Canada's Oil and Gas: An 'Eleventh Hour' Option That Must Not Be Ignored

Canadian Public Policy

Canada's Oil and Gas: An 'Eleventh Hour' Option That Must Not Be IgnoredAuthor(s): Ian McDougallSource: Canadian Public Policy / Analyse de Politiques, Vol. 1, No. 1 (Winter, 1975), pp. 47-57Published by: University of Toronto Press on behalf of Canadian Public PolicyStable URL: http://www.jstor.org/stable/3549835 .

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Canada's Oil and Gas: an 'Eleventh Hour' Option that must not be Ignored

IAN MCDOUGALL / Faculty of Law, Dalhousie University

Canada has consistently underpriced its exports of energy resources and overstated its capacity to export them. The rapid depletion of the conventional reserves of petroleum and natural gas promises a crisis for future Canadian economic growth and stability that may prove to be of unheralded proportions. At the time of writing, Canadian policy makers have a very brief period during which it may yet be possible to contain the dimensions of the problem.

Au Canada, nous avons syst6matiquement sous-evalue les prix a l'exportation des ressources energetiques, alors que nous avons surevalue notre capacit6 d'entrer dans le march6 d'exportation de ces m&mes ressources.

L'epuisement rapide des reserves conventionnelles de petrole et de gaz naturel laisse prevoir une crise pouvant atteindre des proportions surprenantes; la stabilit6 et la croissance 6conomique canadienne risquent alors d'etre fortement affectees. A l'heure qu'il est, il reste un tres court lapse de temps pour permettre aux responsables de la politique economique canadienne de prevenir l'61argissement du probleme.

I INTRODUCTION

The exploration and development of Canada's major energy resources has historically laboured under three major handicaps: namely, wide geographi- cal barriers often separating potential sources from domestic markets, uncertainty concerning the total extent of supplies and the rate at which domestic markets could be expected to expand, and the difficulty in establishing a system of comprehensive resource management in a federal state consisting of ten separate provincial jurisdictions. Defacto, federal involvement in most major energy undertakings appears to have been more as a result of the utilization of American export markets as the catalyst for initial development than any single other factor. In this regard federal policy has in the past twenty years been essentially to assist the provinces in the exploitation of 'their' energy reserves via smoothing the obstacles involved in export market pene- tration. Nor was such an involvement inconsistent with other federal objec-

CANADIAN PUBLIC POLICY-ANALYSE DE POLITIQUES, I: I

winter/hiver 1975 Printed in Canada/Imprimb au Canada



48 / Ian McDougall

tives. Alberta's oil and gas play, the massive hydroelectric undertakings in British Columbia, Manitoba and Quebec and, indeed, the present petroleum and gas activity in the East Coast Offshore all have offered, at various times, the prospect of rapid provincial growth and diversification.

However, as considered at length below, federal policy was too one- dimensional in its development orientation. The dangers of over-commitment to foreign markets and the need to offer protection to the still expanding Canadian requirements were seemingly by-passed. Over the period 1959-1973 Ottawa's energy policy could be reduced to two simple words: 'exploit' and 'export.' In assuming this position the federal policy makers turned a blind eye towards Canada's early experiences with us energy trade. By so doing, it now appears that a considerable amount of credence has been lent to the maxim that 'those who refuse to learn from history are doomed to repeat it.'

The Canadian energy crisis hit this country with bewildering suddenness. For almost thirty years we had been led to believe that of all the western industrial nations Canada had a commanding lead in terms of its undeveloped resource heritage. Thus, even if Laurier's prediction that 'The Twentieth Century would belong to Canada' failed to materialize, it was said that our vast resource base guaranteed our pre-eminence during the twenty-first century. Unfortunately, it now appears that our self-assured acceptance of a destiny of ultimate greatness has produced little more than a complacency so all-pervasive that our 'National Dream' is quickly assuming an unmistakable 'Alice in Wonderland' quality.

