Ottawa may agree to provide extra oil if president backs off tariffs, says Jason Kenney
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United States President Donald Trump is asking for the quick revival of the Keystone XL pipeline, a cross-border undertaking that value the Canadian oilpatch billions when it was cancelled in 2021 by the previous administration and remains to be the topic of an ongoing $1.3-billion lawsuit by the Alberta authorities.
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That is the second time Trump has invited KXL’s backers to resurrect the 830,000-barrel-per-day pipeline following a rejection by a earlier president.
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Upon taking workplace in 2017, he issued a memorandum inviting TC Power Corp. (then TransCanada) to resubmit its allow software after former president Barack Obama rejected the undertaking. TC responded with a brand new software inside two days.
This time, nevertheless, the corporate’s response to the president’s entreaty was solely totally different.
“We’ve moved on from the Keystone XL undertaking,” South Bow Corp., TC’s oil pipeline spinoff, mentioned in an announcement on Tuesday. “We proceed to have interaction with prospects to develop choices to extend Canadian oil provides to fulfill rising demand.”
There are additionally critical doubts within the Canadian oilpatch in regards to the chance that one other firm could be prepared to step as much as construct with out important assurances from the U.S. authorities.
“It’s a loopy factor to say he desires the pipeline constructed immediately when the U.S. has cancelled it twice and there’s billions misplaced alongside the way in which,” former Alberta Petroleum Advertising and marketing Fee chief govt Richard Masson mentioned. “I can’t think about anyone stepping up to do this with out some form of express contractual assure from the U.S. authorities that if it goes sideways once more, they might pay for the entire shot.”
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Trump’s renewed name for KXL comes on the heels of his administration’s proposed tariffs on Canadian merchandise, together with a ten per cent levy on vitality exports, and his repeated claims that the U.S. doesn’t want Canada’s exports.
It additionally comes as Alberta continues to pursue its go well with in opposition to the U.S. by a legacy declare below the previous North America Free Commerce Settlement (NAFTA). The go well with alleges the U.S. breached its free commerce obligations in cancelling the undertaking in 2021 and prioritized “political theatre” over elementary procedural equity.
Alberta’s case nonetheless faces a query about jurisdiction, however a preliminary listening to earlier than a World Financial institution tribunal is scheduled for September, although its success could also be a protracted shot since TC Power’s personal declare searching for US$15 billion in damages was thrown out by the identical tribunal final July.
The tribunal sided with the U.S. in concluding that legacy provisions associated to NAFTA solely permitted claims based mostly on breaches that occurred whereas the free commerce settlement was in power. Joe Biden revoked KXL’s permits after NAFTA was changed by the brand new United States-Mexico-Canada-Settlement.
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Trump on Monday mentioned KXL was “viciously jettisoned” by his predecessor, and the corporate ought to come again and “get it constructed – NOW!,” including that his administration could be “very totally different” by providing “straightforward approvals” and an “nearly quick begin.”
“We would like the Keystone XL Pipeline constructed!” he mentioned in feedback on Fact Social, seemingly contradicting claims he has repeatedly made because the election that the U.S. doesn’t want Canada’s oil and gasoline.
Regardless of the chilly response from KXL’s former proponents, there have been some echoes of assist for resurrecting the undertaking, which might considerably broaden crude flows between Hardisty, Alta., and refineries alongside the Gulf Coast.
Alberta Premier Danielle Smith mentioned in a publish on X on Tuesday that she agreed with Trump, nudging the president to “scrap these inflationary tariff concepts” with a view to give attention to getting shovels within the floor.
Former Alberta premier Jason Kenney, whose authorities pledged to take a position US$5.3 billion within the undertaking, mentioned Trump’s feedback underscore some extent of leverage that Canada may use to extract an settlement to drop tariffs on Canadian merchandise, although it might nearly definitely require the federal government to backstop KXL.
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“A Canadian authorities may go to Donald Trump and say, ‘Hey, we agree with you, we’d wish to promote you extra oil, we’re ready to make it occur, however you’ve received to decide to us that Canadian vitality exports and different exports usually are not going to be tariffed,’” he mentioned.
“We’d like leverage to cope with Trump. He’s indicating one space the place now we have unused leverage and we must always take ‘sure’ for a solution.”
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