Edmonton

Jason Kenney says Biden would have hard time explaining Keystone XL position to Americans

Alberta premier's comments came after Joe Biden, the leading Democratic presidential contender, said Monday he would cancel the Keystone XL pipeline permit issued last year by President Donald Trump.

Next U.S. president will have to work with 'facts on the ground,' Alberta premier says

Alberta Premier Jason Kenney said Tuesday the Keystone XL project "needs to proceed" for the good of Canadians and Americans. (Jason Franson/The Canadian Press)

Likely U.S. Democratic presidential candidate Joe Biden will have a hard time explaining to Americans why he would halt a partially-constructed oil pipeline project, Alberta's premier said Tuesday.

Premier Jason Kenney said the Alberta government financed a portion of the Keystone XL pipeline's construction to ensure it proceeded in 2020. Whoever is elected U.S. president in November will have to work with "facts on the ground," Kenney said.

His comments came after Biden, the leading Democratic presidential contender, said Monday he would cancel the Keystone XL pipeline permit issued last year by President Donald Trump.

Kenney said Biden would have to answer to unionized workers who support the construction of the pipeline expansion, which would transport up to 800,000 barrels per day of oil about 1,900 kilometres from Hardisty, Alta., to Steele City, Neb., once built.

Alberta Premier Jason Kenney and Canadian Prime Minister Justin Trudeau share their thoughts on the importance of Keystone XL. 2:40

"As we hopefully begin to emerge from this pandemic, the public both in the United States and Canada will be increasingly focused on jobs and the economy, and that is why this project needs to proceed," Kenney said at a news conference in Edmonton.

"The recent attack on the North American energy industry by the OPEC dictatorships was an effort to undermine North American energy independence, which is important both to our livelihoods but also to our national security."

Even before the coronavirus pandemic sent demand for oil and global oil prices plummeting, Alberta had been grappling with bottlenecks in trying to export crude.

A Biden campaign policy director told CBC on Monday that cancelling Keystone XL was the right decision by former President Barack Obama in 2015, and would be the right decision now.

The permit for construction and operation of the pipeline across the Canada-U.S. border, approved by Trump in March 2019, can be terminated, revoked or changed at any time by a U.S. president alone, with no requirement to compensate owner TC Energy for any costs.

Limited power to fight a presidential order

James Coleman, a professor of energy law at Southern Methodist University in Texas, said Tuesday Biden could stop the project at any point by using a presidential executive order.

Although TC Energy could take legal action to stop the order, fighting it in court could take years, and the odds would be stacked against the company, Coleman said.

Biden's stance should be no shock to Alberta's government, Coleman said. The former U.S. vice-president has been less friendly to the oil and gas sector than former president Barack Obama was, he said. Obama also rejected Keystone's approval.

"Canada, Alberta, has been working for years now to change the mind of the Democratic party on this one and has not been successful thus far," Coleman said.

In March, Kenney's United Conservative Party government announced Alberta would invest $1.5 billion into construction of the pipeline this year and offer a $6-billion loan guarantee to TC Energy in 2021 to speed construction and create jobs.

The Keystone XL pipeline would bring oil from Hardisty, Alta., to Steele City, Neb. One of the key risks cited in this project, the political risk in the U.S. jurisdiction, where much of the pipeline is located, is largely out of control of the Alberta government. (Natalie Holdway/CBC)

Kenney said Tuesday that when his government made that decision, Biden's stance on Keystone was unclear.

"We made this strategic investment exactly because there was obvious political risk and the markets were not prepared to finance on a conventional basis a project with that kind of risk," Kenney said.

The premier said Alberta may be able to recoup some of that equity stake — he didn't specify how — and would consider filing a trade complaint, should Biden halt the pipeline.

"We have done an extensive legal analysis on those questions," Kenney said.

Moving oil without Keystone XL

In a Tuesday news release, Opposition NDP leader Rachel Notley called on the Alberta government to release more details about the funding deal with TC Energy.

Notley said Kenney had "placed a $7.5-billion bet on Donald Trump winning the White House," using Albertans' money.

But is the Keystone pipeline extension, which will connect to an existing pipeline to the U.S. Gulf Coast, essential for the survival of Alberta's oil industry?

Not necessarily, said Calgary analyst Stephanie Kainz, a senior associate at  RS Energy Group, now part of Enverus.

"We need one of either TMX [Trans Mountain] or KXL [Keystone XL] as long as we have Line 3 built," Kainz said.

"That would give us more than enough egress capacity to move crude out of Canada comfortably."

TMX, now under construction, will triple the volume of oil carried from Edmonton to Burnaby, B.C.

Enbridge's Line 3 will run from Hardisty, Alta., to Superior, Wisconsin. Environmental legal challenges in some states have delayed construction.

Completing Keystone XL would allow companies to get a better price for Alberta oil, Kainz said.

 

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