II CANADA'S OIL AND GAS

In 1895 Canada found its first supplies of natural gas in Haldimand, County of Essex. Within ten years most of these reserves had been exported to the Toledo, Detroit and Buffalo markets. Rapid depletion as a result of these exports caused considerable hardship for not only the economy of the producing centres and Ontario consumers, forced to obtain alternative fuel supplies, but also led to an unnecessarily harsh disruption of international trade relations between the us and Canada. Natural gas sales from Canada to the us were stopped for half a century. Forward-looking regulation might have permitted a more orderly reduction of export flows to the benefit of both nations (Miller, 197o and Gray, 1970). To this early experience we added the Niagara Power Dispute, the Columbia River Treaty,' are now in process of adding the Churchill-Nelson Project, the James Bay Power Project, the Lorenville Thermal Plant, and perhaps will add the Mackenzie Valley Pipeline, the Pan Arctic Polar Gas Route, and a major Athabasca Tarsands Development.2

The Niagara Power Dispute concerned the repatriation of the full Canadian

I See McDougall, Osgoode Hall Law Journal, Vol. 9, no. 2 and Vol. 8, no. 2. 2 Such as proposed by Jean Pierre Goyer and Herman Kahn of the Brookings Institute whereby

rapid exploitation would proceed based upon export market needs rather than domestic during the development stage,



Canada's oil and gas / 49

power entitlement from the Niagara hydroelectric development. The us market had grown dependent upon power from this source, and was in consequence unwilling to return control of the Canadian generators. The ensuing controversy led to the ban in Canada upon export power sales which remained in force until the latter stages of the Columbia river negotiations.

The Churchill-Nelson diversion has had a controversial history. Manitoba hydro requirements, projected as of 1971, could have been amply accommo- dated via installation of regulatory control of Lake Winnipeg outflows and Nelson power development. The Churchill diversion was possible only because of the presence of a large export market in the us midwest, which alone could justify the large scale of the project. The widespread destruction of the southern Indian Lake region is however a direct subsidy that Canadians will have to pay for the privilege (McDougall, i971 and Gibb, 1970).

Quebec Hydro and the James Bay Development Corporation have staunchly contended that not one kilowatt from the first phase of the 12.5 million dollar project is slated for the export market. However, the project's completion is to facilitate the release of an amount of power equal to its output from other parts of the Hydro system for us export. Furthermore phases ii and iin are export-oriented. In short, without the possibility of large exports, Baie James would not be exploited during the foreseeable future.

The Lorenville thermal plant, approved by the National Energy Board, is export-oriented and sited in Canada primarily because of widespread opposi- tion to such plants in the State of Maine.

Both Mackenzie Valley natural gas pipeline proposals involve large export components. The so-called 'Maple Leaf Line' of Alberta Gas Trunk will facilitate the export of 4.2 tcf to the us over five years (i.e. 42 per cent of the total throughput) and the Canadian Arctic Gas project, while it is to connect to Prudhoe Bay as well as the Delta/Beaufort sea reserves, also appears to entail an export of Canadian gas.

The Polar Gas Route may or may not entail us exports. However, but for present us flows from our conventional reserves, this costly project could be deferred for a considerable period.

All of these projects are export-oriented. All have come into being because of burgeoning demands in the us markets. All are either unnecessary or premature from the domestic Canadian point of view. And in combination they may prove dangerous in terms of our economic stability over the medium term. The capital demands of energy and energy-related projects presently under active consideration for the next decade are nothing short of staggering. For example: the Mackenzie Valley Natural gas pipeline - $6.5 billions; the Polar Gas Route - $6-8 billions; tarsands development - possibly between $15-2o billions; the Ontario Hydro expansion - $Io billions plus; British Columbia Hydro investments - $5-7 billions; expansions and extensions to the west-to-east oil and gas pipeline infrastructure - $I billion plus; East Coast Offshore exploration, production and transmission - $1-2 billions; Fundy Tidal Power - $2-3 billions; to which can be added existing capital commitments such as the James Bay hydroelectric project - $I2.5 billions, the Churchill-Nelson Power Diversion - $I billion plus, and planned refinery investments - $ 1.6-2.5 billions. Other projects such as an eastern extension to



50 / Ian McDougall

the power grid - $.5 billion, and an Atlantic thermonuclear programme and investments relating to the transportation of northern petroleum might also be added. Taken together such projects could entail a total investment in excess of $7o billions. Some perspective on this figure can be gained by comparing it with the total assets of Canadian chartered banks of $56 billions. In view of this fact, to suggest that the economy will experience desperate capital shortages of domestic risk capital over the next decade or more is to under- state the problem.

