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77 comments on Canada as an energy superpower
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77 comments on Canada as an energy superpower
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The NAFTA Proportionality clause Article 605 is often misunderstood. It comes into effect only if the Federal Government of Canada (or of the US) undertakes to implement measures to limit exports. As long as the governments refrain from intervening in the North American energy market, there is no proportionality requirement. Decisions to export oil or gas from Canada to the US are entirely made by producers and suppliers, subject to regulatory approval by National Energy Board and the Alberta Energy Resources and Conservation Board, primarily for environmental and safety reasons.
The political effect of Article 605 is to severely limit the power of the Federal Government to intervene in the primarily Albertan energy industry, something Albertans wanted to prevent another National Energy Program. My guess is that the FTA negotiations were based on trading US access to Canadian energy for Ontario and Quebec access to US markets for manufactured goods. In effect, Eastern Canada gave up energy security for (supposedly) free access to US markets.
Interestingly, it appears that the Government of Alberta has recently taken steps to remove what may people believe is a requirement that the ERCB (successor to the EUB) hold in reserve 15 years supply of natural gas for Albertans before permitting exports. The 15 year rules appears to never have been written in law, but to be only an interpretation of the clause in the Gas Resources Preservation act (amended 2008) which requires that
The EUB interpreted the clause to mean that "core consumers" needs should be met for 15 years before gas could be considered surplus and available for export from Alberta (to the rest of Canada or the US). The term "core consumer" was referenced in the Gas Resources Preservation Act and defined in Gas Utilities Core Market Regulation (AB 44/95):
According to EUB, core consumer consumption is less than about 18% of total Alberta Consumption (See Energy Utility Board report EUB ST98-2007, calculation of available for export).
Since the regulations that define core consumers have been repealed, it is no longer clear that there is any restriction on export of natural gas from Alberta, as of 2008.
Thanks a lot for finding this... I was looking for the text yesterday but couldn't get it.
Thanks for posting that. Most people I talk to in the industry have had little input on the subject. I suspect that the complexity of the agreements wording is part of the problem for most people. It certainly was for me, though it seems clear now. It certainly cheapens the credibility of some of the research bodies (ie. parkland institute), who have been publicly decrying the agreement for the (misleaded) reasons i mentioned in my previous post. Other prominent researchers have also apparently misunderstood the agreement (e.g. Richard Heinberg http://www.dogwoodinitiative.org/EB-2008-02-07-prop). As is the case with alot of other work, it makes one aware that you must really question all of the data behind any opinion/analysis.
Did you have a link for where the 56% was specifically mentioned? I could not seem to find it in the site you posted a link for.
There won't be any specific mention of a percentage in the NAFTA agreement as it is determine by a rule.
If Canada were to impose an export restriction on natural gas (or any other defined petroleum product), it could do so only if maintains an export level greater than or equal to "the proportion prevailing in the most recent 36-month period for which data are available prior to the imposition of the measure, or in such other representative period on which the Parties may agree".
The 56% figure given for natural gas would be based on the recent level of exports.
Further, the percentage is based on "total supply", which the agreement defines to be domestic production plus imports. This would be interesting if LNG terminals are established in Canada for gas that is solely destined for export to the US (as has been the case in several proposals).
I believe that the Parkland Institute is quite aware of specifics of the Proportionality article, but the media are not. No doubt Parkland's message has been somewhat distorted by the media's penchant for dramatic sound bites.
Parkland has been trying to raise the awareness of Canadians, especially in Eastern Canada, about Canada's lack of a domestic energy policy and in particular our loss of energy sovereignty. Most Canadians are complacently unaware of our true energy situation and the risks we are running. Their recent paper calling for the establishment of a Canadian SPR got considerable attention in Quebec, the province that is most dependent on foreign imports.
I don't know whether you have the time/resources, but if you could put together a 'keypost' it would be much appreciated... It is disturbingly rare to come across someone who has any worthwhile knowledge of Canada's energy situation.
Anyways, if nothing else, thanks for the input.