What difference does Keystone XL make for Saskatchewan?
Expert says Western Canada is facing a 'differential crisis' for oil
Saskatchewan Premier Scott Moe called a construction halt to the Keystone XL pipeline "disappointing."
A U.S. judge ruled the Department of State made several violations when it approved the project.
On social media, Moe said record-high oil differential costs hit everyone.
Bronwyn Eyre, Minister of Energy and Resources, issued a statement Friday on the decision. It read, in part: "Without new pipeline capacity, demand for rail transportation will continue to increase, which will inflate transportation and other costs for Western Canadian oil producers, as well as other rail-dependent industries such as mining and agriculture.
Additional pipeline capacity is also necessary to address the additional supply expected following the completion of several oil sands projects in Alberta over the next few years."
Samir Kayande with RS Energy Group, a Calgary-based research and data intelligence firm based, said Western Canada is facing a "differential crisis."
"There is more oil that wants to move then there is pipeline capability to move it," Kayande said.
"How the market expresses that is that it drops the price until somebody says, 'Well, I don't want to move my oil anymore.' "
Kayande answered some questions about what difference the Keystone XL pipeline could make for the province.
CBC: What does Keystone XL matter to Saskatchewan?
Kayande: What Keystone XL and what new pipeline projects are is that they're a sense of looking forward, right? What does the next two years look like and then after the next two years what does the next five years and the next 10 years after that look like?
In the zero- to two-year timeframe this decision has absolutely zero impact. In the two- to five-year time frame that impact is more material because this court ruling is actually going to, at the very least, delay the progress of this pipeline.
What happens if and when Keystone XL gets built?
Once Keystone is in operation what you will have is a little bit more transportation capacity then there is oil to fill it and so then the cost of that transport drops essentially. And so what that means is folks who don't have space on the pipe can at least find their way onto either that pipe as walk-up shippers or ... onto another pipe that has more room on it because Keystone is now carrying additional volumes.
The way to think about it is that even though there's not a lot of Saskatchewan shippers or any Saskatchewan shippers directly on Keystone XL they'll still benefit from having overall a new pipeline built. Just as when you're in a constrained traffic zone, just because you don't happen to take the route that a new freeway takes, if enough cars move down that section then it'll relieve the traffic in your neighbourhood.
Is Keystone XL good for Saskatchewan's economy?
Yes, it will help because it means that Saskatchewan oil producers will realize a higher price for their oil. By realizing a higher price for your oil it actually increases the ability to invest in additional oil production and that means jobs.It also means royalties.
Resource royalties are important to the Saskatchewan government.
This interview has been edited for length and clarity.