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Should Canada be less dependent on foreign oil?

Categories: Business

Former Bank of Canada governor David Dodge says it might make more sense to pipe bitumen from the Alberta oilsands to refineries in Eastern Canada than to try and build pipelines to the B.C. coast.

Should Canada refine more of its own oil in refineries like this one in Sarnia, Ont.?Should Canada refine more of its own oil in refineries like this one in Sarnia, Ont.? (Dave Chidley/Canadian Press)Speaking to the Edmonton Journal, Dodge said piping oil across Canada from Alberta to refineries in Ontario and New Brunswick makes more sense than selling oilsands bitumen at a low price overseas and buying foreign oil, such as European Brent crude, at a high price to feed the refineries. 

Dodge admitted that he doesn't know how such a Canadian energy strategy would work.

"I don't know, but I sure as hell as an Ontario resident, would like to pay Alberta prices for feedstock into our refineries, than Brent prices. That gap at the moment is inordinately wide, so there's something here that can work," he told the Journal.

Even as TransCanada Corp. seeks approval for its Keystone XL pipeline to the U.S., it is also considering retrofitting its main natural gas line to carry oilsands crude and bitumen.

Similarly, Enbridge is seeking to build a pipeline from the oilsands to the northwest coast of B.C. near Kitimat, while at the same time applying to the National Energy Board to reverse the flow of oil in an Ontario pipeline, which could ultimately carry more Alberta oil to refineries there and in the Maritimes.

Politicians from both the left and right have championed Canada's refining of Canadian oil. NDP leadership candidate Brian Topp made boosting Canadian refineries a plank in his failed campaign to lead the party. Former Alberta Premier Peter Lougheed has also championed that idea.

But the business case for increasing oil refining in Canada may not be there. For one thing, refining is dictated by local markets, and giving it among the slimmest profit margins of the entire energy supply chain.

Building new refineries in Canada is considered a non-starter, too. The Conference Board of Canada recently reported that it would cost about $7 billion to build a single new refinery.

And a new refinery would have to compete for business with American Gulf coast refineries that are well below capacity, and super-refineries in China and India. A single super-refinery in India has 60 per cent of the capacity of all refineries in Canada combined.

Should Canada be less dependent on foreign oil? Could pipelines and refineries within Canada be the solution to Canada's energy woes? Let us know what you think.

(This survey is not scientific. Results are based on readers' responses.)

Tags: Alberta, B.C., Business, energy, environment, New Brunswick, Ontario, POV

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