A $1.1- billion equity investment from Alberta’s provincial government has relaunched construction of the controversial Keystone XL oil sands pipeline between Canada and the U.S., with work set to start this month.
TC Energy, developer of the planned $8-billion, 1,210-mile pipeline linking Hardisty, Alberta, and Steel City, Neb., said March 31 that the financing will cover planned construction costs through the end of 2020.
Work will reportedly get underway later this month on both sides of the border, including erection of work camps in Montana and South Dakota.
Funding for the project’s remaining two years of construction will come from $4.2 billion worth of Alberta government-backed loans and TC Energy’s own $2.7-billion contribution.
The company also announced that it has lined up 20-year service agreements with an undisclosed number of customers for nearly 70% of the pipeline’s 830,000-barrel-per-day design capacity once the system becomes operational, currently scheduled for 2023.
Pandemic Won't Delay
The decision to get the long-stalled project underway comes amid a 30-year low in oil prices that has battered Alberta’s energy-dependent economy, and the accelerating COVID-19 health crisis. In announcing the province’s investment plans, premier Jason Kenney asserted that moving forward with the project now will provide much-needed long-term economic stability for the province.
“We cannot wait for the end of the pandemic and the global recession to act,” Kenney said.
Energy production and construction are currently exempt from Montana’s stay-at-home directive to control the spread of COVID-19, but Gov. Steve Bullock (D) has expressed concern that the influx of as many as 100 workers could accelerate the disease along the pipeline’s rural route where healthcare services are sparse.
Russ Girling, TC Energy president and CEO, offered assurances that Keystone XL construction will pose no added health risks during the pandemic.
“Construction will advance only after every consideration for the health and safety of our people, their families and of those in the surrounding communities has been taken into account,” Girling said in a statement.
NRDC: Line is Financial Risk
Anthony Swift, director of the Natural Resources Defense Council’s Canada Project, counters that the provincial government is investing in a financially risky project in the face of a global movement toward clean energy, while also putting communities at risk.
“The decision to throw good money after bad will not change that fact,” he added, claiming that the project’s economic contribution will be relatively brief and generate few permanent local-level jobs.
Keystone XL’s revival could also be short-lived. The project still faces multiple pending legal challenges, including a federal court action brought by several Native American tribes who claim the pipeline will illegally disturb cultural sites and water supplies.
Although U.S. District Court Judge Brian Morris has ruled against Keystone XL in previous permit challenges, he refused a January request to block preliminary work on the pipeline. A hearing in the case is scheduled for April 16.
Trans-Mountain: COVID Rules
Meanwhile, another controversial pipeline project with government ties—the $12.8-billion Trans Mountain expansion being developed by its new owner the Canadian government—is likewise touting measures to keep the project progressing amid COVID-19 concerns.
According to a March 30 statement by Ian Anderson, president and CEO of government-owned developer Trans Mountain Corp., the company has adopted measures tailored to the unique aspects of Alberta and British Colombia worksites, including staggered work shifts to minimize the number of people, reduced or eliminated in-person meetings and stepped up cleaning efforts.
Trans Mountain is also watching for potential pandemic-related supply chain disruptions that could complicate the project’s schedule, which calls for completion at the end of 2022.
“We will do everything in our power to not put workers, communities and Indigenous peoples at any COVID-19 risk,” Anderson said, adding that the company “will initiate safe work stand down procedures” should health officials call for more restrictive measures.
Canada’s prime minister, Justin Trudeau, has expressed confidence in Trans Mountain safety efforts and says there are currently no plans to curb or shut down the project.
Meanwhile, the Canadian Construction Association is urging national and provincial leaders to keep pipelines and other construction sites open as long as contractors adhere to best practices for limiting the spread of COVID-19. Along with issuing standardized protocols for all construction sites in the country, CCA urged contractors to comply with measures and guidelines issued by national and local public health authorities.
Many provinces have issued updated COVID-19 safety, communication and sanitation practices, but not everyone in the construction industry wants work to continue.
Provinces Want Safety
The Ontario Construction Consortium, a two-year-old industry advocacy group, echoed sentiments of the province’s carpenters’ and painters’ unions by calling for a two-week shutdown of non-essential projects, citing the difficulty of maintaining proper social distancing at many sites, and limited access to water for more frequent hand washing.
In neighboring Quebec, the CSD-Construction union has called on provincial leaders to impose fines on employers that fail to follow COVID-19 safety practices. The union also reports that two-thirds of members responding to a recent survey want to continue working as long as jobsites offer better sanitary conditions.
While British Colombia industry groups have been largely supportive of the province’s health guidelines and construction’s “essential service” designation, some traditional unions have called for activity at remote labor camps to be curbed to reduce the number of people on site.