Throughout his career, Canadian David J. Manning has never strayed far from the energy sector — whether he’s worked for the private sector or government.
Now the expert on Canada-U.S. energy issues and renewable energy trends in the Americas is back on the government side as energy-rich Alberta’s representative in Washington.
Manning sat down with the Miami Herald recently after speaking at a seminar on “Energy Developments in the Americas” that was organized by the University of Miami’s Center for Hemispheric Policy in collaboration with the Consulate General of Canada in Miami.
As Alberta’s representative, Manning has been in the thick of debate about the proposed Keystone XL Pipeline that would carry crude from Alberta’s oil sands to Steele City, Neb., where it would connect with sections of the pipeline that have already been completed to Gulf Coast refineries.
The controversial pipeline has been under study for more than five years, but the U.S. government hasn’t signed off on it. Secretary of State John Kerry is currently reviewing public comments on a State Department environmental impact report and will forward a recommendation to the president, who will make the ultimate decision on the pipeline.
The State Department report concluded that Keystone XL would have a minimal impact on the environment.
But environmentalists have expressed concerns about the pipeline’s proposed route through Nebraska’s environmentally sensitive Sandhills region as well as the impact on water resources if the pipeline leaks and on efforts to shift away from fossil fuels. TransCanada Corp. has agreed to change the pipeline’s route to avoid much of the Sandhills area.
The pipeline and the oil sands region also have been caught up in the debate over climate change.
Q. Paint me a quick energy portrait of Alberta.
A. Alberta is a remarkable source of energy — the third-largest supplier of energy in the world. Oil is in Alberta; we also have so much natural gas.
At its peak, Alberta supplied 16 percent of U.S. natural gas needs. That’s now down to 12 percent because of shale gas.
Canada now provides 28 percent of U.S. oil consumption and that’s continued to increase. We also have a lot of wind energy. We have the mountains so we have a high wind level.
Alberta’s oil sands provide a heavier oil, which is what U.S. refineries need. The U.S. is producing a lot of oil, but the new oil is lighter so the refineries need to blend that with heavier oils, which are largely coming from Mexico, Venezuela and Alberta.
Q. So being Alberta representative in Washington is really as if you’re Canada’s energy representative, right?
A. That’s interesting. . . . The Canadian structure is a little bit different from the United States. The provinces own the resource. So Alberta not only owns the oil and gas in the ground as a province; it regulates it. You don’t have the private ownership of the resource that you see in the United States. Companies produce energy in Alberta and pay royalties to the people of Alberta.
The jurisdiction over energy is much more provincially focused than nationally focused. Canada plays a role because energy is a critical part of the Canadian economy but Canada is more focused on the economic impact and the movement of energy than the production itself.
Q. How much of your time would you say you spend working on the issue of the Keystone XL Pipeline?
A. More than I like. I think this is the most famous pipeline that’s not yet been built. I’m probably alone in this but I think this is much more a regulatory issue than a political issue. I acknowledge that it has become partisan, that there are politics involved.
This is my third pipeline experience. The first pipeline was moving gas all the way from Alberta to New England and New York. That took six years. The opposition was not so much the environmental community as the U.S. gas industry, who thought they were giving up market to the Canadians. That was the Iroquis Pipeline.
The day it opened the price of natural gas doubled in Alberta because we had a new market to get to, but the price of natural gas was halved in Boston, New York and the Northeast because they had a new supply of natural gas. So there was tremendous logic to that project, but it still took six years.
Keystone is contentious. There will be litigation when the decision is made — regardless of the outcome. So I think the United States government and all its agencies are being meticulous in this decision and they’ve had an unprecedented number of responses because we have the Internet now.
I’m not as appalled by the delay as a lot of others are. I do think that politics are involved because the pipeline has become a focal point . . . that isn’t so much about the pipe as about whether we use fossil fuels. A lot of the energy of this debate around choices of fuels going forward was captured by the pipeline.
Q. But are there environmental issues that will have to be dealt with?
A. The whole question of fossil use is being addressed today. I think it is primarily on the demand side. The CAFE [Corporate Average Fuel Economy] Standards are driving real technology. You’re now going to see an aluminum Ford F150 [truck] that will be 800 pounds lighter. You’re seeing a lot more diesel use. You’re seeing natural gas being used in long-haul trucking and fleet use.
So then on the upstream, Alberta has a charge on carbon that we put into place in 2007 — the first jurisdiction in North America to price carbon. And that money all flows into an innovation fund, which funds research on technology that reduces carbon dioxide.
Q. Can you talk a little bit more about some of the types of research of the innovation fund.
A. The most recent opportunity is the fund has put out a global challenge on the utilization of carbon. Seventy percent of the stored carbon is in Western Canada. Alberta is currently spending $1.3 billion of Alberta money to assist with two huge projects that will store all its carbon. So we’re advancing the storage challenge, but the next phase should be can we capture and use it, instead of just storing it. And if we use it, that in theory will change the economics.
If the carbon has a value, then it makes it easier to use that technology around the world. For example, we’re now running CO2 through algae beds to produce bio-diesel. The algae like CO2, so it grows faster and makes more biofuel. That’s being funded by the innovation fund.
Another project funded was assisting wind power — not only the design of blades and materials but also land use in wind farms.
In our global challenge, universities and scientists from 37 countries responded so we’ll see what comes from that.
Q. How do you assess how efforts to get the Keystone XL Pipeline approved are going in Washington?
A. I’ve been in this job for a year now. Before my time, a lot of the focus from its proponents was on the jobs piece. I won’t debate how many jobs are involved. It takes thousands of jobs to build it. When it’s in the ground, it’ll be a lot less. There was some controversy what the right jobs number was. But it’s going to be a bunch and it’s a good project.
In the enthusiasm to talk about jobs and the economy, I don’t think enough time was spent talking about the environmental issues that have been raised as an objection to the pipe. There was not a high awareness that we had a charge on carbon and that we were the first one to move on that. That’s not how some of our opponents would see the oil industry. The reality is there’s tremendous investment in technology to have more efficient use of fuels and more efficient production and transmission of fuels.
My view is that environmental issues should have been addressed more effectively, more quickly. The environmental community did a very good job of communicating their concerns about the environment. But a more complete story is that Alberta has the best record in terms of addressing the long-term, sustainable development of energy.
Q. What happens if there is no Keystone XL Pipeline? What are the implications for Alberta and Canada?
A. What’s happening now, and this has been confirmed by the latest State Department report, is that the oil is moving because there’s a demand for it. The heavy oil in Alberta is the kind of oil that is needed by the big refineries on the Gulf Coast. They are built to take heavy. A lot of that oil has been coming from Venezuela, which is now preferring to send its oil to China . . . choosing China over the U.S.
The new oil supplies from North Dakota and Texas that are coming from shales are much lighter.
Alberta’s oil is getting [to the refineries] but it is getting there by rail. That is a suboptimal solution from an environmental standpoint to a pipeline.