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Bush energy plan sounds a familiar refrain in Canada U.S. president covets oil sands reserves, Arctic gas; but, without billions of dollars in U.S. investment, the plan remains a pipedream Gary Park PNA Canadian Correspondent
Everyone talked about the great opportunities for Canada in President George W. Bush’s broad energy “action plan.” No one seemed to know quite where they go from here.
But, just in case the obvious was overlooked, consider these first-up reactions to the Bush
blueprint:
• “It’s a tremendous business opportunity for Canada,” said federal Natural Resources Minister Ralph Goodale.
• “This is a real Canadian opportunity and has to be treated as such,” said Alberta Energy Minister Murray Smith.
• “It’s an opportunity for growth,” observed Pierre Alvarez, president of the Canadian Association of Petroleum Producers.
• “We see tremendous opportunity for Canada to contribute more supplies to the U.S.,” said a spokesman for Alberta Energy Co.
However, beyond pledges to expedite regulatory approvals for any natural gas pipeline out of the Arctic, a plug for the potential of Alberta oil sands and the proforma call for the Bush administration to work closely with Canada and Mexico to develop new energy supplies, there wasn’t much in the 163-page policy that was specific to Canada, which is already the leading supplier of energy to the United States.
That was understandable. The obvious focus, given the White House view that the United State faces its worst energy shortages since the 1973 Arab oil embargo, was on domestic concerns and solutions, notably ramping up America’s domestic supplies of petroleum, coal and electricity to meet a current crisis and reduce dependency on foreign energy sources.
What Canada’s industry and political leaders were left to do was look for reinforcement of the belief that the Arctic and the oil sands are the greatest untapped, long-term prospects to meet North American demand and the policy paper offered enough morsels to satisfy those appetites. Gas pipeline routes not addressed Patrick Daniels, president and chief executive officer of Calgary-based pipeline Enbridge – in fact, the only company operating oil and gas pipelines in the Canadian Arctic — said the Bush policy has not ruled out either of two competing pipeline proposals for moving North Slope and Mackenzie Delta gas to market.
He said the highway pipeline would cost as much as US$10 billion, while an “over-the-top” route would cost US$2 billion to US$3 billion less and add 30 cents per thousand cubic feet to the shipping tolls.
Daniels said that although cost should be the prevailing argument for consumers: “I recognize that there are political issues that may balance it off and cause it to go another way.”
Other than giving a push for development of northern gas reserves in both Alaska and the Northwest Territories, the policy sidestepped the delicate matter of which route should be favored.
“I see nothing in particular that favors one route over another,” said Daniels. “Bush is saying, ‘We need to develop the North, we need to move that gas to markets.’ He’s not picking sides.”
Reading between the lines But some observers in Canada, reading between the lines, are inclined to believe that the Bush administration will press for the Alaska Highway pipeline to get North Slope gas to the Lower 48 as quickly as possible.
That thought didn’t escape the notice of Northwest Territories Energy Minister Joseph Handley, who was in Washington for the release of the policy.
Fearful that a highway pipeline will strand Mackenzie Delta gas indefinitely, he said: “It’s frustrating and, to us, I suppose it’s a bit baffling to have President Bush talking about the need to work with the Northwest Territories and our own prime minister (Jean Chretien) not being more aggressive.” ANWR still an issue While generally positive about the Bush plan, Goodale expressed again Canada’s concerns about opening up any portion of the Arctic National Wildlife Refuge to drilling, threatening a Porcupine caribou herd that is a vital part of the food chain for Yukon aboriginals.
“We are opposed and we will continue to oppose the disruption of the caribou calving grounds,” he said.
Goodale also said Canada will use its leverage to “make the case very clearly that ... energy efficiency and conservation is important.”
But he refused to speculate on whether Canada would be ready to withhold energy exports if the United States does not give more attention to conservation.
Canada’s bargaining chip includes soaring exports: 9.8 billion cubic feet per day of gas last year, or 57 percent of total output, compared with 2.7 billion cubic feet per day in 1987, or 34 percent of output; 1.37 million barrels per day of crude last year, or 63 percent of overall domestic production, compared with 620,000 barrels per day in 1987, or 38 percent of the total.
Mackenzie Delta gas would give an added jolt to those numbers, even at a minimum 1.2 billion cubic feet per day, while the potential from the oil sands is almost unlimited at an estimated 300 billion barrels of recoverable deposits using known extraction methods. Oil sands get boost The Bush plan said “estimates of Canada’s recoverable heavy oil sands reserves are substantial and new technologies are being deployed to develop their potential.
“Production from these promising areas now approaches 600,000 barrels a day. Their continued development can be a pillar of sustained North American energy and economic security.”
Eric Newell, chief executive officer of Syncrude Canada, the largest oil sands producer, said the bright spotlight from the White House should help Canadian producers gain the confidence of U.S. investors for future projects.
“It’s a clear recognition of the growth that’s already occurred in the oil sands — and the potential for further growth,” he said.
For Canadians, the overall impression is that energy-hungry U.S. markets will take whatever oil and gas Canada can deliver. The test is whether U.S. companies and investors will do what Canada can’t — pour in billions of dollars to develop the frontiers and build the delivery systems.
Until then, the Bush plan does nothing much more than provide a nice warm and fuzzy feeling for Canadians.
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