As Obama Dithers, Canada Approves Competing Pipeline

With China seeking oil to fuel its economy, the Canadians can’t wait for America to make up its mind.

President Barack Obama speaks with Canada's prime minister, Stephen Harper, in the Oval Office of the White House in Washington DC, September 16, 2009
President Barack Obama speaks with Canada’s prime minister, Stephen Harper, in the Oval Office of the White House in Washington DC, September 16, 2009 (White House/Pete Souza)

While the United States have yet to decide to import more oil from Canada, the conservative government in Ottawa on Tuesday approved a pipeline proposal that would allow more exports to Asia.

Approval for the Northern Gateway pipeline, which will transport some 525,000 barrels of oil per day from Alberta’s oil sands to the Pacific coast, came as the Obama Administration has held off approval for the construction of the Keystone XL pipeline for more than three years, citing environmental concerns.

Keystone XL could boost Canada’s ability to pipe oil from the Alberta fields to refineries and ports along the Gulf of Mexico by the equivalent of some 700,000 barrels per day.

American labor unions strongly favor building the pipeline because it would create construction jobs. But environmentalists — another key constituency for President Barack Obama’s Democratic Party — argue that it will increase Canadian oil sand production, which is more polluting than conventional oil extraction, even if two separate State Department studies and numerous industry reports have shown Keystone would have negligible environmental impact.

In March of last year, the State Department said “approval or denial of the proposed project is unlikely to have a substantial impact on the rate of development in the oil sands or on the amount of heavy crude oil refined in the Gulf Coast area.” It suggested that if Keystone wasn’t built, Canada would find other ways to get the oil to market. On Tuesday, it did.

Canada provided no comment on Northern Gateway’s approval but Prime Minister Stephen Harper earlier said he was “profoundly disappointed” when Obama once again delayed approving Keystone last year.

97 percent of Canada’s oil exports now go to the United States which is also its biggest trading partner. With Alberta’s daily oil production of 1.5 million barrels of oil set to double over the next fifteen years, however, and countries in Asia, especially China, seeking higher imports to fuel their growing economies, the country can ill afford to wait for the American president to make up his mind.

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