The Keystone XL pipeline Was Canceled in This Small Town. What Happens Next?

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  • Bloomberg Quicktake: Now published this video item, entitled “The Keystone XL pipeline Was Canceled in This Small Town. What Happens Next?” – below is their description.

    With the Keystone XL pipeline canceled, Alberta doesn’t have any promising avenues for exporting more oil. Time to trace a post-oil future.

    If Canadians were hoping for better times with a new man in charge to their south, they were quickly disappointed in at least one respect. One of President Joe Biden’s first acts after taking office was to revoke the permit for the Keystone XL oil pipeline.

    The move wasn’t a surprise, but it dismayed national and provincial leaders north of the border nonetheless. It thrusts squarely back on their shoulders a problem that has dogged the province of Alberta’s oil and gas industries for decades — how to get what they produce to international markets. Alberta dominates Canada’s oil production and if it can’t develop its own export system, those riches risk being left in the ground.

    The challenges to achieving such a thing are both geographical and political. Alberta is landlocked. In that sense it’s little different to Azerbaijan or Kazakhstan in Central Asia, or Uganda in Central Africa. While the territories between the oil sands deposits and the open seas may not all be foreign countries, what with Canada’s federal structure, they might as well be. And Alberta’s neighbors don’t share its enthusiasm for hydrocarbons.

    Canada’s west coast would be the most obvious jumping off point for oil and liquefied natural gas exports to Asian markets. But stiff opposition in British Columbia has prevented Alberta’s oil and gas producers from taking full advantage of that opportunity. And, sadly, Alberta’s own politicians have refused to give other provinces much incentive to help out.

    Back in 2012 I shared a platform with Ted Morton, then Alberta’s energy minister, at a conference organized by the Canadian Energy Research Institute. I was bemused to hear him say that because pipelines to the Pacific Coast were of national importance, it was the federal government in Ottawa’s responsibility to get them built, not the provincial authorities in Edmonton. Moreover, he said Alberta wouldn’t share its oil and gas royalties with British Columbia to facilitate transit accords. Every cent would stay in Alberta.

    That seemed to me then, and still does now, a very short-sighted attitude. If Alberta’s economy was to rely on the extraction and export of hydrocarbons, then the Alberta government ought to have been doing all it could to facilitate getting the product to market. Yet giving British Columbia a financial incentive to host export pipelines was one tool Alberta never seemed willing to take out of the box.

    Several years earlier, Paul Stevens of the University of Dundee in Scotland caught my attention at another conference when he presented a list of criteria for what makes a “good” transit country — or, in Alberta’s case, a good transit province. They relate to a territory’s ability to attract investment and the degree to which it can hold a pipeline and its users to ransom once it’s in operation. I’ve summarized them in the table below.

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