TC Energy CEO Russ Girling said that much credit is due to Kenney and President Trump, both of whom overcame various obstacles from indigenous and environmental groups to realize the pipeline’s construction finally.
According to the Financial Post, Alberta will provide a $6 billion loan guarantee beginning in 2021. The project is now anticipated to cost $14.4 billion in total.
In an interview with the Post, Kenney said, “This is absolutely critical for our economic future now more than ever.”
Slipping Oil Prices
Canada’s energy industry has taken a significant blow in the past weeks due to the COVID-19 precautions enacted by the government and the ongoing production war between OPEC countries Russia and Saudi Arabia.
BNN Bloomberg reported that discounts on Canadian oil generally have widened over the past week, with heavy crude slipping to about US$16 per barrel below WTI from around US$10.
TD analyst Menno Hulshof “this is not just a heavy issue,” the analyst added. “We have seen similar moves in the Edmonton Light differential (about US$9 per barrel up from US$3) and synthetic crude oil differential (a discount of about US$12 versus a premium of about US$3).”
Alberta’s benchmark heavy grade, Western Canadian Select, hit record lows yesterday, changing hands below US$4 barrel. It traded around US$4.09 Tuesday.
Critics to the move argue the low commodity prices, exacerbated by the Russia-Saudi Arabia price war, no private sector bidders, and legal hurdles from environmentalists and select Indigenous groups make this a high-risk investment.
What are the benefits?
The Keystone XL addition, from Hardisty, Alberta to Steele City, Nebraska, will provide 1,400 direct jobs to Alberta and 5,600 indirect positions by construction. An estimated $30 billion in taxes and royalties will be generated from the mammoth Keystone XL pipelines.
Alongside the Trans Mountain expansion and Enbridge’s Line 3 replacement project, the Keystone XL addition will alleviate the transportation bottleneck that has stymied energy producer confidence.
Concerns regarding the investment of taxpayer dollars into the project were assuaged as TC Energy is committed to repaying Alberta for it’s $1.5 billion equity investment and $6 billion loan when the pipeline is operational.
The S&P/TSX Capped Energy Index surged 15 per cent following the announcement that surprised industry experts. Suncor Energy Inc., Cenovus Energy Inc. and Canadian Natural Resources Ltd. also saw their respective stocks climb between 17 and 23 per cent each, respectively.
The move also eliminates the need for crude-by-rail transport, which has been suspect to several crude spills in recent memory.
Update:
US President Donald Trump today (April 2nd) announced that he had just spoken to the Crown Prince of Saudi Arabia who had been in talks to Russian President Vladimir Putin and indicated that the two countries will be ratcheting down the oil price war that had been partially responsible for the collapse of the value of oil and gas, especially Western Canadian Select.
[…] National Telegraph […]