Tory leader panned over pipeline; More bitumen headed to U.S.

HINTON - Conservative Leader Ed Stelmach was criticized Saturday for failing to stem the flow of bitumen to the United States after regulatory approval was given to a pipeline project that will ship the product south.

The National Energy Board's approval late Friday of the $3-billion Alberta Clipper pipeline will initially see up to 450,000 barrels of bitumen per day shipped to Wisconsin when it becomes operational in mid-2010, with the potential to reach 800,000 barrels per day.

The pipeline is one of several projects announced or approved in the past year that will see bitumen upgraded or refined in the United States, sending potentially billions of investment dollars and thousands of value-added jobs down the pipeline.

During the 2006 Tory leadership race, Stelmach vowed to curb the shipping bitumen out of the country, comparing it to "scraping off the top soil" of prime farmland, but he's yet to implement any major proposals to achieve that end.

Campaigning Saturday through regions in west-central Alberta that rely on a resource-based economy, Stelmach maintained he's still committed to creating more value-added jobs, but won't force companies to follow his wishes.

He argued Alberta will continue to upgrade between 60 and 65 per cent of its bitumen as oilsands development and processing grows.

"It's one thing to say that we're going to use a stick, but we have to carefully look at what (free trade) agreements we have in place," Stelmach told reporters while campaigning in Hinton.

"We have to be very careful how we proceed. The main thing is we have to bring our costs down and that is by getting more tradespeople, and providing the housing and infrastructure."

All the cost and growth pressures are slowing the development of oilsands processing plants in Alberta and contributing to more and more bitumen being exported, he added.

Stelmach has previously suggested the amount of bitumen processed in Alberta will rise to 72 per cent by 2016, spurred by new upgraders on the drawing board and the government's value-added plans, which are still in the works.

The Tory leader has also said it's foolish to force energy companies to upgrade all their bitumen in Alberta because it would sink the price of the product.

Alberta produces about 1.3 million barrels of bitumen per day -- with about 800,000 barrels of that, or 62 per cent, staying in Alberta, and 500,000 barrels being exported and upgraded outside Canada.

Campaigning in east-central Alberta, Liberal Leader Kevin Taft said the Progressive Conservatives have dropped the ball on the issue by failing to adopt a comprehensive value-added policy that would keep the jobs and oilsands in Alberta.

"The Tories shrugged their shoulders and they're letting Albertans' wealth go south of the border," Taft said in Wainwright. "They just let it go and it's a huge strategic opportunity (lost) for Alberta."

Taft's value-added policy, however, has raised some eyebrows.

The Liberal leader would like to see bitumen upgraded in Alberta, but said there's a benefit to shipping some of the oilsands to other provinces, rather than losing it to the United States.

But Greg Stringham, vice-president with Canadian Association of Petroleum Producers, noted Albertans are receiving great benefits from the oilsands processing already occurring in the province.

He suggested the percentage of total bitumen being processed in Alberta could rise to more than 70 per cent by 2015 as the upgrading capacity comes in line with oilsands development -- about 3.5 million barrels per day.

"We're already getting great value here with the upgrading," Stringham said. "It's going to come along with the oilsands development."

Political observers, meanwhile, said the timing of the Clipper pipeline announcement is "like a slap in the face" to Stelmach because he's been so public about the issue. It also shows the Tory leader hasn't been able to persuade big oil and gas companies to follow his wishes, argued David Taras, political analyst at the University of Calgary.

"This was high on the hit parade during the leadership race and now it seems to be a forgotten policy," said Taras, suggesting the energy board's decision is another speed bump in Stelmach's campaign.

"One after another, it's become a nightmare campaign in which almost two or three times a week there's a shock to the campaign and it always seems to be bad news."

NDP Leader Brian Mason and labour groups immediately went on the offensive, arguing Stelmach is breaking one of his biggest political promises by sitting on his hands while new pipelines are built to export Alberta's crudest product.

"It's just exporting our jobs to the United States," Mason said.

He echoed protests by the Alberta Federation of Labour against $10.4 billion in new international oilsands delivery routes that the National Energy Board approved since September.

The lineup poised to enter construction includes the $5.2-billion Keystone Pipeline by TransCanada Corp., and the $3-billion Alberta Clipper and $2.2-billion Southern Lights projects by Enbridge Inc.

The Keystone project alone will export 18,000 jobs to the U.S., predicts an expert consultants' report done for the federation when it unsuccessfully fought the proposal at NEB hearings.

Among major participants in the emerging international oilsands network, EnCana Corp. ships bitumen to ConocoPhillips refineries in Texas and Illinois.

Husky Energy scrapped a planned $2.3-billion addition to its Lloydminster heavy crude upgrader and will ship its bitumen to a BP refinery in Ohio. Marathon Oil is expanding a Detroit plant to handle newly acquired Fort McMurray production.

By obtaining NEB approval of Alberta Clipper late Friday, the industry could export 1.4 million barrels a day of bitumen by 2015, or almost all forecast oilsands production growth, labour federation president Gil McGowan said.

"It won't be just raw bitumen going down those pipelines -- we'll also be losing thousands of high-paying upgrader and refinery jobs," McGowan said.

Wildrose Alliance Leader Paul Hinman, who says more upgrading incentives are needed in Alberta, questioned whether Stelmach has a plan to keep the wealth and jobs in the province.

"His platitudes and promises are hollow. He talks the talk, he never walks the walk," Hinman said in an interview. "This pipeline is shipping out our very precious natural resources and giving them to someone else to process and make all the money."

Calgary Herald, Page A1, Sun Feb 24 2008
Byline: Jason Fekete and Gordon Jaremko

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