Canada’s oil patch leaders head to Washington, D.C., eager to mend fences

Gary Park, Petroleum News Calgary correspondent

A Who’s Who of oilpatch leaders will be part of a Canadian delegation in Washington, D.C. next week engaged in “damage control” over Canada’s refusal to participate in the Iraq war. The Canadian Council of Chief Executives is sending a team of about 100 corporate heavyweights to an April 7 and 8 summit.

They include Gwyn Morgan (EnCana Corp.), Ron Brenneman (Petro-Canada), Tim Faithful (Shell Canada Ltd.), Tim Hearn (Imperial Oil Ltd.) and Hal Kvisle (TransCanada PipeLines Ltd.).

Also making the trip will be Finance Minister and Deputy Prime Minister John Manley and Bank of Canada Governor David Dodge.

The meetings with U.S. officials, including Secretary of Homeland Security Tom Ridge and White House Chief of Staff Andrew Card, were scheduled months ago.

But the agenda has been dramatically altered since U.S. Ambassador to Canada Paul Cellucci expressed disappointment that Canada had declined to join coalition forces in Iraq, although it has assigned five warships to the Persian Gulf and 2,000 troops to Afghanistan. Cellucci also described as inappropriate remarks by Natural Resources Minister Herb Dhaliwal that the Iraq war resulted from President George W. Bush’s failure as a statesman. Alberta Energy Minister Murray Smith said Dhaliwal had become a “serious, if not mortal liability” to Canada’s energy exports, worth about C$50 billion a year, and should be fired.

With more than half of Canada’s petroleum sector controlled by U.S.-based companies and many key U.S.-Canada energy issues needing resolution, there is anxiety within the Alberta government over possible repercussions.

Issues at risk include: Obtaining the support of U. S. lawmakers to block loan guarantees and floor price incentives for an Alaska Highway gas pipeline; hopes of multi-billion dollar U.S. investment in Alberta’s oil sands sector; and the chances of Alberta companies landing contracts for the post-war restoration of Iraq’s oil infrastructure.

“We’re trying to do a bit of fence-mending,” said Thomas D’Aquino, head of the Canadian Council of Chief Executives, describing the rift as “quite serious.”

However, there is also a widely-held belief that the disagreements will not cause an energy backlash, given Canada’s reputation as a secure source of oil and natural gas for U.S. consumers. In 2002, Canada accounted for 94 percent of U.S. gas imports, while oil shipments from Canada soared 90 per cent from 1991 to 2001.

Less than two years ago, Vice President Dick Cheney’s National Energy Policy report noted that development of Alberta’s oil sands “can be a pillar of sustained North American energy and economic security.”