TC Energy halts work on Keystone XL in anticipation of Biden action

Before President Biden was even inaugurated, TC Energy let it be known they would be stopping work on the Keystone XL pipeline.

In recent days, it has been widely expected that Biden would use an executive order in his first days in office to rescind the Presidential Permit for the pipeline. Approving that pipeline was one of outgoing-President Donald Trump’s first acts after he took office.

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Once Alberta announced it would contribute $1.5 billion to begin construction, plus billions more in load guarantees, one of the first acts of construction was the building of a 2.2 kilometre section of pipe that actually crossed the Canada-U.S. border, ensuring there would already be pipe in the ground if there were further difficulties.

Work on several pumping stations has already begun, including at least one completion, and 145 kilometres of pipe are in the ground in Alberta. Major construction in southwest Saskatchewan was supposed to take place this year.

In a press release the morning of Jan. 20, inauguration day, TC Energy “announced it is disappointed with the expected action to revoke the existing Presidential Permit for the Keystone XL pipeline. The decision would overturn an unprecedented, comprehensive regulatory process that lasted more than a decade and repeatedly concluded the pipeline would transport much needed energy in an environmentally responsible way while enhancing North American energy security.

“The action would directly lead to the layoff of thousands of union workers and negatively impact ground-breaking industry commitments to use new renewable energy as well as historic equity partnerships with Indigenous communities.

The release continued, “TC Energy will review the decision, assess its implications, and consider its options. However, as a result of the expected revocation of the Presidential Permit, advancement of the project will be suspended. The company will cease capitalizing costs, including interest during construction, effective Jan. 20, 2021, being the date of the decision, and will evaluate the carrying value of its investment in the pipeline, net of project recoveries. Absent intervening actions, these steps could result in a substantative, predominantly non-cash after-tax charge to earnings in first quarter 2021. TC Energy will also modify its previously announced financing plans as it would no longer expect to issue hybrid securities or common shares under its dividend reinvestment plan to partially fund the project.

“Our base business continues to perform very well and, aside from Keystone XL, we are advancing $25 billion of secured capital projects along with a robust portfolio of other similarly high quality opportunities under development,” said François Poirier, TC Energy’s president and chief executive officer. “These initiatives are expected to generate growth in earnings and cash flow per share and support annual dividend increases of eight to ten per cent in 2021 and five to seven per cent thereafter.”

The release concluded, “While today’s news is very disappointing, TC Energy is thankful to its customers, American and Canadian workers, our partners the Government of Alberta and Natural Law Energy, labor organizations, industry, the Government of Canada and the countless supporters of this important energy infrastructure project.”

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