The Keystone Pipeline is considered to be one of Canada’s keys to economic development. To Canadians the battle over the pipeline’s construction and access to US energy markets, reflects a bigger issue – how reliable a trading partner is the US? By Leo Quigley, AJOT Canadians, who don’t have an oil security problem, have a different perspective on their oil resources and the future of global exports than Americans. Trade relationships are changing for Canadians, and changing fairly dramatically, with the growing realization that the United States, a long time friendly neighbor of Canada, is becoming less friendly and a less reliable trading partner. Needless to say, the delay of a key project for Canada’s oil industry - the construction of the Keystone XL pipeline – is being perceived as being less than friendly by most Canadians. If nothing else, it was yet a decision by the Obama Administration that has further encouraged the Canadian government to increase its efforts to diversify Canada’s export markets and ship commodities, including oil, to a basket of countries rather than relying entirely on the US market. As part of this policy, Canada’s environmental agency is now considering plans that would see an oil pipeline constructed from the Alberta Oilsands to the small, private Port of Kitimat, which is not unionized and is located on Canada’s West Coast. If approval were given it would open the doors for Canada to significantly increase the amounts of oil it markets to Asia. However, even without the Northern Gateway pipeline, Kitimat is seeing diluent (a thinning agent needed to ship bitumen by pipe, such as naphtha or condensate) traffic through the port increasing. Recently, Encana Corp. entered into an agreement with Methanex Corp. to offload diluent from vessels into rail tank cars for shipment to Alberta. In a statement the company said it expects to import up to 25,000 barrels per day (bpd) of the product. In addition, the company is completing a new debutanizer installation at its Empress, Alberta, location capable of producing about 5,000 barrels per day of diluent. However, a pipeline to Kitimat would not be the first oil pipeline with a window to Asia. Port Metro Vancouver has long been home to a pipeline now owned by Kinder-Morgan, called the Trans Mountain Pipeline, it provides oil to Washington State and to off shore buyers. Recently the company was granted Firm Service approval for the pipeline from Canada’s National Energy Board for the, that will significantly increase the pipeline’s capacity to move oil. However, the slowness of the approval process for pipeline construction, both to the US and to the West Coast, is frustrating for Canada’s oil industry and to potential Asian buyers. Also, the delay provides a major union involved in the oilsands an extended opportunity to oppose Trans Canada’s plans that would see bitumen or, more correctly, diluted bitumen piped to the Southern US to be refined. The president of the Communications, Energy and Paper workers Union, Dave Coles, has said in a statement the Keystone XL project will cost the Canadian economy an estimated 40,500 direct and indirect jobs. “These jobs are literally going down the pipe with the 900,000 barrels per day of unrefined bitumen to the US,” he said. The CEP argues that the value-added processing of the bitumen should take place in Canada rather than providing jobs south of the border. Jim Britton, Vice President for Canada’s Western Region told AJOT: “That’s what it’s been mostly about for us, keeping Canadian jobs in Canada.” The slowness in the approval process has also encouraged Canada’s two major class one railways, Canadian National and Canadian Pacific, to ramp up plans to transport oil by rail, arguing that the railways already have trackage, in place to access major refineries in the US and Canada, can provide the necessary equipment, present less danger of a major spill and can move the oil at a reasonable price. As well, the railways argue that shipping by rail is more