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Keystone XL Oil Project Abandoned by Developer -- Update

09/06/2021 11:39pm

Dow Jones News


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By Timothy Puko 

Canada's TC Energy Corp. and the Albertan provincial government said Wednesday they would scuttle the Keystone XL oil pipeline project, bringing to an end a yearslong controversy over an effort to pipe more Canadian crude to the U.S.

The decision had been expected after President Biden used his first day in office to revoke a key permit for the pipeline to cross the country's northern border, shutting down construction.

It is a victory for environmentalists who have campaigned to block new pipeline construction as a way to limit oil consumption that contributes to global warming.

Groups like 350.org, which has fought the Keystone XL project, have also pressured Wall Street and saw activist investors win board seats at Exxon Mobil Corp.

The group pointed to its own history of leading sit-ins against Keystone XL in front of the White House. And it said it would work to defeat more pipelines.

"When this fight began, people thought Big Oil couldn't be beat," the group's founder, Bill McKibben, said. "But when enough people rise up, we're stronger even than the richest fossil-fuel companies."

TC Energy gave little explanation for its final decision in a Wednesday news release. It alluded to Mr. Biden's decision and said it had completed a comprehensive review of its options before making the final decision to terminate the project. It said that going forward it would build its businesses in shipping and storing natural gas, liquid fuels and power to meet growing North American demand for cleaner fuels.

"We value the strong relationships we've built through the development of this Project and the experience we've gained," TC Energy Chief Executive François Poirier said.

Mr. Biden's action was a major setback for Canadian oil producers and the Canadian government, which had urged Mr. Biden to help salvage the $8 billion project immediately after his election. Keystone XL has been mired in court challenges and left in limbo by shifting U.S. political leadership since it was initially proposed in 2008.

That was a time of record oil prices, and the pipeline was pitched as a key artery to eventually bring 830,000 barrels a day of Canadian crude from Alberta to Nebraska and then to refineries on the U.S. Gulf Coast. Since then, Canadian oil producers have been rocked by falling oil prices and the government had doubled down on getting approval for the project as a lifeline for the industry.

But Mr. Biden agreed with environmentalists who said opening that avenue for more crude into the U.S. conflicted with a need to respond to climate change by shifting to cleaner sources of energy. He said allowing the project to go ahead would undercut the country's international credibility as Mr. Biden tried to push other countries to lower their greenhouse-gas emissions.

"We remain disappointed and frustrated with the circumstances surrounding the Keystone XL project, including the cancellation of the presidential permit for the pipeline's border crossing," said Jason Kenney, premier of Alberta. The province had invested $1.1 billion in the project and will now have to swallow the cost. The government said it would continue to explore its options to recoup its money.

Mr. Biden 's decision, which reversed the pipeline's approval first given by former President Donald Trump, came before TC Energy could finish construction in the U.S. It promptly suspended construction, leading Mr. Biden's critics to decry layoffs that came from the decision and several Republican states to launch a lawsuit to overturn it.

Write to Timothy Puko at tim.puko@wsj.com

 

(END) Dow Jones Newswires

June 09, 2021 18:24 ET (22:24 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

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