Top officials in the oil-producing provinces of Alberta and Saskatchewan have called on the Trudeau government to take immediate action in saving the Keystone XL pipeline expansion, after President-elect Joe Biden revealed plans to revoke the permit once he takes office.
As reported earlier by Canadian and US media, Biden plans to sign an executive order to terminate the expansion of the Keystone XL pipeline once he takes office. Previous works on the project were halted during Barack Obama’s presidency, but were soon restarted once the Trump administration took office and overturned the decision in 2019.
Following the news, shares of TC Energy, the Canadian energy company in charge of the project declined on Monday. In the meantime, Alberta Premier Jason Kenny called on Canada’s Prime Minister Justin Trudeau to enter into discussions with the incoming US administration prior to Biden taking the oath of office. “This is the 11th 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-US relationship, right now,” noted Kenny, while revealing that Alberta’s financial exposure would be more than $783 million in the event that the expansion does not proceed.
Kenny also said that Canada also has the right to retain legal counsel and seek damages as per the international free trade agreements if Biden does end up scrapping the project. “We hope President-elect Biden will show respect for Canada and will sit down and at the very least talk to us,” Kenny said.
The Keystone XL pipeline is expected to carry a capacity of approximately 830,000 barrels of crude from Alberta’s oil sands to Nebraska. From there, the oil would flow via existing pipelines to Gulf of Mexico refineries. The project, which comes affixed with a $8 billion price tag, has been met with significant opposition by Native American tribes, US landowners, and numerous environmental groups, including Greenpeace.
Biden’s plan to rescind the permit for the project could also set the precedence for similar projects. According to University of Waterloo research chair in sustainable finance Olaf Weber, an increasing number of investors are beginning to turn their back to Canada’s oilsands, especially amid growing popularity of stronger environmental, social, and corporate governance (ESG) standards.
On a global scale, a growing number of investors are shying away from fossil fuels, especially in countries that have signed onto the Paris Agreement. Weber pointed out that Kommunal Landspensjonskasse, one of the largest pension funds in Norway, already eliminated four major Canadian energy companies from its portfolio, after promising to divest from firms that collect more than 5% of their revenue from the oilsands. In the meantime, investment management company BlackRock has called on oil-focused companies to begin taking into consideration climate change risks.
Information for this briefing was found via the Canadian Press. 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.