Builder of Halted Keystone-XL Pipeline Seeks $15B NAFTA Claim
A federal judge in Montana refused to dismiss a pending lawsuit by Keystone XL pipeline opponents against owner TC Energy Corp., even though the Calgary-based energy firm announced in early June that it had “definitively terminated” the Canada-U.S. project after President Joe Biden revoked its critical cross-border permit in a Jan. 20 executive order.
The case contains a “live controversy” and cannot be dismissed as moot, Judge Brian Morris said in a July 30 order, because the court can provide relief to plaintiffs “by ordering the removal” of a 1.2-mile border segment of the line constructed under the presidential permit issued in 2019 by former President Donald Trump. Plaintiffs are Indigenous Environmental Network and North Coast Rivers Alliance.
“Although President Biden revoked the 2019 Permit, the possibility remains that he, or a future president, could issue unilaterally another permit to TC Energy,” Morris said, noting the plaintiffs had raised that possibility as a reasonable fear. “The 2019 permit presents a live controversy to the court,” Morris said. He will issue a further order in “due course.”
The federal appellate court in San Francisco on July 16 dismissed an appeal by TC Energy, saying it would not tell the lower court to dismiss the case and declining to vacate any Montana district court decisions.
TC Energy now plans to file a North American Free Trade Agreement claim to recover more than $15 billion in claimed damages resulting from the Keystone XL permit cancellation, which it termed "the U.S. government’s breach of its NAFTA obligations." The government of Alberta, which had pledged about $1.5 billion to the project and spent about $1.3 billion before its cancellation, also said it intends to file a NAFTA claim, which would be the first involvement by a level of government in such a trade dispute, said the Financial Post.
The trade act was replaced last year by the US-Mexico-Canada trade agreement, but claims to the U.S. State Dept. are still allowed, said Hunter Chauvin, an attorney at Liskow & Lewis.
The energy firm already has some demobilization activities underway, it said in previous regulatory filings.
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In the U.S., the bipartisan U.S. Senate infrastructure deal released Aug. 1 includes a provision pushed by Republicans to require the U.S. Dept. of Energy to study the number of direct and indirect jobs lost over 10 years as a result of revoking the Keystone XL permit.
The study, which must be completed 90 days after the bill becomes law, also must include an analysis of whether the pipeline’s cancellation increases the cost of energy.
TC's Energy Transition
TC Energy also said it has begun in the second quarter to "identify [through a request for information process] potential contracts and/or investment opportunities for 1,000 MW of clean energy capacity"—620 MW of wind energy projects, 300 MW of solar and 100 MW of battery storage—to power a portion of its network of existing U.S. oil and gas pipelines.
The firm transports oil and gas through nearly 100,000 km of pipelines in North America, one of the continent's largest networks. It faces rising carbon emissions costs set by the Canadian government, which will increase from C$40 a ton currently to C$170 a ton by 2030.
“This is an important step in advancing our plans to leverage the power and storage business as a platform for sustainable future growth while lowering emissions across our North American footprint,” Francois Poirier, president and CEO, told investors July 29 on a second quarter earnings conference call.
Corey Hessen, TC Energy president of power and storage, told analysts the company had a substantial response to its request with 54 individual projects totaling 16.6 GW submitted for wind, about 27 times the request, and 66 individual project bids for solar and battery storage, totaling about 12.4 GW, "about 40 times the amount of demand that we went to the market with,” he said.
Hessen said results show the level and the size of the opportunity available to TC Energy as part of the energy transition. The company now is evaluating and selecting projects for contract negotiations.
The developer also said last month it struck a deal with Canada's military to develop a 1,000-MW clean hydro energy storage project at a defense training site about 125 miles from Toronto.
The Ontario Pumped Storage Project, which would be the province's largest energy storage project, is "a multi-billion dollar private sector investment over the next eight years ... that could generate about 1,000 jobs during development and construction," according to TC Energy. The firm said the project is expected to cut emissions by 490,000 tonnes when completed by about 2029.
Power and storage is the smallest of TC Energy’s three main businesses, generating just 3.3% of revenue last year compared to about 78% from natural gas pipelines and 18% from oil pipelines, says Bloomberg.
