Biden to revoke KXL pipeline permit in blow to Canada's oil sector

CALGARY, Alberta (Reuters) – U.S. President-elect Joe Biden on Wednesday will revoke the permit needed to build the Keystone XL oil pipeline after being sworn into office, aides said, dashing Ottawa’s hopes of salvaging a project that the struggling Canadian crude sector has long supported.

FILE PHOTO: A depot used to store pipes for TC Energy Corp’s planned Keystone XL oil pipeline is seen in Gascoyne, North Dakota, January 25, 2017. REUTERS/Terray Sylvester

Biden will sign 15 executive orders and memorandums to address the “crises” of the pandemic, climate change and racial inequity, said incoming press secretary Jen Psaki.

Keystone XL, owned by TC Energy Corp, is already under construction in Canada, and would carry 830,000 barrels per day of Alberta oil sands crude to Nebraska. Opposition from U.S. landowners, Native American tribes and environmentalists has delayed the project for the past 12 years, but outgoing Republican President Donald Trump had revived the project.

In a statement, TC Energy said it was disappointed with Biden’s expected decision, saying it would overturn a regulatory process that had lasted more than a decade.

The company said the decision would lead to layoffs for thousands of unionized construction workers.

Canada, the world’s fourth-largest crude producer, ships most of that output to U.S. refineries.

Canadian producers, who have struggled for years from low prices partly related to sometimes-congested pipelines, have long supported KXL. But the Canada Energy Regulator said in a November report that Western Canadian crude exports are expected to remain below total pipeline capacity over the next 30 years if KXL and two other projects proceed, prompting environmental groups to question the need for all three.

Biden’s move marks an early bump in his relationship with key trade partner Canada. Prime Minister Justin Trudeau said on Tuesday that Canada was pressing people at the highest levels of Biden’s incoming administration to reconsider canceling the $8 billion project.

However, Canadian Environment Minister Jonathan Wilkinson also said on Tuesday that engagement between decision-makers would start once Biden entered office. He expressed optimism that the two countries will work cooperatively regardless.

“We have a whole range of energy-related opportunities with the United States that we are interested in discussing with the Biden team,” Wilkinson told Reuters, giving as examples clean electricity, decarbonization of industry, transportation and methane emissions.

Alberta Premier Jason Kenney threatened legal action on Monday if Keystone XL was scrapped.

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