Can Donald Trump Resurrect Keystone XL?
US President Donald Trump is pitching the company behind the project, TC Energy, to return to the US and 'get it built – NOW!'
'I know they were treated very badly by Sleepy Joe Biden, but the Trump Administration is very different — easy approvals, almost immediate start!' Trump wrote on his platform Truth Social Monday night.
The rationale for Keystone was a way to bring together booming US oil production, and to a lesser extent, production from the oil sands in Northern Alberta, to Gulf Coast refineries that were facing declining imports from Mexico and Venezuela. The project was first proposed in 2008 and was supposed to begin carrying 830,000 barrels a day in 2012.
But the Obama administration struck it down on environmental grounds. Trump then revived it during his first term, before Democratic President Joe Biden killed it again by revoking the pipeline's permit on his first day in the White House in 2021.
A network of pipelines called the Keystone Pipeline already exists and moves oil within the United States. The pipeline expansion would allow more oilsands crude to flow to the US Gulf Coast, cutting through Montana, South Dakota and Nebraska before heading south.
Trump on Monday pledged easy regulatory approvals for the project, saying in the Truth Social post, 'We want the Keystone XL Pipeline built.'The idea received a warm reception from Canadian Premiers Danielle Smith of Alberta and Scott Moe of Saskatchewan.
'That project should have never been cancelled. Lower fuel costs for American families is a big win,' Smith posted on X, Tuesday.
'The path to continental energy dominance is to increase non-tariff North American trade,' Moe chimed in. 'This includes the construction of new pipelines like Keystone XL.'
If the idea of a new Canada-US pipeline seems incongruous in the face of pending 25 percent tariffs on all Canadian imports, and 10 percent duties on Canadian energy, that's because it is.
BNN Bloomberg quoted Richard Masson, executive fellow with the University of Calgary's School of Public Policy, who said the interest in resuscitating Keystone XL doesn't jibe with Trump's plans to ramp up domestic oil production while slapping US neighbors with tariffs.
'It seems inconsistent to say we're going to tariff the existing oil that's coming in and still try and get somebody to build a pipeline,' he said. 'It just doesn't make a lot of sense.'
Rafi Tahmazian, a retired energy manager with Canoe Financial, suggested that Trump might be reacting to the recently floated idea that Canada revisit plans for an Energy East pipeline.
'He's worried that if we build a pipeline east, we start to look at sending our oil to other places and diminishing our dependency on the U.S.,' said Tahmazian via CBC News. 'And that is a very big problem for his refiners and the products that they produce for the U.S.'
The Canadian government hasn't ruled out the possibility of a renewed Keystone XL. A spokesperson for Natural Resources Minister Jonathan Wilkinson said the government is 'open to having a productive conversation' about advancing the project.
Joanne Sivasankaran added the project in its current form has all the Canadian permits it needs and the infrastructure north of the border remains in the ground.
However, she said a private sector proponent would need to step forward to advance the project and there is not currently one expressing any interest.
Several oil producers would also have to sign up to ship significant volumes on the line for decades, 'and there just isn't that much oil planned to be produced in Canada these days,' said Masson.
TC Energy spun the oil pipeline component of its business out to South Bow Corp. last fall to concentrate on natural gas and power.
South Bow currently owns the existing Keystone Pipeline. But according to a company spokesperson, South Bow is no longer interested in advancing Keystone XL, saying it has 'moved on'.
'We continue to engage with customers to develop options to increase Canadian oil supplies to meet growing demand,' Katie Stavinoha said in an email to Bloomberg Tuesday.
By Andrew Topf for Oilprice.com
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