From the editor… A president reverses the fortunes of Keystone XL, again

Construction on the pipeline in Alberta last year. The province invested more than a billion dollars to get the project moving. PHOTO: Government of Alberta

Mirroring a similar Oval Office scene from four years earlier, albeit with the opposite intent, a few strokes of Joe Biden’s pen brought the 10-year effort to build the Keystone XL pipeline to yet another screeching halt last month. Just as former president Donald Trump enthusiastically put the project back on track in 2017, the new commander-in-chief eagerly derailed it Jan. 20 as one of his first acts as president.

The outcome was a near certainty since Biden’s election win, but as TC Energy planned layoffs of more than a thousand construction workers, the decision hit home from Alberta and to Nebraska. Predictably, Alberta Premier Jason Kenney was highly critical of the move, and Prime Minister Justin Trudeau expressed disappointment while trying to strike a more conciliatory tone. He stopped well short of Kenney’s demands that Ottawa “respond with consequences for this attack on Canada’s largest industry.”

A long list of construction groups on both sides of the border criticized Biden’s move. Paul de Jong at the Progressive Contractors Association of Canada (PCA) was among them.

“We’re disappointed that the new president has lost sight of the huge economic and strategic advantages of this project,” the PCA president said in a release. “It’s yet another signal to natural resource energy providers that governments don’t have the gumption to stand up for projects, even when they meet every condition.”

What, if anything, Biden’s decision will do to tackle climate change or prevent increasing quantities of Canadian crude from reaching refineries on the Gulf Coast remains to be seen. If recent trends are any indication, the oil will simply be riding to the rails instead.

For construction though, barring yet another miraculous political reversal, it’s probably safe to assume the Keystone XL project has reached the end of the line. The thousands of jobs it would have created in both Canada and the U.S. won’t materialize, meaning yet another promising multibillion-dollar energy industry project has gone up in smoke, with little politicians or businesses on this side of the border can do about it. There have been more than a few of those since 2014 tied to economic, environmental and political whims.

That’s not to say major building projects in the oil and gas industry have dried up entirely. In the pipeline arena alone, construction on the Trans Mountain expansion and Line 3 replacement continues, as does work on Coastal Gaslink on the natural gas side of the business. Still, the end of Keystone XL is yet another reason for contractors to avoid becoming overly reliant on the energy industry. Among other examples, the past few years has seen firms such as North American Construction Group and Stuart Olson, since acquired by Bird Construction, focus on diversification.

There is every reason to follow their example. Alberta will continue exporting oil for the foreseeable future, but an energy transition is underway. Regardless of whether the sentiment is right or wrong, it’s become clear projects like Keystone XL will face an increasing number of political and environmental roadblocks in the years ahead. Contractors able to build exposure in other markets, or pivot to growing segments of the energy industry like clean power or grid-scale storage, will be better positioned to adapt when the next megaproject faces years of delay, or is stopped in its tracks.

This column first appeared in the February 2021 edition of On-Site. Click here to read through the whole issue.