The Keystone Steele City pumping station in Steele City, Neb., in 2015.
Photo: Nati Harnik/Associated PressThe long-delayed Keystone XL pipeline to take oil from Canada into the U.S. heartland will move forward after the Alberta province agreed to help finance the project, pipeline operator TC Energy Corp. said Tuesday.
The official decision to proceed with construction of the 1,210-mile pipeline caps an 11-year odyssey as TC Energy has battled environmental activists, landowners and state regulators for the right to build it. The project became a rallying cry for groups that want to keep fossil fuels in the ground as the world confronts a changing climate.
An expansion of the existing Keystone pipeline system, Keystone XL will be able to pump 830,000 barrels of crude from Canadian oil sands in Alberta to Nebraska and then ultimately to U.S. Gulf Coast refiners. TC Energy expects it to be completed by 2023.
The $8 billion project is being partly funded by the provincial government of Alberta, home to the bulk of Canada’s oil reserves. Alberta will invest $1.1 billion of equity into the project, enough to cover construction costs through the end of 2020. TC Energy will borrow another $4.2 billion from a credit facility that will be guaranteed by Alberta, and another $2.7 billion investment by the company.
The project is “poised to put thousands of people to work, generate substantial economic benefits and strengthen the continent’s energy security,” said TC Energy’s Chief Executive Russ Girling. He thanked U.S. President Donald Trump and Alberta Premier Jason Kenney for their support in getting the project moving.
TC said it had 20-year agreements in place to carry 575,000 barrels a day through the pipeline, representing roughly $1.3 billion of cash flow. The company will also shift 115,000 barrels from the existing Keystone pipeline to the new one.
Keystone XL has weathered more than a decade of court and regulatory battles. Mr. Trump effectively revived the pipeline after it had been blocked by former President Barack Obama, but the project continued to face challenges.
The announcement, which comes 11 years after Keystone XL was first proposed, comes during a difficult time for Canada’s oil industry. Prices for Canadian heavy crudes have fallen to record lows of under $6 a barrel amid a global economic shutdown caused by the coronavirus pandemic and an energy price war triggered by Saudi Arabia. At those levels, Canadian producers are losing money for every barrel they pull out of the ground.
Alberta’s government said the agreement came after six months of negotiations.
“We cannot wait for the end of the pandemic and the global recession to act,” said Mr. Kenney in a statement. “The Government of Alberta is confident that this is a wise investment.”
Write to Vipal Monga at vipal.monga@wsj.com
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