What the US election means for Keystone XL construction in Canada 

Oct 28, 2020

The Canadian economy has been hard hit by the coronavirus pandemic. But the small town of Oyen, Alberta, is a rare bright spot for which many credit the Keystone XL pipeline.

Construction of the pipeline’s Canadian portion started this past summer, and since then, more than 800 temporary workers have come to the area.

“With the pipeline coming in, it’s an economic boom.”

Wanda Diakow, economic development officer, Alberta

“With the pipeline coming in, it’s an economic boom,” said Wanda Diakow, the local economic development officer.

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“There’s been a demand for extra accommodation in our region. Your traffic on your highways has increased. When you drive into the town, the population has increased — like it’s busier. And it almost seems like there’s an energy, you know, like there’s a buzz.”

But Diakow says the boom could turn into another bust if former US Vice President Joe Biden wins next week’s presidential race. As part of his environmental policy, Biden has pledged to revoke permits for the US portion of Keystone XL. That would likely bring construction north of the border to an end.

“It will have a tremendous impact on our region,” she said. “I think there’d be a lot of people sad or mad.”

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The pipeline, which would carry 830,000 barrels a day of heavy crude oil from Alberta across the United States to refineries on the Gulf Coast of Texas, has been more than a decade in the making. Environmental groups and some farmers along the route have opposed the project since it was first proposed in 2008. Biden was vice president when former President Barack Obama vetoed it in 2015. Two years later, President Donald Trump signed an executive order allowing it to go ahead.

Canada’s economy, on the whole, relies heavily on the oil industry. Canada is the third-largest oil exporter in the world and the largest foreign supplier of oil to the United States. Most of that product comes from Alberta, with 98% of exports going to the US. But with the collapse of oil prices over the last few years and the pandemic, Alberta’s economy is struggling.

“The fate of export markets and our ability to get that oil to markets is critical to the Canadian industry,” said Kathryn Harrison, a political scientist who specializes in environmental policy at the University of British Columbia.

Harrison says Canadian oil would still flow to the US even without Keystone XL. But growth in the oil industry has stalled, and oil companies are counting on new pipelines such as Keystone XL to boost exports and allow for further expansion.

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Harrison said producing the type of heavy oil that would be shipped through the pipeline is expensive and carbon intensive. That makes it especially vulnerable if countries like the United States “get serious” about policies to cut fossil fuel emissions.

“If anything, that is pushing Canada’s industry to try to get as much of its products to market while they still can. So, that’s why they’re so keen to get these pipelines built.”

Kathryn Harrison, University of British Columbia

“If anything, that is pushing Canada’s industry to try to get as much of its products to market while they still can. So, that’s why they’re so keen to get these pipelines built,” she said.

The US portion of the pipeline has been held up by lawsuits and regulatory disputes. But this past spring, Alberta’s provincial government, led by Premier Jason Kenney invested $1.1 billion to start construction on the Canadian side. He’s forging ahead even though the pipeline project could be canceled if Biden is elected president.

On a visit to Oyen in October, Kenney said that canceling the project would “undermine the single most important trade relationship that the United States has in the world.”

Kenney said he had sent an envoy to Washington, DC, to drum up support for Keystone XL.

“The US refineries on the Gulf Coast require huge amounts of heavy crude oil. And if it’s not coming from Alberta, then it’s coming from the socialist dictatorship of Venezuela,” he said.

It’s not clear whether Biden could actually put a stop to this project. Industry experts say they would expect a drawn-out, expensive court battle.

In Oyen, the debate has helped shape people’s opinions about the presidential race south of the border.

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Walter Kyriakakis, the owner of Halfway Pizza in Oyen, said business is up by at least 40%, thanks to all the pipeline construction workers who have come to town.

“The pipeline has been a blessing, which is what it’s done not just for me but for this town.”

Walter Kyriakakis, Halfway Pizza

“The pipeline has been a blessing, which is what it’s done not just for me but for this town,” he said.

Kyriakakis said he’d rather see Trump win reelection.

“I think Biden will try to shut down a lot of stuff, and Canada is just like the United States. We do depend a lot on export businesses, and oil is one of them,” he said. “If Biden was to get in, I do not think it would be good for Canada, as a whole. I don’t think it would be good for the world, to be honest with you.”

Diakow said a lot of people in town are worried about the possibility of a sudden end to pipeline construction. But she said that people in the region are resilient, so they’ll try to make the best of the boom while it lasts. 

From The World ©2019