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Pipeline debate heats up in summer months
News Articles Featured | Vancouver Sun | July 03, 2011
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OTTAWA — The marketplace for Canada’s oil resources is a battleground that involves more than just competition with other oil-producing countries.
While rising global demand for energy has made it more lucrative to expand, a multibillion-dollar pipeline proposal to improve market access for Canadian producers has galvanized an opposition that wants to stop the oil from flowing.
Conservation groups and climate-change scientists have seized on warnings from the U.S. Environmental Protection Agency about the long-term environmental consequences of the project, the Keystone XL pipeline, which is being proposed by Alberta-based TransCanada Corp.
But in terms of profits and revenues, the stakes are also high for the industry, along with the Alberta and federal governments.
“From the producers’ perspective right now, they’re really trying to jam oil into a really tight market,” said Andrew Leach, an environmental economist and assistant professor at the University of Alberta’s School of Business. “(When) you open up the market . . . you’ll end up getting a higher price for the product.”
Oilsands crude now represents about 55 per cent of the 2.9 million barrels of oil per day produced in Canada, estimates the Canadian Association of Petroleum Producers, an industry lobby group. Based on projections, oilsands production would rise to 79 per cent out of an estimated 4.7 million barrels of Canadian oil per day in 2025.
The environmental footprint of oilsands production, in terms of intensive water use, energy consumption and global-warming-causing pollution, has driven calls for stringent regulations.
But with governments in Canada and the U.S. failing to deliver on pledges to tackle greenhouse gas emissions, environmental groups have openly acknowledged they want to cut off the industry’s export capacity by stopping the Keystone XL pipeline.
An oil-and-gas industry spokesman has said that access to both the U.S. and Asian markets is “important” to enable the anticipated expansion for Canadian oil producers.
The U.S. public, caught between industry-sponsored ads bombarding U.S. television networks about the economic benefits of the pipeline and calls for civil disobedience from environmental activists, is entering the summer at the centre of a heated battle over the future of the resource.
“If we don’t get moving on these projects, our greatest risk in Alberta is that by 2020 we will be landlocked in bitumen,” Alberta Energy Minister Ron Liepert said in a recent speech.
But some believe the arguments on both sides of the debate are causing confusion and distorting the truth about a pipeline that would expand the flow of Canadian crude by as many as 800,000 barrels per day on a route toward oil refineries in the U.S. Gulf Coast.
“The potential climate damages and energy security advantages of oilsands development are both widely overblown,” wrote Michael Levi, a senior fellow for energy and the environment at the U.S.-based Council on Foreign Relations, in a recent blog post.
While Calgary-based Enbridge Inc. has proposed a different pipeline from Alberta to the West Coast of British Columbia, with a capacity of about 525,000 barrels of oil per day, bureaucrats from Natural Resources Canada have suggested there is not really enough demand — a criteria for approval by Canada’s national-energy regulator — to justify this project.
Rival company, Kinder Morgan, is also proposing to expand the capacity of its existing Trans Mountain pipeline system to the West Coast of B.C.
Another assessment from federal bureaucrats has also acknowledged that the Keystone XL project, if built, would feed into the U.S. addiction to Canadian oil.
The U.S. government is expected to make a final decision on approving or rejecting the pipeline by the end of this year.
In the meantime, a public relations war over the outcome has only just begun.
Tagged with: keystone xl, transcanada, pipeline, enbridge, northern gateway
