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Pipelines to the B.C. coast more important than Keystone: HSBC
News Articles Featured | Vancouver Sun | September 24, 2011
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Pipelines for oil and gas through British Columbia are "significantly more important" than the controversial Keystone XL pipeline to the U.S., the president of the HSBC Bank Canada told a Business Council of B.C. conference Friday.
Citing Prime Minister Stephen Harper's statement that U.S. approval of the Keystone pipeline linking Alberta's oilsands to U.S. markets is a "no brainer," HSBC president Lindsay Gordon said a pipeline to the West Coast is more important.
"I'm not suggesting that pipelines to the West Coast across British Columbia are a no brainer, but I would certainly argue in terms of the strategic importance to Canada and B.C.'s future, they are actually significantly more important than pipelines to the U.S., including Keystone."
Gordon was one of several chief executive officers to stress the importance and urgency of developing access to Asian markets for Canadian energy at the conference, titled British Columbia's Asian Gateway.
They cited the fact that other energy producers are moving more quickly into Asia than is Canada and when it comes to natural gas, the U.S. has huge shale gas reserves that will continue to depress the price Canada receives from American customers.
"We are the only oil and gas exporter in the world that does not have access to a global market," Shell Canada president Lorraine Mitchelmore said "All of our eggs are in one basket in the U.S. That's been great, it's served us well, but things have changed and it's not fine any longer. U.S. demand for our energy is not growing and unless we diversify our markets, we could be in trouble down the road."
She said British Columbia's role as the Pacific Gateway was incomplete as long as it does not include oil and gas.
"B.C. is a real gateway," she said. "But the gate is not fully opened, for energy in particular. Canada really needs to diversify its customer base for energy products and create access to global energy markets."
Enbridge president Patrick Daniel said as long as Canada's energy sector remains dependent on the U.S. market, it will be isolated from higher global pricing. He stressed the economic significance of oil exports, a $50 billion annual export.
"It's not just one of our exports. It is the most important export."
He said Enbridge's Northern Gateway pipeline proposal from Edmonton to Kitimat "is the best way to move crude oil to the West Coast."
The proposed pipeline would move more than half a million barrels a day and would result in a $2 to $3 per barrel price uptick of every barrel of oil produced in Canada. It would create 63,000 person-years of employment.
The CEOs' call for pipelines received applause from the 300 business delegates at the convention, but oil pipelines would threaten indigenous cultures and salmon fisheries, Karen Tam Wu, of the environmental group ForestEthics said in an email to The Sun.
"Industry, like Shell and Enbridge, may be looking for an economic boom, but local cultures and livelihoods will go bust," she said "Shell and Enbridge's projects alone face unwavering opposition by locals, in no small part because the $110 million annual Skeena salmon economy would be threatened."
ForestEthics members were outside the Vancouver Convention Centre to present their case for no pipelines to the business delegates as they arrived.
Inside, the oil and gas industry's dependence on only one market was compared to the forest industry, which was subjected to export restrictions for softwood lumber and then had that market collapse when the U.S. housing crisis hit.
The country's oil and gas sector is now totally dependent on the U.S. market, and needs to follow the forest industry's lead in diversifying into Asia, said Daniel.
He said the forest industry's problems - first a trade dispute and then economic decline in its one and only market - summed up the issue oil and gas producers face in relying on a single market.
Hank Ketcham, president of West Fraser Timber, described how the forest industry had developed its China connection by establishing good relations at both the business and government level.
The development of the Chinese market was "fortuitous" for the forest industry, Ketcham told the conference. The forest industry, he said "is the poster child for what government and industry in collaboration and some really good luck can accomplish in opening up new markets."
He said diversifying into China, which has now overtaken the U.S. as the industry's largest market, has saved 6,000 jobs.
In a later interview, Mitchelmore said Shell is still in the feasibility stage for a liquefied natural gas (LNG) terminal in B.C.
She said Shell is also in discussion with potential customers in Asia and that Shell's proposed West Coast terminal would be of a global scale. It would cost "billions."
"It's significant size," she said. "We have a huge market; we have a huge resource in B.C. and we need to join the two up."
Tagged with: keystone xl, transcanada, pipeline, enbridge, northern gateway, hsbc
