According to Canadian Ambassador to the US Gary Doer, the US $12 billion Keystone Gulf Coast Expansion Project will play an important role in linking Canadian crude oil with the largest refining markets in the US and will, in the process, significantly improve North American energy security.

Canadian Ambassador to the US Gary Doer

TransCanada began commercial operation of the first phase of the Keystone Pipeline System on June 30, 2010. A newly constructed innovative bullet line now carries oil nonstop from Canada to market hubs in the US Midwest.

Phase 2 will extend the pipeline from Steele City, Neb., to Cushing, Okla. The proposed Keystone Gulf Coast Expansion Project is a 36-in. line that would stretch 1,661 miles (2,673 km) from Hardisty, Alberta, southeast through Saskatchewan, Montana, South Dakota, and Nebraska. It would incorporate a portion of Phase 2 of the Keystone Pipeline to Cushing and continue south through Oklahoma to a delivery point near existing terminals in Nederland, Texas, to serve the Port Arthur, Texas, marketplace.

While Canada campaigns to move forward with this project, the country also is addressing the challenges associated with oil sands production. In an exclusive interview with E&P, the ambassador shared his thoughts on these subjects.

How will the Keystone project improve US energy security?

If you ask most Americans the question, “Where does most of your oil come from?” they would say Saudi Arabia, but Canada is the largest supplier of oil to the US.

When people argue against oil from Alberta – or argue against all oil or fossil fuels – they often neglect the fact that there is a continuing demand for energy. Oil and gas will continue to be the fuels that meet that demand.

The next question in terms of the energy security debate is, “Would Americans prefer to get their oil from Canada, a neighbor with a democratic government and with the same democratic values as the United States, or would they prefer to get it from the Middle East or Venezuela?” I think the answer to that question, again, is overwhelmingly that they would prefer their neighbors.

Approval of the Keystone pipeline is going to be a defining point at which the United States decides whether it will rely more on Canada and less on the Middle East.

I think Governor Brian Schweitzer of Montana said it best when we were discussing the Keystone project. He said, “I don’t send my national guard to Fort McMurray or Edmonton; they are in the Middle East risking their lives.”

I can’t make a better argument than that of the governor’s regarding US energy security.

Does the project introduce benefits other than energy security?

There are many economic benefits. Thousands of jobs will be created through pipeline construction and operation. That is one of the reasons the project has garnered support in Montana, North Dakota, South Dakota, Oklahoma, and Kansas and from both of the US senators from Texas.

Usually when you’re proposing an energy project, people say, “Not in my backyard.” For the most part, that isn’t the case with the pipeline. The money associated with building this pipeline is not coming from the public sector. It is coming from the businesses themselves, and that investment will create an estimated 13,000 private sector jobs directly connected to the project along with thousands of additional jobs indirectly associated with the pipeline.

While it’s true that Texas has a lower unemployment rate than the rest of the US – about 8.1% – the state needs these jobs. The pipeline project has the potential to help the economy.

Now is the time to get the building trades people, who have a 25% unemployment rate, working.And this is not requiring any government subsidies. It’s straight-up old private-sector money – “cash on the dash,” as they say. Is the vocal opposition of environmentalists likely to be an obstacle to creating a broader market for production from the oil sands?

We acknowledge that sometimes we are dealing with advocates against oil. The unfortunate situation is that they often oppose operations on the basis of what I call “frozen facts.” This is particularly an issue in Washington, not here (in Texas) and not generally where the pipeline is proposed to go.

Phase II of TransCanada's Keystone Pipeline will extend the pipeline from Steele City, Neb., to Cushing, Okla. The photo shows construction near Augusta, Kan., in August 2010. (Image courtesy of TransCanada)

The number one frozen fact we have to deal with is the perception of emissions.When the oil sands were first being developed, emissions were high – 80% higher than conventional oil – but that level has been brought down to 18%. It’s lower than that of California thermal oil.

Number two is water utilization. Water volumes required to produce the oil sands was high when it first started. It’s like comparing the old IBM computer that filled up a room to a BlackBerry.

Water usage has been reduced from 10:1 to 2:1, which is lower than ethanol. And it still must continue to improve as far as Canadians are concerned.

Number three is the belief that the oil sands are devastating the province. In fact, we’ve set aside a portion of the Boreal Forest in Canada that is the size of France; so we’ve preserved a lot of land.We do take seriously preserving forests in our country, especially some of the undisturbed lands that historically have never been touched except for the traditional aboriginal people who lived in those areas.

Those are the frozen facts we have to deal with in Washington. It is critical that we work to continue to disprove them.

Can you discuss some of the technologies that have been put to use to address such things as the tailing ponds?

A lot of the technology has been used to reduce the number of tailing ponds and the volume of water they contain.A big part of that is reduced water utilization at the front end.A lot more water is reused now, as is a lot of land.

The industry in Canada knows that economic sustainability is tied to environmental responsibility. Companies can’t rely on energy security to drive the industry; it has to be a work in progress on environmental sustainability as well.

The message Canada’s government has given to the industry is that the best way to deal with critics is to correct the facts and to keep moving our feet to improve our record.

What are some of the other things that you are contending with?

One thing we are contending with is that inside Washington, nobody wants to talk about coal having 60 times more emissions than the oil sands. Because nobody wants to take on the coal lobby in Washington, the oil sands have sort of become a bit of a target. I’m convinced that if people have the proper facts, the oil sands can survive this scrutiny. The other thing we’re contending with is propaganda. I was attending a panel in Copenhagen with Canadian Prime Minister Stephen Harper last year that addressed emissions and environmental responsibility. There was a beautiful actress on the panel who said, “You know, I’ve weaned myself completely off of fossil fuels.” My response is that it’s a long kayak ride from Hollywood. Buying credits doesn’t mean you’ve weaned yourself off fossil fuels.You still take an airplane over to Copenhagen. This sums up the battle we’re in.

How do you think Canada measures up in terms of environmental responsibility?

Everybody wants to improve the environment, and that’s why Canada signed on with the United States to a 17% reduction in emissions by the year 2020 from 2005.We committed to that in Copenhagen. It is a more doable proposal from our perspective than Kyoto. It’s more practical in two ways: More countries have signed on, and it is a more realistic and achievable objective. We’ve also got harmonized agreements with the goal of reducing carbon emissions by 17%, and we’ve come forward with the light vehicle and the tailpipe emissions standards.

Meanwhile, Canada is going ahead with new regulations on coal, which will probably eliminate all but two coal-fueled plants in Canada for the purposes of electricity.

We’re not trying to be “holier than thou,” and we know we have to continue to improve our footprint. We take that seriously, but critics of the oil sands should consider the fact that where other oil is coming from is not Disneyland.