Without doubt each undertaking referred to above either has, or will, jeopardize important natural environments. These projects are not a few isolated examples involving an insignificant proportion of the Nation's potential. What is at issue is the exploitation of virtually every major energy resource that the country possesses for what appears to be principally the benefit of our neighbours and at enormous risk to ourselves.

Let us now look at oil and gas as a specific case in point. In 197o the Federal Energy Minister, Mr. Greene, told the country in effect, 'Don't worry about our us gas and oil exports from the Province of Alberta for we have approxi- mately nine hundred and twenty-three years supply of oil and three hundred and ninety-two years supply of natural gas left to play around with' (North, 1973). A short three years later the National Energy Board - a body usually noted for its unparalleled capacity for optimism - wrote that we had only slightly more than a decade's supply of oil remaining in our established producing zones, and that our frontier potential appeared to be both disap- pointing in magnitude and probably costly in the extreme (NEB, 1972). Other authorities3 placed our total natural gas potential at about fifteen years, and even today the major consuming provinces - like Ontario - have talked openly and publicly about the dangers of future deliverability supply short- falls as early as 1974 (Strong, 1974).

One might well ask 'what happened?' How did we get to where we are now and what does it mean for us?

Oil and gas development is perhaps the most complex of modern industrial activities. Uncertainty is the 'name of the game' and for taking the often substantial risks involved the private investors occasionally demand fear- some rewards. But like most industries it is principally a volume business that usually operates on a simple premise: namely, 'the more that can be produced today the better off the industry will be tomorrow.' However, for the resource-exporting country the issue is considerably more involved. A cer- tain amount of industrial development is useful not only for the oil and gas produced, but for the employment and development created. Too much development predicated upon export market service will only ensure that future consumers will find themselves either short of supply or locked into

3 See generally submissions to the NEB gas requirements hearings, and in particular submissions of Canadian Arctic Gas Study Ltd., Ministry of Energy, Ontario, Foothills Pipelines Limited, vol. 4, The Industrial Gas Users Association, The Consumers Association of Canada. It would appear that a consensus is rapidly developing between erstwhile diverse interests vis-a-vis the natural gas problem.




supplies from the most distant and costly sources like the Canadian Arctic.4 Thus Canadian regulators (the NEB at the federal level) had an enormous responsibility. On the one hand they had to encourage the development of the industry, but on the other hand they also had to maintain a watchful eye on the volume of Canadian exports to the United States in order to assure that our future needs were taken care of,5 and to ensure that the country received a fair and adequate economic return for the volumes that were being sold.

It would seem that on both counts the National Energy Board failed rather badly. Since 1959 they have permitted the alienation of the best natural gas and oil that the country will ever be able to produce in terms of cost. High prices and ultimate exhaustion of the southern portion of the western Cana- dian sedimentary basin are imminent,6 and consumers in Canada face a bleak picture failing decisive action to curtail our export flows.

Canada's oil and gas demands will never disappear. On the medium term too much capital investment has been predicated upon the continued supply of both fuels and the overall infrastructure of the economy could not afford to convert rapidly to other power sources. On the longer term the problem isn't much ressened. First, most of the power alternatives appear simply too expensive and, in some cases, too dangerous environmentally. Both consid- erations appear to apply especially to nuclear power (be it breeder, fusion, or fission), coal-fired thermal power and extensive hydroelectric development of our remaining power sources. Second, for some uses there are no viable long-term substitutes. Petroleum is basically a unique commodity as a raw material for plastics, chemicals, paper, ink, carbon, glue, and a range of other products, as well as being the basis for countless lubricants. Probably ninety per cent of the items in most households, from the clothes we all wear to the plywood under the chairs we sit on depend upon a petroleum derivative of one form or another.

