The cancellation of Keystone XL is another blow to Alberta’s energy industry, which has a valuable product to sell but few ways to get it to customers, says a local oil and gas veteran.
“(The impact) is going to be huge on the industry in Western Canada,” said Waschuk Pipe Line Construction Ltd. general superintendent Doug Denk.
“Our pipeline system right now is pretty much choked off because there is not any capacity.
“We’re sitting on such a huge natural resource here that is big money, and this country and this government needs some money coming in. I don’t know how we’re ever going to get out of the mess we’re in right now.
“We’ve got a lot of oil sitting in tanks and a lot of oil sitting in the ground and no way to get it to market.
On Wednesday TC Energy Corp. said it was walking away from the Keystone XL pipeline project. 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.
“Our federal government is way too quiet on this whole issue,” Denk said.
Keystone XL is only the latest blow to Alberta’s efforts to get its oil to markets, said Denk, who is in his 51st year in the oil and gas business.
“Energy East, that would have been the pipeline we needed. That would have serviced Quebec and right out to the Maritimes. That Irving refinery in Saint John, N.B. is the biggest refinery in North America and it’s all running on Saudi Arabian and Venezuelan oil.”
TransCanada cancelled the nearly $16-billion pipeline in the fall of 2017 after the National Energy Board said its review would include indirect greenhouse gas emissions. The project had faced opposition from environmental groups and politicians in Quebec and the economics were undermined by a sharp drop in world oil prices.
“It’s breaking the country it really is. And I wish I had an answer.”
The pipeline would have carried 1.1 million barrels of Alberta oil a day to the East Coast.
The Trans Mountain Pipeline is supposed to give Alberta oil a new route to the B.C. coast and foreign markets but progress has been slow. “They’ve spent billions of dollars and there is not a lot being done there.”
Denk is in the twilight of his career, but he wonders what the prospects will be for the coming generations, including his first great grandchild who was born last December.
“I worry about their futures.”
Red Deer and District Chamber of Commerce’s Reg Warkentin said the cancellation of a major infrastructure project is disappointing “especially one of this scale that would help reduce the price differential for Canadian oil by substantially expanding export capacity and creating incentive for additional oil and gas extraction in our province.
“The economic impact of Keystone XL to our region would have been enormous. The decision highlights that the impediments to growth are not geographical, but often political and should be a taken as a lesson to elected leaders striving for economic growth and job creation,” said Warkentin, chamber policy and advocacy manager.
“Going forward our provincial and federal government’s focus needs to be on opening up export markets facilitating and attracting the development of value-added downstream processing.”
In an Alberta economic update, ATB Financial said the recent increase in world oil prices is helping to repair some of the damage done over the last two years by transportation bottlenecks, the oil price war between Saudi Arabia and Russia and slumping demand because of the pandemic.
However, the burst of economic activity that typically follows oil price increases is expected to be limited.
“Unfortunately, capital investment by the oil and gas extraction sector — while still significant — is expected to remain muted due to the ongoing transportation challenges and as companies focus on debt reduction and repairing their balance sheets,” says ATB’s economic outlook.