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TC Energy suspends work on Keystone XL pipeline project

Click to play video: 'TC Energy halts Keystone XL pipeline project'
TC Energy halts Keystone XL pipeline project
WATCH ABOVE: TC Energy Corp. announced Wednesday it has suspended work on the Keystone XL project in anticipation of U.S. president-elect Joe Biden revoking its presidential permit once he is sworn in. Sarah Offin has details. – Jan 20, 2021

Work on the Keystone XL project is being suspended in anticipation of incoming U.S. President Joe Biden revoking its permit, Calgary-based TC Energy Corp. said Wednesday.

The company said it is “disappointed” with Biden’s action expected later today, adding it will overturn extensive regulatory reviews that found the pipeline would transport needed energy in an environmentally responsible way and bolster North American energy security.

It warned the move will lead to the layoffs of thousands of union workers and comes despite its commitments to use renewable energy to power the pipeline and forge equity partnerships with Indigenous communities.

Francois Poirier, who took over as TC Energy CEO at the beginning of the year, said in a statement the company remains committed to growing earnings and dividends through its investments in critical energy infrastructure even if Keystone XL doesn’t go ahead.

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“Our base business continues to perform very well and, aside from Keystone XL, we are advancing $25 billion of secured capital projects along with a robust portfolio of other similarly high-quality opportunities under development,” he said.

TC Energy said it will stop capitalizing costs, including interest during construction, effective Wednesday, and will evaluate the carrying value of its investment in the pipeline, net of project recoveries.

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It says this will likely result in “substantive” mostly non-cash writedowns in its first-quarter financial results.

Click to play video: 'Alberta has strong legal argument if Keystone XL expansion is killed in U.S.: Jason Kenney'
Alberta has strong legal argument if Keystone XL expansion is killed in U.S.: Jason Kenney

Meanwhile, the Progressive Contractors Association of Canada said in a news release it is disappointed that Biden is “putting politics before reason” in his anticipated decision to rescind the pipeline permit.

“We’re disappointed that the new president has lost sight of the huge economic and strategic advantages of this project,” said PCAC president Paul de Jong.

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“Pulling the plug on a major project, hours after taking office, is a rocky starting point for re-setting Canada/U.S. relations.”

The association, whose member companies employ thousands of Alberta and B.C. construction workers, said the pipeline would have generated as many as 60,000 direct and indirect jobs in Canada and the United States.

On Tuesday, Alberta Premier Jason Kenney urged Prime Minister Justin Trudeau in a phone conversation to continue his efforts to press Biden to allow Keystone XL to proceed.

Kenney’s government has invested $1.5 billion directly in the project, along with loan guarantees, and he has said about $1 billion is at risk if the project is killed.

The 1,947-kilometre pipeline is designed to carry 830,000 barrels a day of crude oil from Hardisty, Alta., to Steele City, Neb. From there it would connect with the company’s existing facilities to reach the U.S. Gulf Coast — one of the world’s biggest oil refining hubs.

TC Energy announced a plan Sunday for the Keystone XL project to achieve net zero emissions by spurring an investment of over US$1.7 billion in communities along the Keystone XL footprint to create about 1.6 gigawatts of renewable electric capacity.

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The Calgary-based company has also struck a deal with four labour unions to build the pipeline and has an agreement in place with five Indigenous tribes to take a roughly $785 million ownership stake.

Some 200 kilometres of pipe have already been installed for the expansion, including across the Canada-U.S. border, and construction has begun on pump stations in Alberta and several U.S. states.

Biden was vice-president in 2015 when Barack Obama rejected Keystone XL for fear it would worsen climate change.

Trump approved it again in March 2019.

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