Defense bill passed by House resolves Canadian oil sands issue, Bingaman says

The Senate's Democratic energy leader does not expect a provision of the 2007 Energy Independence and Security Act to restrict sales of oil produced from Canadian oil sands to US refiners, he told a Canadian-US business conference.

Jeff Bingaman (D-N.M.), who chairs the Senate Energy and Natural Resources Committee, said that the US House on May 22 adopted a clarifying amendment offered by Rep. Dan Boren (D-Okla.) to the fiscal 2009 Department of Defense budget which establishes that EISA Section 526 does not apply to already available fuels.

While he did not presume to speak for Rep. Henry Waxman (D-Calif.), who promoted the provision's addition to the 2007 energy bill, Bingaman said that he understood Waxman intended it to keep the federal government from using its substantial purchasing power to promote development of alternative fuels with more greenhouse gases than current conventional resources.

"Producing oil from oil sands is not a new technology," Bingaman observed, adding that he hopes the Senate will consider adopting a similar amendment as it considers its own DOD appropriations bill.

He said that a broader discussion of oil sands' carbon footprint will be needed even though the Section 526 question could be resolved soon. "Canada's oil exports to the United States will increasingly require US exports of lighter hydrocarbons to Canada so heavier oil which is produced there can be diluted," Bingaman said.

'Very abbreviated' debate

The Senate's global climate change debate a week earlier was "very abbreviated" because it was restricted to two procedural votes, he continued. Bingaman said that he was disappointed it did not go farther since a robust cap-and-trade program with emissions allowances would force the US industrial base to reconfigure its operations.

Democrats decided not to begin a fuller debate because they expected the Bush administration to veto any climate change bill they produced, he said. "One problem is that nearly half of Congress has signed pledges in granite, as part of a political ritual, not to increase taxes," he said during a breakfast address to the Canadian American Business Council's annual meeting.

The next administration and Congress have their best chance to make significant climate policy changes in their first two years, he indicated. "My hope is that the new president, whether it's Sen. [Barack] Obama or Sen. [John] McCain, will take ownership of this issue and proposed something to Congress. That would provide a good starting point," Bingaman said.

The two countries face similar natural gas challenges since their easier onshore reserves have been developed and are rapidly declining, their governments are facing growing pressure from surface land owners in split-estate situations, and development of their major stranded gas resources will require major pipeline investments, he said.

Both countries also need to address energy infrastructure needs, according to Bingaman. "Prices for constructing pipelines are rising around the world because of higher steel costs, particularly for specialty grades used over long distances and at greater depths," he said. The manufacturing base for specialized components needs to grow and retiring energy professionals need to be replaced, he added.

Contact Nick Snow at nicks@pennwell.com

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