(Bloomberg) -- The scrapping of Keystone XL not only means the end of multibillion-dollar pipe dream for TC Energy Corp. -- it also leaves behind 48,000 tons of steel.
U.S. President Joe Biden revoked permits for the oil pipeline on his first day in office, killing a cross-border project that had won a four-year reprieve under his Republican predecessor, Donald Trump. The pipeline would have spanned almost 1,900 kilometers (1,180 miles). TC Energy anticipated needing about 660,000 tons of steel just for the U.S. portion.
About 150 kilometers of pipe had been installed and an additional 2.2 kilometers had been completed at the Canada-U.S. border as of the end of 2020, the Canada Energy Regulator said in a Jan. 22 email. That would amount to nearly 48,000 tons of steel, assuming standard dimensions of line pipe, according to Bloomberg calculations based on industry criteria.
The benchmark steel price is about $1,060 a ton, which would value the haul at almost $51 million -- though as scrap it would be sold for less. Secondary metal, which is any scrap that is already past use for its original purpose, sells at a discount to new forms of the raw material. Once sold, the scrap metal is remelted by the buyer and formed into new steel products.
TC Energy may to have to sell already delivered metal to secondary markets. While unclear exactly how much steel the Calgary-based firm owns that’s tied to Keystone -- some may also be in storage -- industry observers say it likely isn’t enough to make a dent on the market. The amount that could be sold would be a fraction of the total U.S. steel market demand of around 100 million tons a year.
TC Energy couldn’t be immediately reached for comment. A spokesman for the Canada Energy Regulator, which oversees the Canadian portion of the project, said no decisions have been made on the steel.
The regulator “continues to engage with TC Energy since the presidential permit for the Keystone XL Project was revoked,” the Canadian agency said in the statement, adding that it will “continue its regulatory oversight, focusing on ensuring safety and environmental protection.”