CALGARY — TC Energy Corp. is proceeding with its long-delayed Keystone XL pipeline with a US$1.1 billion “strategic investment” from the Alberta government.
The province is making a preferred equity investment in the 830,000-barrels-per-day pipeline project that would carry oil from Alberta to the U.S. Gulf Coast, which is home to the largest concentration of heavy oil refineries in the world.
This is absolutely critical for our economic future now more than ever
Alberta Premier Jason Kenney
In an interview with the Financial Post, Kenney said the company will begin construction on the long-delayed pipeline export project as early as April 1.
“This is absolutely critical for our economic future now more than ever,” Kenney said on Monday.
As part of the funding plan, the Government of Alberta has agreed to invest approximately US$1.1 billion as equity in the project, which substantially covers planned construction costs through the end of 2020. The remaining capital investment of approximately US$6.9 billion is expected to be largely made in 2021 and 2022 and funded through the combination of a US$4.2 billion project level credit facility to be fully guaranteed by the Government of Alberta and a US$2.7 billion investment by TC Energy.
TC Energy Corp., the Calgary-based pipeline giant that has been trying to build Keystone XL for a decade, has already spent $6 billion advancing the project, Kenney said.
Any cost overruns will be paid by TC Energy, Kenney said, adding the government’s exposure to the project is limited to the $7.5 billion in preferred equity and loan guarantees.
“It’s a real, concrete vote of confidence in the future of the Canadian energy sector. We are in a crisis environment with a crash in prices but the pandemic will end and global demand will return,” Kenney said. “When we reach that point, we absolutely must have a major pipeline in commission.”
TransCanada’s Keystone XL pipeline has faced legal holdups amid staunch opposition from environmental groups and landowners.
Andrew Burton/Getty Images files
Oil prices have crashed in the last month as the coronavirus pandemic has caused a dramatic fall in global demand for oil. At the same time, Saudi Arabia and Russia have flooded the market with crude as they engage in a price war.
However, Kenney said, the price war in the middle of a health crisis “highlights now more than ever why we need energy independence” and an interconnected North American oil and gas market.
“We appreciate the ongoing backing of landowners, customers, Indigenous groups and numerous partners in the U.S. and Canada who helped us secure project support and key regulatory approvals as this important energy infrastructure project is poised to put thousands of people to work, generate substantial economic benefits and strengthen the continent’s energy security,” said Russ Girling, TC Energy’s chief executive officer.
“In addition, we thank U.S. President Donald Trump and Alberta Premier Jason Kenney as well as many government officials across North America for their advocacy without which, individually and collectively, this project could not have advanced.”
TC Energy had previously signalled its willingness to sell a stake in Keystone XL as it’s already working on other projects valued at $20 billion.
Company executives said in an earnings call Feb. 13 that TC Energy had acquired all of the land and right-of-ways needed to build the project through the U.S., and had permits in place from the U.S. federal government.
They also have commitments from oil producers to fill the project once it’s complete in June 2023.
“Keystone XL today is fully contracted,” TC Energy executive vice-president and president, liquids pipelines, Paul Miller said on the same earnings call. “It’s fully contracted with the major producers in Alberta, the creditworthy companies.”
In a January court filing, the company indicated it planned to begin work on the section of the Keystone XL pipeline that crosses the Canada/U.S. border in April. At the time, the company said it intended to begin work in Montana and South Dakota in April, followed by work in Nebraska in June.
TC Energy, formerly known as TransCanada Corp., has been looking to build the 830,000-barrels-per-day pipeline – which was rejected by former U.S. president Barack Obama then approved by President Donald Trump – for more than 10 years.
We’re not prepared to bet a huge part of our economic future on one project
Alberta Premier Jason Kenney
As Keystone XL begins construction on April 1, Kenney said the Alberta energy industry needed more assurance for future growth than just one new export pipeline, referring to the federally owned Trans Mountain expansion project, which is currently under construction through British Columbia.
“We’re not prepared to bet a huge part of our economic future on one project. This is our hedge that we get at least one major project built. That will ensure the flexibility for our shippers and the future of the Canadian energy sector,” Kenney said.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
