- The Washington Times - Sunday, March 20, 2005

Saudi Canadia? Indeed

Adam S. Chamberlain’s “Saudi Canadia?” (Commentary, March 13) expressed concern over why so little attention has been paid to Alberta’s massive 175 billion barrels of oil reserves. He should therefore be pleased that, on Tuesday, the government of Alberta will be opening an office in Washington, one of the express purposes of which is to inform Americans of the vast storehouse of secure, proven energy reserves that lie just across their northern border.

There was a mild sense of irony in the air the day after Mr. Chamberlain’s article appeared when the U.S. government’s Energy Information Administration released its 2004 energy supply figures. Once again Canada was listed as the No. 1 supplier of crude oil to the United States. This isn’t the first time Canada topped the list. In fact, it is the sixth year in a row. And, the calculation doesn’t even include the 15 percent of U.S. natural-gas supply that comes from Canada.

Last year, Canada delivered an average of 2.1 million barrels a day of crude and refined oil products to U.S. markets. Over 1 million barrels a day came from the home of the oil sands — the western Canadian province of Alberta.

In 2001, when Alberta Premier Ralph Klein appointed me as the province’s energy minister, my No. 1 priority was to gain international recognition of Alberta’s oil sands. The Alberta Energy Utilities Board, Alberta’s independent regulator, delivered an objective evaluation of Alberta’s energy reserves based on an analysis of 56,000 wells drilled and 6,000 core samples — all of which were public data. This assessment determined that Alberta’s oil sands contain 174.1 billion barrels of oil that could be developed with today’s technology and oil price; 311 billion barrels probable for recovery with increased price and some changes in technology; and an astonishing 1.2 trillion total barrels of oil in place.

In the wake of that assessment, in April 2003, the Energy Information Administration included Canada’s increased reserves in its official tally of world oil reserves. At this same time, the World Oil and Gas Journal for the first time ever included Alberta’s oil sands in its compilation of reserves.

The oil sands have been developed on principles that reward companies that risk their capital and pay the people of Alberta — who own the resource — a fair return for the production and sale of crude oil. Today over $60 billion dollars of investment has taken place or is committed to Alberta oil sands development. Two companies, Canadian Natural Resources and Suncor, have just announced projects that will exceed $10 billion in total investment and help increase the oil sands’ production rate to over 2 million barrels a day in the next few years.

Production costs at the oil sands today hover between $10 to $13 per barrel, depending on the price of natural gas — a key ingredient in heating and separating the tar-like bitumen from the sand in which it is found. Future innovations already being explored focus on fuel substitutes for natural gas, which will drop production costs even more.

“Oil is seldom found where it is needed, and seldom needed where it is found,” is an axiom of the petroleum business. Rarely does a textbook supply/demand situation occur where a country with a surplus of a resource sits next to a country that needs it. The U.S. and Canadian energy situation fits that textbook scenario exactly, and energy relations and trade in oil and gas between the United States and Canada have prospered over the past 50 years. In fact, for the foreseeable future, petroleum production from Alberta’s oil sands could grow each year by an amount equal to the growth in U.S. demand.

We in Alberta wonder, just like Mr. Chamberlain, why these massive reserve changes have not merited more attention. However, over the past two years a brighter investment light has been shining on Alberta’s oil sands and their tremendous potential, including recent significant interest from Chinese petroleum companies.

MURRAY SMITH

Alberta representative

Alberta Office in Washington

Embassy of Canada

Washington

The business of baseball

Imagine my shock when I saw Baltimore Orioles owner Peter Angelos’ full-page ad in the Washington Post on March 13 insisting he deserves to hoard the lucrative television rights of the Washington Nationals — in perpetuity.

The $40 million in revenues from television provides the cash a team must have to obtain players in a free-agent era. For proof of this, look no further than the Yankees — one reason they have long dominated the sport is George Steinbrenner earns so much more on broadcast rights. If the Nationals lose their broadcast rights, they will be the only Major League Baseball team with this dubious distinction, and they will be forever handicapped, perhaps fatally.

Sure, the Nationals might mean some revenue loss for Mr. Angelos — but that’s the way it is in a free-market economy when a new competitors arrives. Besides, MLB is already making extraordinary moves to placate Mr. Angelos by guaranteeing him a base selling price for his team — regardless of its value.

Last December, MLB required the D.C. Council to resolve the thorny issue of funding for the new stadium as a condition for the relocation of the franchise. And we did. But, we didn’t buy into a deal requiring our new team to play ball with one arm tied behind its back.

Let me be clear — I hope the Orioles continue to thrive as a team. Even more, I bet the Nationals can develop a rivalry with them that will make Boston Red Sox-New York Yankees look like child’s play. This will never happen unless we have a fair playing field. To do this, Mr. Angelos must respect the financial integrity of the team and the interests of all D.C. residents.

JACK EVANS

D.C. Council

Chairman, Finance and Revenue

Washington

Your editorial “A backroom baseball deal” (Thursday) is misinformed. Though it is highly unusual, Major League Baseball owns the Washington Nationals. As such, MLB is free to do whatever it wishes with the team, including splitting the franchise and broadcasting rights, as there is no requirement that a team own its broadcast rights.

Moreover, the franchise and its constituent parts are private property. For this editorial page to suggest that MLB be prohibited from dispensing with its property as it sees fit is troubling.

If Congress acts to prohibit MLB from doing this, what is to prohibit Congress from preventing me from selling my private property as I see fit. It would be a terrible precedent.

More important, however, though the Washington club may not control its TV rights, the franchise will not be financially worse off. This is because the eventual price paid for the team will fully incorporate this unique arrangement.

I am sure the savvy businessmen who bid for the franchise will offer substantially less precisely because they will not be buying the broadcasting rights and because those rights will be controlled by an individual who wishes to see the Nationals fail.

With the lower price, the new ownership consortium will have lower interest costs, and thus more to devote to payroll. Finally, if it makes business sense, there is every reason to believe that, in time, the franchise will buy the broadcast rights.

ELLIOT. F. EISENBERG

Kensington

Hezbollah: armed and illegitimate

J. Salemi’s criticism of Joel Himelfarb’s Op-Ed column “Hezbollah’s deadly record” (Tuesday) misses the mark in two areas (“Hezbollah is just like the Zionists,” Letters, Thursday).

First, the two Zionist underground groups, the Irgun and the Lehi, to which Mr. Salemi refers (albeit not by name), gave up their arms and became part of the Israeli political order once the first Arab-Israeli war ended, in 1948.

The Irgun boasted that it had driven the British out of Palestine but did not assert its right to continue to maintain its arms afterward, as Hezbollah has done after boasting that it drove the Israelis out of Lebanon.

Second, If Lebanon is ever to be a genuinely sovereign state, it should have only one force under arms, and that must be the Lebanese army. If Hezbollah insists on maintaining itself as an armed militia, there is no chance for Lebanon to be viable.

Consequently, Mr. Salemi’s call for Israel and the United States to recognize Hezbollah as a legitimate political force while it maintains an armed militia is disingenuous.

ROBERT O. FREEDMAN

Peggy Meyerhoff Pearlstone professor of political science

Baltimore Hebrew University

Baltimore


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