Canada Oil Sands Help U.S. Energy Security
Mon Oct 12, 2009 6:23pm EDT
LONDON (Reuters) – Canadian oil sands are vital to North America’s energy security and are being developed in an environmentally responsible way, Canadian Natural Resources Minister Lisa Raitt said in an interview.
Several U.S. states are considering introducing low carbon fuel standards which would make fuels that emit the highest levels of climate-warming carbon dioxide more expensive.
U.S. President Barack Obama has expressed support for the idea but his administration has not taken a tough stance against carbon-intensive Canadian oil sands.
“Canada’s oil sands are an incredibly important part of energy security for the United States,” Raitt told Reuters at a carbon capture and storage (CCS) conference in London.
“If you don’t purchase from Canada, who are you going to purchase from? It’s going to be more reliance on OPEC nations,” she said.
With an estimated reserve of 173 billion barrels, Canadian oil sands are the largest source of crude oil outside the Middle East. But development of Alberta’s huge reserves requires open pit mines and carbon-spewing processing plants, placing producers at a disadvantage under any fuel standard that rewards low carbon sources.
Last week, the Canadian and Alberta governments promised C$865 million ($823 million) to help oil major Royal Dutch Shell Plc (RDSa.L) develop carbon capture and storage technology to trap the harmful gas at its oil sands processing plant.
“The government will be involved in the promotion of the oil sands … it is a great asset, it is imperative to energy security in North America and it is being developed in a responsible manner and will continue to do so,” Raitt said.
“We are very close to the province of Alberta in that outreach program. So we are here in London doing it … and certainly I will be engaging with the United States as well.”
Raitt said the two governments were working together to address environmental concerns with oil sands and coal-fired power stations with CCS technology.
After backing away from the Kyoto agreement signed by a former Liberal government, arguing the sharp cuts required would do too much damage to Canada’s economy, the Conservative government has pledged to cut Canada’s carbon emissions by 20 percent from 2006 levels by 2020.
“We are leading the way on carbon capture and storage technology and funding of real demonstration projects to remove greenhouse gases from the use of coal and the use of oil and gas, recognizing as well the importance of energy efficiency and renewables,” Raitt said.
CHINA INTEREST
In August, PetroChina (PTR.N) agreed to pay C$1.9 billion for a 60 percent stake in two planned Canadian oil sands projects.
Current regulations call for an automatic review of any foreign purchase of Canadian assets worth more than C$312 million and allow the government to block any investment that would adversely affect national security.
Despite the importance of its oil sands for energy security, the Canadian government said last month it would not introduce further barriers to investing in the country.
“We are a trading nation,” Raitt said when asked whether the government would take a tougher stance on future bids for its energy assets.
“We are very cognizant of the fact that if we want to trade and invest in other countries, we have to allow that trade and investment to happen in ours. However, it has got to be done within the corporate rules of the Canadian government.”
State-run Atomic Energy of Canada Ltd (AECL) is building nuclear reactors in China and hopes to win more contracts.
NUCLEAR AMBITIONS
Raitt said she was still waiting for investment bankers N.M. Rothschild & Sons to deliver a restructuring plan for AECL aimed at boosting its capacity to supply nuclear reactors to a growing global market.
AECL could be split into reactor building and research units, a decision the government expects to make when the report comes comes back this fall.
“To be able to be a vendor of nuclear reactors in the world and be able to build nuclear reactors in the world you have to have a very high degree of focus on that line of business,” Raitt said.
“We also need capacity to deal with something as large as selling nuclear reactors and we are welcoming to investment and equity to help us do that and be an international player.”
