On his first day as President of the United States, Biden cancelled the license to Canada’s Keystone XL pipeline expansion project as previously planned.
This matter immediately caused a great uproar in Canada.
The most reaction to this incident was Jason Kenney, Governor of Alberta, Canada, who strongly criticized the United States in a public speech.
“The Canadian government should respond with practical trade and economic sanctions to protect our vital economic interests,” Kenny said.
Subsequently, on January 22, the third day of Biden’s presidency, when Canadian Prime Minister Trudeau talked with Biden on the phone, Biden did not promise to reverse his previous decision, and Trudeau did not intend to let the “bedrock” pipeline expansion project affect the relationship between the two countries.
I. The fate of “bedrock” and “bedrock expansion” is very different.
It is well known that Canada and the United States are highly economically integrated, as is the oil industry.
The “Keystone” pipeline project was proposed in 2005. In March 2008, George W. Bush) In the last year of his term, the U.S. State Department issued a presidential license for the “bedrock” pipeline project.
The first three phases of the project were completed in 2016, which is the dashed part in the figure below except the green solid line, with a total length of nearly 4,800 kilometers.
David Braziel, CEO of RBN Energy, an energy market consulting company headquartered in Houston, Texas, said that when the “bedstone” pipeline project was first proposed in 2005, due to the need for additional oil supply in the United States at that time, The pipeline project with the “bedrock” is progressing smoothly.
In 2008, Canada proposed the “bedrock” pipeline expansion project, that is, the green solid line in the picture above.
Thanks to the stable supply of oil for the “bedrock” pipeline project, Canada’s share of U.S. crude oil imports has risen rapidly.
According to the 2019 U.S. Department of Energy, Canada ranks first among U.S. oil importers, and imports about half of the United States oil from Canada. In 2005, less than one-fifth of the oil imports from Canada were imported from the United States.
II. The “bedrock” expansion project has encountered three major troubles in the United States.
However, with the passage of time, after the “bedstone” pipeline expansion project was proposed, it has encountered many setbacks, which is very different from the “bedstone” pipeline project. In the United States, the “bedrock” pipeline expansion project has encountered three major troubles.
1. The leakage of the pipeline causes concern.
In April 2016, the “Bingstone” pipeline project had two crude oil spills in South Dakota, the United States, and in November 2017, there was another leak in South Dakota. Although the accident occurred was the “bedrock” pipeline project, it caused more environmental concerns about the “bedrock” pipeline expansion project.
With the conclusion of the Paris Climate Agreement on December 12, 2015, the idea of giving priority to environmental protection and emission reduction has attracted more and more attention from all countries. In both the United States and Canada, the “bedrock” expansion project has met with protests from environmentalists, and the Democratic Party in the United States also advocates active participation in global emission reductions.
2. Project engineering involves political struggle
The “Balstone” pipeline expansion project has been involved in a triple battle in the United States: the federal government-local government, the executive-legislature dispute, and the Republican-Democratic dispute.
The triple fight was the most concentrated in 2015. On January 9, 2015, the Nebraska Superior Court ruled in favor of Republican Governor Dave Heineman’s permission to the project.
Subsequently, the Republican-controlled U.S. Senate and the House of Representatives passed a bill to authorize the project.
However, then-president Obama, who was from the Democratic Party, vetoed the bill of both houses of Congress and thought that the relevant decisions should be made by the executive branch.
In March 2017, then-US President Trump, a Republican Party, overturned Obama’s decision and signed a presidential decree approving the start of the “Beachstone” pipeline expansion project.
On January 20, 2021, the new U.S. President Biden from the Democratic Party cancelled the Trump presidential order on the first day of his inauguration, and the “bedstone” pipeline expansion project was suspended for the second time.
In this way, Republicans support and Democrats oppose it.
The “bedrock” pipeline expansion project rises and falls in this tug-of-war, and the future is unknown.
3. Canadian oil is no longer important.
Warren Mabee, director of the Energy and Environmental Policy Research Institute of Queen’s University in Kingston, Canada, believes that the “Keystone” pipeline expansion project is no longer important for today’s U.S. crude oil supply.
After the “bedrock” pipeline expansion project was proposed, the United States made a technical breakthrough in shale oil exploitation. Michael Tran, general manager of global energy strategy at RBC Capital Markets, said that this led to a 230% increase in U.S. crude oil production.
According to the U.S. Energy Information Administration, the United States produced an average of about 19.25 million barrels of oil per day in 2019, resulting in a sharp decline in the total amount of crude oil imports from the United States.
In this case, why do the Republican Party of the United States favor Canadian oil imports?
Andrew Lipow, CEO of Lipow Oil Associates, a Houston, Texas-based company, said that first, Canada’s oil imports are very stable and will not be subject to political factors.
Impact; secondly because of cheaper prices; thirdly, many refineries in the United States are configured to refine heavy sulfur crude oil from Alberta, Canada, and refineries are unwilling to easily change the crude oil supply chain.
As a senior politician in Canadian politics, Alberta Governor Kenny certainly knows that Biden will not change his domestic policy for Canada, and that Canada has no ability to “sanction” the United States.
Then why did he issue the threat of “sanctions” against the United States?
Political columnist Jen Gerson pointed out in a Canadian Broadcasting Corporation website that the Conservative Party under Jason Kenny promised to restore Alberta’s economy and provide a large number of jobs in the campaign, and invested 1.5 billion Canadian dollars in the “Bedstone” pipeline expansion project.
He also provided 600 million Canadian dollars in loan credit to construction companies. So much money is now “wasted” Kenny needs to give an explanation for the wrong huge investment.
Goessen noted that Kenny had been opposed to the Liberal Party and the NDP’s carbon tax policy, which was the main reason for his victory in the election.
The current setback on the “bedrock” pipeline expansion project not only proves that his proposition cannot be realized, but also completely fails his campaign promise.