OTTAWA - Canada is a weak player in the "global energy game" and needs to improve its performance by selling more oil to China and Asia, warns one of Prime Minister Stephen Harper's most trusted former cabinet ministers.
"For Canada, that is obviously where the future has to be," said Jim Prentice, a senior banking executive who used to hold the industry and environment portfolios in the Conservative government.
"This hard new reality that we are facing — the so-called global energy game — is one that we are forced into, and frankly one that we are not yet playing with sufficient skill, foresight or cohesiveness."
The energy industry is being radically transformed, and Canada has to diversify its energy market beyond the United States where 99 per cent of our energy exports now go, said Prentice.
Canada is affected by the fact that the U.S. is well on the way to becoming the world's largest oil producer and achieving energy self-sufficiency, said Prentice, who was giving the keynote address at a forum on Canada-U.S. business relations in Ottawa.
Canada needs new customers because it is selling its oil at 35 per cent less than the going global rate, he said.
"That makes us a price-taker, not a price-maker."
Moreover, Prentice said, when the U.S. administration decided to delay the construction of the Keystone XL pipeline that would have carried Alberta oilsands crude to the U.S., there was nothing Canada could do about it.
All of that amounts to a major vulnerability for Canada's economy, said Prentice, now an executive at CIBC.
Prentice played down the importance of the stalled Keystone XL deal — which could be approved next year — as well as the $15.1-billion bid by China's state-owned CNOOC to buy Calgary-based Nexen Inc.
Canada's energy future is bigger than one pipeline deal, said Prentice, and while CNOOC-Nexen "is a big deal, it's important, it's not the main issue."
Harper has made selling energy to Asian markets a priority after the rejection of the Keystone XL pipeline. U.S. President Barack Obama delayed the project after massive environmental protests in what was an election year.
Harper has said that while he understands the realities of U.S. electoral politics, Canada needed to look elsewhere for energy customers.
Addressing the same business forum Monday, Harper said the Keystone decision has made Canada realize that it needs to sell its energy products outside the U.S.
"It makes no sense in the global economy that we're in for Canada to sell all of its energy products, virtually exclusively, to its own market or the United States," Harper said.
"It simply makes no sense when all the other opportunities are out there."
In the past, prime minister has branded Canada an "energy superpower."
But Prentice appeared to upbraid his old boss when he told the gathering, "mere ownership does not make you an energy superpower."
Earlier at the event, Gary Doer, Canada's ambassador to the U.S., affirmed the world's largest two-way trading relationship, saying Canada will never forget its best customer even as it tries to broaden trade with Asia.
The two countries are ready to pursue a wide agenda on trade, energy and the environment, said Doer, who noted Canada and the U.S. have a lot of business beyond just Keystone.
U.S. Ambassador David Jacobson said his country isn't worried about Canada increasing exports to Asia, including China, because many of those exports are American-made products.
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10. Oil And Gas Accounts For 4.8 Per Cent Of GDP
The oil and gas industries accounted for around $65 billion of economic activity in Canada annually in recent years, or slightly less than 5 per cent of GDP. Source: <a href="http://www.ceri.ca/docs/2010-10-05CERIOilandGasReport.pdf" target="_hplink">Canada Energy Research Institute</a>
9. Oil Exports Have Grown Tenfold Since 1980
Canada exported some 12,000 cubic metres of oil per day in 1980. By 2010, that number had grown to 112,000 cubic metres daily. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=9&SheetID=224" target="_hplink">Canadian Association of Petroleum Producers</a>
8. Refining Didn't Grow At All As Exports Boomed
Canada refined 300,000 cubic metres daily in 1980; in 2010, that number was slightly down, to 291,000, even though exports of oil had grown tenfold in that time. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=7&SheetID=104" target="_hplink">Canadian Association of Petroleum Producers</a>
7. 97 Per Cent Of Oil Exports Go To The U.S.
Despite talk by the federal government that it wants to open Asian markets to Canadian oil, the vast majority of exports still go to the United States -- 97 per cent as of 2009. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>
6. Canada Has World's 2nd-Largest Proven Oil Reserves
Canada's proven reserves of 175 billion barrels of oil -- the vast majority of it trapped in the oil sands -- is the second-largest oil stash in the world, after Saudi Arabia's 267 billion. Source: <a href="http://www.ogj.com/index.html" target="_hplink">Oil & Gas Journal</a>
5. Two-Thirds Of Oil Sands Bitumen Goes To U.S.
One-third of Canada's oil sands bitumen stays in the country, and is refined into gasoline, heating oil and diesel. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>
4. Alberta Is Two-Thirds Of The Industry
Despite its reputation as the undisputed centre of Canada's oil industry, Alberta accounts for only two-thirds of energy production. British Columbia and Saskatchewan are the second and third-largest producers. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>
3. Alberta Will Reap $1.2 Trillion From Oil Sands
Alberta' government <a href="http://www.huffingtonpost.ca/2012/03/27/alberta-oil-sands-royalties-ceri_n_1382640.html" target="_hplink">will reap $1.2 trillion in royalties from the oil sands over the next 35 years</a>, according to the Canadian Energy Research Institute.
2. Canadian Oil Consumption Has Stayed Flat
Thanks to improvements in energy efficiency, and a weakening of the country's manufacturing base, oil consumption in Canada has had virtually no net change in 30 years. Consumption went from 287,000 cubic metres daily in 1980 to 260,000 cubic metres daily in 2010. Source: Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=6&SheetID=99" target="_hplink">Canadian Association of Petroleum Producers</a>
1. 250,000 Jobs.. Plus Many More?
The National Energy Board says oil and gas employs 257,000 people in Canada, not including gas station employees. And the Canadian Association of Petroleum Producers says the oil sands alone <a href="http://www.capp.ca/aboutUs/mediaCentre/NewsReleases/Pages/OilsandsaCanadianjobcreator.aspx" target="_hplink">will grow from 75,000 jobs to 905,000 jobs by 2035</a> -- assuming, of course, the price of oil holds up.