Canada’s energy future is being affected dramatically by the development of the mining and in-situ production of crude bitumen in ever-increasing volumes from the oil sands. There are plans to export excess production to the U.S. Gulf Coast and ultimately the Far East, via the Keystone, Northern Gateway and Kinder Morgan pipelines, as well as to the U.S. Midwest, Central Canada and the Eastern Seaboard, through existing and slightly modified facilities. The volumes projected for exporting Alberta bitumen and synthetic crude oil, produced after the extraction and initial processing of the bitumen, are expected to double the current volumes by the end of the decade. A portion of this increase will be further refined in Canada. However, a significant amount will find its way to the U.S. or the Far East, given that it is assumed that the Keystone pipeline decision will be a “slam-dunk” after the U.S. election and after the proposed pipelines by Enbridge and Kinder Morgan are commissioned.
In 2011, Canada exported $68 billion of crude oil, while imports of crude oil to Canada amount to about $20 billion a year. What is the opportunity here? Western crude could displace this imported oil. That means the capital would be used in the country, providing an attendant multiplier effect. The possible next step would be for Canada to further process and refine into fuels and chemicals the bitumen and synthetic crude oil that are currently exported from the country, and to export these value-added products. This would increase their value from $48 billion to approximately $70 billion annually.
This added $22 billion is the pool of money at play if we invest in upgrading and refining capacity in Canada. There is a fiscal incentive for building new up-graders and refineries, using the latest and most efficient technologies. It means an opportunity to create new facilities, with the best environmental protection available. It means an opportunity to create jobs and to capture the multiplier effect of that money, so that it is invested in this country. It means an opportunity for the GDP impact to help finance the social programs that make Canada such a wonderful place to live.
This added value, not including its multiplier effect, will mushroom to about $70 billion per year by the end of the decade, given the volumes of crude bitumen that are anticipated. If the multiplier effect is taken into account, this would, in GDP terms, amount to about $9000 for every man woman and child in Canada.
How can we get there? Expanding Canada’s upgrading and refining capacity will take visionary leadership. It will take a change of national policies and co-operation among governments, private-sector firms, labour organizations and banks. It will only succeed if the decision-makers realize that the strategic benefits for Canadians of selling upgraded products are greater than the short-term gain for the few who sell bitumen as it comes out of the ground.
This should be the dream of – and become the reality for – every citizen of this country. Who will make it happen?
