Opinion: Canadian crude is an attractive alternative to imported oil

Contributed to The Montreal Gazette
Greg Stringham
Vice President of Oil Sands
Canadian Association of Petroleum Producers
August 08, 2014
Canada has the third-largest oil reserves in the world, but we import large volumes of oil from foreign sources into Eastern Canada, including Quebec, every day.

Surprised? Well, you are not alone.

Oil refineries in Quebec and Atlantic Canada import more than 600,000 barrels per day from foreign sources. But with Canadian oil production growing, using Canadian crude oil in Quebec, instead of imports, is an attractive option.

First, we know the regulations under which Canada's oil is produced. While some will argue our energy future should not include oil, the reality is that it will; so producing Canadian oil safely, and continuously improving environmental performance, is our best, most reasonable choice.

Many foreign oil suppliers to Quebec, such as Algeria, Angola and Kazakhstan, don't have the regulatory system or transparent environmental reporting that Canada has in place.

You can't discuss safety or environmental performance, or push for better performance, unless you have the data, technology and people to improve it. Our track record of technological investment and advancement ”such as reducing oil sands GHG emissions 28 per cent per barrel since 1990” indicates that Canada does.

Second, when oil is produced in Canada, Canadians benefit from the jobs that oil creates in resource communities and across the country in manufacturing, professional services and technology.

Crude oil is Quebec's top imported product. Government data shows the province spent $13.7 billion importing oil from international markets in each of 2012 and 2013. Most of that total comes from overseas markets, with little in the way of economic return.

However, Alberta's oil sands sector has purchased nearly $600 million in goods and services from Quebec over the past two years, according to an estimate by the Canadian Association of Petroleum Producers. These are tangible benefits for Quebec's economy.

Ste-Claire-based Prevost and Ezeflow, based in Granby, are two well-known Quebec firms selling their products directly to the oil sands.

Large service suppliers also include Montreal-based GardaWorld, which provides security services to downtown Calgary office towers. From an investment perspective, there is also the Caisse de dépa´t et placement pension fund, which holds about $4.7 billion in oil sands equities, according to U.S. filings.

So if it makes sense economically for Quebec to use more Canadian crude, what about making sure crude oil gets to Quebec safely?

Regardless of where Quebec sources its crude oil, most of it arrives via pipelies reliably and safely.

Pipelines have delivered crude oil, including oil sands crude, in North America for decades. Credible third-party studies, such as last year's U.S. National Academy of Sciences report, indicate diluted bitumen behaves the same in pipelines as other crude oils.

In Canada, more than two-thirds of our domestic energy demand is met by crude oil, natural gas and related products, most of which is transported by pipelines. Companies are subject to stringent regulations and laws that they must adhere to in order to operate in Canada.

When it comes to safety, the pipeline industry has a singular objective: zero pipeline incidents. In 2012, the Canadian Energy Pipeline Association (CEPA) announced CEPA Integrity First, which is a program that defines and implements best operating practices for pipeline safety, environmental protection and socio-economic issues. The program enables pipeline companies to systematically seek continuous performance improvements in a transparent manner.

CEPA member companies also abide by the mutual-aid assistance agreement to enhance their emergency response effectiveness by helping each other in the event of a significant emergency. The pipeline industry also supports legislation that will require companies operating major crude-oil pipelines to have a minimum of $1 billion in financial capacity to respond to leaks, spills and ruptures.

Canadian crude will move to market, or demand will be met by oil from other sources. In either event, oil will be produced, transported and consumed.

Connecting responsibly produced Canadian supplies safely to markets in Quebec, Eastern Canada and beyond remains a key priority for our industry.

Quebec and Canada will benefit as a result, because oil from Canada is the best choice for all Canadians.