Our situation is thus rather simple. For the foreseeable future, we will have to pay whatever it takes to ensure continued supplies for both Canadian consumers and industry. Thus, notwithstanding the fact that Mackenzie

4 Mackenzie Gas (1980) Arctic Islands (1985)

Average reservoir Wellhead Mkt. price Wellhead Mkt. price size (tcf) price ($/mcf) price ($/mcf)

0.05 0.65 1.58 1.05 2.25 1.0 0.48 1.38 0.65 1.85 2.0 0.35 1.26 0.43 1.62

(20 MMcfd average well capacity assumed) SOURCE: The Oil and Gas Journal, February 4, 1974 p. 71

5 s.83 NEBaAct 6 See NEB (1972), footnote 3 above, and submissions to NEB Petroleum export criteria hearings 1974

for the general estimates regarding conventional petroleum supplies and availability. For a complete review of NEB export criteria and approved exports and critical analysis thereof see Ian McDougall (1973). It should be noted that in I97i the Board itself was forced to acknowledge a major failure when it estimated a projected supply deficit of over i. I tcf in 'current requirements.'



52 / Ian McDougall

Delta gas may cost upwards of $I.6o per thousand cubic feet in Edmonton, compared with the twelve cents per thousand cubic feet paid Alberta producers a few years ago,' we will have no choice but to outlay the necessary funds. The same is true for oil from the tarsands. A crash program of development such as advocated by the Supply and Services Minister, Mr. Goyer, will require twenty billion dollars and push per barrel oil prices to intolerable levels. Nonetheless, if we have a need of the oil we will have no choices but to follow a plan something like the one he suggests. It will mean that every consumer in this country will have to pay more for his car's operation, more for his home heating, and more for almost every product he consumes, from plastic desk lamps to bricks. It will also mean that every manufactured product that we sell abroad will cost a little more and, accordingly, that the attractiveness of Canadian goods will diminish. And both things suggest that industrial production may suffer rather substantially in the future,9 and our unemployment and general welfare picture along with it.

III STOP THE EXPORTS?

While the future is difficult, we do have an option, albeit a very difficult, costly and, possibly, dangerous one - but one that with care may prove far less forbidding than the consequences of not acting at all. At issue here are the substantial us exports of both western gas and oil that should not be continued.

Historically we have devoted about fifty per cent of Canada's western oil and gas to us needs at rock bottom prices.10 The benefits for Alberta in terms of growth and employment have been substantial. But the opportunity cost for the rest of the country appears to be horrendous.11

At present rates of production these conventional exports will disappear in less than a decade simply by force of natural supply depletion, and both Canada and the United States will have an equal stake in opening up the frontier: a situation that we have every interest in avoiding if we can. But for our present export commitment of natural gas,12 and our apparent extra-legal

7 See cost estimates footnote 4. 8 At the moment of writing neither the reserves north of the 6oth parallel nor the eastern or western

offshore areas have shown any promise of being significant petroleum production areas. 9 Canada's relative position vis-a-vis the us in relation to average production will be worsened if

significant frontier and synthetic production is required. While the us will also require access to unconventional sources, the associated cost premiums will be averaged against a larger conventional base that can be produced at relatively low cost. For this reason the ability to absorb cost hikes without major dislocation to domestic industry is greater in the us than is true for Canada. To the extent that the benefits of this result in lower price structures in the us, American secondary users will maintain a comparative advantage over their Canadian counterparts.

Io For a complete discussion of the natural gas export complexes see McDougall (1973). II That is to say the capital costs associated with two Arctic pipelines and a massive development

program in the tarsands within the decade, plus the corporate operating cost increase associated with non-conventional petroleum and gas, plus the increased individual consumer costs that can be expected, etc.

