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Trump’s Keystone XL decision could boost Alberta economy

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by Russell Hixson

The prospect of completing the Keystone XL pipeline has some Canadian industry leaders excited that Alberta might gain better access to the American market. But U.S. protectionist statements around pipeline projects are also causing concern.
Trump’s Keystone XL decision could boost Alberta economy

Last month U.S. President Donald Trump reversed former president Barack Obama's position on the Keystone XL and Dakota Access pipelines, fast tracking them both for construction, while making clear details of the Keystone XL project need to be renegotiated.

"We are pleased with the decision as it opens up another avenue for Canadian exports and further expands our critical trade infrastructure links to the United States," said Bill Ferreira, vice-president of government relations and public affairs with the Canadian Construction Association (CCA).

"However, without more information on the proposed conditions of approval, it is difficult to comment further at this time."

When asked about Trump's notice requiring the materials for the pipelines to be constructed in the United States, Ferreira said given the integrated nature of the U.S. and Canadian economies, the use of domestic supply-chain policies can create significant problems for contractors.

"At this time, we are uncertain how far the new administration plans to go with respect to domestic preference policies," Ferreira said.

"But I would expect, both CCA and AGC (the Associated General Contractors) will oppose these policies as we opposed the application of Buy America to the American Recovery and Reinvestment Act."

The access to Alberta oil is expected to greatly benefit the hard hit region.

"The major benefit is helping Alberta oil to market, that is the important piece of it," said John Gamble, president and CEO of the Association of Consulting Engineering Companies – Canada (ACEC).

"That is going to help grow the Alberta economy across the board and create significant opportunity for both the design and construction sector going forward."

Gamble added that scarce details make it difficult to comment on Buy American policies and the ACEC will have to wait and see how discussions surrounding the North American Free Trade Agreement (NAFTA) play out.

"President Trump likes to make 140 character pronouncements but trade policy is much too nuanced to sort out on Twitter," Gamble said.

He stated it also appears U.S. officials have seemed to suggest the NAFTA focus will be on Mexico rather than Canada.

"Frankly, we are better with the Keystone XL than without it," Gamble said.

He also responded to those who oppose the building of pipelines.

"We need to reduce the amount of carbon in the atmosphere and that will not happen overnight," he said. "But oil is also a building material, for things like cellphones and bicycle tires and not just for burning in combustion engines."

The Edmonton Construction Association welcomed the chance to complete the Keystone XL pipeline, which it believes would have significant positive effects on the Alberta economy.

"The development of the pipeline, which will strengthen the Alberta economy, is very meaningful to the construction sector because when the pipeline taps our oil, minimizing barriers for the sale of oil, people build — residentially, commercially and industrially," said John McNicoll, executive director of the association. "When our government has strong financial revenue, they have a stronger ability to fund investment in infrastructure. When the economy builds in volume or strength, we all benefit. Builders in the province are encouraged."

McNicoll also addressed critics of the pipeline.

"Responsible stewardship of the environment in regards to the movement of oil can be enhanced when we move away from truck and rail to pipeline, in my opinion," he said. "We are going to ship oil, we are going to sell oil. Right now we move it on trucks and trains. They cost time and energy and man hours. They create pollution. They burn rubber. There are environmental impacts to those means. Movement from truck and rail transport of oil to pipeline highlights responsible environmental stewardship."

McNicoll added that there are thousands of pipelines all over North America and some critical connections in that network will enable Alberta to move resources efficiently and responsibly.

"Current legislation, government oversight, environmental impact minimization approaches and technologies, and the state of our communal concern has greatly improved our approach to the environment," he said. "Much like in the construction community, our attention to safety concerns have improved safety in construction over the last few decades by an order of magnitude. Perhaps we can encourage one another towards continuous improvement in our use of fossil fuels."

The Keystone project was halted in November 2015 by the Obama administration. At the time, Secretary of State John Kerry explained that their analysis determined it would not be in the best interest of the country. Kerry said the project would have negligible impacts on U.S. energy security, would not lead to lower gas prices for American consumers and its long-term contribution to the economy would be marginal.

Kerry also had environmental concerns, saying the project would facilitate transportation in the U.S. by using a "particularly dirty source of fuel."

The Keystone XL Pipeline Project is a crude oil pipeline beginning in Hardisty, Alta., going through Montana and South Dakota, and terminating in Steele City, Neb.

It would have a projected in-service date of about two years after the issuance of a Presidential permit. The pipeline would have the capacity to transport up to 830,000 barrels of oil per day to Gulf Coast and Midwest refineries.

Trump has also expressed support for building the Dakota Access Pipeline which was denied a permit late last year by the Army Corps of Engineers. The project is a $3.8-billion, 1,100-mile pipeline designed to carry around 500,000 barrels per day of crude oil from the Bakken and Three Forks oil production areas in North Dakota to oil markets in the U.S. The project has faced intense protests by the Standing Rock Sioux tribe and its supporters.

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