Guess Who’s Coming to Dinner?

The prevailing view among many U.S.-based advocates of a national Low-Carbon Fuel Standard (LCFS) is that the exportation of Canadian oil sands is a one-buyer market; that the “one-buyer” is the United States; and that if Congress were able to deny American consumers access to those Canadian resources, the market would fall down, shrivel up, and cease to exist within a matter of months, not years.

And while a situation like that would have serious (and adverse) implications for the U.S. — higher prices at the pump, a threat to good-paying jobs, increased dependence on unstable regions of the world for our energy — at least, the thinking goes, we’d be killing off a major source of so-called “heavy” hydrocarbons – oil that’s never to be found, produced or used again.

It’s time to think again. It turns out the Canadians have a lot more options than LCFS proponents had ever thought possible.

And option #1 may soon be China — a nation of 1.3 billion, and starting in 2009, the world’s largest purchaser of gasoline-powered vehicles. News out of Alberta this week suggests that relationship is already well cultivated and very much underway, with state-owned oil giant PetroChina inking a $1.7 billion USD deal to develop Canada’s MacKay River and Dover oil sands projects. From a Bloomberg piece filed by John Duce and Gene Laverty:

PetroChina Co. has agreed to pay C$1.9 billion ($1.7 billion) for a stake in a Canadian oil sands project in its biggest North American acquisition, widening the search for energy resources overseas. …

The transaction is part of the “long-term, strategic development of the company,” PetroChina spokesman Mao Zefeng said today. The purchase is also the first time PetroChina has invested in an oil sands project in the continent.

Part of a “long term, strategic” plan, all right – to snap up secure, affordable energy resources that had previously been earmarked for consumers in the United States. And who can blame either party? While the United States continues to sit on its hands, locked in a furious debate with itself over whether to engage this critical market, and even actively pursuing legislation aimed at banning those shipments from crossing the border, Canada continues to engage new buyers. And China continues to gobble up every single energy asset on which it can get its hands.

Don Martin of Canada’s National Post puts a finer point on it:

Canadian oil sands exports are increasingly encountering U.S. political resistance at federal, state and municipal levels as low-carbon fuel standards move through the legislative process to erect barricades against an energy with an extraction problem.

But it is delusional because there is no post-refining difference between conventional and non-conventional oil and banning it in one state or city merely moves it to another, with no corresponding reduction in carbon emissions. …

If America doesn’t want to use [the oil sands] on environmental grounds, they’re only one pipeline away from losing it to someone else.

One pipeline away – from Alberta’s oil fields to the Canada’s west coast. And from there? Hundreds of thousands of barrels of secure, affordable energy a day loaded onto tankers the size of football fields, transported across 6,000 miles of ocean, unloaded in Chinese ports, processed in Chinese “refineries,” and burned by the same gas-powered vehicles we have here in the U.S.

But at least we’re reducing CO2 emissions, right? Hardly. We’re just outsourcing our energy supplies to the China. Suits China just fine. Canada too. And apparently: the pro-LCFS crowd in the United States.


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