Canada’s oil sector is overly dependent on the United States and needs more pipelines built quickly to reach new markets and preserve the country’s standard of living, a long-time oil sands executive says.
Former Suncor Energy Inc. chief executive officer Rick George told a business audience Tuesday a shortage in pipeline capacity is a matter of Canadian “sovereignty,” one that’s driving down the price paid for Canadian oil, hurting resource companies and gouging government revenue.
“Where our oil exports are concerned, Canada depends almost wholly on the United States, but the reverse is not true,” Mr. George said in a speech at an Edmonton Economic Development Corporation luncheon. He later added: “We need to move this oil in this great province of ours from its landlocked position to the Pacific coast. And we need a new pipeline to do it. Without an alternate export market, Canada could suffer a dramatic blow to its economy and its standard of living.”
To do so, he urged pipeline advocates and critics to get “out of the trench” and have a “civil discussion.”
His speech comes as Alberta’s government issues dire budget warnings because of the growing gap between the benchmark price of American oil and the price paid for the province’s oil.
Mr. George said the spread, currently at about $37, is “really a matter of infrastructure,” one he believes will narrow over the next 12 to 18 months. He expects TransCanada Corp.’s Keystone XL pipeline to be approved, more oil to be shipped by rail, and Enbridge Inc.’s existing Line 9 reversed to send oil east to Montreal.
“The whole system is working on ways to do this. What you have to remember is this is a commodity, right? And the world is going to figure out a way to arbitrage that differential,” Mr. George told reporters. He expects the price gap to narrow before a capacity crunch forces companies to limit production.
Mr. George, who is now a partner at Novo Investment Group, made the keynote speech while promoting his book, Sun Rise.