In an OpEd published in ipolitics.ca, Stefania Bartucci and I argue that while US actions on KXL have awakened Canada to the need to seek new energy markets on its own terms, but good politics are not always good business. Canada and the U.S. share both the problems and profits of the oil sands.
Few would argue that Canada and the United States had to find a way to address the environmental concerns raised by Nebraska. What is not clear is whether the rejection of Trans Canada’s presidential permit application and the launch of a new application is the most efficient way to manage the amending process.
True, the rejection gives the White House some political breathing space, puts the ball back in industry’s court and makes Prime Minister Harper’s endorsement of the Northern Gateway look prescient. It also sent a strong message that Canada is willing to pursue Asian markets independently from the United States. However, the practical obstacles to the Northern Gateway pipeline – Aboriginal land claims, environmental sensitivities and Kitimat port difficulties – are serious enough to dwarf the challenges that KXL has so-far experienced in the United States.
Canada must be prepared to go it alone in the pursuit of its commercial interests in emerging markets but to treat Keystone as a red flag negates a large, complex partnership in energy development. This relationship is about more than just a mega-pipeline. It is about decades of cooperation and a shared interest in developing North America’s most abundant source of petroleum.
Even with the recent influx of investment from Asian interests, the US is still by far the largest investor in the oil sands. American and Canadian companies are partners in the development, production, transportation and marketing of oil sands products. The success of our collaboration is confirmed by the comprehensive cross-border infrastructure to upgrade, refine and transport petroleum products.
The President’s decision underscores the need for a united approach to problem solving. Canada and the US have much to gain from oil sands development, and a fair-weather friendship will not benefit either nation. Only in solving problems together can we generate the full benefits of the oil sands as an engine of economic growth in both countries. (Read the full text here.)