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THE ENERGY CRUNCH: Chrétien taking U.S. energy pact proposal seriously

Bush sees golden opportunity to kick-start dormant but promising energy projects


The Globe and Mail

Published on Feb. 12, 2001

With $30-billion worth of U.S.-bound exports and vast untapped reserves at stake, Prime Minister Jean Chrétien is taking George W. Bush's proposal for a continental energy pact very seriously. Unfortunately, he and other Canadian officials remain largely in the dark about what the U.S. President and former Texas oil man has in mind.

The two leaders met for the first time at the White House in Washington last week, talked at length about energy issues and pledged to collaborate on boosting North American supplies and helping to relieve shortages in places such as California.

Mr. Bush "recognized that they have a problem, and they know that Canada is a good provider," Mr. Chrétien told reporters after the meeting, noting that Canada had more oil reserves buried in the Alberta tar sands than Saudi Arabia. "We have a lot of energy, we are selling a lot of natural gas."

Mr. Bush also told the Prime Minister that Vice-President Dick Cheney, who is spearheading the White House's new national energy policy, would be in touch directly to get Canada's input, an indication of the high priority the administration is giving the issue. Both sides also pledged "co-operative consultations" on energy issues.

Still, the Bush plan, announced during the presidential election campaign, remains largely a work in progress. Mr. Cheney is expected to take the next 45 to 60 days to develop a more concrete plan.

What is clear is that, faced with soaring prices and electricity shortages predicted in California and elsewhere, Mr. Bush sees a golden opportunity to kick-start dormant but promising energy projects, including getting at trapped Alaskan oil and natural gas reserves.

Mr. Bush has said he wants to boost supplies, reliability and cross-border trade, while reviewing potential environmental and regulatory impediments.

Critics have complained that Mr. Bush's energy policy is a transparent bid to capitalize on California's crisis to give a lift to many of the same oil and gas executives who helped finance his presidency run.

Canadian officials insist the U.S. administration has not presented a plan, nor sought a response.

But Canada is eager to highlight to the new administration that it is a dependable and close supplier of oil, gas and hydro power.

"They see the situation in California as a serious problem and they look at what they have to do in the medium and longer term, and they wanted to know what kind of a collaboration they can develop with us," Mr. Chrétien said.

Mr. Chrétien noted that Alberta's tar sand oil is now more economic to extract than ever because of high world prices. He also pitched Canadian oil and gas reserves in the Beaufort Sea and Mackenzie River Delta as an alternative to the contentious oil reserves that lie beneath Alaska's Arctic National Wildlife Refuge.

The refuge is part of the breeding ground for a massive caribou herd that migrates between Alaska, Yukon and the Northwest Territories. Canada is staunchly opposed to drilling in the refuge.

But Mr. Chrétien has conceded that, in the end, the decision to end a 20-year drilling moratorium in the area is a U.S. decision. Under a 1997 agreement, the two countries agreed to consult and help protect the caribou's habitat.

"We cannot force them if they decide to proceed," he said. "We'll protest, but . . . they have not given up a veto right over that."


This week, Report on Business examines the impact of soaring energy prices on consumers and the economy.

Part 1: The perfect storm

Part 2: How Canada fares

Part 3: The good side of deregulation

Part 4: Energy and the New Economy

Part 5: Alternative forms of power

Part 6: Conclusions

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