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Oil squeeze a big concern
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Tags:
trade diversification
Author: Janet Holder
- Executive vice President Western Access
Dated: 9 February 2012
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I’ve said it before and I’ll say it again … I think Northern Gateway is one of, if not THE most important proposed infrastructure projects in Canada today.
That belief was bolstered again when I read in the Globe and Mail about something that serves to underscore what I’ve been saying for some time – Canadian oil producers need another outlet for their oil.
Oil prices for Canadian producers are getting “squeezed” and that’s not a good thing.
It’s not good for energy producers, for the thousands who work in the industry, for communities, for provinces and for the federal government. All of us rely to varying degrees on the viability of our energy sector.
Whether or not the current squeeze is temporary is a matter of debate, but it does underline something very worrisome.
What’s happening? Canada produces a lot of oil. We are also a net-exporter of oil valued at about $50 billion a year.
It has become our most valuable resource and a pillar of our national economy – but there is one catch, virtually all of the oil we export goes to just one market, the U.S.
America is a mature market and demand there isn’t what it once was. Combine that with soaring U.S. oil production, and you get the picture. It’s a potentially dangerous imbalance for Canada.
“On a logistical basis, it points to the vulnerability of having all our eggs in one basket as a nation. It makes more sense to diversify your customer base for crude oil,” Frank King, an analyst with First Energy Capital, says in the Globe.
This imbalance could also see us leave a lot of money on the table. By one estimate, it will cost the energy industry $8 billion a year if Northern Gateway isn’t built. It is already depriving governments of millions in lost royalties and tax revenues every single day.
Northern Gateway would give our energy industry other crucial trade outlets. Booming economies in Asia promise to give Canadians more competitive returns for our resource and shelter us from the vagaries of having a single oil export market.
An Enbridge-commissioned report (which was required of us as part of our regulatory application for Northern Gateway) estimates that this one project would boost Canadian GDP by $270 billion in the first 30 years of operation.
That’s tremendous wealth that would flow through our economy, create jobs and result in higher tax revenues that pay for hospitals, roads, schools – all the things that help make Canada the country it is.
I’m a proud British Columbian and a patriotic Canadian.
And the situation described in the Globe concerns me greatly.
Post your comment
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Northern Gateway, Feb 14th, 2012 (3 months ago)
Hi Randy, thanks for your comment and suggestion.
Ultimately, it’s up to the regulators to make decisions with regards to incident penalties.
No spill is acceptable to Enbridge because our goal is zero incidents. Our number one priority is the safety and integrity of our operations and to prevent all spills, leaks and releases. Since 2002, we have spent approximately $1 billion on our safety and maintenance programs for our Liquids Pipelines systems across North America.
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Northern Gateway, Feb 14th, 2012 (3 months ago)
Hi Shawn, thanks for your comment.
You’re very clearly passionate about your province. Like many British Columbians, you may not be familiar with all of the projects Enbridge engages in. We too see value in renewable energy projects. Did you know that our renewable energy portfolio includes more than 860 megawatts of production? That’s enough to power around 273,000 homes. That power comes from wind, solar and geothermal projects. Renewable energy is a growing part of our business.
Growing the power production and transmission capacity for renewable energy will take time. Until we can transition to renewable energy completely, sustaining our way of life requires the use of oil and gas to heat our homes and fuel for our transportation needs. We take safety and environmental responsibility very seriously at Enbridge. Wherever our operations exist, plans are in place to safeguard the environment against potential adverse effects. If you’d like to know more about our safety planning with regards to Northern Gateway, you’ll find lots of information in the Environmental Responsibility section of this website.
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Northern Gateway, Feb 14th, 2012 (3 months ago)
Hi Dermot, thanks for your question. There’s a great blog discussion happening on Andrew Leach’s blog right now on this very topic. Andrew is a professor of energy economics at the University of Alberta. You can read his post on this subject here: http://andrewleach.ca/oilsands/what-would-it-take-for-eastern-canada-to-run-on-western-canadian-oil/
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Shawn Kokko , Feb 12th, 2012 (3 months ago)
Only when the last tree dies, the last river poisened, and the last fish caught will your realize that you can't eat money. Try thinking of a better cleaner alternative. We Canadians where once a part of Kyoto Protocol against global warming. Today the tar sands stand as the largest single polluter. I love my British Columbia and will help do what ever it takes to keep it lush and green!
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Dermot Hikisch, Feb 10th, 2012 (3 months ago)
Canada is a net exporter of unconventional crude and a net importer of converntional crude. Why export a low value resource and create a few jobs while we could establish the infrastructure to refine within Canada and create 10s of thousands of new jobs within our country?
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Randy, Feb 10th, 2012 (3 months ago)
I am not in favor of this project. Having lived in Ft.McMurray for the last 30 some years I have seen the damage & the time frames required for the enviroment to recover. The risk outweights the advantage. However we probably cannot stop this delevopment. So the trick is to make sure that the consequences are so profound as to ensure that one bucket of oil or one barrel of oil is never spilt. Should this happen there will be no fines or legal charges, the shipment of oil will simply be stopped for 1 year. that way everyone looses their cash flow. This will ensure maintenance & requlation never take a back seat to production.
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