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If U.S. President Obama rejects the Keystone XL in 2014 – or punts it to past his term ending in 2016 – Canada will be hurt demonstrably. Canadians will be bewildered as to how this one single pipeline project became the whipping boy for an environmental movement intent on achieving a carbon-less while GHG emissions are accelerating with emerging country growth.
Looking back, it will be seen partly as the industry’s fault for falling into a trap nicely set by President Obama when he declared that he would support the project if it did not increase greenhouse gases. The industry response – quickly picked up in the media – was that Canada will be able to transport its oil anyway as alternative routes are available. Thus, one should not expect any increase in GHG emissions if Keystone XL is approved.
This response has made it easier for President Obama to reject Keystone XL in 2014. If other alternatives are available, why should he spend any political capital approving a hot potato (in large part of his own making) that would alienate part of his base during the mid-term election year? If Canadians can export oil anyway, he can reject Keystone XL since it does not matter that the project is approved.
But Keystone XL does matter to Canada, which is probably why Prime Minister Harper said he would not take “no” for an answer. It matters because other feasible alternatives are doable but at a cost to the Canadian economy. This needs to be better understood by the Canadian public.
Western Canadian and other mid-continent production are expected to increase by roughly 3.5 million barrels per day (mbd) although the ultimate production level will depend on pricing and cost, of which the latter has been accelerating in recent years. Various options for transporting oil are being considered but are not yet in place.
Pipeline transport within North America includes Enbridge’s Line 9 reversal, the Gulf Coast Access and Keystone XL, totalling 1.7 mbd. Transport to new markets including two B.C. pipeline projects (Northern Gateway and the Kinder-Morgan expansion) and the Eastern Pipeline would increase transport capacity by over 2 mbd. Rail transport to the mid-continent could add on a potential 500,000 barrel per day capacity.
It is not a question as to whether just one of these alternative routes is needed. Most projects are profitable to provide Canadian oil access to U.S. and international markets. Thus, while Keystone XL might be rejected, the industry would have other options to transport oil to markets if approvals are given.
For the rest of this article, click here: http://opinion.financialpost.com/2013/10/28/jack-mintz-a-quashed-keystone-xl-would-cost-canadians-1-7-billion-a-year/