THE BLOG
06/05/2012 12:24 pm ET Updated Aug 05, 2012

Curtain Closing on Canadian Crude

Shell announced plans to expand its oil sands operations in Alberta province by as much as 90,000 bpd and said similar efforts were under way to make the country's western coast a major export hub for liquefied natural gas. The company's chief executive said Canadian regulators need to act quickly or lose out to similar developments in the Middle East and Australia. With mass protests spilling out of Montreal, and opposition leaders quickly getting under the skin of the conservative Canadian government, the supermajor better move fast before time runs out.

Peter Voser, chief executive officer at Royal Dutch Shell, told reporters in Alberta this week that his company aims to expands operations in the region by as much as 30 percent by the end of the decade. Canadian oil and natural gas accounted for more than 10 percent of Shell's production last year and Voser said that, if all goes well, its Athabasca Oil Sands Project would be producing at least 335,000 bpd by 2020.

Shell has billions of dollars set aside for Canadian operations. The focus would be divided between oil and natural gas, but move closer to LNG within the next five years with an eye on export hubs in British Columbia. Canadian regulators, said Voser, are in a race against time because similar developments are expected in Australia and the Middle East soon.

"If Canada wants to compete with those projects when they come into the Asia Pacific, there is a certain time window," he said.

That window may soon be closing. In early May, Adrian Dix, a leader from the opposition New Democrat Party, complained to Canada's National Energy Board that there was a "high-risk, low-return" approach to Prime Minister Stephen Harper's pro-oil sands platform. Now, NDP leader Thomas Mulcair is ruffling the feathers of Natural Resources Minister Joe Oliver for touring Alberta oil sands projects. The NDP, said Oliver, has an "anti-resource" agenda, while Mulcair said, as did Dix, that the oil boom was killing jobs elsewhere outside of Alberta and artificially inflating the Canadian dollar.

Elections are three years away in Canada. The end of the decade, Voser's benchmark for expansions in Alberta, is eight years away. Given mass protests in Montreal, coupled with mass arrests, it seems Canadians are getting frustrated with the status quo. If Shell is worried about windows closing, it should act quickly before the curtains close on the Canadian oil boom.


Cross Posted with Oilprice.com

Daniel Graeber is a senior journalist at the energy news site Oilprice.com. He is a writer and political analyst based in Michigan. More of his articles can be found on his Authors page at Oilprice.com

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