TransCanada Corporation is putting pressure on Alberta Premier Rachel Notley to pay for a guaranteed minimum shipping space on its controversial Keystone XL pipeline, as it offered to do for the now-defunct Energy East pipeline, whether or not the province actually needs the capacity over the longer term.
“The Alberta government has its own oil to sell because it collects barrels of sandy bitumen in lieu of royalties from some producers under the bitumen royalty-in-kind, or BRIK, program,” Bloomberg reports. According to latest data from the Alberta Petroleum Marketing Commission, the province sold about 70,000 barrels per day in 2014.
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But TransCanada’s demand “puts Notley in a bind as she faces a fierce re-election fight in 2019 amid voter anxiety over slumping crude prices,” the news agency notes. “While it’s politically fraught to be seen as not fully supporting a pipeline in Canada’s oil hub, she’s also said to be under pressure from rival Enbridge Inc. to not subsidize its competitor.”
Former Alberta energy minister Ken Hughes said the province agreed to a “take or pay” contract with Energy East out of an interest in opening a major eastbound pipeline route, but Keystone doesn’t offer the same kind of advantage. “The reason we made the commitment was because it was the most important strategic play available to get us to deep water,” he explained. “It had a wide range of benefits, and none of those benefits come about with Keystone.”
Government officials wouldn’t comment on any discussions with TransCanada, but “those decisions are made on a project-by-project basis, weighing many other economic considerations,” said Notley spokesperson Cheryl Oates.
TransCanada has been searching for customers to fill the Keystone line for some time, recently postponing a September 28 deadline for bidders in the wake of Hurricane Harvey. The company plans to spend the last three months of this year “reviewing commercial backing for the project,” Bloomberg notes, citing company spokesperson Terry Cunha.