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

Trudeau to seek 10 days of paid sick leave for all Canadian workers

Paid sick leave is key to keeping COVID-19 spread under control, prime minister says

City of Red Deer down to one confirmed active case of COVID-19

18 new cases were confirmed across the province Saturday

Bentley teacher injects online lessons with fun and creativity

‘Howe’s Historical Moments’ makes learning that much more memorable for the youngsters

Facing changes together: Your community, your journalists

The Rimbey Review covers the stories that matter to you and to our community

44% fewer passengers flew on Canadian airlines in March 2020 than in 2019

COVID-19 pandemic has hit airlines hard as travel remains low

Wetaskiwin RCMP arrest impaired driver following police car ramming

The suspect vehicle purposefully crashed into a parked police vehicle, pushing it into the ditch.

N.S. fire crews continue battling ‘out-of-control’ Porters Lake blaze

Word of the fire first emerged early Saturday afternoon

Technology, representation butt heads amid debate over resuming Parliament

The Liberals are now proposing four meetings a week until June 17

Most Read