Obama Has Left Door Open for Keystone, Alberta’s Morton Says
The U.S. government has “left the door open” to approve the Keystone XL pipeline, which would make it the first of three proposed export routes for Canadian crude to be built, Alberta Energy Minister Ted Morton said.
TransCanada Corp. (TRP)’s planned pipeline would deliver 700,000 barrels a day of crude from Alberta’s oil sands to the Gulf of Mexico through six U.S. states. President Barack Obama denied a permit for the project last month after Nebraska farmers and environmentalists raised concerns about possible contamination of a state-wide aquifer.
Morton said support from the organized labor component of Obama’s Democratic Party would help Keystone XL to be built before two projects that would let Canada boost crude shipments to Asia: Enbridge Inc.’s proposed Northern Gateway pipeline that would run from Alberta to Kitimat, British Columbia, and Kinder Morgan Inc. (KMP)’s proposed expansion of the Transmountain line to Vancouver.
“Notwithstanding the deferral, Keystone XL is still likely be the first one to go forward,” Morton said in an interview after a speech in Toronto. “We are confident that after the political season is over down there, there will be bi-partisan support for Keystone XL.”
Hearings on Northern Gateway, which crosses land claimed by Indian bands and faces opposition from environmentalists concerned about tanker traffic in an area, are not expected to finish until mid-2013, Morton said. The Transmountain project has the advantage of using existing rights-of-way, he said.
About 99 percent of Canada’s crude exports go to the U.S. There is export pipeline capacity to handle production until 2016-17 and rail shipments could grow, while investment would fall if no pipeline is built within the next five years, Morton said.
Alberta, with the world’s third-largest crude reserves, plans to increase the size of its savings fund from oil and natural gas revenues in Heritage Savings Trust Fund, Morton also said.
The fund, created 35 years ago, was worth C$14.7 billion ($14.8 billion) on Sept. 30 following a net loss of C$134 million in the previous 12 months, according to the province’s finance ministry website. Details on plans for the fund will be presented this week, Morton said.
Alberta, the nation’s third-largest economy, presents its annual budget on Feb. 9, with Premier Alison Redford juggling the need to balance expenses and revenue while fielding demands from voters for improvements in health care, infrastructure and education.
Growing the Fund
“I think when you see the budget, which will be introduced on Thursday, and Bill 1 introduced today, you’ll see Premier Redford is taking concrete steps to address the issue of growing the Heritage Fund again,” Morton said. He declined to provide details.
The Albertan fund is a fraction of Norway’s 3.06 trillion kroner ($530 billion) Government Pension Fund Global savings plan funded from its oil and gas sector. The Heritage Fund has “languished” for years and the provincial government has failed to create a “nest egg” that will help compensate for the loss of fossil fuel resources when they eventually run out, the Pembina Institute has said.
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