TC Energy, the Canadian pipeline operator that was building the Keystone XL project, has filed a notice of intent to initiate a claim against the Biden administration for the suspension of the project, seeking $15 billion in damages.
According to the notice, the U.S. administration violated the North American Free Trade Agreement with its decision to kill the $9-billin project that would have carried 830,000 bpd of Canadian crude to the United States. The company had to official drop Keystone XL after President Biden revoked a crucial permit.
Proponents of the Keystone XL project have argued that scrapping the pipeline would not diminish the demand for the heavy crude oil that the pipeline would have carried to U.S. refineries. Instead, it would merely raise the United States’ dependence on crude oil from OPEC countries. An argument has been made that it would also kill jobs on both sides of the border.
Opponents, on the other hand, argued that the Keystone XL was unnecessary because there were enough pipelines carrying Canadian crude into the U.S. It was on the grounds of this perceived lack of necessity for the infrastructure that President Obama suspended the project years ago before his successor, Donald Trump, revived it.
It was suggested back in January that if TC Energy did not challenge the permit rescission in court or through NAFTA, it might sell some of the pipes from the project to offset some of what has been invested so far.
Canadian oil sands production, meanwhile, is on the rise, suggesting demand is quite healthy. According to IHS Markit, oil sands output is on its way to rebounding to pre-pandemic levels and rise by 650,000 bpd between this year and 2030. Since most of the oil sands output not used locally goes to U.S. refineries, this means the argument against additional pipelines may have been premature.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Record Decline In U.S. Crude Stockpiles Fuels Oil Rally
- The Best Energy Dividend Stocks Of 2021
- Russia Is Ready To Open The Taps