Canadian Finance Minister Says New Energy Markets Crucial for Economy
By Paul Vieira
MONTREAL--Canadian Finance Minister Joe Oliver on Monday said failure to get landlocked Alberta crude to markets other than the U.S. will have "stark" consequences for the Canadian economy.
Mr. Oliver's comments come days before the Conservative government of Canadian Prime Minister Stephen Harper is expected to issue a verdict on a controversial proposed pipeline to transport crude from the Alberta oil sands to Canada'sPacific Coast.
According to prepared remarks he was set to deliver to a blue-chip economics conference in Montreal, Mr. Oliver noted that a lack of pipeline infrastructure in Canada means Canadian crude producers sell their oil at a discount compared with benchmark oil prices. That situation isn't sustainable, he warned, and could worsen as Canada's main buyer of crude products, the U.S., is on the path to energy self-sufficiency.
"Market diversification has become an obvious and crucial strategic objective. Simply put, we need new customers," Mr. Oliver said.
He said growing U.S. supply and a lack of pipeline infrastructure means Canadian producers sold their crude at a discount compared with benchmark oil prices, leading to lost revenue of nearly 30 billion Canadian dollars ($27.4 billion) in 2013.
"So the choice is stark," the minister said. "Head down the path of economic decline, higher unemployment, limited funds for social programs like health care, continuing deficits and growing debt or achieve prosperity and security now and for future generations through the responsible development of our resources."
Mr. Harper is set to issue a decision, no later than June 17, on whether Enbridge Inc. can proceed with its proposed Northern Gateway pipeline, which would connect Alberta's landlocked oil sands to a Pacific Coast port for export primarily to markets in Asia. That project has run into stiff opposition in Canada's westernmost province, British Columbia, especially among aboriginal groups and environmentalists.
The two main Canadian federal opposition parties, the New Democrats and Liberals, oppose the Northern Gateway pipeline.
Canada has also been stymied by efforts to get approval from Washington for TransCanada Corp.'s Keystone XL project, which would carry Alberta crude to the U.S. Gulf Coast.
In his remarks, Mr. Oliver also said Canadian export growth has been disappointing, and capital investment has been "stagnant." Both are key ingredients in the Bank of Canada's outlook for modest economic growth.
"But we are optimistic they will come back," he said.
Write to Paul Vieira at email@example.com
(END) Dow Jones Newswires 06-09-140936ET Copyright (c) 2014 Dow Jones & Company, Inc.