Canada scrambles to salvage Keystone XL as Biden prepares to cancel pipeline permit

MONTRÉAL, Québec (CU)_US President-elect Joe Biden, according to North American media reports, is set to cancel the controversial Keystone XL Pipeline, which is projected to carry hundreds of thousands of barrels of heavy crude from the Canadian province of Alberta down to Nebraska.

This news prompted Alberta, the country’s main oil-producing province, to threaten to seek damages as Ottawa made efforts to save the troubled project.

KXL is intended to carry 830,000 barrels of tar sands oil per day, from Alberta to Nebraska but has run into fierce opposition from US landowners, Native American tribes and environmentalists. Accordingly, sources say Biden will cancel a permit for the $8 billion project on his first day in office, over concerns regarding fossil fuels’ contribution to climate change.

However, the move would threaten Canadian jobs as well as relations between the two North American nations, and several political officials, including Alberta Premier Jason Kenney, have urged Canadian Prime Minister Justin Trudeau to reach out to the incoming Biden administration regarding the matter.

“This is the 11^th hour and if this really is the top priority, as it should be, then we need the government of Canada to stand up for Canadian workers, for Canadian jobs, for the Canadian-U.S. relationship, right now,” Kenney said.

He further noted that with Alberta’s financial exposure to the project being over C$1 billion ($783 million), the province believes it has a “very solid” legal basis to seek damages under international free trade agreements if the pipeline is effectively killed.

Meanwhile, Canadian Natural Resources Minister Seamus O’Regan has assured that Canada would continue to push for KXL with the Biden administration, as officials in Ottawa continue to engage with their American counterparts over the pipeline project. 

According to the Natural Resources Defense Council, a US-based environmental advocacy group, the Keystone XL pipeline extension was proposed by energy infrastructure company TransCanada in 2008, and was designed to transport hundreds of thousands of barrels of tar sands oil from Alberta to various processing hubs in the middle of the United States.

Although the process of extracting oil from tar sands comes with steep environmental and economic costs, however in the mid-2000s, with gas prices on the rise, oil companies ramped up production and sought additional ways to move their product from Canada’s remote tar sands fields to midwestern and Gulf Coast refineries.