Canadian Oil Sector in Struggle

The senior bureaucrats have their work cut out for them with the industry and Alberta, the main oil-producing province, waging a public relations war against Chretien's decision to ratify the Kyoto accord on global warming.

Several major companies have started, or have announced plans for, projects aimed at doubling within 10 years output of synthetic crude wrung from Alberta's vast oil sands, and some have warned they may scale back investments over Kyoto.

Oil officials said they hoped the attention leads to compromises to ease tension between their sector and Ottawa and allow billions of dollars worth of projects to proceed as Canada's role as a secure supplier to the United States grows.

Last week, the largest single oil sands producer, Suncor Energy Inc, said a compromise for the high-emission projects was achievable, through measures like tax incentives.

A main oil industry beef is that Ottawa has yet to detail its plans for cutting emissions of such gases as carbon dioxide and methane, caused by production and burning of fossil fuels, leaving developers and investors mired in uncertainty.

Chretien has promised a plan by the time federal and provincial ministers meet on the issue on October 21.

Meanwhile, oil officials said they were impressed by Ottawa's moves to remove barriers to building pipelines in the north, which in the past were threatened by wrangling between government departments and the need for myriad approvals. ©

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