Canada is, according to the U.S. Energy Administration, the leading source of United States crude oil imports, which average 9.033 million barrels per day (mbpd), with Canada sending 2.666 mbpd southwards to the U.S. Mexico is second with 1.319 mbpd and Saudi Arabia third with 1.107 mbpd.
The EIA notes, “Canada is one of the world’s five largest energy producers and is the principal source of U.S. energy imports. … Just as the United States depends on Canada for much of its energy needs, so is Canada profoundly dependent on the United States as an export market.”
The EIA continues, “Canada is the world’s sixth-largest oil producer, and virtually all of its crude oil exports are directed to U.S. refineries. Long a major onshore and offshore producer of conventional crude, the recent growth in its liquids production has been driven by bitumen and upgraded synthetic crude oil produced from the oil sands of Alberta. The vast majority of Canada’s reserves and the expected future growth in Canada’s liquids production will derive from unconventional resources.” In 1988, Canada and the United States signed a free trade agreement (FTA) that was supposed to ensure Canada would never prevent the U.S. from having first access to its huge oil reserves and bilateral trade, which is now worth more $750 billion annually.
The money quote here is “bitumen and upgraded synthetic crude oil produced from the oil sands of Alberta.” Over the past decade, the Canadian government and foreign companies have poured more than $96 billion into developing Alberta’s oil sands, now a resource with no place currently to go.
Shortly after its inception in 2008, the Keystone XL pipeline to transit Alberta’s oil to U.S. refineries on the Gulf of Mexico seemed a done deal, but the contracts aroused an unexpected storm of opposition, delaying if not killing the deal. In a fit of pique, a year ago Canadian Prime Minister Stephen Harperstated. “We cannot be in a situation where really our one and only energy partner can say no to our energy products. The very fact that a no can be said underscores to our country that we must diversify our energy export markets.”
If not the U.S. then, where might Alberta’s oil sands go?
Two months before threatening Washington Harper told a Chinese audience that if Washington did not want Canadian oil, his government would be happy to sell it to China, telling his audience, “We are an emerging energy superpower. We have abundant supplies of virtually every form of energy. And you know, we want to sell our energy to people who want to buy our energy. It’s that simple.”
The only problem with supplying China would be the construction of the westward flowing Northern Gateway pipeline to the British Columbia, which has already engendered significant indigenous opposition.
So, back to square one.
Convince the Yanks that oil sands are of benefit.
Employ Madison Avenue.
The Harper government has increased its advertising spending on the Alberta tar sands to $16.5 million from 2012 levels of $9 million, ahead of Harper’s visit to New York, in an aggressive new lobbying push for Keystone XL.
Harper is hardly hiding his agenda under a bushel basket, as a statement on his website noted, “I look forward to engaging with (U.S. Council on Foreign Relations) council members on pressing issues including the global economy, trade liberalization, energy and security, as well as issues of importance to Canada and the U.S. such as the Keystone XL pipeline.”
It all comes down to Madison Avenue versus the environment – place your bets.
And Harper better put aside extra money for any possible sales to The European Union, which has branded Canadian oil sands as “dirty,” leading Ottawa to appeal to the World Trade Organization, claiming that the EU’s decision would be “discrimination” against Canadian exports.
Ah well, there’s always China – if Ottawa can get those pesky aboriginal Indian tribes to agree to Northern Gateway.
This piece is cross-posted from Oil Price.com with permission.