Stalling threatens Canadian economy

Banking official cites governmental bickering in pipeline, LNG project delays; says nation’s economy, export prospects at risk

Gary Park

For Petroleum News

Bickering and indecision among Canadian governments must be set aside so that Canada’s oil and gas producers can access offshore markets before those buyers turn their attention to other supply sources, said Brian Porter, chief executive officer of the Bank of Nova Scotia, one of Canada’s five largest banks.

He told his bank’s annual meeting that it is now time for Canada’s political leaders to “come together” to engage in a vigorous pursuit of global markets.

“Our inability to deliver energy to world markets is detrimental to Canada’s economy,” he said. “It is also detrimental to our country’s brand and future economic prospects for all Canadians.”

Porter’s decision to lead the banking sector into the public debate on pipelines comes as four proposals to ship crude bitumen from the Alberta oil sands to the United States, Asia and Europe become increasingly bogged down in contentious regulatory hearings and face growing objections from municipal governments, environmental groups and First Nations.

He said it is long past time for Canada to move beyond squabbling that is acting as a significant constraint to exports of “meaningful quantities of energy” that would allow Canada to become one of the world’s largest producers of oil and gas.

“Without the ports and pipelines needed to deliver Canada’s energy products globally, importing nations will source their energy supply elsewhere,” Porter said. “Gaps in our infrastructure will have long-term consequences for our economy.

“We must make global access for Canadian energy a national priority and then make it a reality.”

He said the decline in tax and royalty revenues from low oil and gas prices and shrinking exports to the United States “will constrain our federal and provincial governments’ ability to invest in important areas such as education and health care.”

Porter noted that TransCanada’s proposed Energy East pipeline to deliver 1.1 million barrels per day of Western Canadian crude to domestic refineries as well as open new markets in Europe and Asia is falling behind its timetable and its prospect of injecting C$35 billion into the national economy and creating tens of thousands of jobs.

Other pipelines trapped in a gridlock include TransCanada’s 830,000 bpd Keystone XL line to the U.S. Gulf Coast and two delivery systems from the oil sands to the British Columbia coast - Kinder Morgan’s application to triple capacity on its Trans Mountain system to 890,000 bpd and Enbridge’s 525,000 bpd Northern Gateway pipeline.

The four projects represent about 3 million bpd of incremental production, mostly from the oil sands.

In addition, several plans to export LNG are becoming increasingly challenged by opponents of fossil fuel development.

That battle has intensified with the leakage on April 11 of an estimated 2,700 liters of bunker oil from the cargo ship MV Marathassa, which was moored off one of Vancouver’s most popular beaches waiting for a berth.

Vancouver Mayor Gregor Robertson and British Columbia Premier Christy Clark both heaped blame on the Coast Guard for taking four hours to answer reports of the spill and another six hours to place booms around the vessel.

That fueled the objections of critics who say Canada and British Columbia are far from having the “world-class” spill response program which governments and industry have promised will be in place before crude and LNG tankers start deliveries from Canada’s coasts.