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The dreams are coming fast and furious, as are obstacles and risks
Every nation needs dreams and dreamers. For some reason Canada is suddenly awash in grand projects and industrial schemes, the product of a new national dream created some seven years ago by Prime Minister Stephen Harper.
In a 2006 speech, Mr. Harper floated the idea that Canada should aspire to become a global energy superpower. We are witnessing, he said, “Canada’s emergence as a global energy powerhouse — the emerging ‘energy superpower’ our government intends to build.” Based on the oil sands, the project involves “Brobdingnagian technology and an army of skilled workers. In short, it is an enterprise of epic proportions, akin to the building of the pyramids or China’s Great Wall. Only bigger.”
The energy pyramid schemes are now coming fast and furious, with industrialists, bankers and others talking up pipelines, ports and industrial installations from coast to coast. Also coming just as fast, however, are signals, obstacles and indicators that suggest the grand megaprojects and pipeline proposals run grave risks of becoming pipe dreams.
As the Financial Post’s Claudia Cattaneo notes, the death of Hugo Chavez could trigger a return to more normalized U.S./Venezuela relations and a return of large flows of Venezuelan oil into the United States, oil that could displace Canadian production. (See also the accompanying article by Ryan W. Lijdsman.)
At the same time, the U.S. is in the midst of a major oil and gas revival brought on by innovation in extraction technologies. A report this week from Daniel Yergin and others at IHS said the U.S. could be producing four million barrels a day in new so-called “tight oil,” putting the United States on a par with Saudi Arabia and Russia as oil producers. The price for much of that new oil, it said, could be as low as US$60 a barrel.
Such outlooks do not augur well for the new national dreams that are rising across Canada, dreams that trump the 19th-century railroad projects. In those dreams, scores of pipelines, ports, extraction projects, refineries, rail lines and tanker routes are sprawled across the land, from Prince Rupert in B.C. to Saint John in New Brunswick. Cabinet ministers are talking them up, bankers are pushing expansion, economists are touting the benefits in jobs, imaginations are fired up.
On Wednesday, West Coast newspaper magnate David Black announced he had lined up big-name financing — including the Swiss-based Oppenheimer Investments — to build a $25-billion, 550,000 barrel a day oil refinery and tanker project at Kitimat, B.C. If built, it would be the biggest refinery in Canada. The fact that the refinery will have to be supplied with oil through the highly contentious Northern Gateway pipeline is just one of many obstacles to Mr. Black’s plan.
Meanwhile, at the Vancouver-based Asia Pacific Foundation, also on Wednesday, a couple of consultants — Boston Consulting’s George Stalk and York University professor Charles McMillian — produced a grand strategy paper calling for a massive infrastructure megaproject aimed at making Canada the “North American Gateway” for a flow of goods and resources from a giant port in Prince Rupert, B.C.
For the rest of this article, please go to the National Post website: http://opinion.financialpost.com/2013/03/06/terence-corcoran-canadas-energy-superpower-dreams/