Following Joe Biden’s inauguration as U.S. president, he took the widely expected step through an executive order of cancelling the cross-border permit for the US$14.4-billion Alberta-to-Texas heavy oil pipeline, the Keystone XL pipeline. The decision marks the third time a U.S. president has blocked the construction of this pipeline. Next occurred the decision by Michigan’s Governor Gretchen Whitmer last November which ordered Calgary-based Enbridge to shut down its nearly 70-year-old Line 5 pipeline by May 12, 2021. Line 5 carries each day up to 540,000 barrels of crude oil and natural gas liquids across Michigan and under the Great Lakes. Line 5 is part of Enbridge’s mainland system carrying fuel from Alberta’s oil sands to the Midwestern U.S. and Eastern Canada, especially to refineries in Sarnia, Ontario. Not surprisingly, President Biden’s and Governor Whitmer’s decisions were applauded by environmentalists and Indigenous groups on both sides of the border.
The difficulty is that Canada is the world’s fourth-largest producer of crude oil, and the U.S. is its top customer. While past incidents have occurred where crude oil leakages in pipelines, including those which are part of Enbridge’s mainland system, the alternative means of transportation via rail and trucking also represents serious safety issues. This potential danger was clearly demonstrated in the fiery derailment in July 2013 in Lac-Megantic, Quebec, which killed 47 people and wiped out part of the town. From an economic point of view, the transport of crude oil and natural gas liquids by pipeline is the most efficient and least costly option. Realistically, any transition within the U.S. or Canada away from fossil fuels will take time. While the elimination of fossil fuels makes good environmental sense in light of climate change, there continues to be a dependence on fossil fuels for servicing our industries, running our transportation hubs, producing electricity and heating our homes. Both countries have to cooperatively work together towards achieving environmental goals without creating bad relations between our governments and citizens.
Back in January, Alberta’s Premier Jason Kenney asked the Canadian government to push the U.S. government to reimburse the $1.5 billion it stands to lose from the cancellation of Keystone XL and to reimburse TC Energy, the project proponent, for the money it has sunk into the project. Alberta took an ownership stake in 2020, representing more than $1 billion in taxpayer money to fund the construction of the pipeline. The Biden administration’s decision to block the Keystone XL pipeline has put Prime Minister Justin Trudeau in a very difficult situation, one which he has raised with the President. On the one hand he has to support Alberta’s oil and gas industry. On the other hand the Prime Minister has agreed reduce in Canada’s greenhouse gas emissions by 40 to 45 percent within the next decade. This brings Canada in line with the Biden administration recent pledge to slash U.S. greenhouse gas emissions by 50-52 percent from 2005 levels by 2030.
Critics of the decision to shut down the Line 5 pipeline note that 6,500 good-paying jobs in Sarnia, Ontario, are on the line. A further 23,500 indirect jobs in that same region could also be impacted, and thousands more across Ontario and Quebec. Line 5 also feeds into Line 9, which carries oil to refineries in Montreal and Lévis for Quebec’s supply needs. According to Minister of Natural Resources Seamus O’Regan, Line 5 delivers 66 percent of the crude oil consumed in Quebec. This means that besides Alberta, the Premiers of Ontario and Quebec are extremely unhappy with the Michigan Governor’s position. Any decision to move crude oil and natural gas liquids by alternate means is considered less safe, more costly and realistically not viable given the vast quantities that have to be transported. This is your Catch-22. For this reason, both Canada and the U.S. need to work much more closely to resolve all relevant issues pertinent to their respective constituents. Our continuing good trade and political relationships are in the balance.
FROLITICKS 
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