Enbridge and Keystone XL pipelines pit China versus the United States in a global race for oil

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      The media are having a great time portraying the showdown over the Northern Gateway Project as a cat fight between the premiers of Alberta and B.C.

      But this battle isn't just a bunch of soundbites from two tinpot politicians—including one who may be out of a job within a year.

      In geopolitical terms, this is really a race between the United States and China for Canadian energy, with B.C. and Alberta serving as the playing field.

      There can be little doubt that the United States has serious concerns about Enbridge's proposed pipeline linking the Alberta and Kitimat. That's because it would clear the way for China to get its mitts on Canadian oil, reducing supplies and raising prices for U.S. refiners.

      The Obama administration deftly undermined the Enbridge proposal with a July 10 news release. In it, the chair of the National Transportation Safety Board, Deborah A. P. Harsman, pointed to "a complete breakdown of safety at Enbridge" in connection with an oil spill in Michigan.

      She even claimed that Enbridge's "employees performed like Keystone Kops and failed to recognize their pipeline had ruptured and continued to pump crude into the environment." It was an ironic choice of words, given that one of the rivals to Enbridge's Canadian proposal is called "Keystone XL".

      To really rub it in, Hersman added: "Despite multiple alarms and a loss of pressure in the pipeline, for more than 17 hours and through three shifts they failed to follow their own shutdown procedures."

      Canadian opponents of the Enbridge pipeline seized on this statement to advance their claim that the company can't be trusted to protect B.C.'s environment.

      Meanwhile, China doesn't want too much Canadian oil flowing to the United States through the proposed Keystone XL pipeline. This project is back in play, according to a recent email sent out by the environmental group 350.org.

      Former president Bill Clinton has expressed his support for the project, even though his wife Hillary oversees the approval process.

      Focus on the math

      The Keystone XL pipeline would ship 800,000 barrels of oil per day to the United States.

      The Enbridge pipeline would transport 525,000 barrels per day to Kitimat for export, likely to Asia. And Kinder Morgan Canada's proposed twinning of its pipeline from the tar sands to the Lower Mainland would move another 550,000 barrels per day, enabling the export of more oil to Asia.

      Add those numbers up, and you get nearly 1.9 million barrels of additional oil moving through Canadian pipelines for export.

      According to the Alberta government's energy ministry website, 1.3 million barrels per day came from the tar sands in 2008. The government expects this to rise to three million barrels per day by 2018.

      If the economy slows in either China or the United States, demand for oil will go down in those countries.

      Then, there wouldn't be enough production in Alberta to keep sufficient amounts of oil flowing through all three pipelines to justify the huge capital expenditures.

      Kinder Morgan's parent is a U.S. company, unlike Enbridge. If only one pipeline project to the coast is approved, the U.S. government would prefer that it be Kinder Morgan's.

      Meanwhile, oil production rose by 1.4 million barrels per day in the United States between 2008 and 2011, thanks to horizontal drilling techniques and the controversial practice known as "fracking". This is also undermining U.S. demand for oil imports.

      The Canadian Association of Petroleum Producers recently produced an exceptionally rosy forecast of 6.1 million barrels per day from all Canadian sources by 2030. Of that, five million barrels would come from the tar sands. Prime Minister Stephen Harper has started quoting that production figure as if it's a fact, rather than a very optimistic prediction.

      However, former CIBC economist Jeff Rubin's recent book, The End of Growth, questions whether there will be sufficient demand in the economy for all this oil production.

      He has a chapter called "The Keystone Condundrum", which spells out some of the details. He notes here that Canadian oil producers are selling at about $20 per barrel below the world price into the U.S. market because of the surplus of oil in Cushing, Oklahoma.

      This enables U.S. refiners to buy this oil at a bargain price, then reap windfall profits selling it to motorists.

      The Alberta government is eager to get the Northern Gateway Project approved because Canadian oil producers could sell their commodity at world prices to China, which would bring in more royalties to the provincial treasury.

      In addition, having customers in Asia could also reduce the bottleneck at Cushing, driving up the price of oil sold into the U.S. market, too. That adds up to more money in the pockets of oil companies and the Alberta government.

      B.C. government officials know this, which is why Premier Christy Clark and Finance Minister Kevin Falcon are talking about some sort of revenue-sharing in return for supporting the Enbridge application.

      Rubin points out that if the Enbridge pipeline is approved, the "big loser" will be the U.S. economy. He paints it as a zero-sum game, in that if one pipeline project is approved, the other one is doomed.

      That has to be of concern to the staff working in the U.S. embassy in Ottawa and the U.S. consulate in Vancouver.

      I wonder to what extent they might have pushed the B.C. government to rethink its position on the Enbridge pipeline.

      By finally playing a little hardball, the B.C. Liberal government has begun acting, in a geopolitical sense, in the interests of the United States.

      The B.C. NDP is also advancing the interests of the U.S. economy with its effort to rally citizens to be more concerned about the Enbridge project.

      That's apart from the very real issues related to the marine coastal environment.

      Prime Minister Stephen Harper, on the other hand, is advancing the interests of China by streamlining the regulatory process and trying to cut off funding for environmental groups that oppose the Enbridge project.

