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Canada-US relations strained over upcoming Keystone decision
Within the next three months, President Barack Obama is expected to decide the fate of TransCanada’s Keystone XL pipeline — a knotty choice for him between offending environmentalists who contributed so much to his re-election and turning his back on Canada, which is by far the leading external source of United States oil and natural gas imports.
The tension level was raised Feb. 8 when Canada’s Foreign Affairs Minister John Baird held the first meeting with newly installed U.S. Secretary of State John Kerry.
Keystone was one of the topics, but all that Baird could extract was a promise from Kerry to reach a fair, transparent and prompt decision, without even hinting at the recommendation he will make to Obama.
Gary Doer, the Canadian Ambassador to the U.S., said the decision “has to be made on merit and not noise. If people in Canada perceive that decision is made on noise there will be extreme disappointment.”
Possible repercussions In the absence of any outright threats, the lower level political rumblings in Canada say a negative decision for the pipeline could have repercussions in other trade and border matters, notably Canada’s current plans to purchase a fleet of U.S. F-35 fighter jets.
But Obama raised hopes among environmentalists that he will reject Keystone XL, cutting off 700,000 barrels per day of crude from the Alberta oil sands (equivalent to two-thirds of Venezuela imports), plus about 100,000 bpd from the Bakken, and forcing the U.S. to again rely on oil from such volatile regions as the Middle East, Nigeria and Venezuela.
In the first State of the Union address of his second term, he pledged to make climate change a top priority for his second term, four years after promising to reduce U.S. reliance on oil from politically unstable members of the Organization of Petroleum Exporting Countries.
Inspired by that message thousands — some said 35,000, others 20,000 — occupied a slice of the Mall in Washington, D.C., on a cold Feb. 17 to ratchet up the heat on Obama.
The president wasn’t home, however. He was in Florida, playing golf with Tiger Woods.
While the protesters waved banners and rally leaders urged Obama to move forward on his climate change measures, speakers based much of their argument on the energy-intensive methods needed to extract and process oil sands bitumen — which could increase Canada’s production to 6.2 million bpd from 3.2 million bpd by 2030.
There were also groups opposing coal-generated power, hydro electricity and the use of hydraulic fracturing to produce natural gas.
Getting out of coal Far removed from that scene, Baird delivered a blunt message that Canada could teach the U.S. some lessons in reducing greenhouse gas emission, noting that Canada is the only country in the world that is committed to “getting out of the dirty coal electricity business. These are real, meaningful steps that will either meet or even exceed the work that has been done thus far in the United States.”
Natural Resources Minister Joe Oliver joined that debate, noting that emissions from U.S. coal-fired power plants are 40 times greater than those from the oil sands, with the oil sands accounting for 48 million tons a year of carbon-dioxide emissions while coal-fired plants in the state of Wisconsin alone producing 43 million tons.
But David Pumphrey, an energy and security analyst at the Washington-based Center for Strategic and International Studies, said any attempt to fight coal plants poses a challenge.
“You can rally around the Keystone project and turn it into a slogan and make it into an icon in the climate fight. And it becomes less about facts and more about ideology.”
The mood in Alberta and especially within the industry is becoming testy and edgy as the Keystone verdict looms.
Greg Stringham, vice president for oil sands and markets with the Canadian Association of Petroleum Producers, told the New York Times that a rejection of the Presidential Permit needed for Keystone XL “would be a significant change in the Canada-U.S. relationship. Canada, right now, with our potential growth in energy, is looking for security of demand wherever that might be throughout the world.”
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