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Biden revokes KXL permit in blow to Canada's oil sector, Ottawa disappointed

CommoditiesJan 20, 2021 07:36PM ET
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2/2 © Reuters. FILE PHOTO: A depot used to store pipes for the planned Keystone XL oil pipeline is seen in Gascoyne 2/2

By Rod Nickel and Nia Williams (NYSE:WMB)

CALGARY, Alberta (Reuters) - U.S. President Joe Biden on Wednesday formally revoked the permit needed to build the Keystone XL oil pipeline (KXL), dashing Ottawa's hopes of salvaging the $8 billion project that the struggling Canadian crude sector has long supported.

The move represents another set-back for the beleaguered Canadian oil industry, in particular its energy heartland Alberta, kills thousands of jobs, and marks an early bump in Biden's relationship with Canada, a key trading partner.

Keystone XL, owned by TC Energy (NYSE:TRP) Corp, is already under construction in Canada, and would carry 830,000 barrels per day of Alberta oil sands crude to Nebraska.

But opposition from U.S. landowners, Native American tribes, and environmentalists has delayed the project for the past 12 years and Biden had long pledged to scrap the permit.

"While we welcome the President's commitment to fight climate change, we are disappointed but acknowledge the President's decision to fulfill his election campaign promise on Keystone XL," Canadian Prime Minister Justin Trudeau said in a statement.

Alberta Premier Jason Kenney, who earlier this week threatened legal action if Keystone XL was scrapped, said on Wednesday he was "deeply disturbed" by the move.

"This is a gut punch for the Canadian and Alberta economies. Sadly it is an insult directed at the United States' most important ally and trading partner," Kenney told a news conference.

TC Energy, in a statement issued before the revocation, expressed disappointment with a move it said would overturn a regulatory process that had lasted more than a decade. Former Republican President Donald Trump revived the project, but it still faced ongoing legal challenges.

The Calgary-based company said it will suspend construction and warned there could be a "substantive" predominantly non-cash, after-tax charge to earnings in the first quarter of 2021. TC Energy said the decision would lead to layoffs for thousands of unionized construction workers.

TC Energy stock closed down 1.2% at C$55.92 in Toronto while the benchmark Canadian share index edged up 0.3%.

"This action is killing thousands of Canadian and American jobs at a time when both economies badly need private investment," said Tim McMillan, chief executive of the Canadian Association of Petroleum Producers, adding it also wiped out equity investment in the pipeline by Canadian indigenous groups.

The American Petroleum Institute called Biden's move a "significant step backwards."

Canada, the world's fourth-largest crude producer, ships most of that output to U.S. refineries. In 2019, the U.S. brought in 3.8 million bpd from Canada, more than half its daily imports of 6.8 million bpd.

Canadian producers, who have struggled for years from low prices partly related to sometimes-congested pipelines, have long supported KXL.

Producer Suncor Energy (NYSE:SU) said it backed expanding market access to the United States through pipelines like KXL, which it argues would provide responsibly sourced oil to U.S. refineries for the benefit of U.S. consumers.

But a Canada Energy Regulator report in November said western Canadian crude exports are expected to remain below total pipeline capacity over the next 30 years if KXL and two other projects proceed, prompting environmental groups to question the need for all three.

Biden revokes KXL permit in blow to Canada's oil sector, Ottawa disappointed
 

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Comments (9)
maro turk
maro turk Jan 20, 2021 10:50PM ET
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Good
lee doloff
lee doloff Jan 20, 2021 8:29PM ET
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look at the rules Canada imposes for cars going over the border insane taxes they are mostly gay
Ryan Willemsen
Ryan Willemsen Jan 20, 2021 8:29PM ET
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You need help
lee doloff
lee doloff Jan 20, 2021 8:27PM ET
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frankly who cares Canadians come here they dine out and stiff the servers unless the restaurant puts an auto gratuity the Canadians don't tip
Kelly Mayer
Kelly Mayer Jan 20, 2021 6:40PM ET
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clean energy will bankrupt the US, take millions of jobs and make Russia and China top oil producers, making them ultra rich. welcome to the beginning of the end of the US.
Dave Shortreed
Dave Shortreed Jan 20, 2021 6:32PM ET
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bizarre, US needs oil, Canada has oil, but the US would rather buy it from the mid east. The same mud east that have had multiple sacriins olaced on them due to human rights, ethics and military violatiobs....oh yes, its a brilliant move...
Dave Shortreed
Dave Shortreed Jan 20, 2021 6:32PM ET
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mid east, sanctions placed, and violations...friggin thumbs....
Loan Pham
Loan Pham Jan 20, 2021 6:32PM ET
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it is cheaper from middle east
Benjamin McIntire
Benjamin McIntire Jan 20, 2021 3:05PM ET
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So many people are against it but some only see their side and think that its “American” to allow some garbage industry to plow over landowners rights. So much for libertarian conservatives, all that are left are carpetbaggers.
Felipe Daniel
Felipe Daniel Jan 20, 2021 2:22PM ET
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Joe Biden starting to sell America out
Benjamin McIntire
Benjamin McIntire Jan 20, 2021 2:22PM ET
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How so? Lmao
Joel Schwartz
Joel Schwartz Jan 20, 2021 2:22PM ET
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Clean energy makes us less reliant on other countries for oil, and less exposed to the shipping and protection of that oil. America going green and renewable is a national security measure as well as a climate change measure. We’re less exposed to threats from other contries economically and militarily when we are less dependent on oil.
Dave Shortreed
Dave Shortreed Jan 20, 2021 2:22PM ET
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Joel Schwartz what are you personally prepared to give up to be less reliant?
Joel Schwartz
Joel Schwartz Jan 20, 2021 2:22PM ET
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Dave Shortreed Well I drive a BMW that takes premium. I’d be happy with an electric car that isn’t as expensive to drive.
Loan Pham
Loan Pham Jan 20, 2021 2:22PM ET
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looks at ep and tell me how many clean energy companies are profitable. ... even with gov subsidizes. Do you see energy oil company was subsidized by gov?
Casador Del Oso
Casador Del Oso Jan 20, 2021 1:49PM ET
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Great opening act by Ringmaster Joe. Thousands of jobs lost and millions of dollars wasted.
Benjamin McIntire
Benjamin McIntire Jan 20, 2021 1:49PM ET
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Millions of jobs and trillions of dollars saved you mean by reducing air pollution.
simon meso
simon meso Jan 20, 2021 1:49PM ET
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these money wont get wasted. only redirected. with dirty energy its over anyesy.
Tyler Phillils
Tyler Phillils Jan 20, 2021 10:26AM ET
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Executive orders are by definition the “rule by man” and should be outlawed.
Steve Dyer
WaveRunner Jan 20, 2021 10:26AM ET
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EO were meant to be for administrative purposes.....they have become a means of weaponry.
Ming Li
Ming Li Jan 20, 2021 10:26AM ET
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The fake president starts to damage the industry now.
Joel Schwartz
Joel Schwartz Jan 20, 2021 10:26AM ET
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Lol tyler did you feel this way under trump or is this an epiphany.
 
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