By Jeffrey Jones
Canada’s federal and provincial governments will promote two oil export pipelines as they develop a national energy strategy, despite opposition to the projects by environmental groups and native communities, energy ministers said on Tuesday.
At the end of a two-day meeting among all the nation’s energy ministers, the representatives from Ottawa and Alberta said Enbridge Inc’s $5.4 billion Northern Gateway pipeline to the West Coast and TransCanada Corp’s US$7 billion Keystone XL U.S. pipeline are key to expanding markets for growing oil sands output.
Joe Oliver, the federal natural resources minister, said opening up a new supply route to Asian markets, which Northern Gateway would serve, will cut Canada’s reliance on the United States, virtually the only buyer of its crude, and bring benefits for the economy as a whole.
“Asia is growing — China in particular is now the largest consumer of energy in the world — and so we are supportive specifically of the Gateway project because it will open up exports to Asia and to China,” Oliver told reporters.
The project is currently before regulators. Several British Columbia aboriginal groups have said they will not agree to have it extend through their lands, despite Enbridge’s offers of an equity stake and community development spending.
The pipeline would move more than half a million barrels a day to the Pacific port of Kitimat, British Columbia, where it would be loaded onto tankers. Analysts have said that would focus oil exports on higher-priced global markets, increasing returns.
Market expansion is one of five items the ministers agreed to pursue as part of a strategy to help Canada boost its position as a major global energy producer. Others include removing regulatory delays for big projects, improving energy efficiency, collaborating on energy information and advancing smart grid technology for electricity.
The meeting included a tour of the Alberta oil sands.
Alberta Energy Minister Ron Liepert said the governments were not showing favoritism by singling out Northern Gateway. Another company, Kinder Morgan, has proposed an expansion of its Trans Mountain system to the Pacific Coast.
“We have never picked favorites and we will not be picking favorites. We will support any and all projects that will meet the environmental and regulatory standards that are set out for them, because we need to get our product … to tidewater,” Liepert said.
A Joint Review Panel regulatory hearing into Northern Gateway is scheduled to start in January. One environmental group said Oliver’s remarks appeared to be “presupposing an outcome.”
“The support that has been expressed for Northern Gateway, particularly comments that it is in the national interest, is alarming given that pipeline has not undergone the federal environmental review yet,” said Gillian McEachern, climate and energy program manager for Environmental Defence.
Even before it started in earnest, numerous green groups criticized the national energy strategy process for being too focused on high-carbon oil sands and shale gas development and not concentrating enough on renewable energy sources.
Meanwhile, Oliver said the Keystone XL proposal, which would ship Alberta crude to U.S. refineries on the Gulf of Mexico, is good for Canada and the United States. The U.S. State Department is weighing the project in an extended review.
Environmental groups also oppose Keystone XL, but supporters view it as a way for the United States to cut its dependence on imports from the Middle East and other less stable regions.
“When it emerges from the regulator, hopefully with a positive decision, the discussions that we’ve been having with the Obama administration we hope will bear fruit,” Oliver said.