Christine Dobby Oct 24, 2011 – 5:41 PM ET
TORONTO — The U.S. government is likely to approve the Keystone XL pipeline in part because of the economic benefits that would come along with the controversial US$7-billion project, the head of Royal Dutch Shell’s North American operations, predicted Monday.
In fact, the economic benefits attendant on the energy industries in North America in general are even more important than energy independence, Marvin Odum, president of Shell Oil Co. and upstream director of Royal Dutch Shell’s subsidiary company in the Americas, said at a Toronto conference.
“As you get a real balance of environmental concerns with pipeline safety concerns, with energy security, with the creation of jobs and with the improvement in the economy as a whole, I think a decision will be made to proceed with that pipeline,” Mr. Odum said. “It actually feels pretty obvious to me that will be the decision so that’s my expectation of the government.”
The United States is expected to make a decision on the fate of the TransCanada pipeline, which will transport heavy oil from the Alberta oil sands to refineries on the U.S. Gulf Coast and already has regulatory approval in Canada, by the end of the year.
“From the oil sands perspective, the Keystone XL pipeline is an extremely important part of developing that resource and will be a critical supply artery to the U.S.,” said the executive, who was the keynote speaker at the lunch session of the fifth annual Toronto Forum for Global Cities conference hosted by the International Economic Forum of the Americas.
Anglo-Dutch Shell is one of Canada’s biggest oil sands developers as a 60% partner in the giant Athabasca Oil Sands Project in Alberta.
On the subject of energy security or independence, Mr. Odum said it’s an “interesting goal” but not one he sees as a “primary driver.”
“As I look across North America… the supply potential is enormous and it’s changed dramatically over the last four or five years,” he said, pointing to the development of natural gas plays and the oil sands as well as other resources in Mexico and Alaska.
“So with all of that within reach of North Americans, it could clearly drive us toward the direction of energy independence, but I think the bigger driver in the near term is the economic benefit that comes from that, the number of jobs that come from that,” Mr. Odum said.
He said the United States should consider connections with friendly trade partners like Canada and Mexico as well as a number of South American countries as part of the idea of energy independence more broadly.
Mr. Odum also addressed the controversy over hydraulic fracturing or “fracking” used to extract natural gas from shale reservoirs and said companies can address this through transparency in what they’re doing.
“This is a case where the arguments have gotten away from businesses and industry,” he said. “It actually never should have been a big issue. These are relatively small components in the fracture treating fluids that we put in the ground.”
He noted that all of the components of the fracturing fluid Shell uses are listed on its website, although for proprietary reasons, the specific percentages are not disclosed.
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