Prime Minister Stephen Harper has fresh ammunition to defend plans for a new pipeline from the oil sands to the Gulf Coast: A new Department of Energy study concludes that rising Canadian crude imports could help wean the U.S. off imports from the volatile Middle East.
Mr. Harper is preparing to visit Washington Friday, as convulsions in Egypt raise concerns about vulnerable transportation lines and the potential for the political unrest to spread to major oil producers such as Saudi Arabia.
The timing of Mr. Harper's visit presents a perfect opportunity for him to contrast the risks in the Middle East with the security of Canadian supplies.
The DoE study was submitted to the State Department as part of its review of TransCanada Corp.'s plan to build the Keystone XL pipeline, which would deliver an additional 700,000 barrels per day of Alberta crude to the major U.S. refining hub in Texas.
Alberta and Canadian officials have lobbied Washington to approve the pipeline, and Mr. Harper is expected to raise the issue when he meets President Barack Obama at the White House on Friday.
"Our powerful card is that we are safe and secure; we're the safe upper north as opposed to the volatile Middle East," said Colin Robertson, a former official at the Canadian embassy in Washington and now an adviser with McKenna Long and Aldridge LLP.
Mr. Robertson said he would expect the prime minister will raise the pipeline issue as part of their broader discussion on enhancing cross-border security and trade. "If we're looking at a big deal, it's got to be more than a security pact, it's got to be an access pact, and that includes our pipelines and electricity grids."
TransCanada is hoping to get State Department approval for the XL pipeline by the middle of the year, but the Environmental Protection Agency has raised concerns about its impact, as have environmentalists and many members of Congress.
They worry the pipeline will lead to expanded production in the oil sands - a major emitter of greenhouse gases - as well as a threat to drinking water in the Ogallala Aquifer by locating a crude-oil pipeline over it.
Canadian officials have long tried to play the "security of supply" card, arguing that increased imports from the oil sands will displace imports from undemocratic Saudi Arabia, as well as Venezuela and Mexico, where production is declining.
The Department of Energy study supports that view. It says U.S. refining of Canadian crude could rise to four-million barrels per day by 2030, up from 1.9 million in 2009.
"This projected increase would curb dependency on crude oils from other sources, notably the Middle East and Africa," said the report, prepared by EnSys Energy & Systems Inc., of Lexington, Ma.
Efforts by the U.S. to reduce oil demand through the use of biofuels and boosting mileage for cars and trucks would cut into "foreign" imports rather than Canadian ones, it added.
"A combination of increased Canadian crude imports and reduced U.S. product demand could essentially eliminate Middle East crude imports longer term," the EnSys group concluded.
Alberta's representative in Washington, Gary Mar, said the turmoil in the Middle East and potential threat to transportation lines through Egypt underscores the need for additional production from Canada - not only for U.S. energy security but to bolster global production outside the volatile region.
"Even if the oil that passes through Egypt is not bound for the United States, it certainly has some impact on security of supply in the world," Mr. Mar said. "And for oil to come from Canada, or to come from Alberta, in a transportation system like a pipeline that does not move, that would be viewed as a great thing in terms of U.S. energy security."
Still, the Department of Energy itself has questioned whether the Keystone XL pipeline is needed, and whether the construction of such massive infrastructure for crude imports will undermine government efforts to reduce the overall U.S. demand for oil.
EnSys analysis suggested that the TransCanada line might indeed create a glut of pipeline space that would only be filled as producers ratcheted up production in the oil sands over the next decade.
And it said the XL pipeline itself is not crucial to the desire of Canadian producers to expand imports into the U.S. It noted if the Keystone project did not go ahead, other companies would step in and build pipelines to get the crude oil to U.S. markets, including the Gulf Coast.