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A failure to complete Keystone XL, proposed by Calgary-based TC Energy, would eliminate one of three pipelines that Prime Minister Justin Trudeau has often touted as critical conduits for the Canadian oil and gas sector. In 2013, before he became prime minister, Trudeau said he was a “steadfast” supporter of Keystone XL, and suggested it had been needlessly “caricatured” by opponents of the project.
The expectation of lower oil demand in coming decades has marginally reduced the need for major new pipelines, but many analysts say all three major projects might be needed to reduce dependence on rail cars and raise Canadian oil prices.
As for Ottawa’s role in promoting the project, some observers say the federal government has pushed the argument as far as it can go in an era of growing environmental and social concerns.
“I think Mr. Kenney was entirely off the mark with his comments,” said one senior industry source familiar with discussions between Ottawa and Washington. The person said the federal government has been a “huge proponent” of KXL in public and private, and that the decision by Biden to oppose the pipeline was largely due to political forces within Democratic Party ranks.
“The challenge that Canada has always been up against is that Mr. Biden was part of the Obama administration, which was opposed to KXL.” The person said a “massive progressive and aggressive wing” of the party is unlikely to support the project regardless of facts around pipeline safety or long-term oil demand.
However, Jack Mintz, senior fellow at the University of Calgary’s School of Public Policy, said Biden’s decision to quash Keystone XL is likely to cool Canada-U.S. relations on the energy file — an area where the two countries have long shared large plots of common ground.
“For someone who wants to work with his allies, this isn’t a very good start,” he said. “This is a slap in the face for Canada.”
“The U.S. has to ask itself what it’s going to achieve from blocking this pipeline.”
Whether Canadian heavy oil producers will need Keystone XL is an open question.
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