Live

Watch CBSN Live

Canadian PM's Pledge Pitches Oil Sands Into Further Uncertainty

During a Canadian election debate last week, incumbent Conservative Prime Minister Stephen Harper repeated a promise to ban the export of bitumen from Canada to countries with weaker greenhouse-gas emissions standards. The news stunned companies working in the Canadian oil sands, where reserves of black gold are thought to be second only to Saudi Arabia in volume.

The Canadian oil sands already present some significant commercial uncertainties. Soaring costs and the prospect of stricter carbon-emission standards -- already in place in Alberta, with the Canadian government scheduled to follow suit in 2010 -- are just two of several major issues facing developers. Add the current global credit crisis, and many companies are understandably taking a wait-and-see approach.

StatoilHydro, Norway's largest oil company, has already postponed the development of an oil-sands upgrader project and said that it might simply sell the bitumen -- an abundant sticky, tar-like substance from oil sands that can be industrially processed into synthetic crude oil -- instead. Even that plan, however, might now might prove complicated for bitumen sales anywhere but the U.S.

Alberta premier Ed Stelmach has previously suggested looking to markets in Asia if the U.S. is reluctant to take what is increasingly considered environmentally unfriendly oil, a strategy that export restrictions might scuttle entirely. Harper's words leave pipeline operator Enbridge stuck between a rock and a hard place as well. The Canadian company has a well advanced plan for a $4 billion-plus Northern Gateway project to Kitimat, BC aimed at exporting bitumen to Asia -- especially China. These plans could be ashes if Harper follows through on his promise.

Political pundits see Harper's promise -- which Harper says is intended primarily to prevent emitters from getting around Canadian carbon regulations and keep jobs and revenue in Canada -- as an attempt to win Ontario voters who could decide the election. Should Harper win, however, keeping his word may substantially damage one of Canada's prime business assets.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.