President-elect Donald Trump has vowed to issue a day-one executive order to restore federal approvals for the proposed Keystone XL Pipeline while also pledging to slap tariffs on Canadian imports.
“You have, on one hand, [Trump] saying he wants free trade to reduce energy prices for consumers, while at the same time, on the other hand, threatening to throw tariffs on the barrel that would, presumably, flow through that pipeline, increasing prices for consumers.”
The president-elect’s musings about imposing a 25 percent tariff on Canadian imports shows he’s applying that leverage, Johnston said, which has “everyone north of the border” discussing strategies “to further diversify our risk away” from the United States because, right now, nearly all pipelines beeline south.
Canadian producers annually sell more than $150 billion in petroleum products to the United States, “our biggest, and in some cases, only customer for almost every good this country produces,” she writes.
That relationship no longer works, Baiton said. “Because of this reliance on one customer, Canada has little negotiating power with the Americans,” she writes, calling for initiatives to “build a tariff-proof economy.”
“It’s time to build more transportation routes to new markets, LNG export facilities, pipelines and port expansions, so we are no longer beholden to a single customer,” Baiton said.
Johnston said “it is possible” Trump’s promised executive order will quickly induce Canadian producers into resubmitting a new pipeline proposal to open more pipeline access and broaden shipping capacity.
But for some, doing so “kind of raises a question,” he said. “Why would [Canadian producers] further double down on U.S. dependence now when that dependence is being used” to induce trade concessions?
TC Energy wanted XL to boost its shipping capacity by up to 730,000 bpd of Alberta tar sands crude to refineries and export shipping terminals in Texas and Louisiana.
Although XL secured federal approvals in 2014, President Barack Obama in 2015 vetoed its permit. On his Jan. 20, 2017, inauguration, Trump restored XL’s approval. Four years later, President Joe Biden revoked Trump’s restoration.
That makes whatever regulatory relief Trump bestows posthumous because resurrecting Keystone would require a new sponsor packaging and submitting a new application.
A Will, A Way
While XL sputtered, Trans Mountain, which has built pipelines over the Northern Rockies and operated a port terminal in Burnaby, British Columbia, since the early 1950s, launched an initiative to nearly triple Alberta producers’ access to the Pacific.With an expansion from 300,000 bpd to 890,000 bpd completed in May 2024, the 610-mile TransMountain Pipeline from Edmonton to Burnaby provides access to refineries and an expanded port Canadian producers sought in proposing XL in 2008.
The Canadian Association of Petroleum Producers maintains that even with TransMountain’s tripled capacity, it only adds about 10 percent to the oil volumes transported out of Alberta, noting that until LNG Canada goes online, “99 percent of our natural gas exports will still head south of the border.”
LNG Canada Development, Inc., a five-company joint venture led by Shell, is set to open its $18 billion LNG storage plant and export terminal in Kitimat, British Columbia, in mid-2025.
Overall, he said, demand for Canadian crude is going to be strong, increasingly “by Gulf Coast refiners for that heavier crude oil.”
That’s why Canadian producers “still love access to the Gulf” and why it will remain a preferred destination, with pipelines the preferred method of delivery, Flynn said.
“That is where all the refineries are and where the ships are already geared to export everywhere in the world,” he said.
And that’s why, “whether or not this pipeline gets built, there will be other pipelines coming down from Alberta, another pipeline along the same route,” he said.
“Just, it’s not called ‘Keystone.’”
‘The Real Irony’
The EIA’s September update noted that “refiners on the U.S. West Coast have been key buyers of the new export volumes” being shipped from Burnaby, including 498,000 bpd in July 2024, a record high and 115 percent spike from July 2023.“And there’s the real irony in all this,” Texas Tech University Department of Economics Professor Michael Noel said.
“The oil was going to go. The oil was going to move. We needed the oil. The oil was going to get here,” he said. “And the oil is here. But we just found a much more expensive way to do it.”
Noel told The Epoch Times that XL mostly tracked through “nice flat ground” in Montana, the Dakotas, and Nebraska where it’s “a lot easier, cheaper, safer to pump oil.”
“Now that oil is going up and over the Rocky Mountains to the Pacific Ocean” via the TransMountain Pipeline, “a very expensive pipeline” spanning peaks and “very difficult to access” wilderness, he said.
“You know that gravity works, right? So it’s a lot more expensive to actually move that oil from Alberta to Vancouver” than it would be to Nebraska, Noel said.
In Burnaby, near Vancouver, that Alberta tar sands oil is transferred to barges and shipped mostly to California or Gulf Coast refineries.
U.S. West Coast refineries alone accounted for just more than half of all maritime crude exports from western Canada, the EIA reported in September.
“So, because we need the oil, the oil was always going to get here,” Noel said. “The oil is here, you just raised your price.”
