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Jean Chretien eager to quench U.S. energy thirst Canadian prime minister appeals for oil patch to work with him on building a new relationship with Americas; asks Western Canadians to set aside “old grievances;” some uneasy about his “nationalist” past Gary Park PNA Canadian Correspondent
The United States has an insatiable hunger for energy and Canada will do everything it can to satisfy that appetite, with a special emphasis on launching Arctic gas development, Prime Minister Jean Chretien told 500 industry executives in Calgary.
“I have every confidence we will be able to make the Canada-U.S. energy relationship grow and prosper, to the benefit of both consumers and producers, and we will do so without sacrificing our Canadian energy needs or sovereignty,” he said.
In recent meetings and discussions with President George W. Bush and Vice President Dick Cheney, Chretien has vigorously promoted the potential of Alberta’s oil sands, the High Arctic and East Coast offshore as alternatives to U.S. reliance on foreign oil imports.
He has also pledged that Canada will work with the Bush administration to speed early development of gas deliveries from the North Slope and Mackenzie Delta to Lower 48 markets.
The next round of talks is scheduled for April 20-22 at the Summit of the Americas in Quebec City, when Chretien, Bush and Mexican President Vicente Fox are scheduled to have their own summit on energy.
To underline the priority he gives to energy, Chretien announced in Calgary that a committee of 10 senior cabinet ministers has been named to manage North America’s increasingly integrated energy market and explore Bush’s proposal for a continental policy.
The objective, Chretien, said is to take “full and quick advantage” of a growing U.S. interest in tapping Canadian energy supplies and, in the process, attract billions of dollars of American investment to exploit Canada’s frontier regions.
“We must develop Canadian natural gas resources in the Northwest Territories and the Mackenzie Delta and bring this gas south as soon as possible to meet market demands,” he said.
“The government of Canada will do what is required to ensure that the proper regulatory regimes are in place to facilitate the earliest possible movement of Canadian and American gas from the North.” Transformation for Chretien It is a complete transformation for Chretien from energy nationalist to continentalist. He was a federal energy minister and a key player in the Canadian government’s 1980 National Energy Program, which reinforced a made-in-Canada oil price policy, charged new federal royalties, expropriated frontier discoveries, taxed exports and diverted incentives to Canadian-owned E&P companies.
By some estimates, more than C$60 billion was removed from oil and gas producing provinces and companies, sending firms with high debt loads into a tailspin. Many redirected their investment to the United States, while domestic drilling slumped, production declined and profits plunged.
The National Energy Program was abolished in 1985 after the Liberals were resoundingly defeated in a national election.
Chretien appealed to Western Canadians to put aside “old grievances” — a phrase he used three times — and start building on a new foundation.
Against that backdrop, some industry leaders said Chretien’s commitment was welcome; others were openly skeptical.
Ray Woods, chairman of the Canadian Association of Petroleum Producers, whose members produce 95 percent of Canada’s oil and gas, said that for the prime minister to “speak so positively about the energy sector ... is music to our ears.”
He said Chretien’s comments are a good first step to accelerate Arctic development, which many industry leaders have said is not possible before 2010 unless the regulatory process is fast tracked.
“The whole issue is now higher up the agenda. That has to work in favor of earlier development,” Woods said.
To coincide with Chretien’s visit, CAPP released its own recommendations, including reforming regulatory processes, ensuring competitive tax and royalty regimes and ensuring environmental standards are consistent in all jurisdictions.
CAPP called for a “renewed policy effort” to support development of Canada’s untapped resources — 300 billion barrels of recoverable oil in Alberta’s oil sands, 335 trillion cubic feet of estimated natural gas reserves in Western Canada and 323 trillion cubic feet of estimated gas reserves in the Arctic and East Coast offshore.
Some express skepticism Alberta Energy Minister Murray Smith caustically observed, after listening to Chretien promote a new era of federal-provincial cooperation on energy: “We’ll see.”
He insisted Alberta must have a seat at any negotiating table to ensure the federal government does nothing to hurt the petroleum industry.
“A continental policy could mean billions for Alberta in terms of new investment. But we need to be sitting down with the federal government and the northern territories in partnership with the private sector.
“Certainly President Bush and Vice President Cheney have woken up everybody in Canada to the fact that, hey, there is some hay to be made.”
Peter Lougheed, who was Alberta premier during the National Energy Program, said he was pleased to hear Chretien speaking in such a “positive and cooperative way” and said the “timing was exceptionally significant” with the prospect of massive U.S. investment in Canada’s oil patch.
“It’s one of the few times in my life where I’ve seen the Americans making an approach as direct and significant as they’re about to do in terms of energy.”
Federal Natural Resources Minister Ralph Goodale said Chretien and Cheney are working closely on a continental energy market report, which should be released by late May.
“There is a large opportunity to be pursued here in terms of new business investment and jobs and growth,” he said.
“It is not hypothetical. It is not theoretical. It is real hard economic opportunities and it will certainly accrue to the benefit of Western Canadians.”
Goodale said Cheney understands that the fastest and easiest way for the United States to obtain new energy supplies is to significantly invest in the oil sands.
“Companies that are involved in the oil sands have identified something in the order of C$50 billion worth of upcoming investments,” he said. “Accelerated investment in the oil sands can happen at virtually any time.” Pipeline best option for Canada Goodale also said he is optimistic the United States will choose to transport natural gas from the North Slope through Canada, including a possible link with the Mackenzie Delta, rather than move Alaska’s gas by ship down the Pacific coast.
“Pipeline is by far the best option and there are several routes that the various proponents could apply for,” he said, predicting one or more applications will be filed by late 2001.
Goodale rejected suggestions that the federal cabinet wants to use C$50- billion a year of oil, gas and electricity exports to the United States as leverage in a Canada-U.S. trade dispute over softwood lumber.
U.S. producers, arguing Canadian lumber is unfairly subsidized, have asked Washington to impose duties of between 68 percent and 78 percent on C$10 billion in annual exports.
But Goodale said Chretien does expect a “positive, respectful attitude” towards Canada on all trade issues, especially if the United States is counting on Canada supplying a greater share of its energy needs.
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