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Constrained Canadian Oil Exports if President-elect Biden Cancels Keystone XL?

This Graphic Intelligence illustrates historic and planned takeaway capacity, as well as projections for future production, for crude oil produced in the Western Canadian Sedimentary Basin (WCSB). The figure shows existing oil pipeline capacity and the planned additions, including the Keystone XL (KXL) pipeline project, as well as the ramp-up in shipments of crude oil by railway. 

During the US presidential campaign, President-elect Biden announced his intention to cancel KXL. The 1,947 km pipeline project would increase export capacity for crude oil produced in the WCSB. KXL would provide capacity for shipment of up to 830 thousand barrels per day (kbpd) from Hardisty, Alberta to Steele City, Nebraska, where KXL would connect with existing pipeline infrastructure to deliver oil to US Gulf Coast refiners.

The figure shows that the completion of Enbridge’s Line 3 replacement for its Mainline and Trans Mountain expansion should provide near-term surplus pipeline capacity for export of WCSB oil supply. However, with projected growth of WCSB production and without construction of KXL, export pipeline capacity would again face constraints in the late 2020s. Without additional pipeline capacity, growth of WCSB oil production would either be limited by constrained takeaway, or oil producers would shift to exporting crude oil by railway.

The figure includes the most recent projections by the Canadian Energy Regulator (CER) and Canadian Association of Petroleum Producers (CAPP) for WCSB oil production (both published in 2019 prior to the COVID-19 pandemic), as well as the projection for Canadian oil production published by the International Energy Agency (IEA) in its World Energy Outlook in September 2020.

Alberta’s government has provided an equity investment and loan guarantees for KXL, which would be owned and operated by TC Energy. The project has been the subject of ongoing regulatory proceedings and legal challenges in the US. 

As a cross-border pipeline, the project requires a presidential permit: President Obama denied such a permit and President Trump issued the required permit. President-elect Biden has indicated that he would rescind the permit by presidential order.