Stephen Harper said the Keystone XL pipeline was a no-brainer, and he arrogantly dismissed any and all criticisms of the flawed development model of a 1-million barrel per day, raw bitumen pipeline traversing the continent all the way to Port Arthur, Texas.
The no-brainer has become a migraine headache for our PM and it is now precisely his judgment and wisdom that must be evaluated after U.S. President Obama announced today that there will be no decision on XL until well into 2013.
If XL is not now dead, it is on long-term life support. Some estimates have put delays beyond the end of this year to the $7-billion project at $1 million per day. Oil industry analysts point out that XL's contracts require shipments to commence before the end of 2013.
The news out of Washington came just as new Alberta Premier Alison Redford and a small army of industry lobbyists and politicians were buying airline tickets to join Harper's man in Washington -- Gary Doer -- in a desperate attempt to reverse the tide after 12,000 protesters surrounded the White House last weekend.
They can all stay home now and reflect on yet another embarrassment for Canada, which has now been told by a foreign government that its economic development model is unacceptable. Yes, the Obama decision is ostensibly to study a new route around the Ogallala aquifer in Nebraska, but XL did not go down on that issue alone.
The U.S. decision takes Canada "back from the abyss," as CEP President Dave Coles said today, and opens a window of opportunity for Canada to reconsider the development strategy for the bitumen sands. Without XL, some major new developments in the bitumen sands may now be reconsidered, which may well be very good news for the Alberta economy.
Expect to hear howls of anguish and outrage from some parts of the oil industry that will once again look for internal enemies and foreign scapegoats responsible for the curse of "shut-in-oil." The reality is that the doubling of production in a decade is entirely unsustainable, and not even economically sound. A slower pace of development combined with value-added processing in Alberta will not only provide better long-term economic results, but may also be the only way to avoid a market meltdown.
Here is the no-brainer that Stephen Harper should have figured out. If your product is seen as a global environmental nightmare, and if your failure to demonstrate that it is produced in a sustainable framework creates nothing but controversy for your only major customer, having some oil left in the ground is the least of your problems.
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