Alberta Government Considers Making US Pay for Scrapping Keystone XL

Following US President Joe Biden’s axing of the Keystone XL pipeline, the province of Alberta has been mulling its next steps, one of which includes seeking US compensation via a North American Free Trade Agreement provision.

Alberta, which has financially supported the pipeline to the tune of $1.5 billion to help boost construction, has been considering resorting to a provision in the NAFTA that would help it recoup some of those costs. Although the Trump administration replaced NAFTA with the United States-Mexico-Canada Agreement, the old provision still remains in place.

The Keystone pipeline was prepared to carry approximately 800,000 barrels of oil per day between Canada and the US. However, the termination of the pipeline has been a massive blow to both the oil-rich province and Canada’s energy industry as a whole. Alberta has been relying on the pipeline to reduce its capacity constraints as well as push the price of oil up. However, the cancelled project may not be as economical as it was previously envisioned to be.

According to former Husky Energy Inc. chief executive officer Art Price, the pipeline is “uneconomic,” and Canada’s energy industry should no longer make it a priority. The lack of demand in the North American market that would otherwise prompt the increase in oil production is no longer there. “If the producers aren’t willing to sign off on the pipeline and the refiners aren’t willing to sign off for the pipeline, then it has no economic purpose today,” he said.

In addition, Price noted that the Alberta government should not have intervened via financial support for the pipeline, and that the attempt to restore the project is due to politics rather than economics. “It would be different if there was a million barrels of existing oil sands production locked in or stagnant, but that is not the case,” he said in an interview with Bloomberg.

Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

One thought on “Alberta Government Considers Making US Pay for Scrapping Keystone XL

  • February 6, 2021 7:40 PM at 7:40 pm

    The Keystone XL pipeline had to be stopped, because a toxic bitumen spill down into the Ogallala Aquifer would poison the drinking water for millions, which is worse than a weapon of mass destruction and would destroy the agriculture of the Great Plains states.


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