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Oliver touts tougher climate rules on pro-Keystone tour

Natural Resources Minister Joe Oliver, right, greets workers at a Houston-based refinery owned by LyondellBasell Industries, which recently began processing 60,000 barrels a day of heavy oil from Alberta.

Patrick Schneider/The Globe and Mail

Canada will soon have some of the toughest climate regulations among oil and gas exporting countries, Natural Resources Minister Joe Oliver said Wednesday as he completed a U.S. visit aimed at boosting support for the embattled Keystone XL pipeline.

In a speech at an industry conference in Houston on Wednesday, Mr. Oliver sought to repair Canada's battered reputation as an environmental outlier, arguing that it is, in fact, a leader among oil-producing countries.

"Canada is the largest supplier of heavy oil to the U.S., and soon to be one of the few with stringent oil and gas GHG [greenhouse gas] regulations," Mr. Oliver told a friendly crowd at the CERAWeek energy conference. "In contrast, other suppliers are doing little or nothing to manage GHG emissions."

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As a result, Canada represents "the most and perhaps only responsible choice" for the United States to meet its oil import needs, he said.

Canada has long promised regulations covering greenhouse gas emissions from the oil and gas sector, and Environment Minister Peter Kent said this week he hopes to release the draft rules before summer. Mr. Oliver would not comment on the nature of those rules, other than to refer to them as "stringent."

Critics worry Ottawa will only lightly regulate the sector, providing no incentive for companies to make significant efforts to reduce emissions. Alberta already has rules that set limits on per-barrel emissions and charges a $15-a-tonne levy when companies exceed their limits. But the province acknowledged recently that it will not meet its overall emission targets.

"We need a credible system that actually reduces absolute emissions," Gillian McEachern, campaign director for Environmental Defence, said in an interview from Toronto.

Ms. McEachern said Canada lags oil producers such as Norway, the United Kingdom and Australia in imposing climate regulations.

Mr. Oliver wound up a two-day U.S. visit to bolster the case for approval of the Keystone XL pipeline and other efforts to ship Canadian oil to the Gulf Coast refining hub. Earlier in the week, he addressed the Chicago Council on International Affairs.

Saskatchewan Premier Brad Wall, the latest in a steady stream of Canadian premiers and federal ministers to make the pro-Keystone trek south of the border, spent Wednesday talking to members of Congress in slushy Washington. The Premier said the economic and energy security arguments underpinning Keystone XL are well understood but "we need to be doing a better job talking about the environment."

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While anti-Keystone activists portray Alberta's vast oil sands as a filthy, toxic, and carbon-laden source of crude, the Canadian message in recent weeks has been to claim the country has made huge strides in cleaning up its greenhouse gas emissions.

Earlier Wednesday, Mr. Oliver visited a 270,000-barrel-a-day refinery owned by Dutch-based LyondellBasell Industries NV, which recently began processing 60,000 barrels a day of heavy oil from Alberta.

The Canadian supply became available with the completion earlier this year of the Seaway project, in which Enbridge Inc. and partner Enterprise Products Partners LP reversed the flow of an underutilized pipeline that once carried crude from the Gulf of Mexico to Cushing, Okla.

Refinery manager Kevin Brown said it is critical for his operation to have access to a diverse supply of low-cost feedstock to be competitive in an increasingly export-oriented business.

He said approval of the Keystone XL pipeline would be a boon to the Gulf Coast refining sector, which is largely configured to refine heavy crudes.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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