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Will Canada walk away from a $14-trillion resource? That’s the question John Felmy, chief economist at the American Petroleum Institute, is asking environmentalists who believe that blocking the Keystone pipeline would somehow cap Canada’s oil sands development.
“There is this argument that if somehow we can stop the pipelines coming to the U.S., we are going to stop oil sands development in Canada,” says Felmy, who works at the Washington-based trade association of American oil and natural gas producers.
“What are the oil sands worth? $14 trillion — at around $80 a barrel. Canada’s GDP is about $1.4 trillion – the notion that they wouldn’t develop a resource that is ten times their GDP! In all likelihood it is is going to be developed,” says Felmy, noting that if the oil sands don’t come to the U.S. they will generate even higher emissions as they will need to be shipped, probably to China, where they may be processed less efficiently.
The $7-billion Keystone pipeline has turned into a major flashpoint for environmentalists who say that the development of the oil sands in Canada — which has the third largest proven oil reserves in the world — will be ‘game over’ for the climate.
Over the past few days Harry Reid, the influential U.S. Senate Majority Leader has added his name to a long list of politicians and celebrities opposed to the Keystone pipeline.
In a letter to U.S. State Department, he wrote: “[It] would be wiser to invest instead in job-creating clean energy projects, like renewable power, energy efficiency or advanced vehicles and fuels that would employ thousands of people in the United States rather than increasing our dependency on unsustainable supplies of dirty and polluting oil that could easily be exported.”
Many Republican politicians, meanwhile, have come out in support of the pipeline. Is there a real danger that the Keystone approval process will be yet another victim of politicking in Washington?
“I hope not,” says Felmy. “The company [TransCanada] has adequately dealt with the issues about the environment. We clearly understand that it is an important piece of infrastructure to move oil to the Cushing hub and ultimately to the Gulf which would help the system efficiency.”
For the rest of this article, please go to the National Post/Financial Post website: http://business.financialpost.com/2011/10/26/will-canada-walk-away-from-a-14t-resource-asks-economist/