Energy minister lays out Alberta's new oil strategy

2/11/2013

CALGARY – Alberta is renewing efforts to add value to resources at home and is taking a serious second look at export options that seemed inconceivable just two years ago, Energy Minister Ken Hughes says.

The province’s first economic summit on Saturday reinforced the pressing the need to get oilsands products to international markets, and Hughes said his department is working on an aggressive new plan to upgrade Alberta’s resources in Canada and get them to coastal ports for export “however we can.”

In an exclusive interview with the Journal, Hughes for the first time laid out the Redford government’s new Oil Market Diversification Strategy, which has been in the works since April.

“It is a paradigm shift,” Hughes said. “We’ve taken a very deliberate, strategic approach to this. When you step back, what is Alberta’s interest? Alberta’s interest is to get the best possible price for every barrel of oil that is sold from this province.

“That may not be completely consistent with every other party’s interest. Our interest, though, is quite clear: Our interest is defined by our unusual role as the trustee for the citizens of Alberta for these tremendous assets.”

Hughes said the starting premise is that the province must move away from the continental North American market toward a global market, which means examining every conceivable export option.

For example, the province is working with industry to access using an 869-kilometre pipeline that runs from Norman Wells, N.W.T., to Zama City in northwest Alberta. Built in the 1980s to carry crude from the Arctic Circle to southern markets, the small pipeline could provide a right-of-way for new construction, Hughes said.

From Norman Wells, the line could connect with the right-of-way for the Second World War-era Canol pipeline, which runs to Whitehorse. From there, oil would ship from the port in Valdez, Alaska.

“We’re at the stage where all ideas are good ideas,” Hughes said. “As a result, we’re fully prepared to look at all of the options, options that even two years ago would have seemed completely speculative and would have never had a hope of being considered seriously.”

The province is also looking at ship oil by rail to ports on the U.S. West Coast, Hughes said.

“Churchill is also a real prospect,” he added, referring to Canada’s only Arctic seaport in northern Manitoba. The port has historically been used to ship western Canadian grain.

“We’ve been approached by the Manitoba government, which is interested in selling hydroelectricity to Alberta. ... Our interest in talking to Manitoba is a utility corridor that could contemplate having either pipeline or rail that would go from Alberta to Churchill.”

These ideas are in addition to well-known proposal such as the Northern Gateway pipeline to Kitimat, B.C., the Keystone XL pipeline to the United States, the West-to-East line that would carry Alberta crude to the Atlantic and the G7G proposal to ship oil by rail to Valdez.

“We also have looked at the importance of value-added initiatives as a way to get access to world prices,” Hughes said. “Because if you do value-added in Alberta, say you turn the product into something like diesel, you effectively capture world price.”

But the province isn’t just talking about adding value in Alberta alone.

“It has become clear to us that if value is added to our products anywhere in Canada, that is good for Alberta,” Hughes said. “Value-added anywhere from Come By Chance, N.L., to Saint John, N.B., to Quebec City to Montreal to Sarnia, Ont., and anywhere else, is in Alberta’s interest.”

The role of government, he said, is to ensure that policies and regulations encourage innovation.

“The petrochemical industry in this province was created only as a result of a deliberate recognition by the Government of Alberta and Peter Lougheed of the need for adding value in this province,” Hughes said.

“We must learn from that and we, as the Government of Alberta, are fully prepared to look at how we do things a little differently because sometimes we can enable big changes with small effort.”

The province is also working to build the province’s reputation in Canada and abroad.

“The other role for government is ensuring the political climate is such that we are able to earn the social license to operate,” Hughes said. “We have to perform well here in Alberta and help other people understand what it is we are actually doing here.”

Hughes highlighted the province’s environmental monitoring efforts, land use planning and new energy regulator as evidence of the government’s commitment to environmental stewardship.

“We’re trying to create the environment for growth,” Hughes said. “If we see a strategic role for the Government of Alberta that will help balance the scales in our favour to get things moving in the right direction, we will play that role.”

(Edmonton Journal)


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