Oil sands producers are facing an increasingly troublesome eastern front in their battle for market access, as environmental groups focus their efforts on the growing use of Canadian oil on the Atlantic seaboard.
Oil-sands protesters converged this week on Bretton Woods, N.H., where New England governors held their annual meeting with eastern Canadian premiers to discuss energy trade and innovation. While New Hampshire Governor Margaret Hassan rebuffed efforts to put the oil sands on the agenda, politicians in the U.S. Northeast are facing growing calls for California-type low-carbon fuel standards that could target Alberta's booming production.
"We are calling on Northeast leaders to oppose projects that would bring more tar sands oil into the region, and to implement a regional clean fuel standard along the lines of California," Emily Kirkland, a campaigner for Massachusetts-based Better Future Project, said in an interview.
Ms. Kirkland pointed to a recent report from the Natural Resources Defense Council, which forecast that, by 2020, the U.S. East Coast could be relying on oil sands-derived fuel for nearly 20 per cent of its consumption, assuming pipeline projects such as TransCanada Corp's Keystone XL and Energy East get built.
Keystone XL would deliver diluted bitumen to refiners in the U.S. Gulf Coast, which could then ship their product to eastern markets. Energy East would bring western crude to Irving Oil Ltd.'s Saint John refinery, which is a major exporter to New England and mid-Atlantic states.
New Brunswick Energy Minister Craig Leonard defended the Energy East project, saying it would displace imported crude – and oil shipped by rail from western North America. Mr. Leonard attended the governors' meeting on behalf of Premier David Alward.
"The question becomes: Since this product is already moving, which would you rather have it move by, rail or by pipeline?" he said in a phone interview. "To try to put roadblocks in front of the safer way to move the production doesn't seem to make a lot of sense."
Mr. Leonard said political leaders did not discuss oil sands, but they did focus on their various efforts to increase renewable energy and cleaner transportation options, including the expansion of electric vehicles and the expansion of natural gas-powered trucks.
"We're all trying to move towards a more renewable-based economy, but it's not going to happen overnight," he said. "And while there is a demand for oil, it makes more sense for us to sell our own product to other jurisdictions and utilize our own product rather than depend on other nations for our needs."
Greg Stringham, vice-president of the Canadian Association of Petroleum Producers, played down any industry threat, saying producers do not expect to make major inroads on the East Coast, while there does not appear to be much momentum for a punitive low-carbon fuel standard. And Natural Resources Canada said many sources of U.S. imported crude and refined product are as emissions-intensive as the oil sands, but they are not regulated. "Oil sands crude production is highly regulated and is a responsible, safe, and secure resource which is helping to meet North America's energy needs," the department said.
Environmental groups have won a small victory in persuading the town of South Portland, Me., to pass an ordinance which would prevent the export of oil sands-crude from its docks. South Portland is at one end of the Portland to Montreal pipeline, which currently moves imported oil to Quebec but could be reversed as the market develops.
A spokesman for the pipeline company – which is owned by Imperial oil Ltd. and Suncor Energy Corp. – condemned the decision as based on "irrational fears and in ignorance of plain facts," though he insisted no reversal is being planned.
Meanwhile, northeastern states have begun tracking and reporting crude sources for their transportation fuels, with the intention of eventually implementing a low-carbon fuel standards. but the movement stalled while the industry challenged California's system, a legal action that failed earlier this month when the U.S. Supreme Court refused to take up the issue.
It is unclear what kind of political support it will have until after November, when many of the area's governors face re-election battles or are ending their terms.
But at their meeting this week, the U.S. governors were more focused on their shortage of electricity transmission and natural gas pipelines, which is driving up energy prices particularly during harsh winters. At a news conference Monday, Gov. Hassan said the states need to protect the environment and tourist-drawing vistas while expanding and diversifying its energy sources.