An “Alberta Clipper” is an intense low pressure system that moves swiftly from the Rocky Mountain foothills diagonally into the US central and mid-west. There are all kinds of legends and stories about the winds and dry snow that the clipper carries across the border.

In the boardrooms of TransCanada Pipeline/Keystone, they have to be wondering if a version of the clipper isn’t about to bury them also. This Alberta Clipper is the tar sand - bitumen export rival to Keystone by pipeline giant Enbridge Ltd. that is now filed at the National Energy Board. Interveners, including CEP and the Alberta Federation of Labour, last week signed on for this round of hearings scheduled to begin in November.

Officially, TCPL-Keystone and Enbridge say they are not competing. But the majority view among analysts is that the two proposals are in direct competition. As we mentioned last week, if the Keystone pipeline is operational in 2009 as it plans, it will have the capacity of taking almost all of the available bitumen at that time to US upgraders - abandonning the potential to create 18,000 new jobs in value-added Canadian processing . Enbridge’s Alberta Clipper pipeline is proposed for 2010 with a capacity roughly equal to Keystone at 450,000 bpd - and the potential to expand to 800,000. The combined impact may deal a knock-out blow to a robust and sustainable Canadian energy economy.

But Enbridge believes that its new pipeline has an advantage because of its larger, more established oil pipeline system and its partnership with ExxonMobil in the United States where the two companies are re-drawing the oil supply map of North America. Through reversals of existing pipe, the two companies last year began to move some modest quantities of Canadian crude into Texas. They are now in the planning stage for a major new pipeline from Illinois to Houston to bring much larger volumes of Canadian heavy crude to Exxon’s giant gulf refinery.

Another lynchpin to the Clipper's strategy is the subject of another public hearing before the National Energy Board which will begin next week in Calgary. Enbridge’s “Southern Lights” project seeks to bring “diluents” back to Canada from the Chicago area. Diluents are light hydrocarbons, including some natural gas liquids, that are mixed with bitumen to move the raw tar sands output down a pipeline. The blend of diluent and bitumen is known as “Dilbit”, of which 15 to 30% is diluent. Enbridge is confident that its Dilbit blend is the preferred option for a bitumen exporter because it moves the maximum amount of butimen at a cost advantage.

“SynBit” is an alternative blend for moving bitumen that Keystone/ConocoPhillips will use. It is a 50-50 blend of tar and synthetic crude oil (SCO). Arguably, it provides a market for Canadian SCO whereas DilBit requires no upgrading at all.

Until now, there just hasn’t been enough diluent available to ship large amounts of bitumen. That’s why industry sources have told CEP that the low profile Southern Lights project is key to the whole heavy crude economic model and is nothing short of a bitumen export machine.

The jury is out on whether the tar sands will expand fast enough to support both the Keystone and Enbridge proposals. Certainly the tens of billions that are being invested in these pipeline and upgrader / refinery projects in the United States create enormous pressure in this country to ensure the bitumen export machine is in place.

When the NEB hearing on Southern Lights opens August 13, it appears that labour and some First Nations groups concerned with pipeline routes will again be the only dissenting voices before the “pathetic” National Energy Board, as Edmonton Sun columnist Neil Waugh called it last week. (Dunford’s Legacy Haunts Ed - July 27, 2007). CEP’s lawyer Steven Shrybman will ask questions that this country’s policy makers are not asking, and seem completely uninterested in.

Meanwhile, US oil interests are already reorganizing around Canadian supply. As the Wall Street Journal reported last month (Russell Gold, Oil Companies Stake Future on Canada, July 11, 2007), with ExxonMobil and ConocoPhillips exiting Venezuela, US “energy independence is being redefined so that Canadian crude isn't really viewed as an import.”

Not an import anymore - but continental energy security. That was the message from the oil ministers of Mexico, the US and Canada who met in Victoria BC to discuss the expediting of pipelines in preparation for the Security and Prosperity Partnership (SPP) summit later this month in Montebello, Québec. Next week, we will take a look at the SPP and bitumen export machine.