Shaun Polczer
Calgary Herald
Thursday, June 05, 2008
A growing reliance by American refiners on “dirty” oilsands from Canada is poised to become a major issue in the U.S. election campaign, observers on both sides of the border said Wednesday.

Although no new refineries have been built in the Lower 48 states for more than 30 years, proposed capacity expansions to process Alberta oilsands are the equivalent of building 16 new heavy oil facilities, a new report by Canadian and American environmentalists said.

“The U.S. oil refining industry is contemplating an enormous investment and deep commitment to perpetuating U.S. and global reliance on oil as our primary source of energy into the next generation and beyond, and tying that reliance to even dirtier and more destructive sources of oil,” Ben Wakefield, a senior attorney and principal report author with the Washington-based Environmental Integrity Project, said at a news conference Wednesday.
Environmentalists are pinning their hopes on a change in the U.S. government — and especially the ascension of Democratic nominee Barack Obama — to stem what they see as a rising tide of pollution from Alberta.

But Canadian officials said regardless of who wins the election, Alberta oil will continue to be an important source of supply south of the border. Canada regularly alternates among Saudi Arabia, Venezuela and Mexico as the No. 1 exporter to the world’s largest oil consumer.

“I’m not going to speculate on whoever the American public picks as their leader,” said Pierre Alvarez, president of the Canadian Association of Petroleum Producers. “But the global barrel is getting heavier.

“With high oil prices, the energy issue is back on the political radar in a way that it hasn’t been in a long time. The debate is going to be very real and Canada is going to be a part of it, no question.”

No matter who wins in November, there’s a stronger chance the American government will adopt a “low carbon fuel standard” that could penalize Canadian oilsands imports, said Matt Price, the Alberta-British Columbia project manager for Environmental Defence Canada.

Although he stressed his group is non-partisan and makes no endorsement of candidates, Price admitted environmental groups feel a particular affinity for Obama to champion their environmental causes.

“He’s introduced into the Senate basically what Arnold (Schwarzenegger) has proposed in California,” he said.

However, Price noted that Republican contender John McCain has also expressed concerns over global warming and America’s dependence on fossil fuels.

“You could see this come to pass no matter who wins the White House.
Regardless of whoever wins in November, there will be a major shift in the status quo.”

According to the findings of the report, approximately 1.1 million barrels per day (bpd) of 1.6 million bpd of planned U.S. refinery expansions are devoted to processing heavier crude from the oilsands.

In addition to new capacity, more than 800,000 bpd of existing conventional capacity is planned to be switched over to process heavy oil and bitumen, bumping the total increase to 1.9 million bpd.
Meanwhile, conventional crude processing is undergoing a net decrease of over 300,000 bpd.
 Among the measures proposed to stem the tide, the groups are urging U.S. authorities to implement tougher standards for the growing network of pipelines needed to feed the refinery expansions.
But Brenda Kenny, the incoming director of the Canadian Energy Pipeline Association, said the increased market penetration of Canadian heavy oil speaks to the integrated nature of the North American energy economy.
 Although she predicted a rancorous debate in the U.S., Kenny said it’s unlikely to result in major changes on either side of the border.
“Keep in mind that it’s all electioneering in a heated environment, which does not often translate into good policy,” she said.

“Canadian supplies will remain a centrepoint of Canada-U.S. trade. The idea that the U.S. would go cold turkey on Canadian oil is, in my opinion, far-fetched.”

Denise Hamsher, Enbridge Inc.’s U.S. director of public and regulatory affairs based in Wisconsin, said three-quarters of the oil destined for markets in the Midwestern states is coming from Canada. She said Americans are generally thankful to have access to Canadian crude supplies.

“There’s an appreciation that this will reduce our reliance on non-North American crude. Secure, reliable sources — that message really resonates with the folks we deal with on a daily basis,” she said.

“That doesn’t mean there isn’t a lot of scrutiny, but I think that message overcomes some of the environmental impact flags.”
© The Calgary Herald 2008