Kenney pitches new pipeline to U.S. despite Biden’s Keystone veto

Alberta Premier makes his pitch despite Biden’s veto last year of Keystone XL

Embattled Alberta Premier Jason Kenney is calling on American policy-makers to consider allowing construction of a new pipeline that would ship heavy oil from the province to the United States, as North America grapples with tight energy supplies in the aftermath of the Russian invasion of Ukraine.

Mr. Kenney made the plea on Tuesday in Washington, where he was testifying before the U.S. Senate Committee on Energy and Natural Resources. The hearing was called by Republican John Barrasso and chaired by Joe Manchin, a pro-fossil-fuels Democrat. Mr. Kenney made his remarks the day before his United Conservative Party was set to reveal the results of a leadership review vote that will determine whether he remains as head of the party.

After Moscow’s invasion of Ukraine, the U.S. banned imports of Russian oil as part of its ongoing sanctions against Russian President Vladimir Putin. The U.S. sourced about 700,000 barrels of oil a day from Russia, which accounted for about 8 per cent of its energy needs. After the ban, gas prices spiked to a record high, and they remain at elevated levels. Mr. Kenney said new Canadian pipeline construction would “forever allow the United States to free itself from imports from hostile regimes.”

Washington has not always been open to Canadian pipeline proposals. U.S. President Joe Biden vetoed the Keystone XL pipeline last year over environmental concerns about increased oil-sands production. The multibillion-dollar project would have transported oil from Alberta to refineries in the U.S.

The decision cost Alberta about $1.3-billion. Had Keystone gone ahead, its projected capacity of 830,000 barrels of oil a day would have more than made up for the gap left by the ban on Russian imports.

But despite the much tighter supply environment in the U.S., the chances of the Biden administration considering another major Canadian pipeline project appear slim. In an interview with The Globe and Mail earlier this week, Jonathan Wilkinson, the federal Minister of Natural Resources, said Ottawa “has heard nothing from the Americans that they are actually interested in seeing a new oil pipeline.”

As Mr. Kenney pushed for a new pipeline, he also called on the U.S. to accept more of Alberta’s existing heavy oil production, and urged Mr. Biden to forget about engaging with OPEC countries.

“We find it inexplicable that the President of the United States has been more focused on encouraging additional OPEC production than Canadian production,” Mr. Kenney said. “We have no record of any effort by the administration to reach out to Alberta.”

While America already imports 62 per cent of its oil from Alberta, Mr. Kenney said Canadian producers have the potential to supply an additional 300,000 barrels a day without a new pipeline.

One reason the U.S. appears to be shying away from additional Canadian crude is that the oil has a large carbon footprint. Extracting bitumen requires massive amounts of steam, making it hugely energy intensive. Also, Alberta’s heavy reliance on fossil fuels to power its electric grid – such as natural gas and, to a lesser extent, coal – makes its oil a tougher sell on the environmental front.

Janetta McKenzie, a senior analyst at the Pembina Institute, a Canadian think tank, said in an e-mail that increased oil sands production and a new pipeline would be at odds with Canada’s commitment to reduce its carbon emissions.

Oil sands production and pipelines “take time to scale up and must operate for decades to provide good investment returns,” she wrote. “The likelihood of these assets becoming stranded, when they can’t adhere to changing climate policies during their decades in operation, increases the longer we delay deep decarbonization strategies.”

Mr. Kenney also used his Senate testimony to call on the U.S. government to oppose Michigan Governor Gretchen Whitmer’s efforts to shut down the Enbridge Line 5 pipeline over fears of a potential leak. The 69-year-old pipeline, which stretches for more than 1,000 kilometres, transports around half a million barrels of petroleum a day across the Great Lakes through Wisconsin and Michigan to Ontario.