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Providing coverage of Alaska and northern Canada's oil and gas industry
January 2009

Vol. 14, No. 4 Week of January 25, 2009

Oil sands key agenda item for Obama visit

Gary Park

For Petroleum News

When Barack Obama makes his first foreign trip as president to Canada — likely in late February or early March — it will be a testing time for the oil sands.

With the new U.S. administration ready to spend $32 billion on renewable energy sources and hinting it will place limits on imports of “dirty” fuel from sources such as the oil sands, Prime Minister Stephen Harper and the Canadian industry are braced for what could be pivotal negotiations on the future of the northern Alberta resource.

Harper said in Calgary on Jan. 15 that development of the oil sands is “pretty important, in our judgment, to North American energy security.”

But he acknowledged Canada must also do a better environmental job on the oil sands.

“So I think there’s a balance to be seen there,” he said.

While agreeing there are valid concerns about the environmental footprint of extracting and processing bitumen, he pointed out that the United States has its own energy-related environmental challenges.

The U.S. is a “big country for coal-powered electrical generation. … That’s pretty dirty, too,” he said.

Importance of oil sands

Harper is being urged by the industry to ensure Obama’s administration is fully aware of the importance of the oil sands in North America.

Speaking to Insight Information’s Canadian Oil Sands Summit on Jan. 15, Don Thompson, president of the Oil Sands Developers Group, said Canada must be able to “position the impact of the oil sands relative to the impact of other sources of energy.”

“All sources of energy have an environmental footprint of some form,” he said.

“We have a footprint. There’s no debate about it. But I’d be prepared to defend the environmental record of the oil sands relative to other potential sources of crude oil on which the U.S. and Canada would otherwise have to depend,” Thompson said.

He said it is not accurate to portray the oil sands as standing between “real progress on climate change in Canada and one focused on profit rather than responsible development.”

He said these perceptions exist because an incomplete story is being told and being heard about the oil sands, while agreeing there is a pressing need to develop new processes and technology to reduce the potential impact on the environment.

But Thompson argued that the oil sands currently account for less than 5 percent of Canada’s greenhouse gas emissions or about one-tenth of 1 percent of the worldwide total.

Although forecasts for growth in oil sands production are being rapidly scaled back, Thompson believes output will continue to increase in response to rising global energy demand.

U.S. expected to clarify

Robert Peterson, vice president of consulting firm CRA International, predicted the U.S. will clarify its position on climate change and carbon reduction this year, making it important for companies, no matter how small, to “think about what your technology strategy should be.”

“Greenhouse gas regulation is very likely to become a reality in 2009 or early 2010 ... and the Obama administration is shifting strongly towards a much more proactive environmental stance,” he said.

To that end, Peterson urged industry not to defer or delay spending on technology because of the economic downturn.

“Probably the worst response the oil sands industry can take in this environment is not to stick to its knitting around technology,” he said.






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