Washington big guns take up oil sands cause

Claudia Cattaneo
Financial Post
March 10, 2009

From the recently formed Center for North American Energy Security (CNAES), headed by former Republican Congressman Tom Corcoran, to the American Petroleum Institute (API), some of the world's major oil companies and former U.S. ambassadors to Canada like Gordon Giffin, some big guns in Washington's lobby community are taking up the oil sands cause.

Rather than leaving the Canadian embassy, Alberta's government office in Washington or Canadian oil sands developers to do all the talking, American interests are throwing their weight behind Canada's oil to protect their investments from the green agenda of President Barack Obama.

Mr. Corcoran said there has been intense lobbying in the United States to limit the use of Canadian oil sands. "The new development is that there is pushback. A number of the major oil companies ... have substantial interests in Canada. ConocoPhillips, Exxon Mobil, Shell, have a corporate strategy to develop the oil sands and are well aware of the sizeable market here in the U.S.

"I think a good case can be made for the importance of Canadian oil sands to the U.S. It just has not been made up to this point," said Mr.
Corcoran, who encouraged Canadian oil sands companies to join his group's efforts.

Lobbyist Michael Whatley, a partner with HBW Resources in Washington and former chief of staff to former Republican Senator Elizabeth Dole, said Canadian envoys like Alberta's Gary Mar are doing a great job -- he described him as a "force of nature" in the U.S. capital -- but Washington's insiders can do more.

"Gary is limited in terms of the strict lobbying he can do, because he is a governmental official from a foreign government," Mr. Whatley said. "We work with the Administration, with Congress, outside the beltway with other trade organizations and groups, and we try and build strong allies.
We work with the truckers, the manufactures and the chambers, and make sure that people are echoing what we say when we go and meet with policy makers.

"It's a big-league issue. And it needs big-league players," Mr. Whatley added.

Indeed, Mr. Whatley, who also represents CNAES, said his group is borrowing from the playbook of the environmental lobby, which does five things really well: It uses consistent messages -- no oil, no coal, clean water and clean air; it is aggressive and loud; it builds support outside Washington, working state governments and foreign governments; it rewards good political behaviour and punishes bad behaviour to the point of taking down opponents in election campaigns; and it recruits good allies, such as organized labour or educators.

Jim Ford, vice-president of regulatory affairs at API, said he's not in a position to judge the effectiveness of Canadians in Washington. "What I can tell you is that we do get heard," he said. "We are a constant part of the conversation on policy that affects our industry."

The Alberta government first began pushing the oil sands in Washington when in 2004 it dispatched Murray Smith, a former energy minister, to the U.S. capital to promote the oil sands as a secure source of energy to a sympathetic Republican administration.

Since then, they have become well known, but as a source of "dirty oil"
that key U.S. legislators want to do without.

"Today, because of the environmental issues, it's not about selling oil, it's about defending oil," said Mr. Mar, Mr. Smith's successor. "It's a harder job. I came to recognize that energy and environment are two subject matters that are inextricably intertwined, and a third one is economic security."

Mr. Mar said his job has expanded to work with state and municipal governments, some of which are developing policies that could be hostile to the oil sands, from low carbon fuel standards, to refusing permits to refineries wanting to take more Canadian heavy crudes, to prohibiting state procurement of oil sands-derived fuels.

He welcomes the help from the U.S.

"It's an effort that I think is going in the right direction in terms of educating the policymakers and administrators of the importance of this resource," he said. "Of the 13 countries the U.S. gets its energy from, only three are open and transparent and democratic, Canada, Mexico and Norway, and I would argue that we have the most stringent environmental standards of any of the 13."

The lobby to defend the oil sands has been ramping up in the past two years.

Part of the impetus came from the environmental movement, seen as picking on the oil sands as a culprit of climate change.

"Somehow, [the oil sands has] become the poster child," said one diplomatic source who noted the focus on Canada was deliberate because it's a democracy where green groups can put pressure on elected officials.

"It's no accident at all that nobody's moaning and bitching about production from Venezuela's heavy oil," the diplomat said. Venezuela provides 11% of U.S. oil imports, Canada 23%.

Other catalysts for the surge in the pro-oil sands campaign were Section 526, part of U.S. legislation passed in December, 2007, that threatened to prohibit use of fuels derived from oil sands in federal vehicles; high gasoline prices that heightened concern about America's energy security; California's push for a low carbon fuel standard that is seen as a template for a national standard.

The appointment of powerful Democrats to key climate change and energy posts and Mr. Obama's determination to quickly implement climate change legislation, got even more of the energy lobbyists attention.

"We definitely have a changed situation in Washington today, both as a result of the election of President Obama and stronger Democratic majorities and, therefore, stronger support for doing something definitive on climate change, on doing definitive things on moving to alternative and renewable sources of energy," Mr. Ford said.

Mr. Ford said API, a trade group whose membership includes 400 companies involved in all aspects of the oil industry, from production to refining, began making the oil sands a "louder" part of its conversations with the Washington community about two years ago, when policymakers were making moves to inhibit its use.

API defends the oil sands as necessary to North American energy security.
It ranks the oil sands as one of its top priorities, linked to climate change and the Low Carbon Fuel Standard, along with tax policy, access to oil and gas reserves and renewable fuels.

Its oil sands message: "Canada's our very nearby neighbour, we have the most cordial relations that one can have, they are already our largest source of imported oil, and the potential for being able to increase our level of energy security by increasing the amount of oil that we receive from Canada, from our point of view, is an attractive prospect," Mr. Ford said.

"We like to point out that bitumen is basically heavy oil and that there are other sources of heavy oil imported in this country, Venezuela being a good example, and that's been going on for decades. And when folks raise greenhouse gas concerns, we basically point to the fact that both the U.
S. and Canada are figuring out and coping with climate change."

Meanwhile, the Center for North American Energy Security (CNEAS) advocates the development of unconventional fuels like the oil sands, oil shales and heavy oil in the U.S., Canada and Mexico.

"It's just crazy to take reserves of the magnitude that we are looking at here, in terms of oil sands in Canada, oil shale in the U.S. and heavy oil in both places, plus Mexico, off the map," said Mr. Whatley.

Other members of the pro-oil sands lobby include the Canadian American Business Council; the Consumer Energy Alliance, lawyers like Mr. Giffin (who sits on the board of top oil sands developer Canadian Natural Resources Ltd.) and James Blanchard, a former American ambassador to Canada and a director of Enbridge Inc., the pipeline company that ships most of Canada's oil to the U.S.

Observers said the Washington offices of U.S. oil majors like Exxon Mobil Corp., Chevron Corp. and ConocoPhillips, have become active on the file on their own and through organizations they belong to. Foreign majors like BP PLC, Royal Dutch Shell and Total SA are also increasingly participating in the oil sands debate.