Obama Losing Canada's Oil to China

Monday, 04 Jul 2011 05:15 PM

By Jim Meyers

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The Obama administration is foot-dragging on approving a pipeline to deliver abundant Canadian oil to the United States at the same time the Chinese are investing in a pipeline that could send that oil to China.

The House Energy and Commerce Committee last week passed a bill requiring President Barack Obama to speed up a decision on approving the pipeline. The bill was introduced by Nebraska Republican Rep. Lee Terry, who maintains that the Obama administration has been too slow in making a final decision, the Barack Obama, Fred Upton, China, OilMontreal Gazette reports.

The Canadian province of Alberta has the world’s third-largest oil reserves after Saudi Arabia and Venezuela, and more than Russia or Iran. Daily production from oil sands is expected to rise from 1.5 million barrels today to 3.7 million in 2025.

Delivering the oil will mean building two pipelines, one south to the refineries on the Texas Gulf Coast and the other west toward the Pacific, where it can be exported to China.

If the United States doesn’t approve its pipeline promptly due to environmental concerns, “Canada might increasingly look to China, thinking America doesn’t want a big stake in what environmentalists call ‘dirty oil,’ which they say increases greenhouse gas emissions,” according to a report from The Associated Press.

Sinopec, a Chinese-controlled company, has invested $5.5 billion in the planned pipeline to the Pacific coast.

Sinopec has also paid $4.6 billion for a stake in Syncrude, Canada’s largest oil-sands project, and PetroChina, Asia’s largest oil and gas company, bought a $1.7 billion stake in Athabasca Oil Sands Corp.

According to Alberta Premier Ed Stelmach, American government officials have expressed concerns about the Pacific pipeline delivering oil to China that might have otherwise gone to the United States.

Rep. Fred Upton, a Michigan Republican who is chairman of the House Energy and Commerce Committee, told Newsmax in an interview last week that the pipeline project could create 100,000 jobs and said: “Why is it that we’re not working with Canada, which will be producing more than 3 or 4 million barrels a day from oil sand, and we’ve stalled on the application to build a pipeline?

“If we continue to say we may not be interested, Canada is going to turn around and build that pipeline not to the United States but instead to Vancouver, and they’re going to be selling it off to China.”

Environmentalist groups have urged Obama to reject the pipeline project. They assert that extracting oil from oil sands requires huge amounts of energy and water, increases emissions and threatens rivers and forests.

But Michael A. Levi, senior fellow for energy and the environment at the U.S. Council on Foreign Relations, maintains that environmentalists are exaggerating the dangers of oil sand extraction.

“A lot of people have been convinced that this is the cutting edge of the climate change fight,” he said. “In the end this is the equivalent to half a percent of U.S. Emissions.”

And a report commissioned by the Obama administration suggests that the pipeline to Texas, along with a reduction in overall U.S. oil demand, “could essentially eliminate Middle East crude imports long term.”

The State Department, which must approve the pipeline, has promised a decision by the end of the year, although Republicans wants it sooner.

And Upton told Newsmax that the bill his committee passed last week “is expected on the House floor as early as next month.”

David Goldwyn, a former State Department energy official who left this year to work as a consultant, said he believes the pipeline will ultimately be approved, according to the AP.

“I think it would be a huge waste of a great opportunity to provide supply security,” he said. “We don’t often get the choice of where we can get our oil from. In this case we get to choose Canada. That’s an opportunity we shouldn’t miss.”

And Russell Girling, CEO of TransCanada, the company that would build the pipeline, says opponents of the project are in fact set on targeting Canadian oil sands.

“The real issue here is those opposed to the Canadian oil sands believe that by delaying or denying this permit somehow they will slow down the development of Canadian oil sands,” he told the Business News Network.

“That’s an unrealistic expectation — the Canadian oil sands will get developed, irrespective of this pipeline.”

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