Keystone XL pipeline project cancelled by TC Energy after over a decade of delays

CALGARY — TC Energy Corp. is walking away from the Keystone XL pipeline project, ending a decade-plus battle that pitted the energy industry against environmentalists as oilsands producers sought to export Canadian crude.

Construction on the pipeline was suspended earlier this year after newly elected U.S. President Joe Biden fulfilled a campaign promise to cancel its presidential permit in January.

TC Energy last month took a $2.2-billion writedown on the cancelled project, which pushed the company to a loss in its most recent quarterly earnings.

The Alberta government in March 2020 agreed to take a $1.5-billion equity stake in Keystone and provide a $6-billion loan guarantee to ensure work started immediately.

The government said Wednesday its final costs are expected to be $1.3 billion.

“We remain disappointed and frustrated with the circumstances surrounding the Keystone XL project,” Alberta Premier Jason Kenney said in a statement, “including the cancellation of the presidential permit for the pipeline’s border crossing.”

TC Energy said it would work with government agencies “to ensure a safe termination of and exit from” the partially built line, which was to transport crude from the oilsand fields of Western Canada to Steele City, Neb.

Construction on the 1,930-kilometre pipeline began last year when former President Donald Trump revived the long-delayed project after it had stalled under the Obama administration. It would have moved up to 830,000 barrels (35 million gallons) of crude daily, connecting in Nebraska to other pipelines that feed oil refineries on the U.S. Gulf Coast.

Biden canceled it in January over longstanding concerns that burning oilsands crude would make climate change worse.

Prime Minister Justin Trudeau had objected to the move, although officials in Alberta expressed disappointment in recent weeks that Trudeau didn’t push Biden harder to reinstate the pipeline’s permit.

Alberta officials said Wednesday they reached an agreement with TC Energy to exit their partnership. The company and province plan to try to recoup the government’s investment, although neither offered any immediate details on how that would happen.

The province had hoped the pipeline would spur increased development in the oilsands and bring tens of billions of dollars in royalties over decades.

Climate change activists viewed the expansion of oilsands development as an environmental disaster that could speed up global warming as the fuel is burned. That turned Keystone into a flashpoint in the climate debate, and it became the focus of rallies and protests in Washington, D.C., and other cities.

Environmentalists who had fought the project since it was first announced in 2008 said its cancellation marks a “landmark moment” in the effort to curb the use of fossil fuels.

“Good riddance to Keystone XL,” said Jared Margolis with the Center for Biological Diversity, one of many environmental groups that sued to stop it.

Attorneys general from 21 states had sued to overturn Biden’s cancellation of the pipeline, which would have created thousands of construction jobs. Republicans in Congress have made the cancellation a frequent talking point in their criticism of the administration, and even some moderate Senate Democrats including Montana’s Jon Tester and West Virginia’s Joe Manchin had urged Biden to reconsider.

Tester said in a statement Wednesday that he was disappointed in the project’s demise, but made no mention of Biden.

Wyoming Sen. John Barrasso, the top Republican on the Senate energy committee, was more direct: “President Biden killed the Keystone XL Pipeline and with it, thousands of good-paying American jobs.”

A White House spokesperson did not immediately respond to a request for comment on TC Energy’s announcement.

— With files from The Associated Press