CALGARY, Alberta (AP) — In the northern reaches of Alberta lies a vast reserve of oil that the U.S. views as a pillar of its future energy needs.
China, with a growing appetite for oil that may one day surpass that of the U.S., is ready to spend the dollars for a big piece of it.
The oil sands of this Canadian province are so big that they will be able to serve both of the world's largest economies as production expands in the coming years. But that will mean building at least two pipelines, one south to the Texas Gulf Coast and another west toward the Pacific, and that in turn means fresh environmental battles on top of those already raging over the costly and energy-intensive method of extracting oil from sand.
Most believe that both will eventually be built. But if the U.S. doesn't approve its pipeline promptly, Canada might increasingly look to China, thinking America doesn't want a big stake share in what environmentalists call "dirty oil," which they say increases greenhouse gas emissions.
Alberta has the world's third largest oil reserves, more than 170 billion barrels. Daily production of 1.5 million barrels from the oil sands is expected to nearly triple to 3.7 million in 2025. Overall, Alberta has more oil than Russia or Iran. Only Saudi Arabia and Venezuela have more.
Alberta is one of the few places where oil companies can invest, as the majority of the world's oil reserves are controlled by national governments. Only 22 percent of the total world reserves are accessible to private sector investment, 52 percent of which is in Alberta's oil sands, according to the Canadian Association of Petroleum Producers.
Canada's only major oil export market is the U.S. But with the product of oil sands and pipeline delivery to the U.S. under perennial clouds of environmental objections, and with Asian demand growing, this country wants to diversify its market, and China is eager to oblige.
Sinopec, a Chinese state-controlled oil company, has a stake in a $5.5 billion plan drawn up by the Alberta-based Enbridge company to build the Northern Gateway Pipeline from Alberta to the Pacific coast province of British Columbia. Alberta Finance Minister Lloyd Snelgrove met this month with Sinopec and CNOOC, China's other big oil company, and China's largest banks.
"They are sitting there saying if you need money, we've got money; if you need expertise, we've got that; whatever you need we've got," Snelgrove said.
Alberta Premier Ed Stelmach said American government officials have expressed concern about a pipeline to the Pacific. They have raised it in terms of "Well, are you still going to be able to supply us?" he said.
That fear may already have fallen aside.
"There are people who still feel that one barrel of oil going from Canada to China could be one more barrel going to the United States. But those are people in the minority. It is a concern but it is not a big concern," said Wenran Jiang, a professor at the University of Alberta and a senior fellow of the Asia Pacific Foundation.
Stelmach said the U.S. will remain Canada's primary oil customer.
But aboriginal and environmental opposition to the Pacific pipeline is fierce. The opponents fear it will leak. The local member of Parliament, Nathan Cullen, says accidents are inevitable in the rough waters around Kitimat, British Columbia, where the pipeline will end. And no one has forgotten the Exxon Valdez oil spill of 1989, some 1,300 kilometers (800 miles) north of Kitimat.
However, Canadian Prime Minister Stephen Harper, freshly and convincingly re-elected, is an oil man who has suggested he supports building the pipeline. Also, Calgary-based Kinder Morgan has plans to expand an existing pipeline route to Vancouver so that oil can be shipped to Asia.
Critics dislike the whole concept of oil sands, because extracting the oil requires huge amounts of energy and water, increases greenhouse gas emissions and threatens rivers and forests. Keystone XL, the pipeline that would bring Alberta oil to Texas Gulf Coast refineries to serve the U.S. market, compounds the issue.
Pipeline leaks can affect drinking water and sensitive ecosystems, the U.S. Environmental Protection Agency warns. In a letter to the State Department this month, it cited major pipeline spills last year in Michigan and Illinois, as well as two leaks last month in the Keystone pipeline, a 1,300-mile line owned by the same company that wants to build Keystone XL. The U.S. pipeline safety agency briefly blocked Calgary-based TransCanada from restarting the Keystone pipeline this month because of safety concerns.
But Keystone XL could substantially reduce U.S. dependency on oil from the Middle East and other regions, according to a report commissioned by the Obama administration. It suggests that the pipeline, coupled with a reduction in overall U.S. oil demand, "could essentially eliminate Middle East crude imports longer term."
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