Canadians need to take control of our economic destiny — Alberta Premier Rachel Notley

CALGARY — U.S. President Donald Trump’s blistering comments about Canadian trade underscore the need for Canada to find new outlets for its oil, the head of the Canadian Association of Petroleum Producers said Tuesday.

“If there’s ever been a time for reflection about ‘Why wouldn’t we have optionality?,’ it is now,” CAAP president and CEO Tim McMillan told the Global Petroleum Show in Calgary.

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Given Trump’s comments about trade with Canada being “fool trade,” McMillan said it’s time for Canadian politicians to assist in building new pipelines to the East Coast and to British Columbia’s northern coast to reduce Canadian dependence on the U.S. market.

McMillan said the trading relationship between Canada and the U.S. on energy has been positive for both sides, as oil and gas products flow across the border in both directions.

He said he’s seen little indication that Americans want to change energy imports from Canada – which is the largest oil exporter to the U.S., ahead of Saudi Arabia and other OPEC countries.

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Still, there is alarm in the oilpatch that a trade war between the U.S. and Canada could escalate.

“Any time there’s a trade dispute, it’s problematic for all parties involved. Our trade with the U.S. is so large that you’re seeing all Canadians coming together and looking for a solution, and trying to rally around a solution, and the Prime Minister is leading the charge for us,” McMillan said.

McMillan’s comments were echoed by Alberta Premier Rachel Notley.

“If the last days and weeks tell us anything, it’s that we, as Canadians need to take control of our economic destiny,” Notley said at the trade show.

“We simply must diversify our markets and build our independence accordingly. It has never been more important for Canada to get a Canadian pipeline built to a Canadian coast,” she said.

McMillan said that to diversity from the U.S. market, new regulations that will make building export pipelines more onerous need to be reconsidered. At the same time, there’s a need for new Canadian liquefied natural gas (LNG) export projects on the West Coast for the same reason.

“If there is ever a time to reassess decisions made even a year or two ago, it is now,” he said, referring specifically to the government’s regulatory changes that caused TransCanada Corp. to cancel its $15-billion Energy East pipeline connecting Alberta with New Brunswick.

Despite this, Canadian oil producers are set to send even more of their product south as two of three currently proposed export pipelines are bound for U.S. markets.

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Enbridge Inc. is awaiting a ruling from the Minnesota Public Utilities Commission on the replacement of its Line 3 project through the state, while TransCanada Corp. is working through a legal challenge in Nebraska for its Keystone XL project.

Construction is set to ramp up for a third export pipeline, the Trans Mountain system and expansion project, which the federal government recently purchased for $4.5 billion after Houston-based Kinder Morgan Inc. threatened to walk away from, given the B.C. provincial government’s obstructions.

Despite these new pipelines, new Canadian oil production is expected to be constrained in the coming years, according to CAPP’s 2018 crude oil production forecast released Tuesday.

CAPP’s forecast predicts domestic oil production will rise by 1.4 million barrels of oil per day by 2035, when the country’s total oil output will hit 5.6 million bpd.

The forecast is slightly more optimistic than last year’s projection of 5.1 million bpd, but McMillan said the industry is still expected to grow more slowly than it had been before the oil price crash of 2014.

The vast majority of that growth is expected to occur in the oilsands, where CAPP expects a series of new projects to be built in the 2020s to increase oilsands production by 1.5 million bpd. That growth will also offset declines in other types of oil production, including off Canada’s East Coast.

The forecast is based on a survey of spending plans and project approvals by industry participants.

Oilpatch critics said the forecast is too optimistic given a growing global appetite for cleaner fuels and renewable options such as solar and wind power.

“I think it’s very aggressive and very optimistic, absolutely … when you take a look at both positives and negatives in terms of investment in that industry,” said Robyn Allan, an independent economist and one-time CEO of the Insurance Corporation of British Columbia.

With a file from The Canadian Press and the Calgary Herald