Reprieve on the Canada - China oil connection?

As we reported previously, the president’s prevarication and procrastination on the Keystone XL pipeline has some Canadians itching to begin doing business with China, though the government would rather keep the resources closer to home and deal with the United States. Though no credit goes to the White House, Barack Obama may find himself falling into a bit of good luck on the story. (Well… good luck for us, but not so much for Canada.) In order to get their oil sands petroleum to a port where China could load it on to tankers, a new pipeline to the western coast (known as the Northern Gateway) needs to be constructed. As the Vancouver Sun reports, that’s very much easier said than done.

The $5.5-billion Northern Gateway pipeline linking Alberta’s vast oilsands wealth to Asian markets via a northern B.C. port won’t likely meet its 2017 target to begin shipments – if it gets off the ground at all, retired B.C. Conservative Senator Pat Carney said Thursday.

Carney, who held both the energy and trade portfolios under the Tory government of Brian Mulroney in the 1980s, said Enbridge Inc.’s megaproject faces challenges relating to economics, environmental concerns, well-organized protests backed by Hollywood stars, and aboriginal land claims issues…

“You can’t just bulldoze your way from the oilsands to the coast,” said Carney, who as energy minister dismantled the controversial National Energy Program after Mulroney took power in 1984.

“I can certainly say that if it’s built at all, it’ll be on a much longer time frame than they contemplate.”

My contacts with the industry have repeatedly indicated that social pressures won’t wind up being the driving factor here. Canada has been fairly consistent in ignoring the media intrusion of celebrity busybodies. Further, while dealing with the First Nations is critical for any development in the region, they have enjoyed tremendous success getting the tribes involved, bringing economic opportunity to their communities and providing buy-in where the locals can share in the profits, as well as giving them significant input in terms of managing environmental concerns.

One of the chief barriers is simply the terrain. Driving a pass to the port in Kitimat – the proposed location for tanker access – will involved pushing their way through some incredibly harsh, barren and occasionally mountainous wilderness terrain. (map) Certainly the technology exists to do it, but it’s not something to be undertaken lightly.

This doesn’t mean the project is dead, but the delay could potentially serve our interests. As the Wall Street Journal notes, there is still very strong support inside the Canadian government for a deal on the Keystone XL pipeline being given the green light. (Implied in that analysis is the possibility that if the Northern Gateway deal remains mired, things might look a bit more promising to the south of their borders if there were, shall we say, somebody else making the calls in Washington in 2013. *cough cough*) Either way, it looks like we may have a bit more time to wrestle with the problem than was initially feared.