Pipeline giant TC Energy is formally seeking to recover more than US$15 billion in “economic damages” from the U.S. government following President Joe Biden’s Day 1 decision to cancel the cross-border Keystone XL expansion project.
The Calgary-based company officially filed a request for arbitration Monday with the U.S. State Department after it made its intentions clear in a notice of intent filed with the department earlier this summer.
“As a public company, TC Energy has a responsibility to our shareholders to seek recovery of the losses incurred due to the permit revocation, which resulted in the termination of the project,” the company said in a statement.
“We will not comment further and will follow the process as set out.”
Cancelling the presidential permit issued by predecessor Donald Trump was one of Biden’s first decisions when he took office in January, effectively ending 13 years of on-again, off-again wrangling that bedevilled three presidents and two prime ministers.
Over the course of its troubled history, Keystone XL became an enduring symbol of fossil-fuel excess for environmental activists determined to prevent what they considered a dangerous and damaging expansion of Alberta’s oilsands.
The company officially abandoned all hope for the expansion in June, and shortly afterward filed notice of its intent to seek compensation under the now-defunct North American Free Trade Agreement.
At the time, the company said it would be seeking more than US$15 billion in damages “that it has suffered as a result of the U.S. government’s breach of its NAFTA obligations.”
NAFTA’s replacement, the U.S.-Canada-Mexico Agreement, did away with its predecessor’s dispute-resolution mechanism, but allows companies to file legacy claims for lost investment under the terms of the previous deal.
State Department spokesman Ned Price confirmed receipt of the filing in his briefing Tuesday, the very day that Biden announced the U.S. would release 50 million barrels of oil from its strategic reserve to help slow spiking gasoline prices.
“Canada is a key U.S. partner in energy, as well as in efforts to address climate change and protect the environment,” said Price, who refused to discuss the filing in any detail.
“We look forward to working with Canada to meeting these challenges together. We will, and we know we must.”
Details of the filing will be publicly posted by the State Department “in the coming weeks,” he added.
The average price of gas in the U.S. is about 50 per cent higher than it was a year ago — currently about US$3.40 a gallon, which is about 90 cents US a litre, or C$1.14 under current exchange rates.
Some parts of the U.S., particularly in the west, are experiencing even higher prices. In California, the average price Tuesday of a gallon of regular gasoline in the state was US$4.70.
In Canada, where gasoline prices are typically higher than in the U.S., globalpetrolprices.com reported the average price on Monday was C$1.63 a litre, or about C$6.20 a gallon — roughly US$1.28 per litre or $4.85 a gallon.
The price increases in the U.S. add to Biden’s relentless series of post-pandemic headaches: opening up the strategic reserves and urging U.S. energy companies to open their production taps runs counter to his administration’s hard-charging efforts to invest in green energy and electric-vehicle production, with an eye toward eventually weaning the country off fossil fuels for good.
“The message is that we are in a transition, and the transition does not happen overnight,” Energy Sec. Jennifer Granholm told the White House briefing Tuesday.
The spike in prices is a direct result of what she called a “mismatch” between supply and demand, part of the lingering impact of the pandemic, coupled with the fact that energy companies have not returned to pre-pandemic production levels, Granholm said.
“This is a short-term strategy to make sure that people are not hurting,” she said. “The long-term strategy, to make sure that the country doesn’t hurt into the future, is to build clean.”
In Edmonton Tuesday, Alberta Premier Jason Kenney said, “the (Keystone XL) project was clearly in the best interests of the United States.”
Kenney and his United Conservative government committed $1.3 billion in direct financing to TC Energy Corp. for Keystone. Last June, the province said the investment of taxpayers’ money was a prudent gamble given the potential payoff in profits and jobs.
“I would hope that the (Biden) administration would reconsider its position given these emerging facts about a growing scarcity of global energy, but in any event, we’ve said from Day One that we believe there would be strong grounds to protect our investment and that of TC Energy,” Kenney said.
“We’re glad to see TC Energy proceed with the NAFTA case. We will be considering how best we can partner with them in that, and we think there’s a very strong claim for damages.”
Opposition NDP energy critic Kathleen Ganley said the approach by Kenney’s United Conservative Party government was reckless from the start.
“The UCP made a risky bet and lost $1.3 billion of Albertans’ money,” said Ganley.
“Premier Kenney promised to get the money back, but it’s not clear what, if anything, the UCP government is doing to keep that promise.
“It’s not even certain that if TC Energy is eventually successful in their bid for compensation, that they have to pass any of that along to the people of Alberta for the money lost.”
—James McCarten, The Canadian Press