12 It should be noted that, pursuant to s.17 of the National Energy Board Act, the power has been reserved to revise or cancel export licences for natural gas post facto. The private contracts regulating such sales have been drawn up with notice of this provision, and are thus legally subject to it as an implied condition.




commitment to export oil,I3 we would have an assured and relatively cheap source of supply for most of the traditional Canadian market that would extend beyond 199o in the case of oil (assuming offshore imports constant) and beyond 2000 in the case of gas. Instead of requiring a large diameter Mackenzie Valley Pipeline for domestic needs by I980, as its promoters tell us, we wouldn't need it for another twenty-six years. Instead of a massive tarsands development tomorrow, we could slowly average the relatively expensive synthetic crude into a large base of cheap conventional production and take full advantage of the technological improvements in extractive and processing methods that are sure to occur over the coming years. And instead of jeopardizing the backbone of Canadian secondary industry, trade and employment through uncontrolled cost increases we would maintain a com- petitive edgel4 that might ultimately result in an expanded market reach for Canadian goods notwithstanding the lower volume of international trade that has resulted from the world-wide energy price increases. In other words, instead of a bust we could, with care and determination, create a boom for our secondary producers.

However, there is an additional and persuasive reason for cutting off our oil and gas exports. For the past few years the Canadian dollar has been under rather serious pressure as a result of significant trading surpluses. Surpluses in our trading accounts are politically popular, but as any economist will tell you, they are no less of a problem, in fact, than trade deficits. This sentiment has been echoed time and time again by the Canadian secondary producers, for the upward pressure on the value of the dollar has lowered the attractiveness of our manufactured goods abroad to the point that we have been running serious deficits in our secondary trade accounts. Our recent surpluses, in short, came from our more than favourable primary trade balance. But to the extent that most of our employment and income and our future growth concentrates in our secondary sectors, an overall trade deficit and a devalua- tion of the Canadian dollar appears to make more sense than the reverse. To permit the continuation of primary trade surpluses thus jeopardizes our overall position in two ways: first, we lose a basis of our future economic growth (economical supplies of oil and gas) and second, we artificially produce an economic climate that defeats the potential of existing secondary enterprise (appreciating value of the Canadian dollar). By phasing down the export complexes we not only retain the key to internal stability and a healthy domestic economy, but we also create a balance of payments adjustment that is more in tune with the objective of secondary industrial growth.

The dangers inherent in reduced exports fall into two categories: namely, a federal-provincial crisis between west and east and, possibly, a protracted Canadian-American relations crisis.

Turning to the western question first the danger principally emanates from Alberta. British Columbia, at the first Federal-Provincial Energy Conference,

13 Until last year such exports were not licensed, and today are sanctioned for yearly terms only. 14 Presumably the wider the difference between production costs and world commodity values, the

greater the scope for negotiation of competitively advantageous Canadian price structures. Conservation of the conventional reserves will help to maintain low production cost averages.



54 / Ian McDougall

offered to submit its reserves to federal control.1s Saskatchewan can offer us only eleven and one-half percent of our conventional producing potential and in slightly more than five years time will be in the same category as Ontario, i.e., a consumer reliant upon sources of crude that lie outside of the province. Alberta is thus the cornerstone and to secure her co-operation the rest of the country will no doubt have to be prepared to make significant concessions, including further natural gas and oil price hikes. But from the overall perspective it can be argued that this is still a superior state of affairs, if only for the reason that the benefits of having the cheap reserves of oil and gas localize north of the forty-ninth parallel, even if they do now tend to concentrate in the west rather than in the east.

In this context it is noteworthy that Alberta is not without its own troubles. Exports from the conventional reserve pose many difficulties for the province. For much of the history of oil and gas production Alberta revenue receipts have proven pitifully slight. In some respects it was surprising that the Alberta government wasn't 'laughing out of the corner of their mouths' when the federal government first imposed the recent export taxes. For the very first time they were in a position to negotiate the recovery of a substantial portion of a price increase as provincial netback, whereas through royalties they could only have obtained a fraction of the increment. As a result of the tax they were for the first time in a position to bargain for a share that was considerably greater than that obtainable under domestic provincial law. Why Mr. Macdonald failed to capitalize on this fact before both the people of Alberta and the country at large, and accepted instead the dubious distinction of being 'Ottawa's heavy' is a bit of a mystery. Why Alberta reacted as negatively as they did before the public may be less mysterious in view of the need to placate the large provincial oil and gas interests.

