U.S. President Joe Biden is rescinding the Presidential permit for the Keystone XL oil pipeline project on his first day in office, raising concerns about Alberta’s oil industry and the potential increased dependence of U.S. Gulf Coast refineries on crude imports from OPEC nations.
The day-one executive actions for President Biden include “Revoking, revising, or replacing additional Executive Orders, Presidential Proclamations, Memoranda, and Permits signed over the past 4 years that do not serve the U.S. national interest, including revoking the Presidential permit granted to the Keystone XL pipeline,” the Biden-Harris transition team says.
Since reports surfaced a few days ago that the new U.S. Administration would kill the cross-border Keystone XL project on day one, top Canadian officials have said the move would weaken the existing U.S.-Canada relationship.
Analysts, as well as Alberta’s Premier Jason Kenney, say that killing Keystone XL would not diminish demand for heavy crude oil at U.S. refineries in the future. It could, however, raise America’s dependence on crude oil imports from OPEC, instead of imports from Canada, for the U.S. Gulf Coast.
The United States has reduced its dependence on OPEC oil over the last few years, and is now a net oil importer. What crude oil the U.S. does import today mostly comes from Canada, to the tune of nearly 4 million barrels per day. Only 686,000 barrels per day come from OPEC nations.
But all that could change now.
Richard Masson, an executive fellow and energy expert at the University of Calgary’s School of Public Policy, told The Canadian Press earlier this week that killing Keystone XL could force U.S. Gulf Coast refineries to import more oil from countries like Saudi Arabia and Iraq, instead of from Canada. Related: U.S. Oil Product Demand Is Set For A Biden Boost In 2021
U.S. crude oil imports fell to just 280,000 bpd in October 2020, and just 121,000 bpd from Iraq, according to the Energy Information Administration.
Scrapping the project will also kill jobs—both in Canada and the United States.
According to Kenney, scrapping the Presidential permit for Keystone “would kill jobs on both sides of the border, weaken the critically important Canada-U.S. relationship, and undermine U.S. national security by making the United States more dependent on OPEC oil imports in the future.”
“As president-elect Biden’s green jobs plan acknowledges, Americans will consume millions of barrels of oil per day for years to come. It is in perfect keeping with his plan that the United States energy needs should be met by a country that takes the challenges of climate change seriously,” Kenney added.
On Tuesday, Kenney said he had urged the federal government of Canada “to do everything possible to convey a clear message to President-elect Biden that rescinding the #KXL border crossing permit would damage the Canada-US bilateral relationship.”
“Should the incoming US administration abrogate the Keystone-XL permit, Alberta will work with TC Energy to use all legal avenues available to protect its interest in the project,” Alberta’s premier said in his Sunday statement on the pipeline development.
According to Politico, TC Energy could react to the scrapping of the Presidential permit by challenging the move in court or through the new North American trade deal.
If Keystone XL is terminated, Alberta could also sell the pipes from the project to offset some of the funds it had invested in the project, Kenney said at a news conference earlier this week, as carried by Bloomberg.
Tsvetana Paraskova for Oilprice.com
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