The plug was finally pulled on the troubled Keystone XL pipeline project, and the implications are enormous not only for Keystone XL. The cancellation also impacts the Alberta government, environmentalists, and similar pipeline projects.
It is improbable that US President Biden’s decision to scrap the cross-border permit will be reversed, pushing TC Energy into addressing the significant fallout.
Alberta to recoup government investment
The city of Alberta will need to initiate processes to recoup its billion-dollar investment in the Keystone XL pipeline project.
It invested roughly $1.5 billion with loan guarantees added to jumpstart what was already a problematic project beleaguered by suits and protests in the US. This amount was supposed to get the Canadian leg of the project up and running.
However, with the Keystone XL pipeline project binned, Alberta has massive work to do to retrieve its investment. It first needs to start the liquidation process to offset costs.
It is uncertain what can be done with the already installed underground pipeline. However, according to former TC Energy exec Dennis McConaghy, spare parts can still be sold in the global market.
The bad news is that Alberta cannot recoup costs covering camps, labor, and engineering works. McConaghy adds that the company needs to undergo litigation to salvage what it can and recover as much as possible from its initial investment.
Legal remedies explored
Alberta is investigating all available legal options following the cancellation of the Keystone XL Project.
In the past, TC Energy sued the Obama administration when it stopped the Keystone XL project in 2015. It alleged that in doing so, Obama went beyond his constitutional powers. Nevertheless, the lawsuit did not push through after Donald Trump gave the project the go signal after being elected President.
Aside from a possible suit, Professor James Coleman of the Southern Methodist University said that another route for TC Energy and Canada to recoup costs would be to challenge the termination under the North American Free Trade Agreement.
Coleman explained that both parties could initiate a claim on the group of discriminatory treatment. However, the prospects are dim since nobody has prevailed against the US in a NAFTA suit.
Implications for Kenney, environmental groups
Alberta Premier Jason Kenney was put on the defensive following the cancellation of the pipeline project. The termination dealt a big blow to his touted promise of jobs and business for Alberta.
However, he brushed off the criticism, sharing that a $1.3 billion hydrogen project for Edmonton is already underway.
Government executives were quick to defend Alberta’s commitment to the pipeline. Energy Minister Sonya Savage reported that the government was in good faith when it threw its full support. The pipeline promised higher oil prices, higher oil sands production, and over $30 billion in annual royalties.
Meanwhile, environmental groups received a boost and valuable insight from the cancellation. Keith Stewart, Greenpeace Canada senior energy strategist, said that the Keystone XL campaign paves the way for how environmental campaigns should be conducted in the future. Steward adds that environmental groups need to work with and collaborate with Indigenous communities.
