Canada opens up on gas export and hails big Arctic oil strike
The federal government in Ottawa is moving to untangle Canada's energy mess. In one of its first major steps, it has allowed major new energy exports, doubling the amount of natural gas that can be sold to the United States.
Brightening Canada's energy picture even further, there has been a major oil discovery in the Beaufort Sea, in Canada's high Arctic. The find by Gulf Canada has renewed hopes that the Arctic will yield a treasure of riches.
''It is the most encouraging news we have had so far in the Beaufort,'' said Harry Carlyle, president of Gulf Canada Resources. But one of the big problems will be getting the oil and gas to markets in the south.
''It would take five or six years to bring it (the Arctic oil and gas) on stream by extending the Mackenzie Valley Pipeline,'' says Richard Hallisey, an oil analyst at First Marathon Securities of Toronto.
The Beaufort is said to be one of the most difficult places in the world to look for oil - and probably the most expensive. Exploratory wells cost $200 million (Canadian) each. And getting the energy out could pose political as well as engineering problems. In the mid-1970s, the Trudeau government set up a commission to look into Arctic pipelines and the effect they might have on the life of native people living in the north. It recommended not building major new pipelines, and Ottawa went along with that.
There is a new government in Ottawa now, and the Conservatives under Brian Mulroney appear to be slowly dismantling the nationalistic energy policies the Liberals and Pierre Trudeau brought in. Last week the new energy minister, Pat Carney, announced that the government had approved new gas exporting contracts worth $1.3 billion. All that natural gas will be going to the US.
In making the announcement, Miss Carney indicated the direction the new government will be taking in the energy field: ''Competitive export prices will help Canada regain the industrial sales lost over the past several years.''
Translation: The old energy policies didn't work. Canada and Canadian companies are interested in selling oil and gas and making money.
Miss Carney also said that the Canadian natural gas companies were fortunate to have the US market close by, which ''offers our producers the benefit of stable, high-volume annual sales.''
The old reasoning behind Canada's energy policy was to save for a rainy day, and to make sure the oil and gas business in Canada was not owned by foreigners (usually meaning Americans). But the energy policy, combined with the recession, sent oil rigs south, where they could make a better return. This fine-tuning of the market has caused a major slump in Canada's oil province, Alberta.
The discovery of oil in the Beaufort Sea has the oil capital happy, if not exactly humming with activity again. Gulf Canada's find is able to bring 13,600 barrels of oil a day. It is just about enough to justify building the pipeline to take it out. Billions of dollars have been spent in the Beaufort Sea looking for oil, and so far the gulf find is the best result.
The Beaufort can also produce disappointments. Just after the Gulf Canada announcement, debt-ridden Dome Petroleum of Calgary announced that one of its wells in the Beaufort was dry and had been abandoned. If there are further discoveries in the Arctic, getting oil and gas out may be as big a problem for Ottawa as the restructuring of energy policies.