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Keystone XL

Biden Revokes Permit for Keystone XL Pipeline Construction

The Keystone XL line is already in its fourth and final stage of construction, making the decision all the more illogical

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Today, TC energy announced that it will cease operations of the Keystone XL line, a major pipeline system of more than 2,900 miles that connects oil fields in the Canadian province of Alberta, which contain some of the world’s largest crude oil reserves, with the Gulf of Mexico and the Great Lakes in the United States.

The reason TC Energy has ceased construction operations is that President Joe Biden will revoke the project’s construction permit (as did former President Barack Obama), a decision that was formalized on Wednesday, the same day of his inauguration. The blocking of the Keystone XL line will cost more than 10,000 jobs.

The revocation of the construction permit for the Keystone XL line could cost more than 10,000 jobs. Canada invested $1.5 billion in its construction last year. (TC Energy)

The first two phases of the Keystone XL line have the capacity to transport the equivalent of 590,000 barrels of oil daily to refineries in the American Midwest, and phase three of the line has a capacity to transport 700,000 barrels to refineries in Texas.

Plans to revoke the $8 billion line’s operating permit were made known Sunday by CBC News. The news comes as a slap in the face to Canada, which last year invested $1.5 billion in the project plus as much as $1 billion in bond guarantees. As a result of the investment, the Canadian portion of the project has been under construction for several months, with more than 1,000 workers working in southeastern Alberta.

The stalled line has become a crusade of environmental campaigners. Back in 2015, Barack Obama denied the construction permit on the U.S. side of the border, a decision later reversed by Donald Trump.

A political decision

The Keystone XL line is already in its fourth and final stage of construction, making the decision to revoke its permit somewhat baffling. The move also sends a worrying signal to the market about the stability of some U.S. investments.

TC Energy said in a statement on Sunday night that the company plans to spend on operating the Keystone XL line more than $1.7 billion on solar generation, a wind and battery-powered operating system for the pipeline, hire a union-only workforce, sign indigenous equity partners and establish zero-emissions operations by 2030, all with an eye toward securing Biden’s approval.

Environmentalists accuse those behind the Keystone XL line of facilitating exports of Canadian oil from Alberta’s oil sands. Canada is the third-largest exporter of oil in the world, with 98% of its exports going to the United States.

TC Energy has made several commitments, including investing more than $1.7 billion in a sustainable, zero-emissions operation of the line in order to win Biden’s blessing. (TC Energy)

Although Biden has promised a major energy conversion within his administration, the reality is that the United States still consumes the equivalent of 20.54 million barrels of oil per day. Unless Biden finds a way to convert the entire U.S. vehicle fleet to electric power, the oil industry will continue to thrive.

Fossil fuels, far from being the great villain, have been the main source of greenhouse gas reductions in the United States in recent decades, as relatively clean natural gas has displaced dirtier coal in electricity generation. Even within the oil extraction process itself in Canada, there has been substantial progress; the Canadian government estimates that CO2 emissions associated with oil development have been reduced by 30% since the 1990s.

Ultimately, U.S. demand for oil will not disappear overnight, even if the Democrats dream that such a thing can be decreed. Biden will have to choose where he imports oil from. Isn’t it more environmentally costly to import oil by ship than by pipeline? Will Biden prefer to force American investors to import oil from regimes like Saudi Arabia or Venezuela rather than from a democracy like Canada?

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