For the past several years, Canada’s energy industry has been under tremendous pressure to endure and surmount the challenges faced in its efforts to expand oil exportation
opportunities and to advance the profitability of western Canada’s most precious natural resources—crude oil and natural gas.
Two proposed major pipelines in western Canada—the keystone XL and the Northern Gateway—have been weathering tremendous resistance from activists, residents, and government officials alike. Efforts to appeal to the legal restrictions, safety and environmental concerns, along with financial optimization, have resulted in huge holes in export opportunities and massive amounts of frustration for decision makers.
According to the EIA (Energy Information Administration), North America alone consumed >23,000,000 barrels of oil each day in 2011 (roughly 25 percent of the world’s total consumption). While this number dips from the past several years—likely due to the expansion of alternate energy options—it is unlikely the demand for petroleum products will decline any time soon.
The abundance of natural gas and crude oil reserves in western Canada makes exporting these resources an obvious solution to satisfy the demand, while improving the economy of an entire nation and its stakeholders.
The Keystone XL Pipeline extension and the Enbridge Northern Gateway Pipelines have warranted a significant media presence over the past several months. Despite foreign interest in Canada’s natural resources, countless activists, citizens, and even Canada’s own federal government are opposing the efforts of the industry’s decision makers.
In 2008, the Keystone Pipeline System, which is owned by TransCanada Pipelines (TCPL) of Calgary, AB, proposed the $5.2 billion extension (“the Keystone XL”), vying to add 510,000 barrels per day (81,000 m3/d) to the already 435,000 to 591,000 bpd (69,200 to 94,000 m3/d) quota of the original pipeline. The initial Keystone began operating in 2010, when the National Energy Board (NEB) gave approval for 537 miles (864 km) of TransCanada’s Canadian Mainline natural gas pipeline to be converted to a crude oil conduit. The new U.S. construction of the pipeline (at that time) involved 1,084 miles (1,744 km) of new, 30-inch (760 mm) diameter pipeline in North Dakota, South Dakota, Nebraska, Kansas, Missouri, and Illinois, with delivery facilities at Wood River and Patoka, IL.
The Keystone XL—an extension to the original pipeline—was proposed in 2008 with NEB mirroring swift approval; the South Dakota Public Utilities Commission also followed suit. Soon, thereafter, resistant measures began to surface, halting the proposed extension to date.
Similar to the Keystone XL, the Northern Gateway Pipeline is also making headlines as it, too, attempts to fulfill global demands for gas
and crude. If approved, the dual 731-mile (1,177 km) pipeline would span 320 miles (520 km) in Alberta (starting at Bruderheim), connecting to another 408 miles (657 km) across British Columbia to culminate at a marine terminal in Kitimat, BC.
The notion of the dual pipelines (which were proposed by Enbridge Inc., a Canadian crude oil and liquids pipeline company) is to transport crude oil produced from the oil sands in northern Alberta to Kitimat, while natural gas condensate would move in the opposite direction. The condensate would be used as a diluent in oil refining to decrease the viscosity of heavy crude oil from the oil sands, simplifying the transport processes.
While all sounds logical, both in theory and in the corporate boardrooms, resistance to both pipelines has been mounting from numerous entities, such as environmental activists, social
populations, and both the U.S. and Canadian governments.
In October 2012, Canada’s Industry Minister, Christian Paradis, halted a precedential $5.2 billion bid by Malaysia’s Petronas to purchase Progress Energy. Petronas was planning on
erecting a multi-billion dollar gas plant at Kitimat to serve the Asian demand. Similarly, British Colombia’s premier, Christy Clark, is resisting initiatives by Enbridge’s CEO, Al Monaco, to
negotiate the province of BC’s potential to gain a $6 billion share of the profits of the $81 billion revenues over a 30-year period. During the second of the three U.S. presidential election debates, the opposing candidates, Obama and Romney, broached the Keystone XL pipeline issue at Romney’s invitation—the former stayed low key on the topic, during his campaign and debate, while the latter seeming to sense a vulnerable spot, swung hard verbal punches at Obama.
Read more here.
What Romney (apparently) did not know was that Obama had already approved the southern leg of the extension earlier this year, and in all likelihood will approve the project once he gets reelected. In fact, the northern construction of the project has also been approved. According to the website, “Obama did not mention Keystone XL per se [during the second debate] in terms of what had been permitted and what is being built, [but he] spoke to strengthening the economy, briefly alluding to how much pipeline already exists:
‘What I want to do is to create an economy that is strong, and at the same time produce energy […] And with respect to this pipeline that Governor Romney keeps on talking about,
we’ve—we’ve built enough pipeline to wrap around the entire earth once […] So, I’m all for pipelines [and] production. What I’m not for is us ignoring the other half of the equation.’
He was referring to other forms of sustainable energy solutions, such as solar and wind.”
Read more here.
Environmental impact concerns from activists, citizens, and land owners were loomed largely in the ploys to halt the advancement of both pipelines. TCPL successfully engineered
fourteen alternative route options for the project that avoided the two major areas of concern: the Sandhills Region in Nebraska (a wetland ecosystem) and the Ogallala Aquifer (which
spans eight states and provides water for two million people).
The negative impact to the traditional homelands of Canada’s First Nations typically seeps into the media regarding matters of this nature. Threats of boycotts, protests, and coalitions were raised, such as (in the case of Northern Gateway) the homelands, who comprise a volume greater than 100 bands across northern regions of Canada (30 of which are the Denes). The threats that tankers pose to their age-old food source (the salmon and the wildlife), plus the raping of their terrestrial landscapes by manufacturing equipment, machinery, and pollution, have drawn unanimous opposition to the Northern Gateway.
What is a nation who has (and continues) to formulate the infrastructure to fulfill the undeniable global need for natural gas and oil to do when the populations defying their need are the very populaces who consume them?
With Obama returning to his never-even-got cold hot seat as president, and his nation still warring with one of the three major sources of his nation’s oil, it only makes logical sense to turn to brotherly neighbors for the proverbial cup of sugar—does it not? And what of the nations of the northern communities, the environmentalists and activists whose planned protests and sitins keep the callers in the corporate offices on hold? Do they not exploit the same supplies? Is the resistance that has been placed upon Canada’s energy industry to rise to the world’s undeniable demands for what blatantly are needed (and so readily satisfied) founded on what’s best for humanity or merely a guise for the least damaging way to conquer the game of intrinsic business?
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