      It's noteworthy that a rabid free enterpriser like Harper promotes policies to help a supposedly Communist government in Asia. Meanwhile, the B.C. NDP is being far more friendly to our neighbours to the south.

      It's looking like Premier Clark is moving in that direction, too, though it took her a long time to figure out which way the winds are blowing.

      Perhaps this position will one day result in preferential treatment for B.C. in the export of lumber and other products to the U.S. market.

      The environmentalists, on the other hand, appear to want to stop all the pipelines from being built. They're not playing favourites.

      That's because most of them accept the view of people like NASA scientist James Hansen. He has characterized the Keystone XL pipeline—and probably any other new pipeline proposals from the tar sands—as creating "game over" for the climate.

      Follow Charlie Smith on Twitter at twitter.com/csmithstraight.



      Jim Van Rassel

      Jul 26, 2012 at 6:50pm

      And the winner is??? The pipeline that doesn't get blown-up or sabotaged. You heard it here first, BOTH are going to be last. There is a lot of pent up frustration out there.JVR
      Jim Van Rassel
      Coquitlam BC


      Jul 26, 2012 at 8:30pm

      What I read in Wikipedia and I notice it's now gone is that the the economically viable oil by the Alberta Government's reckoning was 5% of the total. Even if this turns into 10 or 20% it's still not very much. We as a society need to face up to the fact that we are going to run out of economically viable oil. Eventually it will take more energy to recover the oil than the oil can produce. Why can't our world communities commit 1% of their military budgets towards solving the alternative energy problem. As it is now we have nothing economically as cheap to replace oil even we want to. Global warming may force our hand and so far we've done very little serious research. We could close CERN and other projects until a solution is found and make our top scientists earn their keep for instance.

      Pat Crowe

      Jul 26, 2012 at 9:46pm

      As I sit on the park bench overlooking Juan De Fuca straight with Edgecombe and Shandley after work on a Friday having a few pops we can't help noticing the thick smog all over the straights from all of the shipping traffic coming and going from Asia. It dims the view of the Olympic mountains almost to a blur on clear days with no wind. It's only going to get worse. It wasn't like this twenty, even ten years ago. Very sad indeed as all of that pollution blows over Victoria on it's way to the lower mainland.
      It ain't the same over here Charlie.

      Charlie Smith

      Jul 27, 2012 at 9:11am

      Hi Pat,
      That's a very interesting and troubling observation. I remember doing a story a few years ago about the impact of marine-generated pollution on the Lower Mainland's air quality. I was shocked at the time by how much was coming from ships on the water.


      Pat Crowe

      Jul 27, 2012 at 10:22pm

      If we had a line on cheap oil in China. And we wantedI think they would say to import it to our country{Canada}via a land based pipeline to the Chinese coast and that land based pipeline had to pass through sensitive Panda bear country.
      What would the Chinese say about that?
      I think they would say, "you keep your bag of money, Gweilo."
      You go home.

      Taxpayers R Us

      Jul 28, 2012 at 12:04am

      @Pat Crowe:

      I agree. Fuck China.

      Zen Cat

      Jul 28, 2012 at 5:07pm

      it isn't about build the freaking pipelines in your back yard. it's about get off your addiction to oil. who ever has the most oil and money wins? haven't we as a collective species learned anything from previous oil spills on earth and land? if anyone supports more oil projects you are condoning oil companies, governments, and countries to image control efforts to white-wash what is distinctly the colour of black. by allowing these projects to take place you are basically gambling with the fate of earth. but many of you can't see it because of your addiction to oil and love of money. black oil leaves a huge slick over anything and everything and kills ecosystems, decimates animal populations, and wipes away human livehoods on contact. just when we thought it couldn't get any worse you may as well be building our coffins because you sure as hell are driving the hearse with every tree you clear cut, every drop of water you contaminate, every molecule of oxygen, every animal, every species killed, every person infected, every particle of light that turns black with your love and addiction to oil. are you really ready to take this chance? why don't you hold onto earth like you hold your money and oil? spend all your love on earth? why is it so hard? i guess it's hard to talk with money and oil in your mouth.


      Jul 29, 2012 at 12:49pm

      Communist China has been showing aggression around the globe.

      China has hacked into other country's secret files. They have sold infected electronic components to other country's. The U.S. missiles and other weapons, had infected components in them. that were purchased from China.

      Communist China has taken another step of aggression, towards the Philippines. They have taken a city on a Philippine Island. What Communist China is after is, another tiny Philippine Island rich in resources. The U.S. has been in a stand-off with Communist China. They are trying to assist the Philippines to protect their resources from China's aggression.

      Who in their right mind, would sell control of the dirty Alberta tar sands, to Communist China? Those dirty tar sands are, an abomination on the face of Canada. They should be entirely shut down. Climate change is no longer a pooh pooh denial. Even the environmental skeptics are having to admit, this planet is in trouble. However, greed trumps common sense every time.

      We have even managed to pollute space with debris. They are now afraid, of the Muir Space Station and satellites, may be knocked out.by the debris. The oceans are being polluted every day, by the burning of fossil fuels. Our air polluted in the same fashion. Clean underground water, being polluted by pipeline bursts and fracking for gas.

      It's as they say. Man is the most destructive animal on earth, and the most stupid one at that. Wild animals and marine life, don't foul their environment. Only man is stupid enough to do that.