On Monday morning, the Alberta government announced it plans to invest $1.5 billion in the Keystone XP pipeline project to accelerate construction and ensure it’s operational by 2023.
The Government of Alberta has finalized an agreement with Calgary-based TC Energy Corporation, who owns the pipeline, to provide financial support to accelerate construction of the KXL pipeline starting April 1.
The investment will include $1.5 billion in equity investment from the province in 2020 followed by a $6-billion loan guarantee in 2021. The project is expected to be completed and in service in 2023.
In a statement, the government said the agreement is the culmination of six months of negotiations and rigorous vetting by government officials and outside industry experts to ensure the success of this project while minimizing risk to taxpayers.
Alberta Premier Jason Kenney said Tuesday the project was a wise investment and essential for the province's future prosperity.
"Every projection for the Canadian energy sector was that we need a significant increase in pipelines to ship our energy," he said, pointing to issues like the oil price differential and export capacity that were front-of-mind before oil prices crashed this month.
"Inevitably prices will come back to something like normal and there will be a growing global demand for energy for decades to come."
The government is backstopping the project to enable TC Energy to begin immediate construction on the Alberta portion of the pipeline, which the government said will ensure the earliest possible date of completion. The project will create over 1,400 direct and 5,400 indirect jobs in Alberta during construction and will generate an estimated $30 billion in tax and royalty revenues for future generations of Albertans and Canadians.
“We cannot wait for the end of the pandemic and the global recession to act. There are steps we must make now to build our future focussed on jobs, the economy, and pipelines. Today we are moving forward with a project that is essential to our future prosperity. This investment in Keystone XL is a bold move to re-take control of our province’s economic destiny and put it firmly back in the hands of the owners of our natural resources, the people of Alberta. The Government of Alberta is confident that this is a wise investment. After construction is complete, we will be able to sell our shares at profit. In addition, the project will have a net return of over $30 billion to the Alberta taxpayer through royalties and higher prices for Alberta oil in the next 20 years,” Alberta Premier Jason Kenney said in a statement.
Once operational, Keystone XL will provide North America with a stable, secure supply of crude oil, reducing reliance on supply from OPEC. The pipeline will carry at least 830,000 barrels per day of Alberta crude, significantly increasing the province’s takeaway capacity and helping to protect the value of its energy resources.
Construction will begin immediately in Alberta, at the Canada-US border, in Montana, South Dakota and Nebraska.
The Keystone XL Pipeline offers a safe, reliable and environmentally responsible way to deliver crude oil from western Canadian oil fields to Gulf Coast refineries in the U.S. The project will run from Hardisty, Alta., to Steele City, Nebraska, and will cover 1,947 kilometres.
The government will present a related motion for debate and vote this week in the Alberta Legislature.
Keystone will provide more than 830,000 barrels per day of crude oil to Gulf Coast Refineries. It covers 1,947 kilometres from Hardisty, Alberta, to Steele City, Nebraska. Two-hundred fifty-nine kilometres of pipelines will be constructed in Alberta.
TC Energy, which owns the pipeline, will reimburse the government 12 months after oil is flowing through the pipeline.
