NEWS BULLETIN

June 11, 2003 --- Vol. 9, No. 59June 2003

Canada out to head off gas pipeline subsidies

Tax breaks to support construction of an Alaska Highway gas pipeline and energy’s critical role in U.S.-Canada trade relations are on the table in two days of high level meetings in Washington, D.C.

Leaders of the Canadian Association of Petroleum Producers are meeting with U.S. policy makers today and Thursday at a time when energy issues are dominating Washington’s domestic agenda and the U.S. is under special pressure to find new gas supplies.

In conveying their industry’s views of the sweeping energy bill before the U.S. Congress, the CAPP delegation will again register Canada’s opposition to proposed tax credits for the $20 billion pipeline from the North Slope.

CAPP President Pierre Alvarez told the Financial Post that a North American gas market has evolved based on open deals, free trade and an absence of government intervention.

“We would prefer to see government not affect prices in the marketplace,” he said.

Although Canadian government leaders have indicated they will not object to loan guarantees to help finance a pipeline, they and the industry are flatly opposed to tax credits that would kick in when gas prices fell below $3.25 per thousand cubic feet, but would be paid back when prices approached $5.

The CAPP team will also emphasize Canada’s importance as the largest supplier of crude and gas to the U.S. market, exports that topped C$38 billion in 2002.

Alvarez said that given the record of success CAPP wants to ensure that “governments don’t do things that either slow down bringing new supplies (into production) or prejudice one project against another.”


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