The political drama tying up the construction of the Keystone XL pipeline isn't slowing down Canada. According to Bloomberg News, Canada is constructing a $10.7 billion pipeline, which would run through six provinces and four time zones, straight out to the Atlantic Ocean.
It’s the ultimate workaround, albeit a very expensive one. The pipeline is being called Energy East, and it would use existing or underused natural gas pipelines to make its way across Canada. It could be up and running by 2018.
Energy company TransCanada (TRP) first proposed the Keystone XL pipeline six years ago to bring oil from Alberta down to the Gulf Coast. The Keystone pipeline was supposed to create jobs and lessen U.S. dependence on foreign oil. Instead, it has created political theatre, polarizing policymakers over environmental and safety issues.
Yahoo Finance Editor-in-Chief Aaron Task says, “This is all about ‘You snooze, you lose.’” The goal of Canada’s proposed Energy East is to bring tar sands oil from the province of Alberta straight out to the Atlantic Ocean ports in New Brunswick on the east coast of Canada. The oil can then be shipped out to Europe. Bloomberg has called the proposed pipeline, “Keystone on steroids.”
“Prime Minister Stephen Harper wants Canada to be an energy giant,” says Task. “They are sitting on a tremendous amount of oil.”
It’s oil that the rest of the world wants, and Canadian tar sands oil recently cleared a major hurdle gaining regulatory acceptance in Europe. The European Union had planned to label the oil as highly polluting, but changed its mind this week. That's opening up the opportunity for Canada to export oil to the European market.
The EU’s change of heart on oil sands may have more to do with the political climate than global warming. Europe’s dependence on Russian oil has been a growing concern within the EU, says Task. “Putin’s saying, ‘You know, Europe, you’re on your own. I am going to send my oil in another direction and it’s going to be very cold this winter.’” Europe sees Canada, in turn, as having one of the largest reserves in the world.
What Energy East means for the Keystone XL pipeline remains to be seen. Task says, “Maybe this will be a wake up call to President Obama and U.S. policymakers to say ‘Hmmm we’re going to get shut out of not just the energy, but all those jobs that are going to go into building that pipeline. Now they are all going to go into Canada.’”
The current estimated price tag for Keystone XL is $5.4 billion. However, the CEO of TransCanada has said he expects that total to double by the time the U.S. government finishes its review of the project.