Oilsands operators demand workable climate change rules

CALGARY — Major oilsands operators are calling on Ottawa to establish climate change regulations once and for all, instead of leaving it to a hodgepodge of local governments to sort out the rules.

CALGARY — Major oilsands operators are calling on Ottawa to establish climate change regulations once and for all, instead of leaving it to a hodgepodge of local governments to sort out the rules.

The piecemeal approach taken by U.S. states and Canadian provinces is “just not workable” in the long-term, said Bart Demosky, the chief financial officer of Suncor Energy Inc. (TSX:SU), Canada’s largest energy company.

“It will drive all the wrong kind of behaviours — trust me. It’s going to drive up costs for consumers. It’s the model that’s probably going to be the least effective at actually dealing with the issue,” he told an RBC Capital Markets energy conference on Monday.

“If you want to get at reducing greenhouse gases, get everybody on the same standard. Target the end user, not just the producer, and we’ll see real traction and real reductions if that’s what people want from a societal point of view.”

“But that’s going to take federal leadership, not local leadership.”

Suncor is Canada’s oldest oilsands miner, with huge operations north of Fort McMurray, Alta. It has grown its presence in the sector through its merger with Petro-Canada in 2009, and its joint-venture deal with France’s Total SA late last year.

Oilsands projects are often singled out as a major emitter of greenhouse gases that contribute to global warming, though environmentalists and industry disagree on how much more carbon-intensive oilsands crude is compared to conventional sources.

John Langille, vice-chairman at Canadian Natural Resources Ltd. (TSX:CNQ), said he thinks Ottawa will eventually come out with some form of carbon dioxide regulations, but that maybe he has “too much faith in our politicians.”

“I hope they dove-tail that a little bit with what the provinces are doing,” he told the conference.

“I think collectively we can probably come up with some pretty good rules and regulations that get us to where we want to go to without making it absolutely onerous on the industry, to do something that isn’t wise at the end of the day.”

Canadian Natural operates the 110,000-barrel-per-day Horizon oilsands mine north of Fort McMurray, Alta. Production at Horizon has been halted following an explosion on-site in January. The company aims to ramp up at half-capacity in the next month.

or so.

The head of Royal Dutch Shell’s (NYSE:RDS) Canadian division, Lorraine Mitchelmore, and the chief executive of the Canadian Chamber of Commerce, Perrin Beatty, have also called on Ottawa to take a leadership role when it comes to energy policy.

South of the border, a debate is raging over whether the Obama Administration ought to approve a massive pipeline expansion connecting Canadian oilsands crude to refiners on the U.S. coast of the Gulf of Mexico.

The U.S. State Department is expected to make its final decision on the Keystone XL proposal from Calgary-based TransCanada Corp. (TSX:TRP) toward the end of this year.

In its draft environmental impact statement, the State Department said the pipeline would not be necessary until 2020, but global information firm IHS CERA disagrees with that assessment.

“IHS CERA’s outlook expects that around 2015 oilsands exports will likely exceed refining capacity in the U.S. Midwest — currently the main market for oilsands output,” the firm said in a report submitted to the U.S. government Monday.

Critics have charged that Keystone XL will drive up fuel prices for consumers, but IHS CERA said that won’t be the case.

“Keystone XL will increase supply to the broader U.S. market — namely the U.S. Gulf Coast. For a given level of demand, higher supply would lower prices for crude oil, which is the most important factor shaping gasoline prices.”

While the Canada-U.S. energy relationship is key, Suncor’s Demosky said it’s wise

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