Canada's Harper pledges that he will ban Asian, maybe U.S. oil sands exports

Canada may ban exports of raw bitumen to countries which do not meet Canada's processing emission standards if the country's Conservative Government is re-elected in the country's forthcoming poll.

Author: Dorothy Kosich
Posted:  Monday , 29 Sep 2008

RENO, NV - 

Canadian Prime Minister Stephen Harper has put the pressure on Canadian oil sands producers with a warning that, if re-elected, the Conservative Government will prohibit the exportation of raw bitumen to countries outside of Canada that do not have equivalent emission targets.

Experts warn that the move would exclude most oil sands markets except for the U.S., which is struggling with its law prohibiting federal agencies from entering into any contract to procure alternative or synthetic fuels with higher lifecycle greenhouse gas emissions than conventional petroleum.

This past week the U.S. Congress upheld provisions in the national energy act that prohibits federal agencies from using fuels derived from carbon-intensive fuel sources, which could include oil sands. If bitumen exports to the United States were to be banned, Canadian oil sands projects may be in jeopardy.

Alberta produces 1.3 billion barrels of bitumen daily with about 62% remaining in Alberta, and 500,000 barrels being exported and upgraded outside of Canada. About 30% of that is exported to the United States to be upgraded and refined. That figure is expected to triple over the next decade.

Bitumen is heavy, black viscous oil that must be treated to turn it into an upgraded crude oil, which can subsequently be refined to produce gasoline and diesel fuels. Harper says bitumen is found beneath 140,200 square kilometers of north-eastern Alberta.

In a statement, Harper said, "While Canada encourages the export of our energy resources, we cannot allow companies to increase exports of raw bitumen simply in order to avoid Canadian emissions standards as they are strengthened over the next few years. Nor can we afford to export the jobs and spin-off industrial opportunities created by the upgrading of bitumen."

"A re-elected Harper Government will prohibit the exportation of bitumen outside of Canada for upgrading in order to take advantage of lower pollution or greenhouse gas emissions standards elsewhere," he added.

Harper said the new rules could mean that his government would prohibit the export of raw bitumen to future Asian markets, including China. The policy would take effect in January 2010, but would only apply to new exports deals and not impact existing contracts.

Alberta Deputy Premier and Minister of International and Intergovernmental Relations, Ron Stevens, told the news media the province was given no warning of Harper's intentions. Stevens also claimed that no one from the Conservatives have offered to answer any of the Alberta Government's question or asked for any input.

He insisted the "oil sands are the property of Alberta. We'll be keen to ensure that Alberta's interests are protected." However, Premier Ed Stelmach said he would curb the shipment of Alberta's bitumen and jobs down the pipeline to Texas and Illinois.

Adam Sparkes, the Canadian Association of Petroleum Producers' manager of intergovernmental affairs, said his group will work with whichever national government is elected on October 14. A number of oil sands projects are planned or under construction, but some companies are delaying upgrades, citing soaring cost increases.

Liberal leader Stephen Dion said the plan could expose Canada to trade retaliation. "It's because I care about Alberta that I want carbon pricing, a price on greenhouse gas emissions that would be credible, to protect us again a situation where the exportation from Alberta around the world will be stopped by tariffs," he told reporters.