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Canada seeks common ground with US
Gary Park For Petroleum News
President Barack Obama’s climate change strategy is forcing the Canadian government to step up its efforts to ensure that the Alberta oil sands remain viable. Prime Minister Stephen Harper told reporters May 22 he is now working closely with all provinces to “make sure we do everything to ensure the responsible environmental development (of the oil sands), but that we do develop it because it is critical to not just to our economy, but to North American energy security as well.”
He said moves within the U.S. Congress to embrace Obama’s plan to cut greenhouse gas emissions by 17 percent below 2005 levels by 2020 and 83 percent by 2050 are taking “a direction we are comfortable with.”
“To be quite blunt, the more iterations the American plan goes through, the closer it looks like the Canadian plan because we have grappled with many of the tough decisions that are involved,” Harper said.
He said the midterm priority is to develop a climate-change policy that “will not further damage the interests of our economy during a global recession.”
Harper has met with Alberta Premier Ed Stelmach as part of developing a common Canadian approach to international talks on the post-Kyoto period in Denmark later this year.
Tom Huffaker, vice president of the Canadian Association of Petroleum Producers, said the industry is “positive about the idea of compatible or aligned North American approaches” on climate change.
But he noted that the current U.S. bill is only “one step on a rather long road,” given that other Congressional committees and the U.S. Senate have yet to make their contributions.
North West to bid for bitumen One thread of hope from the U.S. debate is being grasped by North West Upgrading, a private company that is still pushing ahead with its plans for a merchant upgrader in Alberta.
It plans to bid for some of the bitumen the Alberta government plans to collect as royalties-in-kind so that it can return to the market and raise more than the C$400 million it already has committed by a large group of institutional investors to start construction on the upgrader.
North West Chairman Ian MacGregor told the Financial Post that the proposed U.S. carbon dioxide limits might force a review of plans by oil sands developers to send their raw bitumen to the U.S. for upgrading and refining.
He said the U.S. is weighing the prospect of taxes in the order of $5-$10 per barrel of bitumen, which could wipe out the current advantages it enjoys over Canada as a center for processing bitumen.
MacGregor also said Alberta has an edge over the U.S. through its ability to use CO2 feedstock for enhanced oil recovery, meaning the gas can become a source of revenue rather than a cost.
North West, through a contractually related company, Enhance Energy, is pushing in that direction, with the goal of capturing greenhouse gases from its upgrader and using them to boost oil production from fields in central Alberta.
He said that scheme could yield an additional 1.1 billion barrels from mature reservoirs and dispose of 2 million metric tons of CO2, the equivalent of removing 2.6 million cars from the roads.
North West and Enhance have applied for some of the C$2 billion the Alberta government has earmarked to advance carbon capture and storage technology.
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