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TC Energy Group, the company that was developing the Keystone XL oil pipeline project, has filed a request for arbitration, seeking $15 billion in compensation for the project that President Joe Biden canceled in his first days in office.
Filed with an international arbitration panel, the request has sounded the starting gun on one of the biggest trade appeals against the United States, Bloomberg said in a report on the news, noting that the move was based on the North American Free Trade Agreement, which allows foreign companies to appeal policy decisions made by Washington.
TC Energy canceled the Keystone XL project last June. It was one of the most controversial pipelines in recent history, drawing anger from Native American communities and environmentalists and a veto from President Obama on the grounds that it was unnecessary for the energy security of the United States.
The pipeline was supposed to carry some 800,000 bpd of Canadian heavy crude to U.S. refineries. As proponents of the project have noted repeatedly, the demand for these Canadian barrels did not die with Keystone XL. Canadian exports of heavy crude to the U.S. have remained high; only the means of transporting them have changed from pipelines to oil trains.
“The U.S. decision to revoke the permit was unfair and inequitable,” TC Energy said in its filing, noting that the United States had put Keystone XL on a 13-year “regulatory rollercoaster”.
The company booked a loss of $1.8 billion in the first quarter of this year on impairment charges related to the canceled project. The government of Alberta also suffered losses—as of February last year, it had invested $1.2 billion in Keystone XL.
“We’re not doing this for symbolic or political purposes. This is a business decision,” TC Energy vice president for liquids pipelines Richard Prior told Bloomberg in an interview. “We had all the permits and requirements in place to start construction on the line, and did so, and we worked with federal and state regulators in both countries for a very long period of time. This is just about recovering that destroyed value of investment.”
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.