A bit of a shame that the writer doesn't dig deeper. And Canada can decrease its exports, but only in increments calculated over the prior 36 months. A fixed quota is not a fixed amount or percentage. The real NAFTA danger may turn out to be in what Canada imports rather than produces, as the NDP grasps, see below.

Some of his phrases are so similar to mine, they make me think my MTL articles get read in Wisconsin. Shameless self promotion? Not really, the paper's audience dictates a much different approach, less knowledge can be assumed. And never enough space.

It's just that these issues will control Canada life and politics soon, there's no way out of that.

September 14th, 2006

Selling Canada by the cubic foot

On July 14, one day before travelling to St-Petersburg for the G8 meeting, Stephen Harper gave his first speech abroad in his capacity as PM. He told the Canada-U.K. Chamber of Commerce in London that Canada is the "new emerging energy superpower."

The next day upon his arrival in Russia, Harper, according to Canadian Press, "hadn't yet checked into his hotel" before he and Putin met and announced a Canada-Russia joint venture to send Russian gas to Canada.

But why does an energy superpower need to import Russian gas?

Under NAFTA's "proportional sharing" clause, Canada is obliged to sell the U.S. a fixed quota of its energy assets, over 60 per cent, even if Canada runs out of oil and gas and we're freezing in the dark. Mexico didn't accept this clause, but Canada sold itself outright. While "energy security" is a huge issue south of the border, Canada, which once had a law stipulating the country keep 25 years of supply for itself, today has completely relinquished control of its energy security.

The NDP denounced the deal, saying "the amount of natural gas Canada must provide to the U.S. would increase if we imported gas from Russia, however, if Russia cut back on the amount it was supplying, the American quota would stay the same, forcing Canadians to give up supplies we might need for ourselves."

In the U.S., over 200 electricity plants designed to run on natural gas were built in the past 20 years. People thought there was an abundance of natural gas available. Not so. But Canada exports natural gas, therefore it must have large reserves, yes? Not so. According to the U.S. Energy Information Agency (EIA), Canada has eight years left at present production levels. Moreover, there's rising demand from the U.S. and Alberta's oil sands. In 10 years, the oil sands will use enough gas in the extraction process to heat every single house in Canada.

Natural gas is much harder to transport than oil, which can simply be pumped into a tanker. It has to be "superchilled," under pressure, to about -160 C (which shrinks its volume 600-fold) and transported in special tankers as Liquefied Natural Gas, or LNG. At the destination, an LNG re-gasification terminal reheats it. LNG carries risks. The U.S. currently has only four LNG terminals. Though there are lots of applications for more, building permits are held up by public protests. So attention shifted to Canada. Canadians are less aware of the dangers of LNG, and there is less resistance.

Two LNG terminals in Canada have been approved, Bear Head in Nova Scotia and Canaport in New Brunswick. Two are awaiting approval in Quebec for the St-Lawrence River: Gros Cacouna, owned by TransCanada and Petro Canada, and Rabaska, owned by Gaz Métro, Gaz de France and Enbridge. Three more in the rest of Canada means seven new terminals in a country that needs only a fraction of the gas imported.

Jacques Levasseur, president of APPEL (Association pour la protection de l'environnement de Lévis) sounds desperate when reached by phone. He'd like to know why Canada needs LNG terminals when it has natural gas reserves. "Rabaska will produce 150,000 tons of greenhouse gases per year." He calls the location a poor choice. The terminal is planned about 1 km from the town of Lévis and pristine Île d'Orléans, and less than 10 km from Quebec City. But APPEL feels its protests fall on deaf ears, and politicians listen to money, not people. Gros Cacouna's final decision is expected next week, Rabaska's a bit later. Levasseur is not confident that Quebec Environment Minister Claude Béchard will rule in his favour.

Gros Cacouna will import LNG from Russia, and Petro Canada is eager to buy stock in Russia's Gazprom energy giant. Rabaska says it will get gas elsewhere. Algeria, Qatar, Trinidad are options. However, Rabaska partner Gaz de France is about to be privatized. And who is bidding high but... Gazprom. Accidents never happen alone. And money talks in Canada, and in Quebec, these days.