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Keystone XL failure reveals a broken U.S.-Canada trade relationship: PCA

Russell Hixson
Keystone XL failure reveals a broken U.S.-Canada trade relationship: PCA
PROVINCE OF ALBERTA — Materials of the Keystone XL Pipeline project sit in Oyen, Alta. The province and TC Energy formally left the project this month after the U.S. government did not go ahead with it.

The final nail has been hammered into the Keystone XL pipeline expansion’s coffin, prompting stakeholders to reflect on what could have been and what went wrong.

The Province of Alberta and TC Energy announced an agreement to exit the project and partnership last week despite roughly 150 kilometres of pipeline being laid.

Paul de Jong, president of the Progressive Contractors Association of Canada, said the project’s failure reveals a broken trade relationship with the U.S.

“At a high level there is a fundamental breakdown in what is supposed to be a reliable trade partnership between Canada and the U.S.,” said de Jong. “It takes time to ensure standards are met, but when a project like this has gone through such a rigorous regulatory review, it signals tremendous weakness and is something that should be attended to.” 

He explained the uncertain process doesn’t go unnoticed.

“The huge problem is investor confidence,” he said. “Investors are looking closely at different projects across the world and trying to determine where to put their funding.”

Investors are looking at processes that are fast and reliable.

“We have to wonder if they might take flight,” said de Jong, noting that Keystone would have produced 1,000 Canadian jobs through just construction and maintenance. “Having a project like this cancelled is a huge chain of opportunities lost.”

De Jong said the project was well researched and well engineered to be environmentally safe and that pipeline companies have a proven track record.

“To have this cancelled because of politics and poor political foresight is very disappointing,” he said. 

De Jong noted it is especially disheartening for Indigenous groups who in recent years have been looking to be involved and invest in major projects.

“This is a loss for them as well,” de Jong said.

The Canadian Association of Petroleum Producers (CAPP) also lamented the lost opportunity.

“CAPP is disappointed that President Joe Biden’s cancellation of the Keystone XL pipeline has resulted in the loss of thousands of jobs on both sides of the border, particularly at a time when private investment is needed for economic recovery. Workers, taxpayers, businesses and Indigenous equity partners are all impacted by the loss of opportunity,” said CAPP president Tim McMillan in a statement to the Journal of Commerce. “Canada must continue to develop greater market access for our resources. Canada’s natural gas and oil industry has an important role to play in providing lower-emissions energy and is committed to ongoing innovation to improve environmental outcomes.”

The project’s demise was also addressed by Alberta government officials, who announced they are now on the hook for millions of dollars.

“We remain disappointed and frustrated with the circumstances surrounding the Keystone XL project, including the cancellation of the presidential permit for the pipeline’s border crossing,” said Premier Jason Kenney. “Having said this, Alberta will continue to play an important role in a reliable, affordable North American energy system. We will work with our U.S. partners to ensure that we are able to meet U.S. energy demands through the responsible development and transportation of our resources.”

Final costs to the government are expected to be materially within $1.3 billion, in alignment with previously disclosed costs.

“We invested in Keystone XL because of the long-term economic benefits it would have provided Albertans and Canadians,” said Sonya Savage, energy minister. “However, terminating our relationship with TC Energy’s project is in the best interest of Albertans under current conditions. We remain undeterred in our commitment to stand up for Alberta’s energy sector and the hard-working people it employs.”

 

Follow the author on Twitter @RussellReports.

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