Keystone XL Pipeline Wins on Capitol Hill Not Enough

The Congressional scoreboard reads 5-2 in favor of the Keystone XL pipeline. But few believe the job-creating project to transport oil from Canada to the U.S. Gulf Coast is any closer to its needed U.S. approval.

The House passed (293-127) a federal transportation bill Wednesday that will now go to conference committee. A provision in that legislation would force the administration to approve the pipeline.

It is the fourth time the House has given its approval on the project, expected to create thousands of jobs during the construction phase and help increase energy security in the long term. The Senate has taken three votes, passing it once as part of the payroll tax deal late last year and defeating it twice.

Not to be forgotten is the importance of the transportation bill. The Senate passed a two-year, $109 billion program two weeks ago. It is expected to be the basis for the conference committee negotiations.

The White House has already threatened to veto the highway bill if the Keystone language remains. Both, however, are critical to funding ongoing infrastructure needs and putting people back to work.

In the upcoming BizVoice magazine (available May 3 in print and online), I’ll have a one-on-one interview with Canadian Consul General Roy Norton, who talks about the importance of this project, the critical Ambassador Bridge between Detroit and Windsor, and other opportunities between the two North American neighbors.

Canadian Bankin’

Pardon the title, but Canada is in a position to make some serious bank off of its natural resources — namely oil. In our upcoming May/June edition of BizVoice magazine, Communications VP Tom Schuman has an interesting interview with Roy Norton, Consul General of Canada, about how Canada plans to move forward after President Obama’s rejection of the Keystone XL Pipeline. Although, Obama contends the rejection was pending more environmental review and may not be permanent. (If you have a few minutes, read Norton’s remarks when he spoke to a group at the Greater Fort Wayne Chamber of Commerce in February.)

At any rate, I just perused the article in the editing process and I think our readers will be intrigued by our northern neighbor’s concerns and ambitions. It also includes a quote from Norton that reinforces why the Indiana Chamber endorsed Sen. Richard Lugar in the 2012 GOP primary and general election:

"You can safely say that if there is one person in the United States Congress who gets the geopolitical importance and relevance of achieving North American energy self-sufficiency and what that could mean for North America in unburdening us, making us less susceptible to Iranian adventurism and Venezuelan adventurism, it’s your senior senator from Indiana." – Norton

Canada Moving Forward After Pipeline Rejection

The January decision by the Obama administration to reject the Keystone XL pipeline drew plenty of criticism in the United States. Canadian officials, while accepting the explanation offered, are concerned, and they are not sitting back and waiting for a potential change of course from their southern neighbors.

Roy Norton, Consul General of Canada, spent last week at meetings and events in Indiana. Norton is responsible for Canadian interests in trade, investment, the environment and more in Indiana, Michigan, Ohio and Kentucky. Norton provided his analysis of the Washington rejection of the pipeline that would transport oil resources from the tar sands of Alberta province to the U.S. gulf coast.

Norton says Canadians are “disposed to take at face value the assurances that President Obama offered Prime Minister (Stephen) Harper that this was a process-related issue, not a substantive decision.” In other words, Obama cited additional environmental review due to Nebraska seeking a rerouting of the pipeline and a deadline set by Congress as the reasons for the rejection at this time.

Although TransCanada, the energy infrastructure company behind the pipeline, has indicated it will reapply for a U.S permit, Norton described the significance of the relationship between the two countries and the next steps for Canada that are already in progress.

“There is concern. Ever since NAFTA (the North American Free Trade Agreement), our resources have been predicated on the notion that we would develop them to export them to you (the U.S.), and 99% of Canadian oil exports have come to the United States. The entire industry has been organized on a principle that suddenly may seem in question: Does the United States continue to want that oil? And if you don’t, we’re not going to just stop developing it.

“The prime minister made clear, in a little jocular way, that we’re not a northern national park for the United States.” Norton continues. “We’re a G7 country with an industrial economy. We happen to sit on the third largest reserve of oil after Saudi Arabia and Venezuela. Ours, other than the U.S., is the only one (oil supply) not government controlled; it’s total private sector investment.”

Harper traveled to Asia earlier this month and entered into an agreement on energy cooperation with the Chinese.

“Our objective, very much,” Norton adds, “is to build a pipeline to (our) West Coast and to be able to sell oil to China, Japan, whoever. Two or three years ago, the prime minister said Canada is an emerging energy superpower. Somebody challenged that and said you can’t be a superpower if you have only one market. So, in business terms, it’s probably true that it’s prudent for us to have more than one market. So we will seek to diversify.”

Norton closes with some of the numbers related to Canadian oil production and potential benefits for the U.S. and Indiana from the proposed pipeline:

  • Sixty cents of every dollar invested in the Alberta oil sands come back to the United States in consumption. “You benefit more from Canadian resource development than you benefit as a country from resource development (anywhere else).”
  • Currently, $160 billion in private sector investment is underway to take production of the oil sands from two billion barrels a day to three and a half billion barrels a day.
  • That increase, with the pipeline, could create “in the order of 343,000 jobs in the United States, 7,500 of those in Indiana” – citing Caterpillar and dozens of other Indiana operations that currently or would supply the oil production and the pipeline.

The Chamber’s May-June BizVoice® magazine will have more from Norton on issues important to Indiana and his country.

“Doing Business in Canada” Event in Indy on Feb. 22

While my impression of Canada is largely shaped by my summer fishing trips to Northern Ontario, it’s important to remember our neighbor to the North is far more than just beautiful country and sparkling lakes — it’s also an international business hub. If your business is one of the many in America currently doing business in Canada — or if you’re considering doing so — the Canadian Consulate General wants to help you get informed.

In partnership with PNC Bank, Barnes & Thornburg and BKD Accounting, the Consulate General is conducting a "Doing Business in Canada" seminar on Wednesday, Feb. 22, 9 a.m. – 1 p.m. at the Meridian Hills Country Club in Indianapolis. (There is no fee to attend.)

Hope you can make it, and the agenda is as follows:

9 a.m. Registration / Coffee / Networking 

9:15 a.m. Welcoming Remarks (Richard Ellis, PNC Bank) 

9:30 a.m. Doing Business in Canada Overview (Delon Chan, Consul & Trade Commissioner)

10 a.m. Business Structure, Labour Law, and Legal issues in Canada (Peter A. Morse, Barnes & Thornburg)  

10:30 a.m. Coffee Break / Networking 

10:50 a.m. Accounting – General Tax Structures: How to Organize the Business to Obtain the Right Tax Result (presented by Tom Miller, Partner, BKD Accounting Firm)  
– Operating Taxes – GST/HST; Tax treaty between the US and Canada 
– Doing business without creating a taxable presence 
– Service PE

11:20 a.m Foreign Exchange Risk Management and Global Treasury Management in Canada
(Thomas Miller, Managing Director, Foreign Exchange)
– PNC’s Capital Markets (Randolph Goode, Global Treasury Management, PNC Bank)

11:50 a.m. US-Canada Relations
Keynote Speaker: Dr. Roy Norton, Consul General of Canada 

12:50 p.m. Closing Remarks (presented by PNC)  

To reserve a spot, just register online.