U.S. refiners may trump president, Burney says
Oil majors prefer supply from Canada
• Canadian oil and gas could become a “trump card” in Canada’s renegotiation of the North American Free Trade Agreement with the United States, former Canadian ambassador to the United States Derek Burney said in Calgary Friday.
Burney, who has been advising Justin Trudeau’s government on NAFTA along with former prime minister Brian Mulroney, told shareholders of TransCanada Corp., of which he is member of the board of directors, that “there will be no surrender” by Canada to the administration of Donald Trump despite his insistence the U.S. will get a better deal, or will tear up the pact altogether.
“Energy is a trump card and we will play it,” Burney said in response to a question from a shareholder about whether Canadian oil and gas could become a bargaining chip in the negotiations.
Speaking to reporters after the meeting, Burney said U. S. refiners would rather import heavy oil from Canada than from unstable suppliers like Venezuela, even as American production of oil and gas from shale formations is growing. That makes Canadian energy a “strength” that bolsters its negotiating position.
“If the Americans are satisfied that they can have energy i ndependence on their own, I am not going to dispute that,” Burney said. “I don’t buy it. I don’t see it. And I don’t think the refiners see it that way. I think they would prefer the kind of commitments they are negotiating already” with Canada.
Burney was a key player in both NAFTA and the U. S.Canada free- trade agreement.
Recognizing the value of Canadian energy, Ameri cans demanded to have unfettered access in the original FTA and in NAFTA, Burney said, and Canada’s tradeoff was to demand unfettered access to the American energy market.
As part of the re- negotiation of NAFTA, Canada should ensure politicians can no longer exercise vetoes on Canadian energy trade, as was done by former president Barack Obama when he rejected Keystone XL, which Burney said was a violation of the agreement. Trump reversed that decision when he approved the project in March.
Keystone XL i s one of the top projects planned by TransCanada, which reported Friday an increase in profit to $ 643 million in the first quarter, from $ 252 million in the same period a year ago, after a “transformational year” in 2016 that included the US$14-billion acquisition of Columbia Pipeline Group to expand in the growing gas- producing Appalachian region of the U. S.
President and CEO Russ Girling told shareholders his pipeline company has $ 23 billion in near- term growth projects under way and $45 billion of opportunities for the long term, including KXL and the Energy East pipeline to Canada’s East Coast.
Girling said it’s hard to pin down a completion date for either “with any credibility.”
Both projects are controversial and have been repeatedly delayed.
KXL is waiting for the completion of a review of its route in Nebraska by Nov. 23.
It is also negotiating new deals with shippers that are being complicated by weaker balance sheets and the availability of transportation options, including rail and the Trans Mountain pipeline expansion, Girling said.