Bloomberg News

Liepert Says Alberta Needs Many Outlets for Landlocked Oil

February 15, 2012

(Updates with Liepert comments in 11th and 12th paragraphs.)

Feb. 13 (Bloomberg) -- Alberta Finance Minister Ron Liepert said the province needs multiple pipelines to ensure its crude doesn’t become “landlocked” as oil companies prepare to ramp up production.

“Our biggest concern and challenge is getting our product to market,” Liepert said in an interview at Bloomberg News headquarters in New York today. “By 2020, Alberta could be landlocked in bitumen.”

The western Canadian province, home to the world’s third- largest pool of oil reserves, is working to obtain capacity to transport crude amid opposition from environmental groups as companies such as Exxon Mobil Corp. and Suncor Energy Inc. invest about C$20 billion ($20 billion) annually in the oil sands.

U.S. President Barack Obama last month denied a permit to TransCanada Corp.’s planned Keystone XL pipeline that would deliver 700,000 barrels a day of crude from Alberta’s oil sands to the Gulf of Mexico through six U.S. states.

Enbridge Inc. has also proposed the Northern Gateway pipeline that would run from Alberta to the Pacific coast, and Kinder Morgan Inc. is seeking to expand its existing Transmountain line to Vancouver.

“Keystone is only one of them, Enbridge is only one of them, but the reality is by 2020 we are going to need two or three Enbridge-Keystones,” Liepert said.

Liepert said he believes the decision to deny the Keystone permit will be reversed after elections this November, and said environmental groups are misrepresenting the province’s oil industry.

‘Makes No Sense’

“The common belief is that this will all change after the presidential election, so I think that’s still where the investor community is,” Liepert said. “The U.S. needs the product. Canada has the product. It just makes no sense that it’s not coming to the U.S.”

Prime Minister Stephen Harper has called diversifying Canada’s energy exports a “national priority” after the Keystone pipeline permit was denied. Tapping markets in Asia may raise the price received by Canadian producers by $13.60 a barrel by 2030, according to a University of Calgary study. About 99 percent of Canada’s crude exports go the U.S.

The federal government last month began hearings on a proposed pipeline by Enbridge to move crude from Alberta’s oil sands to British Columbia’s coast, where it could be shipped to Asian markets.

The pipeline has become a flashpoint with environmentalists, and Harper has said his government will review regulatory-approval rules for new energy projects so they can be concluded more quickly. That will include looking more closely into complaints that “foreign” environmental groups are seeking to overload the regulatory process, according to Harper.

Liepert said environmental groups are relying on “stunts” to generate attention because their arguments are weak.

“It comes down to honesty,” he said. “Let’s put all the facts on the table and let Canadians, Americans, the world, consider the facts.”

--With assistance from Jeremy van Loon in Calgary and Theo Argitis in Ottawa. Editors: Paul Badertscher, Gail DeGeorge

To contact the reporter on this story: Greg Quinn in New York at gquinn1@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net.


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