By Bill Mann
These days, Canadians must feel a bit like a guy watching his downstairs neighbours duke it out about how to split up his inheritance. The inheritance is Canada’s huge oil reserves, Americans are the feuding neighbours, and a proposed pipeline expansion from Alberta’s oilfields to Texas refineries and ports is what’s being bitterly fought over in theUnited States.
The 42,000-barrel oil spill on the Yellowstone River in Montana last week didn’t help the prospects of the already embattled Keystone XL pipeline project, which is planned to cross the Yellowstone just a few miles away. The $7 billion project by TransCanada Corp. aims to get Alberta oil-sands crude to deep-water ports for the first time, in Port Arthur, Texas, and it’s deeply entangled in politics, mostly on the American side of the border.
The current Keystone pipeline goes only as far as refineries in Oklahoma and Illinois. The State Department has to approve the Keystone XL pipeline extension, which will bring 700,000 barrels more of diluted bitumen into theU.S. per day. The Environmental Protection Agency said recently — after two spills on the existing Keystone pipeline — that it has new concerns and will conduct a new round of hearings on the proposed 1,700-mile-long oil straw. The EPA says it will have a final decision by the end of the year, and Secretary of State Hillary Clinton will then also weigh in, since the pipeline crosses aU.S. border.
But Republicans in Congress (the drill-baby-drill crowd) are hopping mad and want a bill requiring the Obama administration to make a final decision on Keystone XL by this fall. The Montana oil spill last week, which closed Exxon’s Silvertip pipeline and enraged that state’s governor and also re-energized environmentalists opposed to the new pipeline, makes that trickier.
The new oil spill was a bit like pouring (refined) on an already-blazing fire. Two recent leaks in the existing Keystone pipeline — noted by the EPA in its delay-for-hearings report — haven’t helped, either. Oil is a messy business even in the best of times. Oil from Alberta’s oil sands is even messier, literally and otherwise.
On the (much calmer) Canadian side of the border, Alberta’s energy minister says he’s going to press Prime Minister Stephen Harper’s new majority government to push harder on the Obama administration to OK the Keystone XL.
The proposed pipeline, which has also drawn strong opposition from farmers and residents in Nebraska and South Dakota along its proposed route would more than double the volume of Canadian oil shipped into the United States. Canada is already the largest U.S.oil supplier.
Lefty Democratic Rep. Dennis Kucinich recently compared the diluted bitumen from Alberta’s oil sands to nuclear waste and says a proposed pipeline to Texas would turn the United States into a “sewer” for Canadian oil.
Needless to say, some Canadians, especially Albertans and oil companies, would take issue with that. Alberta’s provincial government, mindful that its black gold is being called the dirtiest oil in the world, recently announced what it called stringent scientific protocols to carefully monitor the environment in the oil sands, which is taking a beating. But Harper and his federales have already said they’ll take over environmental monitoring of the oil patch. Down south, The Wall Street Journal weighed in with an editorial claiming the EPA wants to “scuttle” the pipeline for political reasons.
It’s a mess — and a tough call — with plenty at stake on both sides of the border.
American politicians, mostly Republicans, want a secure energy future (mostly meaning petroleum) and an oil source not linked to the most politically unstable area of the world (meaning the Middle East).
Canada’s sitting on all that oil, but the easy stuff to get at is drying up. And oil sands (or tar sands, depending on your outlook) bitumen oil is messy — and energy and environmentally costly to process.
The Journal editorializes that the EPA and the Obama administration may reject Keystone XL for politics –a move away from petroleum-based oil sources. If that happens, I expect PM Harper, his political hand strengthened by recently gaining a majority in Parliament, to push much harder to get a Canada-only pipeline built from the Alberta oil fields to a deep-water port that will be located inBritish Columbia, just south of the Alaska panhandle.
After all, the oil-friendly Harper has no say in American politics, but much more political juice in Ottawa since the May federal election.
And there’s no doubt that the Chinese, who are calling more of the economic shots these days, would much prefer the B.C. option. It’s a lot cheaper and easier to ship oil directly from B.C. to China than having it go through the Panama Canal.
My hunch is that Keystone may be rejected by Obama and his EPA, and that Harper could end up saying (politely and diplomatically) that he’s tired of dealing with partisan and bitter American politics. He’ll then strike some kind of deal with the numerous First Nations tribes who oppose an Alberta-B.C. pipeline. My Canadian sources tell me that the Canadian government is indeed involved in low-profile but active discussions with the various B.C. tribes.
Considering the money involved from all the Alberta oil that will pass through a new pipeline, this will be the kind of deal that makes tribal casinos look like chump change.
