Canadian Cutback

Canada is one of the three largest foreign suppliers of crude oil to the U.S. It ships 800,000 bbl. daily to northern-tier states and the Midwest, accounting for 20% of U.S. imports, about equal to inflow from Nigeria. Last week the Canadian National Energy Board issued a report showing that the country could lose self-sufficiency by the early 1980s if exports to the U.S. continued at present levels. Accordingly, Ottawa's Minister of Energy, Mines and Resources, Donald S. Macdonald, announced that exports to the U.S. would be cut by 100,000 bbl. by Jan. 1, even more later in the year, and would possibly be phased out altogether by the 1980s unless Canadian production was increased.

Reason for the planned cutback, according to Prime Minister Pierre Trudeau: Canada's tar-sands oil reserve probably totals around 500 billion bbl., equal to that of the Middle Eastern nations but contained in sands deep beneath the Alberta soil and thus far too expensive to tap. Canada cannot even take full advantage of all the oil that it is now pumping; a cross-country pipeline goes eastward from Alberta and Saskatchewan only to Toronto. Thus, while Canada exports some of its western production to the U.S., it is forced to rely on imports to supply its eastern provinces.

By cutting back on outflow to the U.S., Canada hopes to reserve oil for itself when the pipeline is eventually extended to Montreal, a project announced during last winter's Arab oil embargo and originally scheduled for 1976, but currently bogged down in financing. The unstated purpose of last week's action was to pressure multinational oil companies, which have lately been pulling back on exploration because of increasing costs, into pressing ahead on development of the vast tar-sands deposits. At least one major company was not moved; a spokesman for Mobil said that the Canadian action was all the more reason why the U.S. should move faster to develop its own resources.

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