Harper's plan may hit oil sands exports to Asia
Fri Sep 26, 2008 2:55pm EDT
By Jeffrey Jones
CALGARY, Alberta (Reuters) - A campaign promise to ban exports of tar-like bitumen from Alberta's oil sands to countries that do not match Canadian efforts to cut greenhouse gas emissions could affect shipments to Asia, Prime Minister Stephen Harper said on Friday.
Enbridge Inc, which operates the main pipeline for Canadian oil exports to the United States, is proposing a new line to Canada's west coast from Alberta to allow oil sands-derived crude to be shipped to Asia.
Harper announced the export-ban plan on Friday, ahead of the October 14 general election. Asked by reporters whether it could affect future exports of bitumen oil to Asia, he replied: "Well, it could, it absolutely could."
He said the policy would not affect existing contracts, all of which involve supply agreements with U.S. refineries.
Enbridge's planned C$4.2 billion ($4.1 billion) Gateway line would take 400,000 barrels a day of oil sands crude to a port at Kitimat, British Columbia, on the Pacific Coast. There it would be loaded on to tankers and shipped across to Asia.
Enbridge could not be immediately reached for comment. Its chief executive, Pat Daniel, has said the initiative is being driven by interest from refiners in Singapore and Japan.
The Conservatives did not say which Asian countries could be denied bitumen on environmental grounds.
Canada's oil sands are the largest oil reserves outside of Saudi Arabia. Producers plan to spend C$100 billion exploiting the carbon-intensive resource and output is expected to nearly triple to 2.8 million barrels a day by 2015.
Federal Environment Minister John Baird and Industry Minister Jim Prentice said following Harper's speech that the proposed ban was unlikely to affect bitumen shipments to U.S. customers since both presidential candidates have pledged to cut greenhouse gas emissions.
"I think it's clear that the United States is moving gradually toward a similar policy to our policy with respect to greenhouse gas emissions," Prentice said.
The Harper government has said it plans to cut Canada's greenhouse gas emissions by 20 percent from 2007 levels by 2020. Environmentalists have criticized the government for not being stringent enough and falling far short of the country's commitment under the Kyoto protocol.
New Democratic Party leader Jack Layton, who wants a moratorium on oil sands expansion, called it "absurd" for Harper to complain about emission rules in other countries.
"He doesn't have limits on carbon emissions in Canada," Layton told reporters in Vancouver, British Columbia.
Harper did not say how close to achieving any cuts in emissions a country has to be before avoiding the ban.
The issue of raw bitumen exports is already controversial in Alberta, whose provincial government has called for more plants at home to upgrade the gooey crude into refinery-ready light oil.
Upgrading within Alberta would prevent companies from exporting carbon emissions to countries with lax standards and would also create jobs in the province, Harper said.
However, some upgrading plants have already been delayed or shelved due to spiraling costs and a tight labor supply.
Companies, including EnCana Corp and Husky Energy Inc, have struck deals to export raw bitumen to U.S. refineries, where upgrading costs are lower.
($1=$1.03 Canadian)
(Additional reporting by Scott Haggett and Allan Dowd; editing by Rob Wilson)
http://ca.reuters.com/article/businessNews/idCATRE48P79520080926?sp=true
