Good morning. It’s James Keller in Calgary.
TC Energy’s decision this week to terminate the Keystone XL pipeline was hardly a surprise.
Joe Biden’s win in last year’s U.S. presidential election, after campaigning to kill the project, still left some holding out faint hope he could be convinced to change course. But his inauguration-day executive order pulling the pipeline’s cross-border permit seemed to leave no path to revive the project, which would have provided a much-needed direct route for Alberta crude.
The Calgary-based company said it made the decision after a comprehensive review of its options. TC clearly determined there were none left, and will instead focus on safely winding up the project.
The reaction from the business community was muted, given the apparent preordained nature of the decision, and while TC’s stock price dropped the day after the cancellation, it has already rebounded to above where it started.
The response in Alberta, however, was more aggressive. The province has long held up Keystone XL as key to Alberta’s oil sector, which has struggled for years in the face of constrained pipeline capacity and low prices. And it’s not the first pipeline to fail, instead joining a list that includes Enbridge’s Northern Gateway and TC’s Energy East pipelines.
Worse for Alberta is that the government invested more than $1-billion last year when it appeared TC Energy was prepared to walk away after struggling to find private investment. The province expects the cancellation will leave it on the hook for $1.3-billion.
Mr. Kenney has said repeatedly that his government would use legal challenges to recoup its losses from the United States, namely by filing a lawsuit under the North American free-trade agreement’s Chapter 11 provisions, which remain in effect.
This week, the Premier said that’s still on the table and the government is talking to TC Energy about strategy. The company, however, has not publicly said what it’s prepared to do or if it is even interested in legal action.
Experts have said Alberta likely wouldn’t have standing on its own and would need TC Energy to join such a case. But experts have cast doubt on whether there’s much of a case under NAFTA.
The fact that the pipeline was approved by former president Donald Trump with an executive order, rather than through traditional regulatory channels, is unusual and probably would hurt a legal claim, Kristen van de Biezenbos, an associate professor at the University of Calgary’s law school who specializes in energy law, told me.
That’s because presidents have unfettered power to issue, or revoke, executive orders. And because no other pipeline has ever been approved through executive order, there’s no comparable projects for TC to point to in order to show the company was treated unfairly in comparison.
Mr. Kenney also said the province intends to intervene in a lawsuit filed by 23 Republican-led states challenging Mr. Biden’s executive order.
The Globe’s Jeffrey Jones writes that Keystone XL’s cancellation came on a day of demarcation for Canadian energy. As TC was terminating its pipeline, the five largest oil-sands producers announced plans to achieve net-zero CO2 emissions by 2050.
“The very fact that the companies in a sector responsible for 11 per cent of Canada’s emissions are beginning a process that, one assumes, can be tracked and analyzed shows they are no longer counting on a future of unlimited growth as envisioned when Keystone XL was devised and debated.”
David Berman writes that TC Energy will do just fine without Keystone: “TC Energy’s announcement on Wednesday that it had cancelled the project was really just a formal declaration that observers knew was coming – analysts adjusted their targets for the stock price back in January – which was why the share price barely moved on the news.”
This is the weekly Western Canada newsletter written by B.C. Editor Wendy Cox and Alberta Bureau Chief James Keller. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here.