With U.S. President Joe Biden cancelling the authorization for the Keystone XL pipeline, attention turns to the Trans Mountain expansion project– from those for and against. It’s owned by the federal government and is under building and construction, however numerous question if the oil pipeline will ever be finished.
The town of Oyen in southeastern Alberta has actually been taking pleasure in an uncommon thing in the province these past few months: an economic boom.
The community has actually been bustling with pipeline workers who showed up by the hundreds last summertime to assist develop the Canadian leg of the Keystone XL pipeline.
Doug Dingman, who owns a grocery and liquor store in the neighborhood, stated his service has been up 20 percent with the crews in the area and he believed they ‘d be around until next fall.
Those employees might soon start hitting the highway out of town as TC Energy revealed a suspension in the job on Wednesday, after U.S. President Joe Biden pulled the license for the proposed pipeline and rejoined the Paris environment accord as anticipated.
” I’m still quite upset that he [Biden] is going to shut it down,” stated Dingman, who stresses over the implications for the oilpatch, the province and the economy.
But the situation also has him questioning other important tasks for the province’s oil and gas sector, including the Trans Mountain pipeline expansion.
The TMX project is owned by the federal government and is under construction, however some Albertans continue to fret it will never be completed.
” I actually don’t think that’ll occur, either,” he said. “I believe that B.C. is going to obstruct everything.”
All eyes on TMX
No doubt, the pressure from the oilpatch on the prime minister to finish Trans Mountain will heighten after this week.
Like lots of, Mark Salkeld was not shocked by the Biden decision, however is still left feeling ” dissatisfaction and aggravation,” stated the executive with Katch Kan, an Edmonton-based oilfield service company.
” We can’t be strangled by the U.S. We’ve got lots [of oil] moving there, no doubt about it, however there’s lots more yet to move,” he said, suggesting there will be renewed oilpatch interest in any export proposition whether it’s a pipeline, rail job, or some other option
Lots of officials are expecting improved relations in between Canada and the United States under President Joe Biden, but his executive order cancelling the Keystone XL pipeline dealt some of those hopes an early blow– especially in Alberta. 2: 02
The Trans Mountain growth has faced a variety of its own problems, yet building and construction continues the pipelines that will transport oil from Edmonton to the Vancouver area for export. Previous legal and regulatory obstacles, the building and construction was just recently stopped briefly after a series of safety incidents.
” I don’t believe even if there’s no other nation to deal with on that project that there aren’t going to be considerable difficulties,” said Connie Van der Byl, director of Mount Royal University’s institute for ecological sustainability in Calgary.
In reality, the demise of Keystone XL might rejuvenate challengers of Trans Mountain to attempt to stop that pipeline project too, she stated.
” Total, this is another signal to Alberta and those gotten in touch with oil and gas that it is difficult times. You have to have empathy for those in the industry,” stated Van Der Byl, who worked for TC Energy as a service expert in its natural gas department more than a decade back.
Climate policy, demand unsure
Alberta’s oil market has desired more export pipeline capacity for many years in order to lower the danger of costly bottlenecks, like the ones that struck the sector in 2018 When export pipelines are complete, there can be stockpiles in the province, which drives down costs and forces more business to move oil by rail. It’s the reason the Alberta federal government had a curtailment policy just recently in place to restrict the amount of oil production and keep higher prices.
The existing Trans Mountain pipeline is running at maximum capability.
For many years, Keystone XL was viewed as a requirement by the oilpatch, but evaluating the effect of losing it now mainly depends upon where environment policies, world oil demand and Canadian oil production is headed.
For example, the latest modelling by the Canada Energy Regulator shows a need for Keystone XL, the Trans Mountain expansion, and Enbridge’s Line 3 pipeline under its referral circumstance, which presumes “an absence of future domestic and global environment policy action.”
Nevertheless, under what the regulator calls its evolving situation, Canada brings in new greenhouse-gas reducing steps to meet its stated climate targets Canadian oil and gas production decreases, and there might be adequate export capability with Enbridge’s Line 3 and the Trans Mountain growth.
But that’s still assuming those projects can be constructed. Considering all the hurdles pipelines have actually faced in the last decade, that’s no assurance. The threat is why the federal government chose to acquire Trans Mountain and why the Alberta government devoted billions of dollars to TC Energy in 2015.
Stephanie Kainz is a senior relate to the intelligence team at Enverus, an energy data analytics firm in Calgary. She expressed doubts for months about the future of Keystone XL, however she feels great about Trans Mountain getting constructed.
” On the heavy crude front, I believe that Trans Mountain is important– it does supply that additional capability,” she stated.
The task continues to face determined opposition, including demonstrations and blockades, from groups concerned about increased tanker traffic, oil spills, and environment change.
Kainz thinks there’s broad assistance for the project, but she stated the federal government and Trans Mountain require to deal with stakeholders to assure neighborhood members that live along the pipeline system that the line “will be safe and that they’ll be safe.”
Plan B for KXL
For now, the Alberta government and TC Energy will consider their next relocations, which could consist of pursuing legal action to recoup their investment, like the company briefly tried in 2016, or starting the liquidation procedure of pipe and other assets to help balance out costs.
For TC Energy, there will be frustration, but it’s simply among many jobs the company is pursuing. Thinking about the company operates throughout North America with a variety of services from oil and natural gas to electricity and nuclear, the company still has many development chances.
As for Trans Mountain, the general public spotlight has constantly shone brilliant on the multi-billion dollar expansion task. Still, with Keystone XL no longer in the picture, the focus on the federal government’s pipeline project will only sharpen– for those for and against.