CALGARY – An industry analyst says Western Canada’s oil producers will likely cope better in the short term with Joe Biden’s cancelling of the Keystone XL presidential permit this week than they did with the same move by ex-president Barack Obama in 2015.
But Phil Skolnick, a New York-based analyst for Eight Capital, agrees with other observers that the end of the pipeline will stifle new investment and production growth in the Canadian oilpatch for years to come.
Shortly after being inaugurated on Wednesday, U.S. President Biden, who was Obama’s vice-president, fulfilled a campaign promise and took away the pipeline permit that former president Donald Trump returned to builder TC Energy Corp. in 2019.
Skolnick says the difference between now and 2015 is that producers are looking forward to opening two other export pipelines — Line 3 and Trans Mountain — that together provide nearly one million barrels a day of export capacity.
Richard Masson, an executive fellow and energy expert at the University of Calgary’s School of Public Policy, agrees the two remaining pipelines will provide enough capacity to allow oil production to grow into the second half of this decade.
But he says uncertainty about capacity beyond that point makes it impossible for producers to make decisions about new multibillion-dollar oilsands projects, which could take five years or more to plan and build.
Canadian Energy Pipeline Association CEO Chris Bloomer, meanwhile, says excess space in the oil transport system is vital going forward to provide optionality, energy security and stable pricing for producers.
Earlier Thursday, TC Energy Corp. said it planned to eliminate more than 1,000 construction jobs related to its decision to halt work on its Keystone XL pipeline expansion project.
The company had previously warned that blocking the project would lead to thousands of job losses.29dk2902l