Canada plans on oil pipeline to service growing Asian market
Many are concerned that Canada's currency is becoming tied to the value of oil
Canada has the third-largest oil reserves in the world. Some estimate
that Canada may even have the second-largest. Canada has since become
the top energy supplier to the United States with dreams of becoming the
top supplier for other nations as well. Approximately 1.5 million
barrels a day are produced now, and that number is expected to double or
triple in the next decade. The main goal in Canada's pipeline dreams is
Asia, in particular China.
The port of Kitimat, a small Canadian town would be the endpoint of the proposed Northern Gateway pipeline carrying oil from Canada's energy-rich province of Alberta to be shipped by large tankers to Asia.
Canada finds itself in a "Catch-22" situation, with its oil really only headed to its southern neighbor and production in the oil sands increasing rapidly, the situation creates a bit of a glut for producers in Alberta with limited pipeline options.
"There is a limited market," Werner Antweiler, a professor of Economics at the University of British Columbia in Vancouver says. "Right now the price difference can be as high as $30 a barrel, so every day the oil companies are losing a significant amount of money. They're not getting paid the world price; they're getting paid a lower price."
The solution will be reliant on new markets and diversification. The port of Kitimat, a small Canadian town would be the endpoint of the proposed Northern Gateway pipeline carrying oil from Canada's energy-rich province of Alberta to be shipped by large tankers to Asia. The $5.5 billion project, proposed by pipeline construction firm Enbridge, would transport 525,000 barrels of oil a day if approved.
Northern Gateway is just one of a number of new pipeline projects aimed at transporting Canadian crude to new markets. Another firm, Kinder Morgan, has proposed a pipeline from Alberta to Vancouver, running alongside an existing but smaller pipeline.
Eastern Canada currently imports most of its oil from other countries, such as Nigeria, Iraq and more recently Brazil.
"In the past three or four years, there's been significant Asian interest - China, Japan, Korea and even Thailand," Stingham says. "It's not concentrated in one area, but the biggest market is the Chinese market."
There are growing concerns about the general expansion of the country's oil industry. A recent report released by the Pembina Institute, a think thank working on sustainable energy, raises concerns that as the industry rapidly expands, Canada's currency is becoming tied to the value of oil. As the Canadian dollar goes up, so does the cost of manufacturing, making Canadian exports more expensive and less competitive. Manufacturing hubs in central Canada, particularly Ontario, have seen sharp declines in jobs in the past few years as the country's currency has risen.
"While Canada is exploiting its comparative advantage with respect to natural resource extraction, the rate of change is causing significant challenges in central Canada - making it difficult for this region to adjust to incredibly rapid structural changes in the economy," according to Pembina.
The report goes on to note that "the result appears to be a uniquely Canadian strain of the Dutch disease that could be called 'oil sands fever' - a strain that is beginning to create clear winners and losers in Canada's economy and could pose a significant risk to Canada's competitiveness in the emerging clean energy economy."
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.
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Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: Canada, oil pipeline, Asian markets, Candian economy, exports
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