A $1.5 billion government investment in the Keystone XL (KXL) pipeline project will accelerate construction, ensuring it is operational by 2023.
The Government of Alberta has finalized an agreement with Calgary-based TC Energy Corporation to provide financial support to accelerate construction of the KXL pipeline starting April 1. This investment will include $1.5 billion in equity investment in 2020 followed by a $6 billion loan guarantee in 2021. The project is expected to be completed and in service in 2023.
This agreement is the culmination of six months of negotiations, as well as rigorous vetting by government officials and outside industry experts to ensure the success of this project, while minimizing risk to taxpayers.
The government is backstopping the project to enable TC Energy to begin immediate construction on the Alberta portion of the pipeline. This will ensure the earliest possible date of completion. The project will create over 1,400 direct and 5,400 indirect jobs in Alberta during construction and will generate an estimated $30 billion in tax and royalty revenues for future generations of Albertans and Canadians.
“We cannot wait for the end of the pandemic and the global recession to act. There are steps we must make now to build our future focussed on jobs, the economy, and pipelines. Today we are moving forward with a project that is essential to our future prosperity. This investment in Keystone XL is a bold move to re-take control of our province’s economic destiny and put it firmly back in the hands of the owners of our natural resources, the people of Alberta. The Government of Alberta is confident that this is a wise investment. After construction is complete, we will be able to sell our shares at profit. In addition, the project will have a net return of over $30 billion to the Alberta taxpayer through royalties and higher prices for Alberta oil in the next 20 years.”Jason Kenney, Premier
Once operational, Keystone XL will provide North America with a stable, secure supply of crude oil, reducing reliance on supply from OPEC. The pipeline will carry at least 830,000 barrels per day of Alberta crude, significantly increasing the province’s takeaway capacity and helping to protect the value of its energy resources.
Right now Alberta’s oil export capacity is limited by the lack of pipelines. Without the ability to export more oil, there is no incentive for producers to invest in more production in Alberta. Completing KXL will signal to the oil and gas industry, and to investors around the world, that they have a future in Alberta. Without more pipelines, the future of our oil and gas industry is capped; with today’s announcement, employers and investors should have the confidence to maintain existing projects and to spend new money on new projects.
Construction will begin immediately in Alberta, at the Canada-US border, in Montana, South Dakota and Nebraska.
The Keystone XL Pipeline offers a safe, reliable and environmentally responsible way to deliver crude oil from western Canadian oil fields to Gulf Coast refineries in the U.S. The project will run from Hardisty, Alberta, to Steele City, Nebraska and will cover 1,947 kilometres.
Given the significance of this issue, the Government will present a related motion for debate and vote this week.
- KXL will provide more than 830,000 barrels per day of crude oil to Gulf Coast Refineries
- Covers 1,947 kilometres from Hardisty, Alberta, to Steele City, Nebraska
- 259 kilometres of pipelines will be constructed in Alberta
- At least 6,800 direct and indirect jobs in Alberta and over 15,000 direct and indirect jobs in Canada
- Project is expected to be completed in 2023
Financial details (CDN$)
- Government of Alberta will contribute up to $1.5B (CAD) in equity investment in 2020
- The government will backstop this project with a $6 billion loan guarantee in 2021
- TC Energy will reimburse the government of Alberta 12 months after oil is flowing through the pipeline