Political forces are aligning in Canada toward a vital debottlenecking of the oil sands.
With the border crossing of the Keystone XL pipeline awaiting approval that probably won’t come from the US government, provincial and federal governments in Canada have made progress on alternatives.
Without new capacity to move petroleum out of landlocked Alberta, production will face physical constraint within a couple of years. Rail and trucking capacities have increased impressively and offer immediate relief and flexibility. But they’re costlier ways to move oil than pipelines are. Because extra transportation costs erode the wellhead value of production, operators in the bountiful oil sands need more pipelines.
Companies have made two proposals for pipelines between Alberta and the Pacific. Both would transit British Columbia, and both face environmental opposition. Both proposals also have been hurt by a political dispute between provincial leaders.
Liberal Premier Christy Clark of British Columbia and Progressive Conservative Premier Alison Redford of Alberta have been at odds over the pipelines Albertan producers need and BC environmentalists oppose. Redford especially objects to Clark’s demand that British Columbians share the wealth generated by bitumen production in proportion to risks posed by pipelines crossing their province.
On Oct. 15, the premiers reported progress of a working group formed earlier to negotiate the issues. They announced a timeline leading to publication of a final report and action plan by next Dec. 31.
The next day, the “throne speech,” which outlines the federal government’s goals for the next session of Parliament, called for action.
“For Canadians to benefit fully from our natural resources, we must be able to sell them,” said the speech, read in Senate chambers by Governor General David Johnston. “A lack of key infrastructure threatens to strand these resources at a time when global demand for Canadian energy is soaring. We must seize this moment.”
These developments are political, of course. But they’re no more political than persistent inaction by the US on Keystone XL—and much more constructive.
(This article appeared first at www.ogj.com on Oct. 18, 2013; author’s e-mail: [email protected])