Joe Oliver Makes “False Claims” in Keystone XL Push

In his efforts to advance TransCanada’s bid for the proposed Keystone XL pipeline, that will carry 700,000 barrels of oilsands oil from Hardisty, Alberta to refineries in the Gulf of Mexico, Natural Resources Minister Joe Oliver has travelled to Washington six times. During his most recent trip he resorted to “desperate and false arguments” to sell the project according to Robyn Allan, former President and CEO of the Insurance Corporation of British Columbia.

In a recent piece for the Vancouver Observer, Allan writes Oliver’s “eagerness” has led him to make misleading claims about the significance of the pipeline to energy security – for both the U.S. and Canada – job security and the environment.

During his November 6^th trip Oliver claimed “the approval of Keystone XL would enhance energy security, create thousands of jobs and support the environment. Approval would displace oil from Venezuela which has repeatedly threatened to cut off its supply to the United States and has the same or higher emissions as the oil sands, with less stringent regulations.”

As Allan points out, the Keystone XL would only account for a portion of imported oil to the U.S., accounting for only six percent of U.S. imports.

However, that amount of oil, if upgraded domestically and shipped to the east coast of Canada (which currently imports oil from other countries), could potentially be significant in terms of Canadian energy security.

So, to the claim of U.S. energy security, Minister Oliver is off the mark.

Allan claims that the argument for job security is equally misleading. Even President Obama took issue with claims the pipeline would create thousands of jobs in an interview with the New York Times.

He said, “Republicans have said that this would be a big jobs generator,” but “there is no evidence that that’s true. The most realistic estimates are this might create maybe 2,000 job during the construction of the pipeline, which might take a year or two, and then after that we’re talking about somewhere between 50 and 100 jobs in an economy of 150 million working people.”

The export of diluted bitumen from Canada, says Allan only guarantees Canadians will lose out on upgrading and refining jobs.  “Diluted bitumen shipped to the Gulf Coast means upgrading and refining oil sands crude does not take place in Alberta – it takes place in the U.S. So we can be assured Keystone XL actually represents thousands of jobs lost to Canada.”

When it comes to environment, Minister Oliver bases his reasoning that Keystone XL will “support the environment” on the claim that Venezuelan oil has the same or higher emissions as the oil sands but without a strong set of regulations to guide production.

Allan breaks down the claim this way: for the pipeline to actually benefit the environment, oilsands oil emissions would have to be lower than Venezuelan oil emissions, be capable of displacing Venezuelan oil, and Venezuelan oil not imported would need to remain unexploited.

To clarify on the first point, Allan reached out to Minister Oliver’s office but could not get a response.

Allan would be right in assuming that oilsands represent Canada’s fastest growing source of greenhouse gas emissions and that Alberta, due to industry, accounts for 49 per cent of Canada’s total emissions.

Without a strict basis for comparison, however, Allan takes an extremely favourable position – that Venezuelan crude has higher emissions than Albertan oil. But that assumption only propels Allan to ask the next question. Could oilsands bitumen displace Venezuelan crude in the U.S. market?

As Allan explains, this is extremely unlikely. Venezuelan oil is produced by a state-owned company Petróleos de Venezuela South America (PDVSA). PDVSA owns and controls three “captive” refineries in the U.S. which are supplied with a guaranteed feed of Venezuelan oil. Even if Canada could displace the Venezuelan crude supplying these Venezuelan-owned refineries, Venezuela would need to agree to halt production of an equal amount of oil from its reserves to allow for the ‘displacement’ of that oil.

This would amount to the shutting down of 40 percent of Venezuela’s resource sector.

Allan writes, “Mr. Oliver’s claim that Keystone XL would enhance energy security, create thousands of jobs and support the environment is wrong. For many of us concerned about adding value to our non-renewable resources, meaningful and long term jobs for Canadians, global warming and climate change, his brazen misrepresentations are insulting.”