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New energy infrastructure ‘strategic imperative’ for Canada

Joe Oliver, speaking at the 2013 Energy and Mines Ministers’ conference Monday in Yellowknife, said the U.S. market is important for Canada, but that it is unlikely ‘to be growing at the pace that it had been growing.’


Oil and gas companies need to diversify their export markets because new discoveries south of the border will temper demand for Canadian energy, say the country's natural resources ministers.

Joe Oliver, Canada's minister of natural resources, met with the majority of Canada's energy and mining ministers Tuesday in Yellowknife at their annual meeting. The group emphasized the importance of opening export markets in the Asia-Pacific region, which requires new infrastructure.

Energy proponents have long argued new pipelines must reach tidewater so Canada can charge more for its products because it would bring access to more global customers. Now the industry and politicians are increasingly calculating the impact of surging oil output in the United States, as production soars in places like North Dakota and Texas.

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The shift in focus shows how Canada's energy ministers are trying to strengthen the argument for export pipelines. Mr. Oliver noted Canadian energy exports to the United States will continue to grow, but at a slower pace. This means support for the controversial Keystone XL pipeline, which Prime Minister Stephen Harper once called a "complete no-brainer," may shift to other projects. Proposed pipelines to the east and west coasts would allow tankers to move oil and gas products to Asia. All proposals, however, particularly for pipelines, come with opponents.

The U.S. "has found vast amount of shale gas and tight oil and in the future will not need us as much as they have in the past," Mr. Oliver told reporters after the conference. "The U.S. market remains an important market for Canada, but it is not going to be growing at the pace that it had been growing."

Virtually all of the Canada's oil exports go to the United States, and without an infrastructure boom, this will not change.

Mr. Oliver focused on reaching markets in the Asia-Pacific region in the communique issued after the annual conference. His statement did not reference how exporting energy to countries like China, India, South Korea, and Japan would benefit prices for producers in Canada. Instead, he said the country must establish "the conditions necessary" for Canada to diversify its markets, particularly the construction of infrastructure.

"This is a strategic imperative since Canada currently exports virtually all its oil and gas to the United States," he said. Mr. Oliver in his comments in the communique did not specifically say this meant building pipelines, which the industry and politicians argue is the safest and most efficient way to transport oil and gas.

The federal government's staunch support for TransCanada Corp.'s proposed Keystone XL, which would connect the oil sands to refineries on the U.S. Gulf Coast, has not diminished, Mr. Oliver said.

Prince Edward Island, Nova Scotia, Manitoba, and Quebec all sent deputy ministers, according to Brian Kennedy, who works with the Northwest Territories, which hosted the conference. Quebec did not sign the final communique.

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"Quebec acknowledges the preparation of this press release and is open to collaborate with other governments in sharing information and best practices and encourages bilateral discussions with provinces and territories sharing common interest on energy and mining related issues," the document said.

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