Big-city U. S.
mayors and presidential hopeful Barack Obama, who joined the parade
this week of ill-informed, U. S. anti-oil sands policies, should be
careful what they wish for.
While the aim is undoubtedly to
pander to the electorate in an election year charged with oil and
climate-change debate, what they are stoking is an increasingly angry
Canadian energy industry that is seriously looking at non-U. S. markets
for its oil.
Here's what Rick George, chief executive of Suncor
Energy Inc., Canada's largest single oil sands producer, said this
week, reflecting rising frustration with the wave of American anti-oil
sands policies:
"We are down to very limited amounts of spare
capacity," he said. "Mexico is in very steep decline. The North Sea is
in decline. Venezuela is likely to slip from here. There are problems
in Nigeria, Russia. The world will absorb this oil one way or the
other. If the U. S. doesn't take it, then we will develop other
markets."
Borrowing heavily from the rhetoric of the
environmental movement, right down to using the pejorative "tar sands"
to describe Canada's reserves, mayors from the United States' largest
cities adopted a resolution at a meeting in Miami on Monday singling
out Western Canada's oil-sands sector as part of a crackdown on fuels
that cause global warming.
Yesterday, Mr. Obama vowed to break
America's addiction to "dirty, dwindling and dangerously expensive" oil
if elected U. S. president -- and he said one of his first targets may
well be imports from Canada's oil sands. A senior advisor to Obama's
campaign said it's an "open question" whether Alberta's oil sands fit
with Obama's vision for shifting the U. S. dramatically away from
carbon-intensive fuels.
The moves follow the adoption in December
by the U. S. federal government of a law that bans federal procurement
of alternative fuels that generate more greenhouse gases than
"conventional sources," which could include oil from the oil sands. A
campaign by the Canadian sector to exclude Canada's oil has yet to bear
fruit.
Meanwhile, California has adopted low-carbon fuel standards that disfavour Canada's production.
Canada's
oil is now exported almost exclusively to the United States because
it's dependent on the reach of pipelines. Of the 2.7 million barrels
produced daily, 1.6 million is sold to Americans and 15,000 to 25,000
goes to non-U. S. markets, through a Kinder Morgan Energy Partners oil
pipeline from Alberta to the West Coast.
That picture could soon change.
The
sector is looking at reversing Enbridge Inc.'s Line 9, which would
allow Western Canadian oil to move all the way to Montreal, and then
from there move on another pipeline to the East coast, where it could
be loaded on tankers for sale offshore. Because the pipelines are
already built, it's estimated it would take barely a year to reverse
the flow of the oil and open that new option.
Meanwhile, interest
is perking up yet again to build another pipeline from Alberta to the
West Coast, to Kitimat or Prince Rupert, where oil tankers could sail
to Asian markets.
Greg Stringham, vice-president of the Canadian
Association of Petroleum Producers, said oil-sands companies are
studying the alternatives because they want to keep their options open
in case U. S. policies reduce their access to the U. S. market.
It's not the first time the Canadian sector has pondered offshore oil routes. It's time to take them seriously. Source
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