Jim Letourneau's Blog

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Oil Sands' Strategic Role in the Spotlight

Carolyn Bartholomew, chairwoman of the U.S.-China Economic and Security Review Commission, has a raised concerns about growing Chinese presence in America's “backyard.”  according to The Globe and Mail.

I think that an acquisition like this should raise national security questions both for the government of Canada and for the government of the United States.

This isn't your father's communism. China isn't going to be building a military base in Fort McMurray, they simply want access to resources and they are willing to pay for them. If US energy independence is a goal of the Obama administration, it would be foolhardy to ignore oil sands. Bartholomew's role as chairwoman of the US-China Economic and Security Review Commission doesn't allow much room for strategic thinking. Most of her statements are going to be of the "China bad" variety.

The US Department of Energy (DOE) put out a fact sheet last October (before the election) that outlined how important the oil sands are. Here are a few direct quotes:

  • The Canadian oil sands are critically important to U.S. energy security—and to North American security.

  • The United States cannot produce enough domestic oil to meet domestic demand. So we must rely on stable partners—like Canada—with plentiful hydrocarbon resources.

  • Canada’s proven oil reserves total 179 billion barrels, of which 173 billion barrels are in oil sands reserves, making Canada second only to Saudi Arabia in global oil reserves.

  • 99% of Canada’s crude oil exports are to U.S. markets.

Some of these facts are being ignored by Obama's green team. Canadians realize that they are stuck with a dominant trading partner that is intent on denigrating one of Canada's main economic engines. Stimulus spending and subsidies on steroids will bring help bring new energy sources into use but these are going to have a minor impact for a long period of time. For today, and the next few decades out, the oil sands are an important part of North America's energy mix. Having a second bidder on Canadian oil makes good sense and the construction of the Northern Gateway pipeline to Kitimat, B.C. is a logical response to the current investment climate.

It appears that the US is conflicted when it comes to Canada's oil sands. The National Post's Don Martin says it best -  Use the oil sands or lose them.