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New government sets lively pace on issues Canada under Martin: patching U.S. relationships, Petro-Canada sale, opening B.C. offshore, nuclear power on minds of cabinet ministers Gary Park Petroleum News Calgary correspondent
The new Canadian government under Prime Minister Paul Martin has filled the sky over the energy sector with trial balloons.
Blazing into the new year, cabinet ministers have declared:
• Mending Canada-U.S. relationships is a “must” if Canada is to build on its energy exports.
• Selling the government’s remaining 19 percent stake in Petro-Canada could be on the horizon.
• Exploration of British Columbia’s offshore poses no obstacles.
• More government support, but not necessarily money, is needed to expand the nuclear industry.
Efford works on fence mending
Describing himself as a person of “action,” Natural Resources Minister John Efford has wasted no time in his first month on the job, holding a meeting with U.S. Energy Secretary Spencer Abraham and spending three days with industry leaders in Calgary.
He said his advisers are pressing for a national energy strategy for Canada to expand infrastructure in the Alberta oil sands, develop Arctic gas reserves and build two liquefied natural gas terminals in Nova Scotia and New Brunswick to serve U.S. markets.
Less than a week after his appointment Dec. 12, Efford met with Abraham to seek agreement on a transportation policy for gas from the North Slope and Mackenzie Delta and to make a case for the two LNG terminals.
“Improving the relationship between Canada and the U.S. is a must,” he told reporters in Calgary Jan. 12 in an indirect reference to the tensions that built up last year under his predecessor Herb Dhaliwal, who questioned President George W. Bush’s statesmanship on the Iraq invasion and threatened to withhold permits for an Alaska Highway gas pipeline if the United States subsidized the project.
Efford said he endorsed accelerated energy development in Canada to help the United States achieve its goal of greater energy security. Efford: protect environment, ‘but not at the expense of business’ He also said that the first principle governing any decisions on implementing the Kyoto Protocol in Canada is that the energy industry “must grow.”
“We have to protect the environment, but not at the expense of business,” he said, announcing that he will meet with Environment Minister David Anderson this month to explore what changes, if any, are needed in the Kyoto implementation plan.
For now, Efford said it is too early to know whether the government will have to take measures over and above its commitments to cap greenhouse gas emissions and protect energy jobs. “Maybe there will be some, maybe there will be none,” he said. Goodale exploring sale of Petro-Canada shares Finance Minister Ralph Goodale aroused interest by declaring a personal preference to sell the government’s 49.4 million shares in Petro-Canada and spend the windfall on environmental technology.
At current trading levels, the holding is worth close to C$3.2 billion, but net return would be about C$2.6 billion after deducting the government’s original investment of C$570 million.
A government source told The Globe and Mail a decision will be made in the “short-term,” hinting it could be part of a budget expected in late February or early March.
Goodale was more cautious on the target, noting that the divestiture would need an “elaborate” selling process.
By Jan. 12 he said that no decision had been taken and he “wouldn’t want to speculate” because that could be seen as “improperly interfering in the marketplace.”
Federal restrictions prevent any single investor or group from holding more than 20 percent of Petro-Canada, which was created as a state-owned company in 1975 to provide the government with a “window” on the oil and gas industry and to promote Canadian ownership of energy resources.
Petro-Canada and Suncor Energy are the only two of Canada’s five integrated oil producers and gasoline marketers that are not controlled by foreign investors, unlike Imperial Oil, Shell Canada and Husky Energy.
Among analysts there are doubts that the government would be happy to see the shares sold off at a discount at a time when their value has climbed from C$50 to about C$65 in the past year and could push closer to C$80 in a bull market.
There are also questions about who might be interested in snapping up Petro-Canada widely diversified assets that include interests in Canada’s Arctic, oil sands and offshore East Coast, plus its profitable, but widely-scattered international division.
However, Martin indicated several times during his campaign for leadership of the governing Liberal party that the proceeds from a Petro-Canada sale could be used to make Canada a world leader in environmental technologies aimed at reducing greenhouse gas emissions. Atlantic offshore could be model for British Columbia On the British Columbia offshore, Efford said Newfoundland and Nova Scotia have provided optimism that offshore resources can be developed without harming fish stocks or the marine environment.
While declaring that he has the “same thinking” for British Columbia, he promised an open mind for views from those who oppose drilling in Pacific waters.
He also promised to work closely with Environment Minister David Anderson, an implacable opponent of hasty decisions on opening up the British Columbia offshore. Efford also supports nuclear power In other interviews, Efford emerged as an advocate of expanding Canada’s use of nuclear power, describing it as a “clean environmental thing to do.”
However, he promised no additional money for government-owned Atomic Energy of Canada Ltd., which received C$179 million in federal subsidies last year, suggesting that would need the backing of Goodale.
Atomic Energy of Canada has been promoting a revival of nuclear power after a hiatus of 10 years, making a case for 20 new reactors across Canada over the next two decades.
That thinking follows recent comments by Phil Prince, president of the Canadian Energy Research Institute, who predicted Canada will need more nuclear plants to meet electricity demands that can’t be satisfied by oil, natural gas, coal and renewable fuels.
Meanwhile, Atomic Energy of Canada has been pitching the merits of a new advanced reactor in the United States — a so-called light-water reactor that can generate 730 megawatts for about US$700 million, or enough electricity for 700,000 homes.
Currently, the United States is relying on 103 old commercial reactors in 32 states that meet about 20 percent of total U.S. energy demand, while coal-fired plants produce about 51 percent.
Although it has never sold a reactor in the United States, Atomic Energy of Canada has built 22 reactors in Canada and another dozen in South Korea, Romania, Argentina and China.
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