By Barrie McKenna and Nathan Vanderklippe, Globe and Mail, November 10, 2011
The Obama administration’s move to sideline the Keystone XL pipeline is a major setback for relations between the world’s two largest trading partners, and threatens Canada’s role as the leading energy supplier to the United States.
The U.S. State Department’s decision to force TransCanada Corp. to explore alternative pipeline routes in Nebraska pushes out a final ruling until at least 2013, well after next year’s U.S. presidential and congressional elections.
The State Department decision sent a shock wave through Canada’s energy industry, an economic stalwart of the country that has for almost six decades counted on the United States as virtually its sole export market. The first dribs of oil began to find their way across the border in 1952, when Canada sent an average 3,900 barrels a day south. That volume has grown nearly 500-fold. In 2009, Canada exported a total of 687 million barrels to the United States, which has previously pointed to Canada as a secure source of friendly oil.
Now that bedrock trading relationship has come into question.
The United States is becoming a “less attractive customer in general for Canada, for not just energy but everything because of their own economic and financial difficulties,” said Gwyn Morgan, the former chief executive officer of Canadian gas giant Encana Corp.
“This is just another signal that Canada is going to have to diversify away from the United States, not just in energy but in everything else we can.”
Canadian leaders appeared caught off guard by the State Department’s ruling, which came days before Alberta Premier Alison Redford was set to promote Keystone XL and Alberta’s oil sands industry on a trip to Washington.
Prime Minister Stephen Harper had characterized Washington’s approval of the project as a “no-brainer” that would create thousands of construction jobs in both countries and meet U.S. needs for a reliable supply of crude in an unstable world. Now Canada is scrambling for a plan B for its oil.
“Canada will be looking for a buyer and so obviously the Keystone project is one that is proposed and one that we would like to see go forth, but obviously we’re a resource-based, energy-based country and we’ll be looking at all opportunities,” said Sarah McIntyre, a spokeswoman for Mr. Harper. ...
The Keystone pipeline has become hopelessly tangled in U.S. politics in recent months. The State of Nebraska has threatened to legislate moving the pipeline beyond an environmentally sensitive area, known as Sand Hills, which sits in the middle of the massive Ogallala Aquifer – a vital groundwater source for the U.S. Midwest.
Environmentalists saw the pipeline decision as a chance to attack the oil sands, a major source of global warming carbon emissions.
Mr. Harper's characterization of the potential U.S. decision to "green-light" the project as a "no brainer" might well indicate his myopia in these matters; it would have been a no-brainer for Harper, completely oblivious as he is of the need to protect the environment and totally and blindly committed to the needs and aspirations of the corporate oil and gas sector.
There are many other much more brilliant minds than Harper's, this time in the U.S. Obama Adminstration, and especially in the U.S. State Department, presided over by Hillary Clinton, who can hold both the short-term economic needs for secure energry and the long-term environmental impact of the potential destruction the Ogalalla Aquifer in Nebraska in their mind's eye simultaneously, something apparently Harper and his cabinet are unable or unwilling to do. Asking for an alternative route does not mean the project is dead. It simply means that more visionary leadership will be applied to the eventual route chosen.
The decision to request an alternative route should send strong signals to Ottawa that the U.S Administration is gently but assertively taking a leadership role, within the limits of its capacity to govern (given the obstructionism of the Republicans in Congress), in protecting the environment, and without favouring its traditional "neighbour to the north," perhaps even opening the door to more vocal and forceful oppossition to the oil sands project itself, something the Canadian government is loath to utter.
We live in a very complex network of connection to a variety of international neighbours. And the complexity of issues that require attention is growing both in nuance of complexity and in number, requiring a much more subtle and sophisticated hand on the wheel in the wheelhouses of governments, especially in democracies.
Clearly, this is something the Obama administration has "got" while the Harper government has not.