Keystone is the McGuffin of Canadian energy politics.
Defined as a device used in fiction to set the plot in motion, but of little importance in and of itself, the McGuffin triggers action and reaction throughout a book or film.
In Canada right now the Keystone pipeline is a stand-in that defines where all the players fall on the big issues of oil extraction and export, carbon emissions and climate change.
The story’s climax will come when president-in-waiting Joe Biden makes a final decision on whether to halt construction on the pipeline, which stretches from Hardisty, Alberta to the Texas Gulf coast.
In the meantime there’s plenty of drama to be had. This week a First Nations firm called Natural Law Energy announced plans to invest up to $1 billion in Keystone. The investment is contingent on the group of three Alberta and one Saskatchewan bands securing financing. The deal would close in the third quarter of 2021.
That plot twist has Alberta Premier Jason Kenney cheering. It bolsters his argument that despite the contention of environmentalists, there are plenty of Indigenous Canadians who support oil and gas development and see it as a means to better their own economic security.
The Natural Law announcement also proved a diversion to the outrage that was mounting over his own comments on Alberta’s investment in Keystone.
Despite straightened economic times, the provincial government committed in the spring to plow $1.1 billion into the pipeline and also backstop the project with a $4.2 billion loan guarantee.
In a recent interview with a conservative blogger Kenney said the Keystone investment is a “hedge” against the political risk that the federal Liberals will pull out of their commitment to the TransMountain pipeline.
“I was not prepared to put all of our eggs in the basket of the Justin Trudeau-owned pipeline,” said the premier.
The premier’s opponents are questioning whether his feud with Trudeau justifies sinking taxpayer money into Keystone, a project which has been struggling for 10 years to get all its regulatory ducks in a row.
All the investment from the west could amount to nothing if the Canadian government can’t convince the incoming Biden administration to leave U.S. permits in place for the project. That’s the setup for the next turning point in the story: Biden and Trudeau will at some point sit down and talk bilateral relations. According to Foreign Affairs Minister François-Philippe Champagne a prominent item on Canada’s agenda will be Keystone.
Champagne and the Alberta government are pressing their case on the basis of North American energy security and Alberta’s efforts to reduce the carbon footprint of its oil. Keystone proponents also hope that given construction is already underway on both sides of the border, Biden won’t want to put existing jobs at risk.
Biden is on record as saying he will pull the pipe permits as part of his green agenda. How willing he will be to antagonize Americans concerned with climate change is the central question.
So what’s really at stake in all of this punting of the Keystone political football? Like any good McGuffin, there’s less than meets the eye to the project itself.
In many ways, the TransMountain from Edmonton to Vancouver makes more sense economically for Alberta. That pipeline doesn’t need U.S. approvals. Given that the federal government owns it, Trudeau is bound to support its completion.
And it sets the stage for the opening of markets in Asia to Alberta oil.
Keystone only continues to bind Alberta’s resource to the single-U.S. market. That vassal relationship has only served to push down the price of the provincial resource.
Some economists are starting to wonder if, given the economic cataclysm of Covid and the ramping up of alternative energy sources, more than one pipeline will even be needed to handle Alberta’s export needs.
A few years ago the Alberta government could have anted up a few billion bucks as a political “hedge” without a lot of public backlash. But now taxpayers may wonder if this McGuffin is worth all that money and drama.
Photo Credit: The Canadian Press
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