Keystone XL positioned ‘very favourably’ to win Biden’s approval: TC Energy

TC Energy (TRP.TO)(TRP) believes its Keystone XL expansion project is on track to win over an incoming U.S. administration that has vowed to halt construction south of the border.

The Calgary-based company said on Tuesday that it is pursuing $37 billion in commercially secured capital projects in North America, including the controversial pipeline that President-elect Joe Biden railed against on the campaign trail, calling it “tarsands we don't need.”

“We've looked at the incoming Biden administration's Build Back Better plan,” Bevin Wirzba, TC Energy’s executive vice president and president of liquids pipelines, told a virtual audience at the company’s annual investor day. “The steps that we have already taken with Keystone XL, we believe have positioned it very favourably.”

Among those steps is a newly signed deal with Natural Law Energy, an alliance of Canadian Indigenous communities, for an investment up to $1 billion in the project. The deal would make Keystone XL the first major North American pipeline with Indigenous ownership at a time when energy infrastructure companies face increasing opposition from environmental and some First Nations groups. The deal hinges on Natural Law Energy securing financing. TC Energy said it is expected to close in the third quarter of 2021. Detailed commercial terms were not disclosed.

The investment follows the Alberta government’s purchase of a $1.5 billion stake in the project, plus $6 million on loan guarantees, announced in March. Wirzba said unlike the province, Natural Law Energy will not exit the investment once the project is in service. Rather, he said the agreement with the group allows it to pursue stakes in future projects.

“This investment will be a long-term minority interest in the project,” Wirzba said. “As we continue to monitor our project execution going forward, and the new elements of opportunities that come up, we’ll continue to work with them as partners to see if it makes sense to bring them in as partners.”

Biden assisted in cancelling the Keystone XL expansion during his tenure as Barack Obama’s vice president in 2015, before President Donald Trump overturned the ruling. More recently, he’s vowed to implement a plan for net-zero emissions in the United States no later than 2050 once in office.

Forging financial ties to Indigenous groups is a factor TC Energy believes will sway the Biden administration in favour of the project, which would carry 830,000 barrels per day of crude from the Canadian province of Alberta to the U.S. Midwest.

Wirzba said the company is working to build further partnerships with First Nations and Indigenous groups in both Canada and the U.S. He also noted job creation, agreements with unions, and training to transition workers to green jobs will help win Biden’s support.

Incoming chief executive officer Francois Poirier, currently the chief operating officer, echoed Wirzba’s optimism that Keystone XL expansion will progress beyond construction in Canada after more than a decade of delays.

Keystone XL “continues to be a very important project for both Canada and the U.S.,” Poirier said at the virtual meeting on Tuesday.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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