The Government of Alberta and TC Energy have reached a deal for Alberta to terminate its involvement in the Keystone XL pipeline.
The agreement comes nearly five months following the revocation of a Presidential permit approving the pipeline being signed by new American President Joe Biden on his first day in office in January. The project received approval from former President Donald Trump and would have eventually transported up to 830,000 barrels of oil a day from between Alberta and Nebraska. The eventual cost would have been somewhere in the neighbourhood of $8 billion U.S.
In March 2020 the government announced they would put forward $1.5 billion in equity investment in the project in 2020, followed by a $6 billion loan guarantee in 2021 in an effort to accelerate construction.
In a news release, Wednesday afternoon the government says they and the energy company have "reached an agreement for an orderly exit from the KXL project and partnership. The two parties will continue to explore all options to recoup the government’s investment in the project."
“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 Alberta Premier Jason Kenney. "Having said this, Alberta will continue to play an important role in a reliable, affordable North American energy system. We will work with our U.S. partners to ensure that we are able to meet U.S. energy demands through the responsible development and transportation of our resources.”
Alberta Energy Minister Sony Savage added, “We invested in Keystone XL because of the long-term economic benefits it would have provided Albertans and Canadians. However, terminating our relationship with TC Energy’s project is in the best interest of Albertans under current conditions."
The government says final costs to them surrounding the ill-fated project are expected to be materially within $1.3 billion, in alignment with costs previously disclosed.
Alberta's government decided to invest in the project because it says it aligned with the province’s long-term economic interests and the pipeline’s completion would have led to higher prices as well as increased volumes of oil sands crude production, generating at least $30 billion in increased royalties over 20 years for Alberta taxpayers.
Around 150 km of the, eventually, 1,930 km pipeline have been installed in Alberta and employed over 1,600 people during its short-lived peak construction period.