While a higher provincial netback is important, the flight of exploratory capital out of the province and the currently high level of production pose a threat that is undeniable. The backbone of the provincial natural heritage is quite simply disappearing and a new basis for economic prosperity will have to be found. In this regard the Pan-Alberta Project and the most recent Alberta Gas Trunk 'Maple Leaf Pipeline'16 would seem to reflect a desire on the part of the province to secure its place as the clearing house for Arctic production as provincially internal reserves wane. Likewise, the emphasis currently being placed on the development of a petro-chemical industry, research and development of the tarsands, and the development of higher cost conventional sources are all additional evidence of the province's struggle to pre- serve a viable economic base in face of the dangers imposed by the rapidly depleting conventional reserves.

Alberta is thus essentially engaged in a hurried attempt at reformulating the underpinnings of its economy. This is a lot to accomplish in ten years and will tax the stability once enjoyed in the west. Cutting off the export drain will

15 It should be noted however that BC gas supplies have dwindled at a rapid rate which combined with two notable 'field failures' has led to imminent provincial shortages, despite emergency diversion of additional Alberta supplies.

16 It will be recalled that 42 per cent of this project's capacity is export-oriented, notwithstanding recent press fixation upon its all-Canadian ownership structure.




more than double the time that is available. Furthermore, the province will not forfeit great sources of revenue. The United States-Canadian gas supplies have come largely from operations of wholly-owned subsidiaries that have maintained a stranglehold over Alberta producers. This gas has been moved across the border at some of the lowest rates in the world. Yet even doubling or tripling the export prices does little to assist, for given the vast preponder- ance of us ownership most of the additional earnings pass on to us shareholders." Instead, to double or triple the prices paid by both domestic and foreign consumers yields only a state of affairs where the country as a whole experiences a net loss. The real winners are once again the American companies, with Alberta skimming off a fraction of the returns - far less than the premium the rest of the nation has to pay out.

Export phasedowns, compensated by measured price increases aimed at eastern Canadian consumers, a federal secondary development strategy aimed at diversifying the western economic base, a new non-discriminatory transportation policy and a share program for tarsands' research and development would offer both west and east alike more than the present chaos can ever provide.

But the United States may be more of a problem. Their dependence upon us may be fractional, but the economic stakes at issue for them are nonetheless enormous. In this sense an immediate reduction in exports overnight would be nothing short of irresponsible. Such controls will have to be phased in; but while this may be the case the time during which substantial reductions must occur cannot be too protracted due to the heavy over-production that is presently being experienced. A formula that entails A general ten per cent decline per quarter year, and applying to both conventional oil and natural gas reserves, would be ideal: flexibility would thus be possible in terms of the geographic regions affected in the United States and, hopefully, an attempt would be made to allocate the reduced flows so as to do as little injury as possible to existing American market interests.

We should, however, be clear on one thing: we are under no obligation to adopt the position that we should 'sink or swim' with our neighbours in the interest of maintaining continental amity and comity. This view fails to take into account the numerous vital differences between the Canadian and American crises. The Americans in particular have enormous internal medium-cost reserves that they have yet to develop and that give them a security over the longer term that Canada simply does not enjoy. Our very limited quantities of cheap oil and gas are, in other words, used to subsidize us efforts at constraining the rate of price increases in their markets. As a result the United States has been able to defer the problems that are associated with price rises which will follow from the development of their higher cost indigenous sources. Canada, by way of contrast, appears to have but two types of reserves: cheap and very expensive. The economic penalties that are involved in the development of the frontier are far greater for us than will be

17 It should be noted that legislation will be necessary to ensure that the benefits of the recent federally-imposed gas price increases are passed on to the producers. See generally Report on Business, B2, Globe and Mail, September 24, 1974.



