Alberta invested more than $1 billion in the project previous year, kick-starting construction that had stalled amid determined opposition to the line from environmentalists and Native American tribes along its route.
The company swung to a loss in the first quarter, hit by C$2.2 billion ($1.81 billion) impairment charges related to the suspension of the Keystone XL project.
US President Joe Biden formally rescinded a permit for the pipeline by executive order on his first day in office in January.
As a result, the Canadian leg of the project had been under construction for several months with around 1,000 workers in southeast Alberta.
The Albertan government was a key backer of Keystone XL, striking a deal for a $1.5-billion equity investment in the project in 2020 and offering $6 billion in loan backstops for 2021.
"TC Energy's infrastructure plays a critical role in powering the North American economy, delivering the energy people need every day, safely and responsibly".More news: US to buy 500M Pfizer vaccines to share globally
In a news release Wednesday afternoon, the government said it reached an exit agreement with TC Energy, but both parties would still look for ways to recoup the government's investment in the project.
Keystone's demise follows cancellations of Northern Gateway and TransCanada Corp.'s Energy East and a delay in Trans Mountain, which the Canadian government bought in 2019 for $4.5 billion from Kinder Morgan.
The 1,200-mile line, created to carry crude from Canada's oil sands through Montana, South Dakota and southern Nebraska, has faced years of pointed opposition from environmental and community groups, as well as a number of legal battles that landed the project before the U.S. Supreme Court.
On Wednesday, Kenney said Alberta would continue to work with its US partners to ensure that the province is equipped to meet USA energy demands.
The province had hoped the pipeline would spur increased development in the oil sands and bring tens of billions of dollars in royalties over decades. "We will continue to identify opportunities to apply this level of ingenuity across our business going forward, including our current evaluation of the potential to power existing USA assets with renewable energy".
"The cancellation of the Keystone XL pipeline extension is devastating".More news: Multiple Fatalities After Pedestrians Struck by Vehicle in London
Some 200 kilometres of pipeline have already been laid, including across the Canada-U.S. border.
"The termination of this zombie pipeline sets precedent for President Biden and polluters to stop (Enbridge Inc.'s ) Line 3, Dakota Access, and all fossil fuel projects", added ground campaign manager Kendall Mackey.
Wyoming Sen. John Barrasso, the top Republican on the Senate energy committee, was more direct: "President Biden killed the Keystone XL Pipeline and with it, thousands of good-paying American jobs".
Jared Margolis of the Arizona-based Center for Biological Diversity called the pipeline's termination a landmark moment in the fight against the climate crisis. "Good riddance to Keystone XL".
While some Indigenous groups opposed the pipeline, one participated in oil and gas development as a solution to poverty on reserves.More news: Pope voices sorrow over Canadian deaths, doesn't apologize