Canada Faces Fight over Oil Sands


"Canada's plan to expand its oil exports has been encountering growing resistance from politicians, both at home and south of the border."


April has been a difficult month for Canadian oil sands producers.

A few weeks ago, the Canadian government was forced to deny it was threatening the EU with a trade dispute after a strongly worded letter was leaked, suggesting the EU's anti-oil sand stance was "unjustified discrimination."

Meanwhile, Canada's plan to expand its oil exports to the U.S. has been encountering growing resistance from politicians south of the border, both within the Obama administration and Congress.

Canada's current problems come with investment in its industry on the rise. In 2010 investment grew by $1.8B, and further growth is anticipated this year.

However, industry experts say sustained investment will require the oil sands industry to expand from a regional to a global supplier.

The key project for growth in the U.S. is TransCanada Corporation's $13B Keystone pipeline, which would deliver 1.1 Mbl. of crude a day from Alberta, through six American states, to refineries on Texas' gulf coast.

But the project is not progressing the way the industry hoped.

Dr. Paul Chastko, industry expert, says Keystone, "reinforces our ties to …the only export market that we have."

Of even more importance is a proposed pipeline linking Alberta's oil sands to Canada's pacific coast, says Chastko.

"It brings with it the prospect of opening up new markets in China and India and the Pacific to really diversify our security of market."

But those plans remain stalled in part because of a tanker traffic moratorium off the British Columbian coast.

Both the Liberals and the New Democratic Party have said they would keep the moratorium in place.

The ruling Conservative party, which has its political base in Alberta, would like to see the pipeline go ahead, although they set aside one quarter of the oil sands for conservation just two weeks ago.

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