As reported by the American edition of NBC News, citing the administration of the Canadian state of Alberta, the company TC Energy has officially announced the cancellation of the Keystone XL oil pipeline project
The decision follows President Biden’s recent revocation of permission to build the pipeline. This is the ignominious end to a twelve-year, nine-billion-dollar project.
The news, while seemingly domestic in nature, nevertheless illustrates to the fullest extent the political and economic course upon which the United States has embarked.
No sooner had the US coal miners come to their senses than the oil industry joined them. The fact is that Keystone XL was essential to maintain the current momentum of the U.S. oil and gas industry and promised not only to provide thousands of new jobs at a time of maximum unemployment since the Great Depression, but also to lift the United States out of the stupid situation into which its leaders had steered it by quarreling with key oil importers.
But first things first.
The first time in recent history that the US and Canada, strategic allies, raised the issue of supplying Canadian oil to Midwestern states’ refineries was in the late 1990s. It was then that the initial project, including the construction of three pipeline strings, was developed, agreed and implemented. By 2013, the first two pipelines were built with a combined capacity of 590,000 bpd, and the third was completed three years later. Since the first two showed their reliability and undoubted financial benefit, the capacity of the third was increased to seven hundred thousand barrels. As it is easy to calculate, over one million two hundred thousand barrels of the coveted black liquid were pumped daily from Canada to Midwest refineries. To understand the scale, every tenth gallon of gasoline in the country was produced by American refineries on the basis of these supplies.
In the wake of the success, the parties developed the design for a fourth pipeline back in 2012, which was named Keystone XL. All shortcomings of the previous phases were taken into account. For example, the previous route was an inverted “G” and ran first eastward through three Canadian states, then turned strictly southward, passing through North and South Dakota, and finishing its way in Nebraska. In Keystone XL, oil workers proposed cutting a corner on the map, shortening the route (and thus the cost) of transportation by running the pipeline directly from Canadian Alberta diagonally through Montana into Nebraska. The length of the line would have been almost halved, and US refiners would have received additional feedstock and emerged from the crisis.
The latter arose as a result of Washington’s foreign policy; it was he who gave the go-ahead for the construction of the first three branches of Keystone. The US began imposing sanctions in packs on Venezuela and Iran, from where the country was importing heavy bituminous oil, on which US fuel producers were technologically set up. Once the Persians and the descendants of Simón Bolívar started having problems with US democracy, the latter had problems supplying raw materials, which could be partially compensated by chemically similar oil from friendly Canada.
Keystone XL would not only have loaded production capacity and given jobs to residents of very depressed Montana, but it would also have increased the transhipment of secondary petroleum products at the end points – the ports of Port Arthur and Houston. But during this very period, Democrat Obama, who was very fond of and promoted alternative energy in every possible way, became President of the US.
From the very beginning, the project was met with fierce opposition from all sorts of “greens” and “activists” who were sympathetic to Hillary Clinton, then Secretary of State. With her active involvement, Barack Obama banned construction in the winter of 2012 on environmental grounds. TC Energy (then called TransCanada) received an independent opinion that it was fully compliant with all environmental requirements, plus the state governments involved got involved. For example, the then Governor of Nebraska, Dave Heineman, approved the construction and asked the State Department not to interfere with a project that was vital to the region.
The government dragged its feet, and by 2014, the project had gone from $5.4 billion to $8 billion.
In the winter of 2015, the Senate gave permission for the pipes to be laid, but Obama immediately vetoed the decision.
A year later, Donald Trump came to power with an open bet on hydrocarbons, and during his presidency, the US went from perpetual importer to supplier of oil and gas for the first time in its history. Unsurprisingly, the 46th US president has once again allowed Keystone XL pipes to be laid. “The Greens tried to stall the project through the courts, but the government issued an official opinion that a working oil pipeline produces several times less greenhouse gases than transporting oil products by rail. Last spring, the Alberta government provided TC Energy with a $1.5 billion tranche and another six billion in government guarantees. Construction has started.
True, it immediately ran into incredible opposition from the Democrats and their electoral base. Joe Biden’s election programme was built around supporting alternative energy, banning Keystone, and he was given maximum help by recognisable personalities. In particular, such celebrities as Leonardo DiCaprio, singer Cher, Jane Fonda, Robert Downey Jr. and many others actively opposed the ill-fated pipeline.
On taking office, Biden made good on his promise and withdrew the building permit.
In a statement on the matter, Canadian Prime Minister Justin Trudeau said Canada was very disappointed. He was joined by Alberta state leader Jason Kenney, who added that the country, which had been making targeted investments in a mutually beneficial project, suffered a loss of nearly $1.8 billion at TC Energy.
No new pipeline means no new jobs, no increase in mutual trade and no increase in budget revenues.
We have allowed ourselves to look at the US-Canadian project in such detail for several reasons.
First of all, the Amur Gas Processing Plant, unparalleled in our history, was recently launched in the Far East. A gigantic enterprise that will make it possible to move away from selling energy raw materials to selling high value-added co-products. The first pile of the future plant was driven in 2015, and today we have a sophisticated, modern production facility in the east of our country. No political squabbles, party struggles or manipulation by the “environmental mafia” have been able to prevent this. Hundreds of related enterprises were involved in the project, and the number of staff at the construction site exceeded twenty thousand. In the future more than two and a half thousand people will work at the Amur gas processing plant, they will live there, buy homes, raise children, the government will build roads, schools and kindergartens, and money will flow into the regional budget.
Second, Russia has chosen its own path. Our country is not rushing from one extreme to another. We rely on traditional energy, on the development of regional and cross-border infrastructure, which benefits everyone, including our neighbours. Russia “sews” itself to the world by means of oil and gas pipelines and power transmission lines, providing its partners with the necessary resources. At the same time, domestic producers are provided with orders – from concrete and fittings to pipes and railcars, the budget money is spent on the implementation of strategic and regional projects, settling in the final accounts of citizens.
Renewable sources are not forgotten either. Russia is preparing to produce and supply hydrogen, to use coal-bed methane, and the number of wind, solar and hydroelectric power plants is growing.
New sources of energy will one day replace traditional sources, but for now it is important for us to ensure stable development and growth. Russia has its own, special way, and so far it is proving to be right.