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Providing coverage of Alaska and northern Canada's oil and gas industry
December 2008

Vol. 13, No. 52 Week of December 28, 2008

Hot on the Obama trail

Canada told to waste no time getting energy message to new U.S. administration

Gary Park

For Petroleum News

If Canada wants to remain the largest external supplier of petroleum and natural gas to the United States it should waste no time beating a path to the door of the incoming U.S. administration, says a briefing by the Conference Board of Canada.

The authors, Gary Clyde Hufbauer and Jisun Kim, suggest that door is likely open, but it is up to Canada to initiate proceedings.

The board, Canada’s largest not-for-profit research organization, explores how the U.S. is likely to deal with climate change matters under President Barack Obama and what that means for Canada’s role as one of the world’s top five energy producing countries, whose exports fetched C$90 billion in 2007 (20 percent of the value of all exports) and directly employed 372,200 people.

“At a time of global financial turmoil and the resulting recession (of unknown depth and direction) momentum toward a climate pact has slowed both in the United States and internationally,” the document said. “Some experts, however, have argued that the financial crisis calls for faster — not slower — action on climate change.”

The authors probe how an Obama presidency is likely to tackle climate change and the implications for Canada, noting that Obama through his election campaign argued the U.S. must show leadership in reducing greenhouse gas emissions.

Canada’s job, they said, is to make a strong case to the new administration “that Canada is the foremost secure source of clean energy.”

Canada’s interest significant

Hufbauer said Canada has a significant interest in Obama’s climate and energy policies, “especially if Canadian oil sands production is viewed as ‘dirty oil.”

It emphasized the need for Prime Minister Stephen Harper’s government to open dialogue with the Obama team to counteract notions about the oil sands and Canada’s climate change strategies.

Hufbauer said Harper and his cabinet have proposed a bilateral climate change pact with the U.S., “a rapid move … that was partly inspired by a desire to protect Alberta’s oil sands projects from potential measures that the Obama administration might enact,” given that Obama, without specifically fingering the oil sands, said the U.S. should lower its dependence on oil.

He said Canada’s case will need to show that on a “well-to-wheels basis” — from the well to the consumer and making allowance for transportation costs — the oil sands emit no more carbon dioxide than Venezuela and Middle Eastern oil.

Hufbauer also argues Canada will likely be required to establish its commitment to cleaner energy production by investing in and deploying clean technologies, such as carbon capture and storage, while the U.S. will need to weigh the balance between its energy security concerns and its worries about the CO2 generated by oil sands operations.

Alberta also concerned

Alberta Deputy Premier Ron Stevens told the Calgary Chamber of Commerce earlier in December that the Alberta and Canadian governments must seek to build a strong relationship with the Obama administration.

To that end the Alberta government office in Washington, D.C., and the province are “committed to getting the accurate facts to U.S. lawmakers,” and offsetting misinformation from environmental advocates, he said.

“We are organizing oil sands tours for influential congressional leaders … speaking to U.S. think-tanks and most importantly getting information to President-elect Obama’s advisors,” he said.

Stevens said he took some comfort from Obama’s campaign message that the U.S. “needs to eliminate oil imports from the Middle East and Venezuela within 10 years.”

He said Alberta is anxious to “earn a global reputation” as a responsible energy producer, as evidenced by its C$2 billion fund to advance large-scale carbon capture and storage technology.

“There’s an environmental cost to producing energy from the oil sands, just as there is to producing energy from any source,” Stevens said. “But the solution isn’t to risk Canada’s future by shutting down development.”

He said success for Alberta will depend on “how clearly and effectively we convey the importance of our energy assets to both countries.”

Standing up for Alberta

Stevens said some special interest groups have portrayed the oil sands as an environmental plague and declared they “will not rest until we have an oil free world. Their stories are misleading or outright false. They conveniently ignore details, they distort facts,” he said.

Indicating the success these advocates have had in winning over hearts and minds, Stevens said he and Premier Ed Stelmach “believe we would be negligent if we did not stand up for Alberta’s interests wherever and whenever possible to correct misinformation.”

“We can’t allow special interest groups to gain more of a foothold in their efforts to restrict (exports) of oil sands oil. The scenario is potentially devastating for all of Canada and harmful to U.S. energy security.”

Noting that Alberta shipped 1.35 million barrels per day of crude to the U.S. in 2006 — representing 13 percent of total crude imports by the U.S. — he said further technological advances “hold even greater possibilities” for the province’s future as a crude supplier to the U.S.

Stelmach visits Texas

For Alberta, the road to Washington also runs through Texas, where Stelmach made a three-day strategic trip in mid-December.

“Texas and Alberta are the pillars of North America’s energy economy and it is critical for our jurisdictions to work together on energy development,” he said.

“It is equally important that our jurisdictions look for opportunities to collaborate and develop new technologies such as carbon capture and storage as we both transition to meet the demand for cleaner energy.”

Stelmach’s meeting with Texas Gov. Rick Perry was interpreted as his chance to build friendships wherever he can find them in the U.S., especially with a leader also facing the prospect of federal regulations that could undermine the energy industry.






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