Oilpatch History

At Long Last, An Effective National Oil Policy For Canada

"VOLUNTARY", WITH BIG STICK IN BACK GROUND 1961 OIL TARGET 640,000 BARRELS DAILY AVERAGE, 100,000 B/D IN ONE YEAR, 800,000 B/D AVERAGE FOR 1963.

1961 OIL TARGET 640,000 BARRELS DAILY AVERAGE, 100,000 B /D IN ONE YEAR, 800.000 B/D AVERAGE FOR 1963.

Canada has, at long last, declared an effective National Oil Policy. Trade & Commerce Minister George H. Hees outlined it to the House of Commons in Ottawa on Wednesday afternoon. Here is the complete text of his statement:

As the House is aware, the Government has been giving active consideration to the situation of the oil industry in Canada for some time. It has had the benefit of a constructive report from the Royal Commission on Energy, and the National Energy Board has studied intensively the changing conditions which have characterized the period since the Commission reported.

I wish to inform the House that the Government has decided upon a National Oil Policy which is. briefly. To achieve target levels of production of oil, including natural gas liquids, which will be set from time to time, and which will be designed to reach approximately 800,000 barrels a day in 1963. This objective for 1963 can be achieved by the industry on an economically sound basis; and will be approximately as high as the figure which would be achieved if the Montreal Pipeline were to be constructed.

The production target level for the first part of this period will be an average of 640,000 barrels a day for the year 1961, with a level of not less than 625,000 barrels a day to be attained by mid-year. This compares with an average production of 550,000 barrels a day in 1960.

These targets are to be reached by increased use of Canadian oil in domestic markets. west of the Ottawa Valley, and by some expansion of export sales largely in existing markets which can be reached through established pipelines. The growth in domestic use is predicated in particular on substituting. in Ontario markets west of the Ottawa Valley, products refined from Canadian crude for those now supplied from foreign crude.

This will require in Ontario the displacement of the present small imports of crude, and a progressive reduction in imports of foreign products and transfers of products refined from foreign crudes in Montreal. Refining capacity in Ontario will have to be increased over the period so that by 1963 capacity is sufficient to enable the Ontario market, west of the Ottawa Valley, to be supplied substantially from Canadian crudes.

The Government program for expanded production of oil will be on a voluntary basis. but importers of crude and petroleum products will be required to report their imports monthly from Jan. 1, 1961, in order to permit the National Energy Board to continue to assess the situation.

The increase in production of Canadian oil reflected in these target levels will of course require a sincere effort and full co-operation by all segments of the industry. The Government desires that this effort and co-operation will be forthcoming without formal regulation.

The Government has instructed the National Energy Board to evaluate the contribution of individual companies to the general efforts of the industry, as well as to report periodically on the progress of the program. If this progress suggests that voluntary efforts are not producing the results anticipated then the Government will take whatever further steps the circumstances may require to ensure the success of its policy, including the proclamation of Section 87 of the National Energy Board Act, which provides for the regulation of imports and exports of oil.

In developing its policy, the Government has full regard to the interests of other countries which might be affected by its decisions. Its present program is designed to achieve the national objectives with the least possible disruption of normal trade patterns. The increase in exports which is integral to the Government's program is wholly consistent with the growth of sales of Canadian oil contemplated when exemption from United States oil import controls was established, under which Canadian oil is relatively free to move into the United States by overland means of transportation.

The progressive displacement of imported crudes and products in the Ontario market is considered to be fully consistent with the public announcement of the (government of Venezuela that it considers that its oils should not reach these markets in the interior of Canada. The United States government has been made aware of the Canadian government's plans in view of the close connections between the oil economies of the two countries. Other interested governments are being informed today of the contents of the announcement which I have just made.