56 / Ian McDougall

true for the United States when they have no alternative but to resort to their medium-cost sources. In addition, the Americans know more about their total indigenous supply base than we know about the potential of our frontier. We are playing the game, comparatively speaking, in the dark. The little information that we have presently on hand is not particularly encouraging. Thus the risk for us in prematurely exhausting our best and potentially sole viable economic source of petroleum and gas is infinitely greater than that being assumed by the Americans.

For these reasons it makes sense to isolate the pro-Canadian aspects of the export controversy from its so-called 'anti-American' elements. Our neighbours have alternative reserves where we may not. They have supplementing alternative technologies which could be employed to prolong existing reserves which we either do not possess or cannot afford. And finally, they are wasting a resource which is basic to survival in a northern climate. In other words, without moves to protect ourselves, Canada may well end up 'sinking' while the United States continues to 'swim.'

Finally, the more the debate is characterized as being a problem of pro or anti-Americanism, the greater would seem to be the likelihood of a sharp United States reaction in the event that we actually do phase down the exports. If we are to present a case for such cutbacks, it should be on the basis of our own national interest: in other words, a measure that we would not undertake but for the presence of overwhelmingly serious domestic consider- ations. The fact that we have other arrangements under which we export significant blocks of power, or will be exporting such power in the future,'8 is in the context of the issue a significant testimonial to the fact of our willingness to assist our neighbours to the extent that we are able. These arrangements should also prove to be a persuasive dis-incentive in respect of possible retaliatory gestures. Hopefully, this will never become a relevant consideration. An escalation of punitive measures aimed at coercing a more pliant Canadian attitude towards our remaining petroleum and natural gas on the one hand, and on the other hand a recognition of Canadian sovereignty in face of dire domestic need is beyond reasonable contemplation.

After all is said and done we have to maintain a perspective on our present situation. In particular, Canada's past over-commitments appear to have occurred more as a consequence of over-eagerness to develop, rather than simply from American demand. To operate on the assumption that the United States is 'anti-Canadian' to the degree that they would attempt to subvert domestic efforts to secure the well being of Canadians is no less extreme than to assume that export phasedowns represent punitive 'anti-Americanism.' If, however, it proves true, then the so-called 'good relations' enjoyed between the two countries are indeed the fiction that some contend, and we should perhaps waste no more time on the myth.

I8 The Columbia River 'downstream benefits,' Churchill-Nelson, Ontario Hydro exports, James Bay-Churchill Falls exports, Lorenville, to name but a few.




REFERENCES

Gibb, Underwood and McLellan (I97o) A Report on the Churchill River Diversion, Summary Study (Winnipeg, October 1970)

Gray, Earle (I970) The Great Canadian Oil Patch (Toronto: Maclean-Hunter) McDougall, Ian (1971) The Churchill Diversion: An Examination of its Implications

with Respect to the Development of a Legal Framework for the Management of Canadian Water Resources (Ottawa: Environment Canada, Policy and Planning Branch, Sept. 1971)

McDougall, Ian (1973) 'The Canadian National Energy Board: Economic "Jurispru- dence" in the National Interest or Symbolic Reassurance.' The Alberta Law Review vol. XI, no. 2

Miller, John Thomas (1970) Foreign Trade in Gas and Electricity in North America:A Legal and Historical Study (New York: Praeger)

National Energy Board (I972) Potential Limitations of Canadian Supplies, Oil and Gas (Ottawa: NEB, Engineering Branch, December 1972)

North, F.K. (1973) The Future of Canada's Fossil Fuels, Address to the Canadian Association of Physicists, Montreal, June 20, 1973, P. 2.

Strong, J.P. (1974) Study prepared by John P. Strong, Petroleum Consultant, Re- specting the Supply and Deliverability (Availability) of Canadian Natural Gas from Traditional Sources, prepared for the Minister of Energy for Ontario, August 1974.



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Canada's Oil and Gas: An 'Eleventh Hour' Option That Must Not Be Ignored

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