Through the Wire

Obama’s Keystone Denial Prompts Canada to Look to China Sales

January 19, 2012
| Energy
| Asia and the Pacific, The Americas

Jan. 19 (Bloomberg) -- President Barack Obama’s decision yesterday to reject a permit for TransCanada Corp.’s Keystone XL oil pipeline may prompt Canada to turn to China for oil exports.

Prime Minister Stephen Harper, in a telephone call yesterday, told Obama “Canada will continue to work to diversify its energy exports,” according to details provided by Harper’s office. Canadian Natural Resource Minister Joe Oliver said relying less on the U.S. would help strengthen the country’s “financial security.”

The “decision by the Obama administration underlines the importance of diversifying and expanding our markets, including the growing Asian market,” Oliver told reporters in Ottawa.

Currently, 99 percent of Canada’s crude exports go to the U.S., a figure that Harper wants to reduce in his bid to make Canada a “superpower” in global energy markets.

Canada accounts for more than 90 percent of all proven reserves outside the Organization of Petroleum Exporting Countries, according to data compiled in the BP Statistical Review of World Energy. Most of Canada’s crude is produced from oil-sands deposits in the landlocked province of Alberta, where output is expected to double over the next eight years, according to the Canadian Association of Petroleum Producers.

Harper “expressed his profound disappointment with the news,” according to the statement, which added that Obama told Harper the rejection was not based on the project’s merit and that the company is free to re-apply.

Proposed Enbridge Pipeline

Canada this month began hearings on a proposed pipeline by Enbridge Inc. to move crude from Alberta’s oil sands to British Columbia’s coast, where it could be shipped to Asian markets.

Environmentalists and Canadian opposition lawmakers welcomed the Obama administration’s decision. Megan Leslie, a lawmaker for the opposition New Democratic Party, said the Keystone pipeline project was harmful to Canada’s energy security.

“What I’m opposed to is continuing the unchecked expansion of the oil sands,” Leslie said by telephone.

Enbridge’s pipeline may now become the new flashpoint between Harper and the opposition. Harper has said building the capacity to sell the country’s oil to Asian markets is in the national interest, and the government will review regulatory- approval rules for new energy projects so they can be done more quickly. Harper has also said he will look more closely into complaints that “foreign money” is being used to overload the regulatory process.

‘Cannot be Hijacked’

“We have to have processes in Canada that come to a decision in a reasonable amount of time, and processes that cannot be hijacked,” Harper said at a press conference Jan. 6 in Edmonton.

The Keystone decision is the latest of several U.S. moves that have irked Canadian policy makers. Canada objected to “Buy American” provisions in the Obama administration’s $447 billion jobs bill that was blocked by Republicans in Congress, as well as the restoration of a $5.50 fee on Canadian travelers arriving in the U.S. by plane or ship.

Approval of Keystone is a “no-brainer,” Harper said in a Sept. 21 interview with Bloomberg.

Yesterday’s rejection “certainly introduces new uncertainties into the economic relationship,” said David Pumphrey, deputy director of the energy and national security program at the Center for Strategic and International Studies in Washington. “This is a cornerstone of economic development for the country.”

Creating 20,000 Jobs

The denial came before a Feb. 21 deadline set by Congress after Obama postponed a decision in November. TransCanada said the 1,661-mile (2,673-kilometer) project would carry 700,000 barrels of crude a day from Alberta’s oil sands to refineries on the U.S. Gulf coast, crossing six U.S. states and creating 20,000 jobs.

“I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy,” Obama said today in a statement. “We will continue to look for new ways to partner with the oil and gas industry to increase our energy security.”

Canadian policy makers said they remain optimistic TransCanada will eventually be able to proceed.

Alberta Premier Alison Redford said in a press conference in Edmonton that it is still “entirely possible” the pipeline will be built and said it was good news that TransCanada planned to apply again.

Canada will continue to support TransCanada Corp.’s plans to build the Keystone XL pipeline, Canadian Foreign Minister John Baird said, adding that it is in the best interests of both Canada and the United States.

“We strongly believe that Keystone’s in the best interests of both countries,” he said. “We’ll continue to be an active supporter of the project.”

--With assistance from Andrew Mayeda and Greg Quinn in Ottawa . Editors: John Simpson, Paul Badertscher

 

Login or Create New Account
Email Address:
Password:
New to LIGNET? Create New Account
GET FREE Intelligence Reports

LIGNET provides you with actionable intelligence and in-depth analyses from seasoned insiders including senior CIA officials, presidential advisors, ambassadors, and more.

 
Sign Up for
FREE Intelligence Reports!
 
 
Join Now
Already have an account?
Click here to log in.

 
Join Now
Knowledge is Power
Only if You Access it!
Upgrade to a full access account and get the official CIA World Fact Book 2014 FREE!
Upgrade Now
FREE CIA World Factbook 2013
 
 
What is LIGNET?
Powered by Newsmax
LIGNET is registered in the U.S. Patent and Trademark Office. Langley Intelligence Group Network is registered in the U.S. Patent and Trademark Office.