Lawsuits likely if Democrat Biden cancels Keystone XL, Canadian observers warn

Lawsuits likely if Democrat Biden cancels Keystone XL, Canadian observers warn

Lawsuits likely if Democrat Biden cancels Keystone XL, Canadian observers warn

CALGARY — Billions of dollars in lawsuits will likely result if Joe Biden is elected U.S. president this November and carries out a threat to cancel the presidential permit allowing operation of the Keystone XL pipeline, Canadian observers say.

The promised action by the leading U.S. Democratic Party candidate, confirmed by his campaign office on Monday, would also deprive U.S. Gulf Coast refineries of a fresh supply of vital Canadian heavy oil, leaving them dependent on imports from countries such as Saudi Arabia and Venezuela, they add.

“This is all grandstanding and it doesn’t look good on the politicians,” said Hal Kvisle, a former CEO of TC Energy and current chairman of both the Business Council of Alberta and oil and gas producer ARC Resources Ltd.

“TC would have a multibillion-dollar lawsuit against the U.S. government if they kill the project that’s already been approved.”

The company green-lighted Keystone XL on March 31 following the Alberta government’s pledge to take a $1.5 billion equity stake and provide a $6 billion loan guarantee to ensure work started immediately.

A month later, TC Energy said it would adjust its plans but forge ahead with construction after a U.S. court ruling that invalidated a nationwide permit allowing pipelines to cross waterways.

The company said Tuesday it had nothing to add to its Monday statement that ignored the comments from the Biden campaign, instead extolling the virtues of Keystone XL as an engine of investment and jobs growth.

The Biden declaration represents a significant risk for the US$8-billion project and would likely result in Calgary-based TC Energy re-examining how prudent it is to continue construction, said financial analyst Jennifer Rowland of Edward Jones.

Alberta’s backing, however, mitigates the financial concern.

“I think it becomes potentially a little bit easier for TC to go ahead and spend knowing that the initial money is really being backed by the government,” she said in an interview.

“That does take some pressure off so that they can continue. They can gamble because it’s not their money.”

Rowland said it would be “naive” to think that Biden wouldn’t kill the pipeline simply because it has been partly built.

There are three oil export pipelines currently under construction. The Trans Mountain pipeline expansion is to add 590,000 barrels per day though the Vancouver region, while 370,000 bpd is expected from the Line 3 replacement project through the United States.

But Keystone XL’s 830,000 bpd of capacity, if anything, is more important for Canada, said Dennis McConaghy, a former TransCanada executive and author of a book about the pipeline for which initial applications were made in 2008.

“KXL was always the most strategic of those three pipelines,” he said on Tuesday.

“It went to the market that most wants our heavy oil. It’s a much more direct route, it provides the greatest economy.”

The project’s potential value in higher oil prices and higher royalties for government make Alberta’s investment worthwhile, in spite of the risk, he said.

Richard Masson, an executive fellow with the School of Public Policy at the University of Calgary, said construction of the two other pipelines will satisfy the immediate need but Keystone XL will eventually be required if Alberta’s oilsands output continues to grow at around 100,000 barrels per day each year as forecast.

Spokeswoman Sonja Franklin of oilsands producer Cenovus Energy Inc. says the company won’t speculate on the outcome of the U.S. election and remains a firm supporter of the pipeline.

This report by The Canadian Press was first published May 19, 2020.

Companies in this story: (TSX:TRP, TSX:CVE, TSX:ARX)

Dan Healing, The Canadian Press

Keystone XL

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta’s chief medical officer of health Dr. Deena Hinshaw and Premier Jason Kenney say the province would look at adding additional COVID-19 measures in the coming weeks if the virus continues to spread. (Photo by Government of Alberta)
Walk-in COVID-19 vaccination clinic to open in Red Deer

Alberta adds 1,345 new cases of the virus

Public health restrictions on non-essential travel and vacation bookings are being increased in B.C. (B.C. government)
COVID-19: B.C. announces signage along Alberta border to discourage non-essential travel

B.C. extends COVID-19 indoor dining, group fitness ban until May 25

A vial of some of the first 500,000 of the two million AstraZeneca COVID-19 vaccine doses that Canada has secured through a deal with the Serum Institute of India in partnership with Verity Pharma at a facility in Milton, Ont., on Wednesday, March 3, 2021. THE CANADIAN PRESS/Carlos Osorio - POOL
Alberta begins rolling out AstraZeneca COVID vaccine for those aged 40 or older

There are more than 70 pharmacies offering AstraZeneca, including 26 offering walk-in appointments

A child writes in their school notebook during a home schooling session in Cremona, Alta., Monday, March 23, 2020, amid the worldwide COVID-19 pandemic. Thousands of students in Calgary will shift to online learning as of today in a bid to curb rising COVID-19 infection rates in the city. THE CANADIAN PRESS/Jeff McIntosh
Online classes begin for some Alberta students amid rising COVID-19 cases

Alberta currently has the highest rate of active COVID-19 cases in the country

In this image from NASA, NASA’s experimental Mars helicopter Ingenuity lands on the surface of Mars Monday, April 19, 2021. The little 4-pound helicopter rose from the dusty red surface into the thin Martian air Monday, achieving the first powered, controlled flight on another planet. (NASA via AP)
VIDEO: NASA’s Mars helicopter takes flight, 1st for another planet

The $85 million helicopter demo was considered high risk, yet high reward

sign
Alberta Biobord Corp. recently hosted a virtual open house from Stettler

The company plans to develop a fuel pellet and medium density fibre board (MDF) plant near the community

The Rogers logo is photographed in Toronto on Monday, September 30, 2019. THE CANADIAN PRESS/Tijana Martin
Rogers investigating after wireless customers complain of widespread outage

According to Down Detector, problems are being reported in most major Canadian cities

People are shown at a COVID-19 vaccination site in Montreal, Sunday, April 18, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
Nothing stopping provinces from offering AstraZeneca vaccine to all adults: Hajdu

Health Canada has licensed the AstraZeneca shot for use in people over the age of 18

Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during Question Period in the House of Commons Tuesday December 8, 2020 in Ottawa. The stage is set for arguably the most important federal budget in recent memory, as the Liberal government prepares to unveil its plan for Canada’s post-pandemic recovery even as a third wave of COVID-19 rages across the country. THE CANADIAN PRESS/Adrian Wyld
Election reticence expected to temper political battle over federal budget

Opposition parties have laid out their own demands in the weeks leading up to the budget

Each spring, the Okanagan Fest-of-Ale is held in Penticton. This year, as a result of the COVID-19 pandemic, the festival will not be held. However, beer is still available. How much do you know about this beverage? (pxfuel.com)
QUIZ: How much do you really know about beer?

Put your knowledge to the test with this short quiz

Pall Bearers carrying the coffin of the Duke of Edinburgh, followed by the Prince of Wales, left and Princess Anne, right, into St George’s Chapel for his funeral, at Windsor Castle, in Windsor, England, Saturday April 17, 2021. (Danny Lawson/Pool via AP)
Trudeau announces $200K donation to Duke of Edinburgh award as Prince Philip laid to rest

A tribute to the late prince’s ‘remarkable life and his selfless service,’ the Prime Minister said Saturday

Most Read