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Saturday, June 28, 2008

Alberta's mission: convert oil sands skeptics

Toxic tailings ponds, such as this one at Syncrude's Mildred Lake mine site, are an environmental challenge left behind after extraction of bitumen from the oilsands.Chris Schwarz/Canwest News ServiceToxic tailings ponds, such as this one at Syncrude's Mildred Lake mine site, are an environmental challenge left behind after extraction of bitumen from the oilsands.

WASHINGTON -- Two years ago, the Alberta government parked a huge dump truck on the National Mall in Washington, announcing to U.S. lawmakers Canada was about to become the next big thing in global energy.

It was an ostentatious display -- the yellow behemoth used in oilsands extraction stood five metres tall, with four-metre-high tires -- that helped put Alberta's oilsands on the map for a Congress deeply worried after 9/11 about the security of the U.S. energy supply.

But the higher profile has come with a cost. Now, Canadian oil is sparking fear and loathing on Capitol Hill and elsewhere.

After playing defence for the past year against a focused U.S. environmental lobby, federal and provincial officials were blindsided this week when big-city U.S. mayors and Barack Obama's campaign announced their own distaste for "dirty" Alberta oil.

With record-high gas prices dominating U.S. election-year politics and fuelling public anger, Canadian officials are girding for an intense and protracted fight to change the oilsands' image and protect one of Canada's richest exports to the U.S.

"Our big, big job is not so much lobbying. It's educating," said Allan Gotlieb, Canada's ambassador to the U.S. in 1981-89.

"It's to make people understand that a lot of the criticism about the oilsands is unfair and unwise, and potentially damaging to U.S. interests."

The plan? Convert oilsands' skeptics, one member of Congress at a time. Alberta is taking two influential Democratic lawmakers - including the chairman of the House committee on energy and air quality - on a tour of the Athabasca oilsands next week. A similar trip is planned for congressional staffers later this summer, part of Canada's campaign showcasing its efforts to reduce the industry's carbon footprint.

"With U.S. lawmakers, we are letting them know that we don't view it to be a showdown between the economy and the environment," said Gary Mar, Alberta's representative in Washington.

"We know we have to show leadership on both."

He cites industry statistics about environmental advances in oilsands production: Greenhouse gas emissions per barrel of oil have dropped 45% in the past decade, and where five barrels of fresh water were needed to produce one barrel of oil, some companies now use less than a barrel of water.

But that message has been lost in the push by U.S. lawmakers - including Mr. Obama and Republican candidate John McCain - to break U.S. dependence on foreign oil.

Until recently, Americans considered foreign oil principally the product of Saudi sheiks, or politically unstable Nigeria and politically unfriendly Venezuela.

What frustrates Canadians in Washington is that Hugo Chavez's heavy oil - some of it brilliantly marketed as cheap heating fuel to residents in the Bronx and other poor U.S. communities - has become less offensive to environmentalists than petroleum from the U.S.'s northern neighbour.

"The environmental movement is interested in stigmatizing oil, and it suits their purpose to focus on oilsands oil, because that seems to be where the growth is," said a senior Canadian government official.

"They would have liked the United States to have moved off of oil yesterday."

The reality is far more complicated. Last year, Canadian oil supplied 18% of U.S. needs. At least 50% of the oil refined in Illinois, Mr. Obama's state, comes from Canada, and half of that from Alberta's oilsands. Demand is only expected to grow, with long-term plans for 90% of oil refined in the U.S. Midwest to come from Canada.

"In the end, Senator Obama has to get real," said Dave Sykuta, executive director of the Illinois Petroleum Council.

"Canadian oil is in the bull's eye right now because environmental groups have decided to make it their cause. But without it, the Midwest would be screwed."

Gordon Giffin, a former U.S. ambassador to Canada during the Clinton administration, said U.S. policy-makers have "a very big void in understanding" the extent of Canadian oil resources and the industry's increasing environmental sensitivity.

He said he was "frankly stunned" by the mayors' approval of an anti-oilsands resolution at their conference this week, and "the industry in Canada was caught off guard and similarly surprised."

"[T]here hasn't been an adequate recognition of the intensity of the argument on the [environmental] side," he added.

"If you cede the podium to the other side, then negative impressions get created."

With the next president and Congress expected to accelerate efforts to develop alternative energy sources - and potentially pass new global warming legislation - Canada wants to ensure the U.S. pursues a continental energy and climate strategy. Ottawa would like nothing more, for example, than to be included in any future cap-and-trade plan for greenhouse gas emissions.

Canadian officials believe most U.S. lawmakers, even Democrats who tout themselves as environmentalists first, are ultimately pragmatists. Notwithstanding tough campaign talk, Ottawa thinks U.S. national interests will eventually trump the "special" interests that demand attention during the presidential campaign.

Mr. Mar argues it's simply not logical for U.S. lawmakers or environmentalists to make his province's oilsands their energy enemy.

"If you stop oilsands from coming into the United States, you will increase the reliance of the U.S. on other sources of oil -– perhaps Venezuela, Nigeria and Saudi Arabia," he said.

"Alberta oil will go somewhere else, perhaps China, perhaps India. The ability of environmentalists to influence how that oil is used in those jurisdictions is very limited."

Canwest News Service

Original here

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