CEP has submitted an appeal to the federal cabinet over the Keystone Pipeline decision. If you are interested in these issues, it is a must-read document that sets out the case of why Canada should get a grip over oil and gas energy policy. You can download the document from CEP blog site.

The context for this appeal is that National Energy Board decisions must be approved by the federal cabinet before they take effect. As well they should, given the extraordinary fact that the NEB is sleep walking through the most turbulent period in Canadian energy policy in the past several decades. The Board’s long serving chair and CEO, Ken Vollman, retired last April, and the Vice Chair, Gaétan Caron has been filling in since then.

The CEP strategy is to use the Keystone decision to provoke a debate on Canadian oil and gas policy in the federal parliament’s Standing Committee on Natural Resources. Because Harper adjourned the last Parliament, the committee will be reappointed over the coming days.

However the main event in oil and gas policy at the moment is the Alberta Royalty Review. Much has been said about the $2 billion annually that Alberta is losing because of ridiculously low royalties. But the Royalty Review Report also offered some very important points about the bitumen-export model and the so-called “market decisions” that is driving it. Here are some of the key points that the Review Report made:

·       The oil sands bitumen market is a “thinly traded market with relatively few participants, which is not transparent.” A lot of bitumen is traded internally between companies and the Royalty Review was not convinced that real value is reflected. In fact, they said “there is no observable market price” for bitumen.
·       “Alberta will become primarily an exporter of low value bitumen while the ‘value added’ to refine and upgrade will take place primarily outside Alberta.”
·       The future of the industry “is a question of vision as well as economics…”
·       The report recommends an “upgrader royalty credit” equal to 5% of capital costs for a producer to switch from bitumen exports to value added upgrading.

This report can be added to the CEP Appeal to Cabinet as required reading for Gaétan Caron, our interim NEB chair, and for Members of Parliament. Time is running out on the opportunity for an oil and gas policy that serves Canadian interests.