A year ago, the U.S. president rejected an application by TransCanada to run a massive pipeline from Alberta to Texas. Canada’s prime minister assured oilsands producers it was just a hiccup; the project would get the green light after the U.S. election.
Three months ago, Americans re-elected Obama. He still hasn’t approved the Keystone XL pipeline.
Last week he pledged to make climate change a higher priority in his second term. “The path toward sustainable energy sources will be long and difficult,” he said in his Jan. 21 inaugural speech. “But America cannot resist this transition; we must lead it.”
Two other shifts in the landscape have occurred:
The U.S. has moved a long way toward energy self-sufficiency. It produces enough natural gas to meet its own needs thanks to hydraulic fracturing (“fracking”). And it is ramping up domestic oil production, thanks to new technologies that have unlocked the “tight oil” trapped in rock formations. Americans won’t be buying nearly as much energy as Harper anticipated.
Ottawa’s backup plan — to export oil to eager overseas buyers — has run aground. There is no way to get Alberta’s bitumen to the Pacific coast. British Columbia won’t provide a transit route. The aboriginal peoples whose territory Enbridge proposes to cross with its Northern Gateway pipeline are even more adamantly opposed to the $6-billion project.
The bottleneck has already driven down the price of Alberta’s tarlike oil. It is now selling at 40-per-cent below the North American benchmark (the West Texas Intermediate price) and 50-per-cent below the global standard (Brent crude price).
Last week Premier Alison Redford warned Albertans the province faces a $6-billion budgetary shortfall because of dwindling royalty payments. Ottawa is feeling the fiscal pain, too. For two years running, Finance Minister Jim Flaherty has had to reduce his revenue projections because of lower-than-expected taxes from the oilpatch.
The bottom line is clear: Canada needs the Keystone XL pipeline more than the U.S. does.
“We’ve made it extremely easy for Obama to say no,” warns Simon Dyer, policy director of the Pembina Institute.
The Edmonton think-tank is not opposed to oilsands development, he stresses. But the rapid pace of expansion and the complete lack of federal regulation over greenhouse gas emissions are sending the wrong signal to the White House. (Alberta has regulations but they’re too weak to provide much protection.)
Dwyer places most of the blame on the prime minister. Unlike Alberta Premier Alison Redford, who is open to ideas to clean up the oilsands, Harper and his natural resources minister, Joe Oliver, are inflaming environmentalists on both sides of the border, thereby validating Canada’s reputation as a producer of “dirty oil.”
Obama is expected to wait until the state department completes its analysis of the environmental impact of the proposed pipeline in April before making a decision.
Keystone has support in the U.S. Congress. Fifty-three senators (out of 100) called for quick approval of the pipeline application last week. The House of Representatives has voted in favour of the project four times in the last two years. And Nebraska Governor Dave Heineman, mollified by TransCanada’s acquiescence to his demand that the pipeline be rerouted around an environmentally sensitive region, has dropped his opposition.
But that won’t be enough to convince Obama to give TransCanada the go-ahead.
Harper could improve the odds, Dyer says, by placing a firm cap on carbon emissions. Redford could do her part by closing Alberta’s coal-fired generators and requiring oilsands producers to adopt cleaner technologies and extraction methods.
Neither will guarantee a yes from the White House. But both would strengthen Canada’s position whatever lies ahead.
Original Article
Source: the star
Author: Carol Goar
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