Thoughts on the Keystone Pipeline
Texas refineries are geared up for heavy crude from Venezuela. For obvious reasons that situation isn't ideal. A solution to that problem is the Keystone Pipeline. This commentary from Eric Newell is diplomatic but realistic as to Canada's options.
Keystone XL Pipeline important for both Canadian and U.S. economies
By Eric Newell
Climate Change and Emissions Management (CCEMC) Corporation
The world is hungry for all forms of energy. As global populations and economies grow the appetite for energy grows as well.
Canada has the third largest proven oil reserves in the world. We’re the only non-OPEC country among the top five countries with large oil reserves. Most of our oil goes south to the United States, and we are their largest foreign supplier.
The bulk of Canada’s oil is produced from the oil sands in Alberta and it has, increasingly become a target for criticism. Many of us are surprised by both the tone and the volume of the outcry; after all, we are doing a great deal right in Alberta.
Alberta first in many environment initiatives
It was Alberta which produced the first Climate Change Action Plan in Canada, back in 2002. It was the first jurisdiction in North America to legislate mandatory greenhouse gas emission reductions across all industrial sectors in 2007. It was the first province in Canada to introduce an emissions levy for large emitters. And it was the first to set a price on carbon, at $15 per tonne.
The Climate Change and Emissions Management (CCEMC) Corporation is responsible for allocating the funds collected from large emitters to clean technology projects. To date the CCEMC has allocated funds to 27 projects valued at more than $632 million. All of these projects are part of a larger effort to help move us to a lower carbon future.
In fact, Alberta is investing more in climate related technology funds than any other province in Canada.
The province is also investing more in carbon capture and storage technology on a per capita basis than any other jurisdiction in the world. Since the 1990s, Alberta has been exploring all facets of storing carbon dioxide - from running small pilots to large-scale demonstration projects, and in 2008, the province committed $2 billion to fund large scale CCS projects.
Alberta is also actively developing a world-class environmental monitoring, evaluation and reporting system forAlberta’s oil sands.
This work is especially important given the challenges ahead and growing demand for fossil fuels. Alberta is well positioned to meet growing energy demands and to do so in a responsible way.
According to a story in the Globe and Mail, some believe that by 2015 refineries in the U.S. mid-west that process Alberta crude will be at capacity. The Canadian Association of Petroleum Producers expects existing pipelines to be full by 2017 or 2018.
Simply put, Canada needs access to more refineries that can process crude from the oil sands and we need access to more markets.
There is growing demand for oil, even though the pace of growth is slowing in the U.S. and in China, the largest emerging market. The United States still consumes more oil than any other nation in the world. It imported 11 million barrels of oil a day in 2008, a figure that the White House hopes to cut by one-third by 2025.
Energy and fuel efficiency programs, conservation and clean technology will reduce reliance on fossil fuels; however, the International Energy Agency still sees oil demand rising this year and next by more than one million barrels per day, based on current projections from the International Monetary Fund for GDP growth.
Previous estimates indicated that primary energy demand is projected to increase by about 36 per cent worldwide between 2008 and 2035, and according to the 2009 World Energy Outlook, by 2030, 80 per cent of this demand growth would be met by fossil fuels. While economic uncertainty brings estimates into question, it seems safe to assume that fossil fuels will continue to play an important role worldwide for years to come.
The need for new markets for Canadian oil becomes more obvious as concerns mount about the Keystone XL Pipeline. Keystone XL would deliver oil from the Alberta oil sands south to Gulf Coast refineries.
The impact of the pipeline not going ahead could be significant.
If Keystone does not proceed, the U.S. will fail to realize significant economic benefits. In the U.S., where economic concerns continue to dominate headlines, TransCanada has indicated Keystone XL would impact the U.S. economy to the tune of $20 billion.
Once it is up and running, states along the route will receive $5.2 billion in property taxes during the operating life of the pipeline. The pipeline is also expected to provide more than 20,000 manufacturing and construction jobs.
An inability to export a growing supply of bitumen presents economic concerns for Canada as well. From 2010 to 2035, the estimated investments, reinvestments and revenue from the oil sands will impact Canada’s GDP to the tune of $2,283 billion, based on a recent CERI study. If Keystone XL proceeds, western Canada’s total pipeline capacity would expand by 700,000 barrels per day. In that scenario, total Canadian GDP impact would be about another $633 billion over 25 years.
Alberta will continue to seek new markets
These are just some of the reasons that these pipelines are important both to Canada and to the United States. Even in the face of uncertainty, however, it remains clear that Alberta will continue to seek new markets, and to strengthen its relationship with our largest customer, the United States. It will also continue to be a leader in clean technology and help Canada transition to a lower carbon future.
Eric Newell is chair of the Climate Change and Emissions Management (CCEMC) Corporation.
Name: Celia Sollows
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