Canada had better get its act together, immediately, on export pipelines. I don鈥檛 just mean the Trans Mountain Pipeline, now owned by you and me and all other Canadians. I mean we need to revive Northern Gateway and Energy East right now.
Why? Because our only customer for essentially all our exported oil may not need or want much of it anymore.
I was able to score a brief but very insightful one-on-one discussion with Harold Hamm, North Dakota鈥檚 biggest oilman, on May 31. Hamm is the CEO and largest shareholder of Continental Resources, and his company had been one of those who led the charge in North Dakota鈥檚 surge of oil production from 90,000 barrels per day roughly a decade ago to 1.2 million barrels per day today.
I just happened to end up in the breakfast line with him. I quoted to him a line from a speech he gave eight years ago at that very same conference, and how I have cited that speech numerous times since then. That was my in, and he said it would be OK if I talked to him briefly before the presentation started that morning. You can find it at www.pipelinenews.ca/1.23337588.
I asked Hamm if Canada is a competitor or compatriot when it comes to crude oil production. 鈥淭hey鈥檙e definitely competitors,鈥� he said, repeating, 鈥淭hey鈥檙e definitely competitors.鈥�
He explained how American oil refineries want heavy, sour crude, and they are increasingly exporting their North Dakota light sweet crude since Canadian oil is crowding them out of American refineries.
He also said America would become crude-independent by 2020. When I pressed him if this meant Canada was included, he said that America would be able to do it alone.
Therein lies an enormous problem for Canada, not just the oil sector, but our entire economy. What happens if our customer for 99 per cent of our exported crude oil decides it no longer needs us?
Trans Mountain is just a drop in the bucket in the export capacity we would need if we suddenly have to find other customers for the roughly three million barrels per day we currently export to the U.S. Last week, the Canadian Association of Petroleum Producers forecast Canadian oil production will grow 33 per cent from 4.2 to 5.6 million barrels per day by 2035.
That number is obviously contingent on America buying most of that production. But what if they don鈥檛 need it, or desire it?
Make no mistake about it: its oil wealth that funds not just Alberta鈥檚 economy and a good chunk of Saskatchewan鈥檚, too, but much of the equalization formula. Quebec鈥檚 damned near free child care? Oil. Their never-ending freeze on university tuition? Oil.
It also funds a large portion of federal coffers.
If we can鈥檛 sell our oil to America, we鈥檙e in big, big trouble.
And what if Donald Trump is re-elected as president in 2020, the same time America could become crude-independent, according to Hamm? They鈥檙e buddies, you know. It鈥檚 a good bet it was Hamm who invited Trump to come to that conference two years ago, on the campaign trail. That was the day Trump secured the Republican nomination and I just happened to get a chance to ask him about the Keystone XL pipeline.
Construction still hasn鈥檛 started on that pipeline. If America doesn鈥檛 want our oil (as Obama amply proved in delaying Keystone XL), we may never need it.
We鈥檝e also found in recent weeks that Canada has no friend in President Trump. We are marching to a trade war with our southern 鈥渇riend,鈥� the friend who has gotten nicey-nice with Kim Jong Un of North Korea. Kim鈥檚 spent the last several years trying to build nuclear missiles to aim at the White House. And yet Trump said the Canadian people are going to pay for our prime minister saying he鈥檚 going to stand up for us.
Given the trade wars he鈥檚 started with Canada, Europe, and now China, does anyone really think, given the option, Trump wouldn鈥檛 turn off the taps on the Enbridge mainline and existing Keystone pipeline on a whim, just because he could?
We need to re-examine our export options immediately, reactivate all these export pipeline projects and get them built now, before an unstable 鈥渇riend鈥� in the White House totally destroys our economy with a tweet. We need to have options to export every available barrel overseas, and we need those options in two years if at all possible.
