Segrist: The Keystone for Trump?

It’s like clockwork.

The party that controls the White House changes and the otherwise left-for-dead Keystone XL Pipeline re-enters the national news cycle.

“The Trump team’s plan to resuscitate a dead oil project,” read a Politico headline in November, detailing anonymously sourced plans of the president-elect to resurrect the Keystone XL.

Even though President-Elect Donald Trump had already threatened Canada with tariffs.

Even though no midstream company is waiting in the wings to build it.

“(The Keystone project is) on the list of things they want to do first day,” one source told Politico.

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Though, it would be hard to approve a pipeline project on Day One if there’s no pipeline project available to approve. On the other hand, some analysts chalked the issue up to Trump being Trump. They said that whatever action the White House takes will be unpredictable, but the president-elect is unlikely to shoot himself in the foot.

The U.S. accounted for 97% of Canada’s crude exports in 2023, according to the Canada Energy Regulator. The percentage may change with the opening of the Trans Mountain Pipeline, but the U.S. imports 50% of the crude shipped from the new pipeline as well.

That amount of trade is as important to the U.S. as Canada.

“Our futures are undeniably linked, as they always have been,” said Kevin Birn, Canadian oil markets chief analyst for S&P Global Commodity Insights, in an interview with the Calgary Herald.

A decade of back and forth

The Keystone pipeline has become undeniably linked with American politics. Each of the last four presidents have weighed in on the project in one form or the other.

“Build the damn thing,” President George W. Bush told the crowd in Pittsburgh at Hart Energy’s DUG East conference in 2013.

The 2,689-mile Keystone Pipeline System delivers crude from Hardisty, Alberta, to refineries and hubs in Illinois and southeast Texas. TC Energy (TRP) and ConocoPhillips (COP) built the line. TRP bought COP’s interest in 2009 and started operations in 2010. The pipe has delivered around 4 Bbbl of crude since.

Before the line was completed, TC Energy was already planning for an extension.

In 2008, TRP proposed the Keystone XL, an 875-mile addition that took a more direct route than its predecessor from Alberta to hubs in Illinois and Oklahoma. The project would have increased the network’s capacity from 591,000 bbl/d to 830,000 bbl/d.

The pipeline ultimately failed after enduring a process that made the Mountain Valley Pipeline seem like a cakewalk by comparison. Opposition to the project became a rallying cry for environmental groups, and the Keystone XL bounced around in on-again, off-again status for more than a decade. 

In 2010, the U.S. State Department drafted an approval, then extended its environmental review, then announced its approval in 2011, and then demanded a route change three months later.

Protests ramped up and the Keystone XL became part of the national debate. In 2011, more than 1,200 people were arrested for civil disobedience during a prolonged demonstration at the White House.  The issue became the tennis ball in the ongoing back-and-forth between a Republican Congress and President Barack Obama’s White House.

“For years, the Keystone Pipeline has occupied what I, frankly, consider an overinflated role in our political discourse,” Obama said in his final decision to reject the project in 2015. “It became a symbol too often used as a campaign cudgel by both parties rather than a serious policy matter.”

It then became an issue in the 2016 election, with Donald Trump offering support. One of his first acts in office was to reverse the State Department’s stance on Keystone XL in 2017. However, Trump wanted certain elements of the deal reworked and demanded that U.S. line segments be built with American steel.

By the time work started in 2020, another election season was underway. This time Trump lost, and new President Joe Biden made cancellation of the project one of his first priorities.

Almost dead

Before Trump brought it up during his 2024 campaign, the Keystone XL seemed to be put to rest for good.

TC Energy was still attempting to recover some of the losses of the failed project six months ago.

In July, a tribunal rejected TRP’s arbitration claim of $15 billion against the U.S. government. The midstream company submitted an arbitration request under the North American Free Trade Agreement (NAFTA) in 2021.

The reason for the rejection? The changing of minds regarding political policy. The Trump administration canceled NAFTA in 2020 and replaced it with the USMCA agreement. Biden canceled Keystone XL’s permit the year after that decision.

The tribunal hearing the arguments told TC Energy they could not decide if they had the authority to determine which set of rules was in place.

“This ruling does not align with our expectations and views of the plain interpretation of the protections NAFTA and the USMCA were designed to offer,” said Patrick Keys, executive vice-president and general counsel for TC Energy, following the decision. “TC Energy was treated unfairly and inequitably in the revocation of the permit, which was driven by political considerations.” 

Three months later, a stung TC Energy spun off its liquids pipeline business into South Bow. The new company is focused primarily on paying off debts and has not indicated an interest in bringing back the project.

After the federal permits were canceled, opponents of the line in Nebraska ensured that land easements were returned to the property owners, meaning any further project would have to be started from a blank slate.

Still, the pipeline, or a substitute, does have its supporters. Fewer than 10 crude transport pipelines cross the U.S.-Canadian border. The Keystone’s primary competitor, Enbridge’s Mainline, is considering an expansion, even with the TMP’s startup, Bloomberg reported in November.

The Mainline reported that uncontracted demand for pipeline space was greater than capacity in July, August and November. Several Canadian market players said high demand for crude pipeline space is expected for the foreseeable future.

“I think Keystone XL might be back on the table,” Bob Geddes, president of Calgary-based Ensign Energy Services, told the Calgary Herald. “It’s all about providing cost-effective energy.”

On the other side of the border, it’ll be about whether Trump decides to revive a political fight for the next go-round.