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Keystone Pipeline Will Diminish Energy Security, Prominent Canadian Says

In an interview, Canadian economist Robyn Allan explains how export pipelines like Keystone XL would do more harm than good for Canada's economy.

Mar 13, 2013

Prominent Canadian economist Robyn Allan made waves in Canada last year with papers claiming that rapid oil sands growth would do more economic harm than good for her country.

Allan's controversial analyses focused on the Northern Gateway pipeline, a proposal to carry raw tar sands bitumen through British Columbia for shipment to Asia. One of her main points was that shipping raw crude for upgrading and refining in other countries also means exporting those industriesand jobsabroad

She also warned that increased oil sands exports would drive up the value of Canada's currency. Already, an inflated "petro-dollar" is making it tough for Canadian goods to compete in export markets and is "hollowing out" manufacturing sectors, she said.

Now, Allan is making the same arguments about an even bigger and more contentious export pipeline: the Keystone pipeline. If approved by the Obama administration, the Keystone pipeline would send 830,000 barrels of bitumen a day from Alberta to the Texas refining hub.

Allan, a former CEO of the Insurance Corporation of British Columbia, one of Canada's biggest insurance firms, says that through presentations, meetings and op-eds she's trying to "balance out" the economic debate on the Keystone pipeline, which she claims has been reduced to a simple choice between jobs and the environment.

"There are economic costs that haven't been considered," she says.

In an extensive interview, Allanwho supports measured oil sands developmentexplains her position on the Keystone pipeline and discusses potential economic risks to Canadians if it's approved.

InsideClimate News: Are you in favor of the Keystone XL pipeline?

Robyn Allan: No. This is a pipeline intended for the export of diluted bitumen to the U.S. And it's not in Canadians' economic, public or environmental interest.

Editor's note: Because raw bitumen has the consistency of peanut butter, producers have to dilute it with condensate—a form of gasoline found near oil and natural gas wells—so it can flow through pipelines. Hence the name diluted bitumen.

ICN: Can you explain your thinking?

Allan: We need to ensure energy security for our country, and the best way to do that is by upgrading bitumen in Alberta and shipping it to refineries in Eastern Canada.

ICN: Among Canadians, are you in the minority with your Keystone pipellne opposition?

Allan: I actually think that the view I have is in the majority of Canadians. The average Canadian ... is concerned about this pipeline.   

ICN: How important is Canada's oil for U.S.-Canada trade relations?

Allan: Ninety-nine percent of our [petroleum] exports go to the United States. So there's no question that our trade relationship with the United States is very important. It's been a historically strong and sound relationship. We want to keep it thriving.

Editor's note: Oil and petroleum products make up nearly one-third of U.S. commodity imports from Canada, according to U.S. trade statistics. 

ICN: How important is approval of the Keystone pipeline for the U.S.-Canada relationship?

Allan: We hear a lot here in Canada that if it doesn't get approved, it's going to negatively impact our relations. I don't believe that's true. I think that a no to Keystone in the long run, and even in the short run, will enhance U.S.-Canadian relations.

ICN: How so?

Allan: Most Canadians will be encouraged by the refusal of Keystone XL, since it will allow us to deal with the serious issues of climate change and issues of Canadian energy security that supports all sectors of the Canadian economy.

ICN: The State Department just issued its fourth environmental impact statement, which essentially said the Keystone pipeline will have no effect on the speed and scope of oil sands development. What do you think of its analysis?

Allan: The first question I would ask is, if it's not going to assist in the pace of development of the oil sands, then why would it be built?

We're talking about 830,000 barrels a day of capacity. That's a significant amount of supply. And when [the pipeline] went through the approval process up here in Canada before the National Energy Board, [the producers] had to convince the board that the pipeline was absolutely necessary to ensure that the oil could make its way to market.

That's the case that was made to approve the pipeline here. It's just really hard to believe that saying yes or no to this pipeline makes no difference whatsoever to the amount of diluted bitumen that is made available in North America.

ICN: How crucial is the oil industry to the Canadian economy?

Allan: We are an economy built on our natural resources, and it's very important that we develop them—and that we create economic growth from it. It's how you do that that's important.

Bitumen export pipelines [like Keystone XL] are not the answer. The [raw export] strategy that's driving Keystone XL is actually going to have a net negative impact on our economy.

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