Alberta is unlikely to recoup much of its $1.5-billion loss on the Keystone XL Pipeline by selling off unused pipe now that the Biden Administration has pulled the plug on the megaproject.
At any rate, it’s hard to believe much of the pipe will be good for anything but scrap after sitting outdoors exposed to the elements for more than five years since former U.S. president Barack Obama first cancelled the Keystone XL project in 2015.
Indeed, some of the pipe was purchased a decade ago, long before Mr. Obama cancelled the project the first time, and has sat aboveground unused and deteriorating ever since.
Pipe left aboveground longer than its manufacturers recommend can become prone to failure when ultraviolet radiation from the sun makes protective coatings deteriorate, resulting in pitting and corrosion of the steel. For example, this was found by TC Energy engineers to have happened to sections of pipe exposed to sunlight for up to nine years near Little Rock, Arkansas.
So Mr. Kenney almost certainly didn’t have it right when he said a week ago that if Joe Biden went ahead and killed the project as soon as he was sworn in – exactly what Mr. Biden did after his inauguration on Wednesday – “there would be assets that could be sold, such as enormous quantities of pipe, that would offset construction costs.”
Well, don’t count on that unused pipe fetching enough to make a meaningful dent on the $1.5-billion loss Mr. Kenney incurred when he made his bad bet that former president Donald Trump would win the U.S. presidential election last November and allow the project to go ahead.
Indeed, it’s whispered in the oilpatch that much of the pipe used in news photo opportunities as part of Premier Kenney’s pressure campaign to demonstrate the project was ready to roll was too old and too far gone to be put in the ground.
So it’s reasonable to think that if Mr. Kenney had gotten his wish and Mr. Trump had been re-elected, or if the former president’s attempted coup had somehow succeeded, the project would have cost considerably more and taken a lot longer to complete than estimated because new pipe would have had to have been manufactured, purchased and shipped to worksites.
Mr. Biden signalled his plans early and clearly, and kept his promise as soon as he was elected, so his decision to kill the project could have surprised no one except Premier Kenney’s most gullible supporters.
It’s highly improbable it surprised Calgary-based TC Energy Corp. Why do you think the former TransCanada Corp. changed its name in 2019? TC Energy’s senior executives can certainly read the writing on the wall, even if a lot of people in Alberta who wish the oil booms of yore could somehow come again are wilfully blind to reality.
It’s very hard to believe that TC Energy hasn’t been planning for months for this development to take place. After all, that’s why its executives are paid the big bucks.
That would explain why TC Energy threw in the towel so quickly, even before President Biden had actually signed the order.
And it explains why many of the members of the company’s Keystone XL project team were reassigned to other projects around the time of the Nov. 3 presidential election, and why the company is looking at more investments in renewable energy, such as those it’s made in the past in solar and wind power. It also owns close to 50 per cent of Bruce Power, generating electricity from nuclear power in Ontario.
Many of TC Energy’s top executives must recognize that the inevitable has now happened and they can get on with planning for their company’s future without dealing with pressure from contractors and United Conservative Party politicians to continue the pretence the pipeline to the U.S. Gulf Coast has any life left in it.
As Premier Kenney himself admitted, TC Energy would have walked away from Keystone XL a year ago if Alberta taxpayers hadn’t underwritten the scheme to the tune of $1.5 billion, with the promise of $6 billion more, to keep the UCP’s pipedream alive.
“There are no prospective private sector bidders of the Keystone XP Project at this time,” he said last year when he announced the gamble. “In other words, without this investment by Alberta, the pipeline would not be built.”
Well, it turns out that even with it that pipeline will never be built. And Mr. Kenney and the UCP would like you to think that’s Prime Minister Justin Trudeau’s fault.
Well to be fair to Mr. Kenney there are probably some assets to be sold – $10 for the coffee machine in the site office? Maybe not that much for rusty old pipe though. Mr. Kenney is doing what he does well here – weasily spinning and misdirection.
The false hope of a significant recovery here perhaps keeps people from being definitive about the loss. If Mr. Kenney can keep this vague long enough perhaps something else will arise to distract everyone. If not, perhaps he can create a distraction himself, anything to stop those screaming headlines about a $1,5 billion loss.
It would be interesting to know if TC bought actually much new pipe over the last year for its project. I am thinking it sounds like it didn’t. I suspect they didn’t buy into the false hope narrative as much as our Premier did. Well at least it seems TC was more prudent with its money than our Premier at the pipeline casino. How reassuring. However, as an Albertan, I would still like more than a vague response, or more misdirection, about how much the loss of public funds was here. It is time to move past false hope and face reality here. I think we have a right to know.
The UCP are costing Albertans big money with their foolish risks. It’s way overdue for the UCP to be gone. If anyone thinks the UCP are doing a wonderful job, they are mistaken. The UCP aren’t fit to govern Alberta.
UCP will win the next election. Majority. Guaranteed.
Get all the 41 rural ridings (easy peasy, gullible folks) + 3 Calgary ridings = 44 seats = win = continued slaughter of Alberta
JSS, Sadly, I must agree with your analysis of voting patterns in Alberta.
Maybe, when ranchers, country and western singers, and farmers can’t drink, or fish in Alberta rivers, they will change how they vote?
The Keystone XL pipeline had to be stopped, because a toxic bitumen spill down into the Ogallala Aquifer would poison the drinking water for millions and would destroy the agriculture of the Great Plains states.
Spoken like a dangerous, subversive, Alberta-bashing environmental radical.
Well Neil, you bring up an interesting question: Is pipeline, and oil & gas-bashing the same as Alberta-bashing?
Is being pro-environment, (aka clean water and air) Alberta-bashing?
