Pipeline delay risks Canada's oil future, prime minister warns

  • Updated: December 2, 2013 - 9:42 PM

– Canada’s bid to become what Prime Minister Stephen Harper calls an energy “superpower” is at risk as approval delays for new pipelines threaten an industry already hurt by high costs and rival production.

The world’s sixth-largest crude producer can’t get its surging crude supplies to markets in Asia where prices are higher than in North America. Decisions in the next year or so on proposed pipelines designed to connect oil-sands production to supertankers on the Atlantic and Pacific coasts may set the tone for the future of the nation’s energy industry.

“There’s no doubt that over the next 12 to 24 months, there will be some significant decisions made on pipelines infrastructure in Canada,” Ian Anderson, president of the Canadian division of Kinder Morgan Energy Partners LP, said Nov. 29 in Lake Louise, Alberta. “What’s important about the time frame is, there’s a window of opportunity here to build this infrastructure.”

Harper is counting on Asian markets to reduce the $30 a barrel discount between Canadian heavy crude and the U.S. benchmark as well as to provide job and economic growth and boost tax revenue. He has referred to Canada as an emerging energy superpower because it has the world’s third-largest oil reserves, with output from the oil sands projected to double over the next 10 years.

Further delays on pipeline projects may set back Canada’s ability to capture rising demand for fossil fuel and condemn its producers to lower prices, said Judith Dwarkin, director of energy research at ITG Investment Research Inc. in Calgary.

“The reality is it’s by no means certain which of them will be approved and built,” she said. “In the meantime, Alberta’s bitumen producers can’t stop or won’t stop the production train.”

Bloomberg

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