The Alberta government is investing $1.5 billion  in the Keystone XL (KXL) pipeline project to accelerate construction, ensuring it is operational by 2023.

It announced Tuesday it has finalized an agreement with Calgary-based TC Energy Corporation to provide financial support to accelerate construction of the KXL pipeline starting April 1. This investment will include $1.5 billion in equity investment in 2020 followed by a $6 billion loan guarantee in 2021. The project is expected to be completed and in service in 2023, it said.

“We cannot wait for the end of the pandemic and the global recession to act. There are steps we must make now to build our future focused on jobs, the economy, and pipelines,” said Alberta Premier Jason Kenney in a news release. “Today we are moving forward with a project that is essential to our future prosperity.

“This investment in Keystone XL is a bold move to re-take control of our province’s economic destiny and put it firmly back in the hands of the owners of our natural resources, the people of Alberta. The Government of Alberta is confident that this is a wise investment. After construction is complete, we will be able to sell our shares at profit. In addition, the project will have a net return of over $30 billion to the Alberta taxpayer through royalties and higher prices for Alberta oil in the next 20 years.”

TC Energy said the project will result in an investment of approximately US$8.0 billion into the North American economy.

“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 President and Chief Executive Officer, in a news release. “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.”

At 1,210-miles (1,947-kilometres) in length, the project will be capable of safely delivering 830,000 barrels per day (Bbl/day) of crude oil from Hardisty, Alberta to Steele City, Nebraska where it will connect with TC Energy’s existing facilities to reach U.S. Gulf Coast refiners to meet critical needs for transportation fuel and useful manufactured products. With pre-construction activities underway, the pipeline is expected to enter service in 2023, said TC Energy.

“During construction, we will continue to take guidance from all levels of government and health authorities to determine the most proactive and responsible actions in order to ensure the safety of our crews and community members during the current COVID-19 situation. Construction will advance only after every consideration for the health and safety of our people, their families and of those in the surrounding communities has been taken into account.”

The government said it is backstopping the project to enable TC Energy to begin immediate construction on the Alberta portion of the pipeline. This will ensure the earliest possible date of completion. The project will create over 1,400 direct and 5,400 indirect jobs in Alberta during construction and will generate an estimated $30 billion in tax and royalty revenues for future generations of Albertans and Canadians, it said.

“Once operational, Keystone XL will provide North America with a stable, secure supply of crude oil, reducing reliance on supply from OPEC. The pipeline will carry at least 830,000 barrels per day of Alberta crude, significantly increasing the province’s takeaway capacity and helping to protect the value of its energy resources,” said the government.

“Right now Alberta’s oil export capacity is limited by the lack of pipelines. Without the ability to export more oil, there is no incentive for producers to invest in more production in Alberta. Completing KXL will signal to the oil and gas industry, and to investors around the world, that they have a future in Alberta. Without more pipelines, the future of our oil and gas industry is capped; with today’s announcement, employers and investors should have the confidence to maintain existing projects and to spend new money on new projects.”

Construction will begin immediately in Alberta, at the Canada-US border, in Montana, South Dakota and Nebraska.

The Keystone XL Pipeline will deliver crude oil from western Canadian oil fields to Gulf Coast refineries in the U.S. The project will run from Hardisty, Alberta, to Steele City, Nebraska and will cover 1,947 kilometres.

“The Canadian Energy Pipeline Association (CEPA) applauds today’s announcement by TC Energy regarding its final investment decision on the Keystone XL pipeline. Keystone XL will be a safe, reliable and environmentally responsible way to connect the American economy with abundant Canadian energy. Using world leading safety measures and technologies, this project represents billions of dollars of capital investment and thousands of well-paying jobs,” said Chris Bloomer,
President and CEO, Canadian Energy Pipeline Association (CEPA).

“As the most studied cross-border pipeline in North American history, it will provide the U.S. with a secure source of
crude oil from a trusted trading partner, Canada. This decision provides a critical boost of confidence to the Albertan and Canadian economies. It is essential that Canada can continue to attract major investments like Keystone XL, which will result in
billions in government taxes and royalties and improved market access for Canadian resources. TC Energy and the Government of Alberta are commended for their steadfast support of the Canadian energy industry. Canada is a world leader in the construction and operation of energy infrastructure. This decision helps to ensure that Canada will continue to safely deliver our responsibly produced energy resources to the world.”

In a statement, Canada’s Minister of Natural Resources, the Honourable Seamus O’Regan, said: “This is good news for our oil and gas industry. It comes at a time when the industry needs it. It means thousands of good, well-paying jobs for the highly-skilled workers the industry needs now and into the future.

“The Government of Canada has always been a strong supporter of Keystone XL. The project increases our market access – safely, responsibly, and sustainably — and fits within Canada’s climate plan. I commend the Government of Alberta on providing equity support and loan guarantees. These will help to ensure the success of the project.

“We know these extraordinary global conditions have given rise to extraordinary challenges for Canadian energy sector workers and their families. Still, Canada remains the best place to invest when it comes to responsible, sustainable resource development. Today’s announcement will bring about real benefits to our country’s economy, and continue to set the bar for strong safety and environmental practices.”