Joe Oliver on oil, gas and coal
Federal Natural Resources Minister Joe Oliver attended last week’s international conference in Vancouver on liquefied natural gas development. I spoke with him about Canada’s energy exports and emissions. Here are excerpts from that discussion:
TF: President Barack Obama’s recent state of union address seemed to hint at approval for the Keystone XL pipeline from Alberta to U.S. refineries, with perhaps some measure to go along with it like a carbon cap and trade market. Your government has backed North American cap and trade before. Would you do it again?
JO: No, we’re not thinking about that at all. The U.S. Congress is opposed to that concept from what I understand.
TF: Your party ran ads targeting NDP leader Thomas Mulcair and equating cap and trade with a carbon tax. They’re not the same, are they?
JO: The end result is that taxes increase because of how we handle carbon. It hasn’t been successful in Europe at all. Anyway, it’s not part of our thinking. We are making significant progress on greenhouse gas emissions. Our recent regulations regarding heavy-duty vehicles, the previous rules regarding cars and light trucks, which are identical to the U.S., are going to be helpful.
And also the rules relating to coal-fired electricity. It’s our objective to see all those coal plants closed, and in that regard we’re certainly ahead of the U.S. Coal is contributing 40 times the greenhouse gas emissions of the oil sands. And actually the oil sands are less than half the emissions from coal-fired electricity in the state of Illinois.
We’re moving with the U.S. on the over-arching objective of reducing our greenhouse gas emissions by 17 per cent from 2005 to 2020, but we’re also doing other things that the U.S. hasn’t yet decided to do. We’ve been approaching the reduction of emissions on a sectoral basis, and the next area of focus will be regulations in the oil and gas sector.
TF: You’re comfortable with the idea that exporting LNG that replaces coal is an appropriate step at this time, one that’s doable as opposed to these Kyoto-type gestures?
JO: It is doable. And on a global basis, this would be a very significant development. If China, for example, could significantly move from coal to gas, that would have a huge impact.
Canada’s small. We’re about two per cent of global emissions. We have to do our part, that’s the responsible thing to do, but it’s the big emitters that are going to make the difference to global emissions.
TF: At the conference, a representative from China was talking about how LNG from B.C. has to compete with pipeline gas from Russia. Can B.C. be competitive?
JO: We have to be competitive. There's a big debate going on between buyers and sellers with respect to pricing, and it's going on with oil as well. Buyers like the Japanese and South Koreans look the price at which gas is selling in North America, and what the price is internationally, and naturally they want to pay Canadian domestic prices. The exporters want to get the international price. That's where the markets determine what it is.
The Chinese look at what they can buy Russian oil for, but they'll also want to look at the need to diversify. That's important. No one wants to be beholden to one source. Second, they look at Canada as a country that will fulfill its contractual obligations. The non-financial issues will come into it as well.
TF: Speaking of countries beholden to one source, or one customer in this case, that describes Canada pretty accurately.
JO: Which is why we need to diversify.
TF: International Energy Agency talks about self-sufficiency in the U.S., oil and gas, by 2035. What does that mean for the Canadian economy?
JO: Firstly, I don’t think they’re going to be self-sufficient in oil. North America will be self-sufficient in gas and oil. What it means is, for gas we’re going to have to find new markets, and for oil we’re going to have to find markets to sustain the growth in supply.
The United States will still be a big buyer of Canadian oil. We’re shipping about two and a half million barrels a day, of which a million comes from the oil sands.
Right now we’re losing about $50 million a day because of the crude oil bottleneck in the U.S. midwest, compared to international prices. We absolutely must find new markets, which is why our government in principle is supporting the transport of oil and gas to the west, to the east, continuing to the south and possibly even the north.
Tom Fletcher is legislative reporter and columnist for Black Press and BCLocalnews.com