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The Globe and Mail

Ottawa energy strategy targets diverse marketplace

The federal government is strengthening its support of a controversial pipeline project, as Canada's energy and industry ministers gather in Alberta in hopes of pressing forward a national energy strategy.

One of the key planks of such a strategy, those ministers said, is more co-ordinated government support for Asian exports of Canadian oil and gas.

Part of that includes a renewed effort to beat back red-tape barriers to new projects, as it becomes clear that such exports are an increasing priority for Ottawa. On Monday, federal Natural Resources Minister Joe Oliver offered some of his clearest statements to date in support of such efforts.

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"We want to diversify the marketplace," he told reporters after a visit to the Fort McMurray area. "The Americans are a great customer, but 97 per cent of our energy [exports]is going to one customer, and it clearly behooves us to diversify."

Mr. Oliver was especially pointed with regard to Northern Gateway, the $5.5-billion pipeline proposal by Enbridge Inc. to connect the oil sands with the British Columbia coast, where crude could be shipped to customers in China, California and elsewhere.

Gateway has stirred fierce criticism among B.C. aboriginal groups, fearful that spills will foul salmon-bearing rivers and ocean waters integral to traditional ways of life.

But "Gateway, in our opinion is in the national interest," Mr. Oliver said, suggesting a strong willingness by Ottawa to support development of the controversial project, which has yet to gain regulatory approval. Reducing regulatory obstacles is a key goal, Mr. Oliver said.

Discussions between ministers will touch on ways of "improving the regulatory system so it's less duplicative, so it's more fair, transparent and independent – but takes into account the need for expeditious review."

It's clear that Canada's political leaders increasingly believe the stakes are high for Canada if it is not able to find other markets for its energy products, which are the single largest contributors to the country's economy. Several developments have heightened those stakes. The discovery of immense U.S. shale gas reserves is already shouldering out Canadian product. In addition, delays in the U.S. approval decision for another controversial pipeline, TransCanada Corp.'s Keystone XL project, have stirred worries about the security of future energy sales south of the border.

Without other alternatives, growth in Canada's energy sector could be choked off, an event that would hurt not only Alberta, but other areas of the country that have benefitted both from manufacturing oil sands equipment and sending workers west.

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The energy ministers meeting is taking place against that background. Over the weekend, a number of political leaders visited oil sands projects owned by Suncor Energy Inc., Cenovus Energy Inc. and Canadian Natural Resources Ltd. Over the first few days of this week, ministers will hear from industry and environmental group, as they work to draft the foundation of a Canadian energy strategy.

New exports, Alberta Energy Minister Ron Liepert said, are a "natural starting point" for such discussions.

"If in fact we're going to be a global energy superpower, then we better find ways to get our product to markets globally," he said.

For industry, the possibility of increased government support for exports is welcome news. In addition to Gateway, several others companies are looking at ways to pipe or rail oil sands crude to the coast for export; at least four groups are also pursuing projects to liquefy natural gas and ship it across the Pacific.

Having governments speaking with one voice will help build confidence in overseas markets about buying Canadian – a key consideration, given that this country's energy must compete globally, said Tim Wall, president of Apache Canada Ltd., one of the firms pursuing LNG exports.

Companies must have "the ability to be able to compete with people like Australia," he said. Governments, he added, can help pave the way, "and then we come in behind and try to market our product being a Canadian product."

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International confidence in the regulatory system is especially important if Canada is to woo foreign investment dollars, said Greg Kist, vice-president of investor relations and marketing with Progress Energy Resources Corp, which is also working toward LNG exports.

"Foreign markets have to be comfortable that Canada is open for business, and Canada is willing to put in place the things necessary to allow this energy to move abroad," he said.

But, he warned, "time is of the essence. … We can't wait 10 years for this to happen. Otherwise, others will ultimately supply those Asian markets."

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