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Providing coverage of Alaska and northern Canada's oil and gas industry
June 2011

Vol. 16, No. 25 Week of June 19, 2011

Billions on the line

Alberta Finance Minister Lloyd Snelgrove says key to Asia investment in Alberta ability to ship oil sands crude, LNG, to China

Gary Park

For Petroleum News

Chinese petroleum companies could parlay a C$13 billion investment in Western Canadian oil sands and shale gas prospects into billions of dollars of development spending, said Alberta Finance Minister Lloyd Snelgrove, during a trade mission by Alberta government and business leaders.

Between bitumen expansion and LNG opportunities, just one of China’s state-owned enterprises that has entered the Canadian upstream in the past 18 months could pour C$20 billion into achieving commercial production over the next 10 years, he said, adding that other companies “are talking about enormous investments.”

The major proposal so far is a C$5.4 billion joint venture deal by PetroChina to advance development of Encana’s shale gas deposits, pending approval by Canada’s foreign investment regulators.

But the whole dream will evaporate if plans to ship oil sands crude and liquefied natural gas to Asia do not proceed as soon as possible, Snelgrove said.

“What is critical to them is having access (in China) to what they produce in Canada,” he said.

Northern Gateway priority

In particular, he said Enbridge’s proposed Northern Gateway crude pipeline from Alberta to a British Columbia tanker port is the top priority.

Ian Wild, executive vice president of provincially owned ATB Corporate Financial Services, said he was told by Chinese oil executives there is growing frustration over opposition to the Enbridge project which could place future investment at risk.

“Their patience is running out,” he said. “They told me specifically that C$10 billion to C$20 billion (of spending in Alberta) is in jeopardy.”

Snelgrove said China now tops the list of future economic investment and export prospects for Alberta.

“For a century, we had the biggest market in the world just south of us and we didn’t have to look anywhere else,” he said. “We probably became too complacent with our dependency on American markets.

“Now that China is the second-biggest economy in the world, just about everything they want, we have.”

Calgary Mayor Naheed Nenshi, a member of the delegation, said Alberta can no longer afford to be insular and focus only on its existing markets “because, frankly, other people will come and eat our lunch.”






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