With the departure of former US President Donald Trump, the controversial Canada-US Keystone XL oil pipeline is back in the headlines, however, experts say the project has always cast a shadow of uncertainty.
The privately financed pipeline project planned to transport 830,000 barrels a day (bpd) of heavy crude oil extracted from the oil sands of Canada’s Alberta province down 1,900 kilometers to the US state of Nebraska to join a network of existing pipelines.
From there, the oil will be transported through existing pipelines to refineries across the Gulf of Mexico.
Former President Barack Obama had rejected the Keystone XL (KXL) in November 2015 after a seven-year review due to its potential environmental impact and its effect on human and animal health along its path. Trump, however, shortly after taking office in January 2017 signed an executive order allowing TC Energy -- formerly known as TransCanada -- to reapply for the construction of the project.
The pipeline has faced years of ongoing protests by environmental activists and organizations, indigenous communities, farmers, and company owners along its planned route.
It has always been the focus of criticism due to the impending high emissions levels over its life cycle and its propensity for spillages.
-Canadian producers already braced for project reversal
The controversial pipeline has come to the agenda again after the newly elected US President Joe Biden signed an executive order as soon as he assumed office on Jan. 20, revoking Trump's decision to cancel the CAN$8 billion (US6.29 billion) project.
'Canadian oil sands producers have become accustomed to bad news over the past six years -- be it global price routs, demand destruction, or local infrastructure constraints -- and have adjusted the scale and pace of upstream development accordingly,' Norway-based Rystad Energy's Vice President for North American Shale, Thomas Liles, told Anadolu Agency.
Liles said while a formal cancelation would certainly come as unwelcome news in the Canadian oil patch, however, the impact on Western Canadian oil production in the near- to mid-term 'is likely to be muted.'
'Canadian producers have already factored egress constraints into their near-term growth profiles, not to mention uncertainty over demand,' he said, noting that total out-of-basin oil exports from Western Canada were expected to average between 4.2 million and 4.4 million barrels per day over the next few years.
He said assuming the Keystone XL is canceled; Canadian producers would be left with two major pipeline newbuilds – the Enbridge's Line 3 Replacement with 370,000 bpd in incremental export capacity between the Canadian border and Superior, Wisconsin, and the Trans Mountain Expansion project, which carries incremental egress of 590,000 bpd from Edmonton, Alberta, to Burnaby, British Columbia, with further tidewater access to international markets.
'While the politics around KXL will continue to reverberate for some time, the reality is that Western Canada -- for the first time in recent memory -- may soon reach a juncture at which it has excess oil export capacity,' he said.
-US and Canada due to discuss future of project
Biden's first call with a foreign leader will be with Canadian Prime Minister Justin Trudeau on Friday, during which the duo are expected to discuss the pipeline expansion project.
After Biden signed an executive order to cancel the KXL project soon after his inauguration on Wednesday, Canadian Prime Minister Justin Trudeau said the move was disappointing.
Alberta Premier Jason Kenney called on the Trudeau government to ask the US to 'sit down and discuss the decision.'
'If, however, the US government refuses to open the door to a constructive and respectful dialogue about these issues, then it is clear that the government of Canada must impose meaningful trade and economic sanctions in response to defend our country's vital economic interests,' he said.
By Sibel Morrow and Firdevs Yuksel