Canada's government last week proposed new fines and regulations for major crude oil pipelines in the country. Canada is among the world leaders in terms of oil production and needs safe and secure transit options to support its economy. At home, provincial and federal officials are debating prospects for a major pipeline project planned for the western coast. Across the border, the government of Prime Minister Stephen Harper says science is on its side in terms of the Keystone XL project. What happens with those pipeline projects may indicate whether the government moved ahead of the environmental issue effectively enough.
Business started its slow return to normal in Alberta last week following heavy flooding that closed off downtown Calgary. The downtown Calgary offices of major energy companies, as well as those of the National Energy Board, were closed in response to a state of emergency declared as a response. Enbridge Energy shut down parts of a major pipeline system north of Calgary after about 750 barrels of oil sands spilled in a remote area near Fort McMurray. The company said it suspected flooding in the region may have dislodged the pipeline, leading to a release.
Canadian Natural Resources Minister Joe Oliver said from British Columbia that pipeline operators would have to keep nearly $1 billion on hand to respond to spills. Pipeline companies found to have violated environmental laws would have to fork over around $100,000 as part of a new enforcement regime. The provincial government in British Columbia is insisting on tighter pipeline rules as a condition of supporting the Northern Gateway pipeline, a 700-mile project designed to carry 525,000 barrels of oil per day to western Canadian ports.
The provincial government and members of the aboriginal community have expressed concern about the potential environmental impacts of oil sands development in the region. Across the border, President Barack Obama may have tipped his hand on the Keystone XL pipeline, designed to carry 830,000 bpd from Alberta through the United States to Gulf Coast refineries. A U.S. presidential permit is needed for the cross-border pipeline and Obama said the national interest would be weighed against environmental concerns.
"The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward," he said.
The Canadian government says science is on its side when assessing tar sands pipelines. A study released last week found pipelines carrying heavy Canadian crude oil are no more vulnerable to spills than their conventional oil counterparts. Opponents, however, say the study missed the mark. Others say pipelines like Keystone XL won't break the back of the environmental camel but it certainly won't help.
Oliver sought to get ahead of the issue in British Columbia by announcing new regulatory schemes. He said comprehensive efforts on pipeline safety could allay some of the concerns.
"Our government is developing our natural resources in a way that enhances jobs, long-term prosperity and environmental protection," he said.
The Canadian government said its economy is growing on the back of oil production and the Harper administration aims to keep it that way. By making his announcement in enemy territory, Oliver is showing the government is serious about its energy ambitions. Critics say Canadian crude oil production and delivery are "relatively recent" developments. The fate of Canada's domestic and international pipeline projects will likely be an indication of how well the Canadian government maneuvered ahead of the debate.
By. Daniel J. Graeber of Oilprice.com