With Only One Oil Customer, Canada is “Leaving Billions of Dollars on the Table”
Alberta Premier Rachel Notley has called for more pipelines to help transport Canada’s crude oil to international markets. The lack of infrastructure has left the Canadian province selling the majority of its crude oil to the U.S. at a discount, a problem that Notely said must be addressed, reports CBC.
In September, Notley told an audience at an Alberta Urban Municipalities Association convention that she wants at least one “drama-free” pipeline built in order to carry Alberta’s oil to world markets. Her comments came after signing a Canadian Energy strategy, with the intended goal, at least in part, to help producers reach wider markets.
“This … strategy will also help … as we address a key challenge facing the energy industry in this province, which is the need to improve our access to new world markets, which means essentially getting at least one new pipeline built to tidewater,” the Alberta Premier said.
Notley reiterated this sentiment during a roundtable meeting between herself, Canadian Prime Minister Justin Trudeau and a number of Canadian energy executives, reported the Calgary Herald.
“Natural resources will always be a core part of Canada’s economy,” said Trudeau. “We have great natural resources the world wants and we need to make sure … we’re developing them in a responsible and sustainable way.”
Energy executives like Suncor Energy (ticker: SU, Suncor.com) President and CEO Steve Williams said the meeting was “very encouraging.”
“What we got today was an understanding of the challenges we face and an agreement that we’re all going to do what’s in the best interest of Alberta and Canada, which is to start to work toward market access,” Williams said.
Despite the positive tone of the meeting, Trudeau fell short of offering any sort of assurance, however, leaving Williams and others cautious of what lays ahead. “I think ‘assurances’ is too strong a word,” he said. “What we agreed was that we understood the need for [the new rules] and we’re all going to go away and work toward that end.”
We’re Leaving Billions of Dollars on the Table
Carmen Velasquez, executive director of energy programs for the University of Alberta’s Alberta School of Business, said there are several reasons why Canada needs more pipelines.
“The main one is because right now, the majority of our crude oil still goes to one market. If we want to grow, then we need diversity of markets … an opportunity to sell to another consumer so we’re not at the mercy of one consumer.”
“We just need access to every potential market,” said Cenovus Energy (ticker: CVE, Cenovus.com) spokesman Brett Harris. “The U.S. will always be a significant market for us. [But] we have pretty much one customer and that means … we have to take fairly discounted prices for our oil.
“So, essentially, we’re selling, as a country, one of our major exports at discounted prices and leaving billions of dollars on the table every year. And that’s money that goes to royalties and taxes that help support roads and schools.”