pulled for proposed pipeline
TC Energy is considering selling steel and other spare equipment from its Keystone XL project as it continues to decide its next course of action on the failed pipeline proposal.
Almost one month after U.S. President Joe Biden pulled the permit for the project, Calgary-based TC Energy is still assessing its options and looking at how it will recoup expenses related to Keystone XL.
The company has laid off more than a thousand workers as construction was halted on the pipeline last month and it is now looking at selling its inventory of pipe and other materials.
"This is a very complex process, and as we evaluate our path forward, we have begun to immediately wind down our construction activities in both Canada and the U.S.," said Bevin Wirzba, an executive vice-president with TC Energy, during a conference call with investors on Thursday.
"It's going to take some time to work with our partners and customers to determine what those exact next steps will look like."
TC Energy said it expects to take a "substantive" charge when it reports its results for the next financial quarter due to the cancelled project, although the company would not say what the size of the writedown could be.
Several analysts asked company officials about the project's future.
"They're not saying, frankly, that it's officially dead, but practically speaking, they're moving on," said analyst Elias Foscolos, with Industrial Alliance Securities, in an interview.
Partners in the project include the Alberta government, which invested billions of dollars to support the project. Alberta Premier Jason Kenney previously said he is prepared to "use all legal avenues available to protect its interest in the project."
The Keystone XL pipeline saga began when the project was first announced in 2005.
The 1,897-kilometre pipeline would have carried 830,000 barrels of crude a day from the oilsands in Alberta to Nebraska. It would then have connected with the original Keystone pipeline that runs to refineries on the U.S. Gulf Coast.
Biden's revoking of the permit was part of a series of executive orders aimed at tackling climate change that also included re-entering the Paris climate accord.
The move effectively cancelled the project, with TC Energy announcing the same day that it would lay off a thousand workers related to the project.
The news was also a blow to Alberta's United Conservative government, which had backed the project with an investment of $1.5 billion plus loan guarantees.
Keystone opponents — who have fought the project with protests and in the courts — celebrated Biden's decision. For years, they had been raising a red flag over the harm they said the pipeline would have on the environment and climate change.
But Biden's move has been criticized by some U.S. politicians concerned about the impact on American workers, the energy sector and future investment.
Kenney is also among those expressing worry about what the decision could mean for existing cross-border pipelines that also face opposition.
In an interview earlier this week, Dennis McConaghy, a former vice-president with TC Energy, said he believes the company should be looking at meeting Biden's decision with legal action.
"They should be prepared to test that just as a matter of common law, let alone under NAFTA, that they have claims that they should be pursuing," he said Tuesday.
In his view, the economic argument for the project still stands, saying it would be the best way of getting Alberta crude to its highest-value market, the U.S. Gulf Coast.
He suggested Biden's decision will leave a legacy that will make it difficult for companies to consider risking billions of dollars on a project when one White House administration can provide a permit "and have it revoked capriciously when another one comes in."