In July, 2011, TransCanada started shipping pipe to its laydown yards along the right of way. This was a convoy of pipe trucks passing through Shaunavon. That pipe sat in the open for nine years, although at one point it was recoated. Photo by Brian Zinchuk

After 18 years of heartbreak and misery, TC Energy is dumping its experiment into oil pipelines like a despised soon-to-be-ex-wife.

TC Energy announced on July 27 it is spinning off a new liquids pipelines company from its natural gas pipelines and power generation business. The new, unnamed company will take the 72 kilometre, 20 inch White Spruce Pipeline and 460 kilometre, 20 inch Grand Rapid Pipeline in northern Alberta. But those are chicken feed. This is all about the half-continent spanning 30 and 36 inch Keystone System/Marketlink which runs 4,324 kilometres from Hardisty, Alberta, to the U.S. Gulf Coast.

And it’s also about the projects that weren’t built – the Keystone XL expansion to the Keystone system, and the Energy East pipeline, from Hardisty to St. John, New Brunswick. TC Energy took charges in excess of a billion dollars on each of those failed projects which proved that it’s now next to impossible to build a major pipeline in this country, or to the U.S.

This graphic, from what was then TransCanada, shows the Keystone pipeline system as initially planned. The Keystone XL portion, in dotted blue, was never built. TC Energy

TransCanada Pipeline, as it used to be known for decades, had been a gas pipeline system. Its mainline was one of the foundational projects of our country in the mid-20th century. But by the early 21st century, increasing natural gas production in the northeast United States due to the shale revolution meant the mainline was now operating around half capacity. What to do?

TransCanada came to the conclusion it could convert one of its six mainline pipes from natural gas to oil service for at least part of the mainline. It would make a sharp right turn west of Winnipeg and head straight south into centre of the U.S., eventually tying into the crucial hub at Cushing, Oklahoma (and later to the Gulf Coast).

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But the mainline was still running dramatically under capacity. So TransCanada cooked up the idea of converting the largest pipe in the mainline system, a 42 inch line I worked on around 1997, to oil service. They would extend it through Quebec to a port on the south shore of the St. Lawrence River and then through New Brunswick to the Irving Oil Refinery at Saint John, and its tidewater port. This, too, would have been a major nation-building project, providing an export outlet for up to 1.1 million barrels of oil per day oil from Alberta, Saskatchewan and even Manitoba to the Atlantic basin. It would also displace most foreign, imported oil with Western Canadian oil.

Construction near Moosomin in 1997 of the pipeline that was supposed to eventually become the Energy East pipeline. Photo by Brian Zinchuk, who was a worker on the project

Despite two-thirds of the pipe already in the ground, it failed spectacularly due to opposition from the François Legault-led Government of Quebec and the Justin Trudeau-led Government of Canada. The federal government’s movement of the environmental assessment goalposts ultimately killed the project for TransCanada.

But it was the Keystone XL project, by far, that was TransCanada’s worst failure imaginable. First proposed in 2008, KXL was stalled by President Obama until he eventually killed it in 2015, revived by President Trump in 2017 as one of his first acts, only to be mortally wounded in 2020 by a Montana judge and given a coup de grace by President Biden within minutes of being sworn in as president in 2021.

I, personally, was the reporter who asked Donald Trump if he would approve Keystone XL and invite TransCanada to build it, back in May, 2016, on the day he secured the Republican nomination to run as their candidate for president. He said, “Yes I would. Totally. It should be approved.” But added he wanted a piece of the profits for the U.S.

In my question to him, I pointed out the project had caused great disruptions to Canada-U.S. relations. Indeed, it was the most significant irritant for the better part of a decade.

While Obama slow-walked it for seven years before finally saying no, the pipe sat in fields across Saskatchewan, Montana, South Dakota, and Nebraska. They sat so long it became essentially worthless junk. Would you trust pipe that sat in the open for the better part of a decade to not be corroded, then pressure that sucker up and hope it doesn’t leak like a sieve?

TransCanada’s Shaunavon pipe yard, as seen on Google Earth. After several years sitting in the sun, the pipe was painted white to protect it. It wasn’t enough. Google Earth

And that became a major problem for the original Keystone pipeline that was actually built and put into service in 2012, just as the anti-pipeline movement was rising to a fever pitch. The most recent one, last year in Kansas, resulted in the pipeline being derated, meaning its capacity was reduced on more than 1,600 kilometres. I suspect that Dec. 29 spill was the final straw for the TC Energy board, which apparently has been considering this move for two years now.

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Indeed, the Keystone name, itself, has come to symbolize the ant-pipeline, anti-oil movements. The project became so toxic that TransCanada changed its name to TC Energy. And that toxicity was evident in the July 27 announcement. In the entire press release about the spinoff of the its liquids pipelines business, “Keystone” is only mentioned twice – once in the list of assets, and once in the legalese. In the accompanying slide deck, it’s mentioned once in a list, once in an appendix, and once in the legalese. It is abundantly clear “Keystone” is now the word that shall not be uttered.

Indeed, the anti-pipeline movement, which found its strength fighting Keystone XL is one of the main reasons the costs of the natural gas Coastal GasLink project have more than doubled for TC Energy.

Could things have gone differently? If Energy East had been built, if Keystone XL hadn’t been such a dragged out, painful experience, Canadians, as a whole, would be much better off. But both were impossible with anti-oil, anti-pipeline presidents and prime minister. What has been reinforced is that only a fool would try to build a pipeline in this country now.

TC Energy may say this is about creating “shareholder value by unlocking incremental growth and enhancing efficiencies.” But it’s not hard to figure out the real reason.

 

Brian Zinchuk is editor and owner of Pipeline Online. He can be reached at brian.zinchuk@pipelineonline.ca

 

 

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