The Foreign Service Journal, December 2003

the world is that they ignore the mas- sive deposits of oil sands in the west- ern Canadian province of Alberta, concentrated in the Athabaska region. Located in the northern part of the province, these deposits are esti- mated to total between 1.7 and 2.5 trillion barrels of oil, making them one of the largest proven reserves of oil in the world. Of that total, the U.S. Energy Information Administration estimates that at least 170 billion bar- rels are commercially recoverable with current tech- nology, as long as crude oil prices do not fall much below $20 a barrel. That figure is based on a conserv- ative evaluation of the cost of extraction, which is steadily coming down; other analysts say the figure could be as high as 300 billion barrels. When such authorities as EIA and Oil and Gas Journal formally recognized the extent of the Athabaska sands earlier this year, Canada (with 260 billion barrels) immediate- ly moved up to rank as the world’s largest oil reserve holder after Saudi Arabia. As recently as 1973, the oil sands’ potential was not well known. But motivated by the OPEC oil embargo, Canadians —and their U.S. partners —began to work out how to turn this massive resource into refined products. Thanks to those investments, 62 percent of Canada’s crude oil exports now come from heavy or synthetic sources like the oil sands. In fact, those sources provide the United States with a significantly greater flow of oil than we ever imported from Iraq, and are expected to achieve a pro- duction rate of a million barrels per day sometime this year. With tens of billions of dollars of further private-sector investments planned, it is entirely possible that that pro- duction rate can be doubled within five years and quadru- pled in another decade. A Good Partner The OPEC oil embargo drew our attention to one glob- al commodity, to a handful of exotic countries, and to the geopolitics that seemed to move them. So the realization that our largest andmost dependable energy supplier is sit- ting to our north has yet to sink into most Americans’ con- sciousness. Canada is a young country, but it is also a very old democracy that shares our basic val- ues. We count on each other not just militarily and diplomatically, but eco- nomically, as well. Canadians return wealth to every region of the United States every day as tourists, as univer- sity students, as shareholders, as win- ter or retirement residents, and as investors. The majority of Canadian direct investment abroad — more than $65 billion so far — is in our country, supporting jobs and enterprises in industries like financial services, minerals and metals, communications, and chemical products. In particular, Canada’s energy exports to the United States are an integral part of the planet’s single largest trade and investment relationship. Yet, ironically, this helps to explain why we think so little about Canada as an energy supplier. As for energy, Canadians already cooperate with us to a degree that would be difficult to achieve with other ener- gy partners. Here are some highlights: • At least once a year, U.S. and Canadian energy offi- cials get together through the Energy Consultative Mechanism. It’s a way to deepen cooperation and mini- mize bilateral irritants, and we’ve been doing it for nearly 25 years now. For example, the ECM keeps departments and agencies on both sides well prepared to manage the complex issues raised by the financing and routing of the two Arctic natural gas pipelines which are now being con- templated. • Both of our countries, along with Mexico, are “conti- nentalizing” our partnership through the North American Energy Working Group. • Even while we have different national approaches to the Kyoto Accord (which Canada has formally ratified), we are sharing research both on climate change science and on the related issues of energy research and development — through visionary initiatives such as the International Partnership for the Hydrogen Economy. • Canada is our largest supplier of uranium and radioactive isotopes, and we have complementary civilian nuclear technologies and industries. Our energy future is less and less about buying a few commodities on world markets. More and more, it involves developing new energy sources, finding new envi- ronmental solutions, disseminating new fuel and conserva- F O C U S 42 F O R E I G N S E R V I C E J O U R N A L / D E C E M B E R 2 0 0 3 Canada’s role as a net energy supplier to the United States traces back to the 1920s in the electric power industry.