There is a fundamental question in Canada‘s tar sands debates: how fast and hard should expansion go? Bitumen producers and pipeline companies point to a tripling of production to 3 million barrels per day (bll/d) by 2015. Unless we have pipelines in place such as Keystone, the Alberta Clipper and Gateway, the result will be “shut-in” oil. In market terms that could mean more bitumen for sale than can be practically shipped resulting in a lower price. According to the industry, that is a matter of public interest that Canada’s National Energy Board cannot allow to take place.
Tripling production by 2015 raises a host of issues. Will there be upgrading and refining facilities in place in Canada before long term export contracts commit the bitumen to US upgraders? There are questions of natural gas supply, fresh water, and social issues like providing housing and health care for permanent and transient workers. Perhaps most important, will the rate of expansion allow Canada to meet Kyoto and post-Kyoto climate change commitments? Daunting questions all, and exactly the kind that CEP is arguing that the NEB should ask in order to determine Canada’s public interest.
Now what if the governments of Canada and the United States, and the major oil and pipeline companies, were getting together to plan not a tripling, but a five-fold increase in tar sands production over the next 25 years? Needless to say, to accomplish this ambitious target there would be recommendations for everyone in the industry, government and regulatory bodies. But social and environmental issues like jobs and greenhouse gasses would have to be excluded from the recommendations. That is exactly what happened in Houston, Texas in January, 2006 under the auspices of the Security and Prosperity Partnership (SPP).
The SPP is the continental integration model to recast NAFTA in terms of U.S. security needs. Its annual meeting is happening next week in Montebello, Quebec behind the usual barbed wire and tear gas security to keep George Bush, Stephen Harper and Felipe Calderon from suffering the indignity of actually seeing protesters. If you are not already well briefed on the SPP and the Montebello meeting, you can check it out at the Council of Canadians at http://www.canadians.org.
The SPP looms over Canadian energy policy because of a commitment from Prime Minister Harper to work within the SPP to deepen continental integration of energy supply. However, the SPP merely incorporated an already existing organization established 4 years earlier by Jean Chrétien and George Bush - the North American Working Energy Working Group. This public-private organization was a meeting point for government and industry officials on energy supply, with four expert sub groups. When the SPP incorporated the NAEWG, it added five more expert sub groups - notably the Oil Sands Expert Group, which convened the workshop in Houston.
The workshop produced an impressive 90 page report full of information on the tar sands and markets. The report discusses what it would take to facilitate 5 million bll/d from the tar sands and the need to “streamline” pipeline approvals to bring that product to US markets. The gathering included oil and pipeline companies, the US Department of Energy and 10 federal government and Alberta government policy bureaucrats, including the chief economist from Alberta’s Energy and Utility Board and the Director of the Oil Division at NRCan. You can read the report at http://www.rqic.alternatives.ca/psp/os_spp_wwr.pdf
Two weeks ago, the three SPP energy ministers - Canada’s Gary Lunn, the US’ Samuel Bodman and Mexico’s Georgina Kessel met in Vancouver in advance of the “three Amigo” summit in Montebello. According to reports in the Globe and Mail and Petroleum News Lunn pressed Bodman for speedier pipeline approvals in US state regulatory bodies for the Keystone and Enbridge pipelines currently before Canada’s NEB. “Our goal is to cut approval time in half,” Lunn is quoted. http://www.petroleumnews.com/pdfarch/527949191.pdf
Needless to say, none of this has any impact on our National Energy Board which is carefully examining various pipeline bitumen-export proposals to see if they measure up to Canada’s public interest.
Sarcasm aside, it is more than evident that our Conservative government’s participation in the SPP has cast a geo-political continental shadow over the emerging Canadian debate on the oil sands, bitumen exports and Canadian energy security. The SPP and the NAEWG agenda, in fact, goes well beyond oil sands expansion and includes cross border electricity transmission and a plan to redress our dwindling natural gas resources with a network of Liquid Natural Gas terminals on the Atlantic and Pacific coasts.
This Saturday, energy workers unions and some social partners from Canada, the United States and Mexico will hold their own summit in Montreal to better understand the SPP and to emphasize the energy needs of citizens in each country. Next week a report on this first-ever meeting of North American oil, gas and electricity workers.