Alberta Sees Midstream as Part of U.S. Bilateral Ties

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Amid tariff threats from one of its largest trading partners, the premier of Alberta said the path to a strong U.S. relationship runs through oil and natural gas pipelines.

Canadian Prime Minister Justin Trudeau met with U.S. President-elect Donald Trump during the weekend at Trump's Mar-a-Lago estate in Florida to discuss trade between the two North American economies.

In a move to stop the flow of illicit drugs like fentanyl and to control immigration, Trump has threatened to impose a 25% tariff on all Canadian goods on his first day in office.

With the U.S. the top export destination for Canadian oil, Alberta's premier said it was no surprise that energy was a topic of discussion between the two North American leaders.

"It once again demonstrates that the path to strong security and economic relationships with the United States is directly tied to our nation's commitment to providing the United States with the oil and gas it requires to achieve its energy security and affordability goals," Danielle Smith said in a statement on Saturday.

Trudeau's office has been relatively silent on the meeting, though Trump confirmed on his social media channel that energy was discussed at Mar-a-Lago.

Trump brokered a free-trade agreement with Canada and Mexico during his first term in office. For his second non-consecutive term, however, he vowed to impose tight tariffs, while at the same time raising the possibility of pushing for the long-stalled Keystone XL oil pipeline from Alberta to the U.S. Gulf Coast.

That project had been sidelined more than once by U.S. presidents concerned about its environmental impact. The original Keystone Pipeline is now the main asset of South Bow Corporation, a liquids pipeline spinoff of TC Energy Corporation (NYSE:TRP) (Calgary, Alberta), formerly TransCanada.

The only portions of Keystone XL that are operational are within the U.S. and do not cross the border; it's only the OG pipeline that brings in imports to Steele City, Kansas.

South Bow alone accounts for about 20% of the crude oil delivered to the United States, where many refineries are tooled to process the heavier type of oil found in Alberta.

Canada is by far the top crude oil exporter to the U.S. The Energy Information Administration, the statistical arm of the U.S. Department of Energy, showed Canada delivered about 4 million barrels per day (BBL/d) to the U.S. during the seven-day period ending November 22, which represents about 60% of total U.S oil exports.

Mexico is a distant second, with 151,000 BBL/d delivered during the period ending November 22. That represented a dramatic decline from the 768,000 BBL/d sent during the seven-day period ending November 15.

Commodity prices have been somewhat suppressed since Trump was elected in November amid concerns that tariffs would undermine growth in the U.S. economy, the world's largest. Rather than absorb the extra costs of imports, many companies will simply pass that on to a consumer still reeling from post-pandemic inflationary pressures.

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