What if someone is critical of Kenney pissing away billions of our tax dollars on stupid gambles, is that Alberta-bashing?
But moving on, the UCP has a new plan to toxify the drinking water supply here in Alberta with waste products from coal mining. C’mon, Alberturds, selenium is just salt! Who doesn’t like salt?
The Biden administration might have something to say about that, because rivers don’t stop at borders. What do you say about the Oldman River contamination, Mr. President? Don’t hold back.
Rivers certainly don’t stop at borders, but the Oldman river keeps on rolling until it joins with the Bow to form the South Saskatchewan, from which the water ends up in Hudson Bay eventually. So not something Biden can say much about. The Milk river, on the other hand, starts in the US, comes into Alberta, then goes south again.
Was the plan, then, to keep pumping money into an essentially dead project until after the 2023 election?
David, you are definitely correct about the KXL cancellation not being a surprise to TC executives – it wasn’t even a surprise to the investment community at large. If you follow the link below to the TMX website, it will show a graph of TC’s share price for the last 5 days, and it is clear the market was totally expecting the cancellation – the share price actually spiked a bit after the cancellation.
The link also provides a partial answer the the question ABS posed on your last article with regards to insider trading at TC; in the past 6 months insiders sold roughly 37 thousand shares and bought 32 thousand, so I think that is a non-issue.
https://money.tmx.com/en/quote/TRP
I read the link you posted with regards to TC engineers and found it most distressing. Although Mr. Biden’s rationale for cancelling the KXL permit was primarily with regards to climate change, I believe most of the opposition to the project along the proposed route was primarily motivated by concern about the damage caused by a leak. It is essential that pipeline companies build pipelines that are as leak-proof as they claim they are during their community presentations, if they are going to rebuild the trust they once had.
Anyone here who can do an in-depth look at the 12-month data for insider trading on TC stock?
It’s not a simple matter. Important dates for quarterly accounting and announcements matter. Exercising stock options also comes into play. And insiders do sell high and buy back low.
TC Energy also has a new CEO as of the start of this year. He appears to have more of a focus on the energy transition than the previous leader did, recognizing that the company must adapt quickly to the changing business climate (wink*) before its business of hydrocarbon pipelines becomes obsolete.
Now the leftover pipe is being sold on Kijiji for $7B OBO, in a spoof that is allowing Albertans to laugh-cry at the stupidity of it all. We can’t change what our government did to us, so we might as well laugh-cry.
To be blunt, the thing that applies to Jason Kenney, et al, here is, “you f$$ked up.” Not only that, but the Kenney UCP are f$$king up with regard to open-pit coal mining as well. Honestly, as stated above, if it’s all about money, TC Energy can see the forest for the trees but the Kenney UCP, cannot. And royalties on ongoing open-pit col mine projects? Peanuts. A 6% PST would bring in a lot more, about $11 billion/year. In the meantime, the Kenney UCP are doing very mean-spirited cuts to things like health care, education, AISH, and now today, cutting funding for a Central Alberta camp for folks with developmental disabilities…..the lowest of the low. And, they just don’t care. What would Jesus say?
I ran across this on an engineering forum: “Big inch pipelines represent a significant capital investment that has a finite shelf life. Finishing the pipe a couple of years before it is ready to be used may be supportable, but a project schedule should be able to orchestrate completion dates closer than that.”
I wonder if we are responsible for disposing of this stuff?
I have a great idea: “Hyperloop!” (To the tune of “Monorail!”). All I need is a few $billions of investment and loan guarantees.
Jason Kenney’s multi-million dollar pension should be used to help reimburse Albertans.
Good coverage of this fiasco so far! I think, as Canadians, we all know what it is like to be embarrassed by our government. My deepest sympathies go out to the reasonable adults in Alberta.
To be fair to Mr. Kenney, he wouldn’t keep going back to the “blame Justin” well if it didn’t keep working. Once again, condolences to the reasonable adults in Alberta, who I imagine must be feeling discouraged, isolated and powerless.
Wait until it’s discovered that a good portion of that loan guarantee was used by TC to purchase their own stock.
No doubt a prudent (as well as unscrupulous) UCP hack would have purchased TC stock before the big buy back, provided they had inside knowledge of Kenney’s rather generous and misguided arrangement with TC.
Something to think about when the NDP’s request for details of the TC arrangement is heavily, heavily redacted.
In my opinion Kenny has simply been playing a game. He had no plan for the Alberta economy and he most likely knew if there was a new Pres. there would be no pipeline. He needs to keep using his old lines to keep the voters happy. He needs to keep using his old lines to convince voters its all Trudeau and the federal Liberals fault.
Kenny needs to know at some level he can’t and Canada as a country can’t force the U.S.A. to do much of anything they don’t want to. We have a population of 36 M. the U.S.A. approx. 340M. What does Kenny think Trudeau is going to do when Biden kills Keystone? Start a war? How could Trudeau start a trade war with the U.S.A. when we need them more than they need us. Now currently the economies are inter woven because of NAFTA 2 and 1 but that could be worked around quite quickly. Does Kenny truly believe that if we stop American goods coming into Canada, that the Americans at some point won’t stop our goods from going into their country?
From the get go, the problem was the water in the U.S.A. if the pipeline burst, and there were enough e.g.s where their pipelines burst in other areas. You can live without oil, but you can not live without clean water. O.K. lets see if Kenny is willing to drink a few glasses of tar mixed with water and chemicals every day for a few years or he could read the reports on the effects of the Flint Michigan water on people’s health.
Just wondering, what if Kenney had put the 1.5 billion into abandoned well cleanup, what would have been his return in matching covid funds from Trudeau?