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Carlos Pascual, the U.S. State Department's special envoy on international energy, says the U.S. considers Canada its most important energy partner. (DONNA CARSON/DONNA CARSON/REUTERS)
Carlos Pascual, the U.S. State Department's special envoy on international energy, says the U.S. considers Canada its most important energy partner. (DONNA CARSON/DONNA CARSON/REUTERS)

Canada 'most important energy partner,' U.S. envoy says Add to ...

The United States remains deeply committed to Canada as a reliable energy supplier – including oil sands production – despite its delay of TransCanada Corp. ’s Keystone XL pipeline.

That was the message delivered by Secretary of State Hillary Clinton’s top energy adviser in Ottawa on Thursday.

Carlos Pascual, the State Department’s special envoy on international energy, was here for a series of meetings with his disheartened Canadian counterparts on bilateral energy issues.

Topping the list of the Canadians’ concerns was President Barack Obama’s decision last November to delay approving the Keystone pipeline after Nebraskan officials demanded it be re-routed to avoid a sensitive environmental area.

But the envoy said that bilateral energy trade, including imports from the oil sands, remains strong and the U.S. and the world is counting on Canada to develop its vast resources.

“The United States values Canada as its most important energy partner,” he said in an interview. “There has never been a doubt about that. It is true now and it will continue to be true in the future.”

He said booming oil and natural gas production in the U.S. – along with secure access to Canadian imports – is a boon for U.S. national security, leaving the superpower far less dependent on the Middle East and Africa for its oil.

At a luncheon attended by several federal officials, Brian Crowley, president of the Macdonald-Laurier Institute, told Mr. Pascual that Canadians were “profoundly disappointed” that the U.S. administration appeared to be swayed by political considerations in rejecting the pipeline.

“It was important to express our disappointment and the hope that we can get things back on track,” Mr. Crowley, whose Ottawa-based think-tank hosted the lunch, said in an interview afterward.

He echoed the view common in the Alberta oil industry and Harper government that the Obama administration was seeking to delay the Keystone process beyond the November election in order to avoid a politically charged decision.

However, Mr. Pascual said the Obama administration responded to concerns from Nebraska, and then was forced to reject TransCanada’s original application because it could not meet a congressionally imposed deadline for a decision.

“The president did not reject the possibility of a pipeline. He said it could not be done within that time frame,” the envoy said. He added the State Department is currently working with officials from Nebraska as they review a proposed new route for the pipeline.

Prime Minister Stephen Harper seized on the November decision to delay the Keystone XL decision as an evidence that the U.S. was an unreliable customer and that Canada must diversify its exports to capture growing markets in Asia, particularly China.

It is a theme echoed by Mr. Obama’s Republican opponents, who have accused Mr. Obama of driving Canada into the arms of Beijing.

Mr. Pascual insisted the U.S. is not opposed to Chinese investment in the oil sands, nor in Canada’s efforts to diversify its exports. In fact, he noted in a presentation at the University of Ottawa that Chinese state-owned firms have invested more than $4-billion (U.S.) in the past two years in U.S. shale gas and tight oil plays.

“We think there is sufficient oil in Canada and production capability that Canada will sell oil to the United States, will sell oil to China and will put oil in international markets,” he said.

“That is really important. The fastest growth in demand for oil in the world is coming out of China and India. Being able to supply that growth with consistent and reliable supplies is absolutely critical to maintaining stability in global oil markets and being able to maintain stability in the price environment.”

The U.S. is becoming less dependent on overseas sources of crude. Its own production is expected to climb by two million barrels per day between 2005 and 2015. Canada alone now supplies a quarter of U.S. imports – equal combined level of the next two, Saudi Arabia and Mexico.

Imports declined to 45 per cent of U.S. consumption in 2011 from 60 per cent in 2005, and are forecast to fall, perhaps dramatically so, if the optimistic assessment of the potential for new oil production holds true.

But Mr. Pascual said the reduced reliance on imports does not mean the Americans can ignore the international market or withdraw from policing key oil trade routes.

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