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Canada tells US it will export ‘elsewhere’ if its oil not wanted
The battle over TransCanada’s Keystone XL pipeline has shifted from shadowboxing to a bare-knuckles contest in Canada.
Federal Natural Resources Minister Joe Oliver has sent a blunt message to Obama administration officials telling them that “if they don’t want our oil, it is obvious we are going to export it elsewhere.”
By way of stirring the pot, he said that as part of a “broad strategic objective” Canada must diversify its markets and China “has emerged as the largest customer of energy in the world, so it is utterly obvious what we must do. They are hungry for our (mineral and petroleum) resources.”
However, Oliver did not specifically endorse Enbridge’s Northern Gateway proposal, which is designed to export 525,000 barrels per day of oil sands crude to the Asia-Pacific region, saying he will respect the regulatory process that is now evaluating the project.
Alberta: Northern Gateway option Newly installed Alberta Premier Alison Redford joined the pro-oil sands chorus, describing criticism of the sector as “shortsighted, misinformed and exaggerated” and making it clear her government will support both Keystone XL and Northern Gateway.
“If Keystone isn’t approved, it’s got to be Northern Gateway,” she said. “We also have to look at Kinder Morgan’s (Trans Mountain pipeline) because they have a regulatory corridor that allows for expansion.”
If the Gateway pipeline and Trans Mountain expansion proceed, the United States would lose first call on Canadian crude and undermine its goal of energy security, Redford said.
The latest hiccup for Keystone has surfaced in Nebraska, where the state senate is holding a special session to discuss the proposed routing of Keystone.
Asia attracting interest Regardless of whether the project is approved at the federal level later this year, Asia is attracting interest from pure-play oil sands producer Cenovus Energy, which has opened a data room to prospective joint venture partners for its 90,000 bpd Telephone Lake project and nearby undeveloped lands.
Chief Executive Officer Brian Ferguson said the “billions of barrels of recoverable oil” that are up for bids have allowed Cenovus to pre-qualify “several” potential partners.
They cover national oil companies, supermajors and multinationals based in Calgary, Houston, London, India and China, he said.
There is speculation that India’s energy giant Reliance Industries has been evaluating oil sands assets and may have been the September buyer for C$60 million of Oil sands Quest’s Wallace Creek assets near the Cenovus joint venture properties.
In addition, Oil and Natural Gas Corp., based in New Delhi, reportedly entered discussions last spring to acquire oil sands reserves.
Ferguson said the timing of a Cenovus deal will hinge on what progress is made over the next few months, adding the end result could involve, cash, asset swaps or other options, while Cenovus will file an application before yearend to upsize the initial Telegraph Lake project to 90,000 bpd from 35,000 bpd.
—Gary Park
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