U.S. may protect oilsands

Considering move to exempt region from new crackdown

CALGARY — In response to concerns that new U.S. environmental legislation will drastically impact development of Canada’s oilsands, Washington is considering classifying oil produced from the region as “conventional” fuel rather than subject it to the stringent standards expected of “alternative” fuels.

The U.S. government passed a law that prohibits federal procurement of alternative fuels that generate more greenhouse gases than “conventional sources,” which spurred a warning last month from Canada’s ambassador to the United States, Michael Wilson. Mr. Wilson said a narrow interpretation of the legislation would include the vast deposits of the oilsands — where U.S. firms are major investors and the U.S. government is a major customer.


An interdepartmental working group with representation from several U.S. agencies is looking into how to classify the Alberta deposits under the new rules, said a source who suggested the step was taken because “D.C. does not want to hammer” the region.

Mr. Wilson’s letter to several senior members of the U.S. administration — including Robert Gates, the Secretary of Defence, and Condoleezza Rice, the Secretary of State — outlined concerns with the Energy Independence and Security Act 2007, passed in December.

“The U.S. government would be seen as preferring offshore crude from other countries over fuel made in part from U.S. and Canadian sources,” Mr. Wilson argued. “Further, the U.S. government would be contradicting other stated goals to encourage greater biofuels use and Canadian oilsands production.”

The letter also warned of unintended consequences for both countries if it compromised the oilsands, which are a key supplier to U.S. military and postal fleets.

Financial Post