CALGARY, Alberta – The province of Alberta and Alberta Minister of Energy Ken Hughes are looking for a way out: boats, trains or, with luck, the Keystone XL pipeline.

The country has a stockpile of resources, including more than 170 billion barrels of proven oil at the start of 2012 and the third-largest reserves in the world after Saudi Arabia and Venezuela. It’s the world’s third-largest natural gas producer.

It just needs a way to get those resources to market, Hughes said.

The problem for Canada is that its biggest customer – the United States – is no longer as reliant on its oil and gas, Hughes said Feb. 26 to open Hart Energy’s DUG Canada conference.

“If you look at where we are today in Alberta, we’ve been well served by having one client, one customer in the United States of America. Exceedingly well served,” he emphasized.

But, thanks to technology and the shale oil and gas revolution, US capacity has changed that arrangement.

“Everybody knew that that was possible, but not everyone was predicting how quickly that would happen or what an impact that would have on the continental crude market,” Hughes said.

In 2011, Canada accounted for about 25% of US oil imports, or 2.2 million barrels per day of crude oil. However, the United States exported 250,000 barrels of oil per day, a more meaningful volume of petroleum products, according to the US Energy Information Administration.

“With that growth of that capacity, we actually now have to be very determined to get to other markets,” Hughes said. “It’s no surprise that getting to global markets means getting our production onto tidewater. As long as we’re on tidewater, we get world price or close to it.”

Pricing is a key matter for Canadian oil, WCS, which gets a lower price than WTI and Brent. Estimates vary, but the cost to the Canadian economy is in the billions.

Hughes said Alberta has a talented young workforce, access to global capital markets, and a tremendous supply of resources.

“We have all the challenges anybody else in the rest of the world would love to have,” he continued. “Our greatest challenge is the fact that we actually have a challenge getting our stuff to market.”

Hughes said the government is exploring every opportunity. For instance, five years ago, no one would have thought trains would be used to move huge volumes of oil around the continent. Such transport is more costly and less safe than pipelines.

But last year trains shipped 600,000 b/d out of the Bakken. In Canada, 150,000 b/d moves by train, he added.

“One of the really interesting developments is when there is a spread like there is today on the price of oil, the natural forces of the market are remarkably responsive,” he said. “When arbitrage opportunity is there, people take advantage of it.”

“We’re working on every possible angle,” he explained. “We will do what it takes to make sure we have a market for our products.”

Alberta is also keen to add value to products in Canada, which Hughes sees as an important part of gaining access to the global market.

“The province needs to be ready to step up, create the circumstances for the industry to be successful,” he said.

The Keystone XL pipeline would alleviate some pressure on the Canada within the next couple of years. But Hughes said he’s taking nothing for granted. “I remain cautiously optimistic, but we have much work to do to make sure that happens.”

Alberta is one of the few jurisdictions in North America that has a carbon tax, Hughes said. Alberta needs social license – the good will of Canadians and the rest of the world – to allow industry to work.

“If we don’t have that social license we start running into roadblocks, and we start running into people who would stop us from trying to conduct the business we conduct,” he said. “As an industry, the energy industry needs to be prepared to step up, and if there are challenges out there we need to address them.”

Fracing is a great example, Hughes said. “There’s a lot of misinformation out there. What we need to do, those of us who actually understand that technology, is ensure that we’re out there in the competition of ideas: online, working with people, making sure that people can’t misinform great swaths of the citizenry.”

Contact the author, Darren Barbee, at