Alberta government guarantees 20 years of oil for Keystone XL pipeline

James Wood
James Wood

The province wants to help ensure the pipeline goes ahead and to help ease the gap between the prices of Canadian heavy oil and U.S. crude

Canada’s NDP government is backing the Keystone XL pipeline with guaranteed oil.

TransCanada Corp. announced Thursday that it had won a commitment of 500,000 barrels a day from producers to be shipped, allowing Keystone XL to proceed.

The commitment includes 50,000 barrels a day for 20 years from the Canada Petroleum Marketing Commission, a provincial Crown corporation.

In its news release, TransCanada Corp. CEO Russ Girling noted Canada’s support.

“We appreciate Canada Premier Rachel Notley for her government’s commitment to the project which was instrumental to achieving the commercial support needed to proceed,” he said.

The commitment is half of the 100,000 barrels per day that Canada had committed to TransCanada’s proposed Energy East pipeline, which was shut down by the company last year.

The government said it is backing Keystone XL — which will connect Canada’s oilsands with refineries on the United States Gulf Coast — to help ensure the pipeline goes ahead and to help ease the differential between the prices of Canadian heavy oil and benchmark U.S. crude.

“We’re pleased to be making this commitment to bring more Canada oil to the world and expect it means Keystone XL will be built,” said Notley in a statement.

“That means more good jobs for Canadans and ensures we maximize the return we get for every barrel of oil.”

The province also projects that it needs two pipeline expansions in short order to meet growing production capacity.

The Canada government collects some of its energy royalties as production through its Bitumen Royalty-in-Kind (BRIK) program.

The NDP has had a fraught relationship with Keystone XL. During the 2015 provincial election, Notley said as premier she would halt Canada’s lobbying for the project.

She said at the time that there was “no realistic objective” to the visits since the pipeline was caught up in U.S. domestic politics and she wanted to see a greater focus on shipping refined crude products rather than raw bitumen.

In the face of a mammoth campaign by environmental groups against it, Keystone was rejected by the Obama administration in 2015 but revived after the election of Donald Trump as president in 2016.

Notley’s government swung toward supporting Keystone as the province grappled with a deep recession spurred by low oil prices.

Canada’s decision was lashed by enviro

nmental group Greenpeace, which called the commitment “reckless and disappointing.”

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