TC Energy Corp. gave the go-ahead Tuesday for construction of its $8-billion US Keystone XL pipeline project, with help from the Alberta government.

The company said Alberta has agreed to invest approximately $1.1 billion US as equity in the project, which substantially covers planned construction costs through the end of 2020.

The remaining $6.9 billion US is expected to be funded through a combination of a $4.2-billion project-level credit facility to be fully guaranteed by the Alberta government and a $2.7-billion investment by TC Energy.

The 1,947-kilometre project will be able to carry 830,000 barrels of crude oil per day from Hardisty, Alta., to Steele City, Neb., where it will connect with TC Energy's existing facilities.

The provincial government says the pipeline project will create more than 1,400 direct and 5,400 indirect jobs in Alberta during construction and will reap an estimated $30 billion in tax and royalty revenues for provincial and federal coffers over the next two decades.

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

TC Energy — formerly known as TransCanada — says with pre-construction activities underway, the pipeline is expected to enter service in 2023.

Alberta Premier Jason Kenney said during a news conference on Tuesday that the project was a wise investment and essential for the province's future prosperity.

"Every projection for the Canadian energy sector was that we need a significant increase in pipelines to ship our energy," he said, pointing to issues like the price differential and export capacity that were front of mind before oil prices crashed this month.

"Inevitably prices will come back to something like normal and there will be a growing global demand for energy for decades to come."

Kenney said the investment is "not in any way a distraction" from the fight against the coronavirus pandemic and has been in the works for six months.

Once the project is complete and in service, TC Energy expects to acquire the Alberta government's equity investment under agreed terms and conditions and refinance the $4.2-billion US credit facility in the debt capital markets.

"Strong commercial and financial support positions us to prudently build and fund the project, along with our existing $30 billion secured capital program, in a manner that is consistent with maintaining our strong financial position and credit metrics," TC Energy chief executive Russ Girling said in a statement.

'When the industry needs it'

Alberta's investment in the project has symbolic power, said Warren Mabee, director of the Queen's University's Institute for Energy and Environmental Policy.

"This is probably welcome news because it is not just money to support workers and money to keep families going, it is a sign of support for the sector and a vote of confidence in a sector that has really been beat up," he said.

Federal Natural Resources Minister Seamus O'Regan applauded the Alberta government for investing in the project.

"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," he said in a statement.

Alberta Premier Jason Kenney, shown in this January file photo, said the Keystone XL project is essential for the province's future prosperity. (Todd Korol/The Canadian Press)

"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."

Kenney said the province won't be asking Ottawa for financial support with this project but said federal advocacy will continue to be necessary to tout the importance of pipelines.

The Canadian Energy Pipeline Association (CEPA) said in a statement that construction of Keystone XL will be a big boost for Alberta's economy, as well as that of Canada.

"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," said CEPA president Chris Bloomer.

Project has faced numerous hurdles

The decision is sure to disappoint U.S. environmental groups that have fought against the pipeline in regulatory hearings and the courts for years.

In a statement on Tuesday, Catherine Collentine, associate director of the Sierra Club's Beyond Dirty Fuels campaign, took issue with the timing of the announcement during the COVID-19 pandemic and vowed to continue the fight.

"By barrelling forward with construction during a global pandemic, TC Energy is putting already vulnerable communities at even greater risk," she said.

The project was first proposed more than a decade ago but has faced numerous hurdles.

The pipeline was rejected twice by the administration of former U.S. president Barack Obama over worries it could make climate change worse.

But President Donald Trump has been a strong proponent of the project and issued it a permit that environmentalists say was illegal.

Richard Masson, executive fellow at the University of Calgary's School of Public Policy, said the Alberta investment was likely needed to mitigate a looming political risk from the U.S. presidential election set for this November.

"What happens if the Democrats win and pull the [presidential] permit?" he said.

"TC Energy is essentially saying, 'We don't want to take that risk' … Alberta is essentially saying, 'OK, we'll take that risk, we'll put in $1.5 billion Canadian, and if it ends up that no one pulls the presidential permit, then we're all going to work on getting the rest built over 2021 and '22."'

U.S. President Donald Trump holds up a signed executive order to advance construction of the Keystone XL pipeline at the White House on Jan. 24, 2017. (Kevin Lamarque/Reuters)

A court hearing in the permit dispute is set for April 16 before U.S. District Judge Brian Morris in Great Falls, Mont. Morris has previously ruled against the project.

TC Energy has filed status reports with the judge about its intentions to start work.

"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," Girling said.

"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."

Demonstrators walk to the Andrew W. Bogue federal courthouse in Rapid City, S.D., as they protest against the Keystone XL pipeline in this June 2019 file photo. (Adam Fondren/Rapid City Journal via Associated Press)

Keith Stewart, a senior energy strategist with Greenpeace Canada, characterized Alberta's investment in the project as "massive government subsidies to oil executives and shareholders."

"It is telling that Premier Kenney is firing educational workers and attacking doctors to save money during a pandemic, yet can somehow find $7.5 billion to prop up a pipeline project that the private sector won't back," he said in an email to CBC News.

"He may want voters to believe that boom times are just around the corner, but even before COVID-19, global investors and central bankers were warning that the smart money is moving out of fossil fuels."

Kenney said the money for the project will be borrowed and is not related to the recent temporary layoff of an estimated 20,000 school staff.

"Not one dime is being redirected from any other area of spending," he said.

He added that while he's been skeptical of government intervention in the market, he doesn't believe the pipeline would be built without the province's support.

University of Calgary economist Trevor Tombe says there is a strong public policy case for such government involvement if the companies behind the pipelines are having challenges — as was the case when Ottawa stepped in and bought the Trans Mountain pipeline expansion project two years ago to ensure it got built.

"If the company was going to delay construction because it couldn't access credit, then the government stepping in at that moment makes a lot of sense," Tombe said.

"But if the timing of this decision is related to non-financial factors, then that would be concerning."