‘The U.S. market will not be large enough to accommodate all of Canada’s oil exports,’ said Natural Resources Minister Joe Oliver.
Canada is scrambling to build an expansive new oil pipeline network to reach new markets including Asia as its sole customer, the United States, hikes production, aiming to become the world’s top exporter.
Canada holds the third-largest oil reserves in the world but 98% of its oil exports and 100% of its natural gas shipments go the United States. This has made Canada the top energy supplier to its neighbor.
But that could soon end.
The United States is seeing a boom in shale gas and offshore oil production as it strives for energy independence, and the International Energy Agency recently said the U.S. could become the world’s top oil producer by 2020.
This week, Canada’s Natural Resources Minister Joe Oliver urged a fix: build more pipelines to move oil from landlocked Alberta province to both refineries in eastern Canada and the Pacific coast to fill tankers bound for Asia.
“The U.S. market will not be large enough to accommodate all of Canada’s oil exports,” Oliver said.
“By 2035, Canadian oil exports will be 4 million barrels per day, but total US imports will only be 3.4 million barrels per day. This highlights the need for Canada to access new markets,” Oliver added.
The federal government has put its weight behind several new pipeline projects, but the initiatives face stiff opposition from environmentalists and regional authorities.
“We’re already lacking outlets for the oil now being produced — existing pipelines are at capacity,” said Marco Navarro-Genie, a researcher at Calgary-based Frontier Centre for Public Policy.
“We’re forced to sell our oil at $22 below market value because we can’t get it to any market outside of North America,” Navarro-Genie said.