Archive | Oil and Gas Sector-Politics and Image

Trudeau’s sad legacy: Billions in energy infrastructure spending, scuttled on his watch – by Claudia Cattaneo (Financial Post – September 9, 2017)

The Northern Gateway pipeline ($7.9 billion), the Pacific Northwest LNG project ($36 billion), and now likely the Energy East pipeline ($15.7 billion) are three privately funded infrastructure projects that would have materially strengthened the economy for decades — and all were scuttled under Prime Minister Justin Trudeau’s watch in the past year.

It’s sad to say, but the last time there was so much heavy handed, poorly thought out federal interference into the energy sector was during the failed National Energy Program in the early 1980s, when Trudeau’s father Pierre was in charge. The first two projects are gone for good, after frustrated proponents moved on to less-intrusive jurisdictions.

The Energy East project remains in play after proponent TransCanada Corp. said Thursday it would suspend its application for 30 days, however the company suggested it may not build it at all. It’s a reaction to the National Energy Board’s unprecedented decision to widen its study of the project to include the upstream and downstream greenhouse gas impacts of the whole oil industry. Continue Reading →

Lost resource opportunities mean higher taxes – by Colin Craig (Toronto Sun – September 7, 2017)

But it’s not just the oil and gas sector that is constantly being obstructed.
Ontario’s “ring of fire” – an immense mining opportunity in northern Ontario
– has yet to ignite and the massive Site C hydro dam in B.C. is facing
opposition from the province’s new government. In 2016, the Financial Post
identified “35 projects worth $129 billion, that have been stalled or cancelled
due to opposition from environmental, aboriginal and/or community groups.”

Every Canadian should reflect on four words Oklahoma Governor Mary Fallin recently shared at a conference in Banff. After describing how she had heard about several oil and gas companies cancelling their multi-billion dollar projects in Canada, Fallin quipped – “opportunity here, opportunity there.”

The inference was that she could approach those companies and try to convince them to invest in her flourishing oil and gas state. Fallin of course wants the thousands of jobs those companies would bring, the billions in tax revenues they would pay and all the other positive spinoff effects.

So why is Canada letting all those jobs, and the billions of tax dollars they would contribute, slip between our fingers? Continue Reading →

Can Canada remain an ‘energy superpower’? – by Glen Hodgson (Globe and Mail – September 6, 2017)

Glen Hodgson is senior fellow at the Conference Board of Canada

A decade ago, Canada was being touted by political leaders and media commentators as an “energy superpower.” Does that description still fit today – and will it be appropriate tomorrow?

It goes without saying that energy is a key part of the Canadian economy. It represents about 10 per cent of GDP and one-fifth of exports. Canadian oil production has grown by around 50 per cent in volume terms over the past decade – driven by oil sands investment and production – although natural-gas production has softened. Canadian exports of oil, natural gas and low-carbon electricity are very much in demand in the U.S. market.

But the energy game is changing. Four factors are going to challenge Canada’s future status as an energy power.

Factor 1: Ample new sources of oil and natural gas supply. Arguably the most striking story of new energy supply is happening not in the traditional Organization of Petroleum Exporting Countries countries, but right next door in the United States. Continue Reading →

How big shifts in U.S.-Canada oil trade erased the ‘geopolitical premium’ on oil prices – by Peter Tertzakian (Financial Post – August 30, 2017)

NAFTA talks continue. Goods like milk, lumber and auto parts are all under the negotiators’ microscopes. Oil is clearly visible, too. Last year, the bilateral trade of energy (including natural gas, oil and power) between the U.S. and Canada was about US$55 billion, with oil being 80 per cent of the total. It’s dollar amount dwarfs other industries, but negotiators may need to view this vital commodity using a different lens.

Beyond size, the upstream oil business between America and Canada reveals big shifts in dollar and volume trade over the past few years.

The United States has long been its northern neighbour’s biggest oil customer. Yet since 2014, it’s reciprocally grown to become Canada’s biggest supplier too. As a result of this bilateral exchange of barrels, the growth in the oil trade deficit (from the American perspective) has slowed down somewhat. That’s notable for negotiations. But of more interest is that both countries have pushed out a large portion of their “foreign oil” suppliers. Continue Reading →

Environment v. economy: Canada’s brewing political battle – by Gary Mason (Globe and Mail – August 16, 2017)

There’s a reason the federal Liberals want to include a clause in any rewrite of NAFTA preventing member countries from diminishing environmental safeguards in the name of fuelling investment: It’s an area in which they suddenly find themselves politically vulnerable.

The North America free-trade agreement negotiations are beginning at the same time as the federal government is preparing to bring in new rules that would put more restrictions on companies looking to establish resource development opportunities in Canada.

Provinces are now bracing for the impact of a national carbon tax that is scheduled to be introduced next year in those jurisdictions currently without one, or the equivalent of. (In Ontario and Quebec, that would be cap-and-trade.) The stultifying impact these initiatives could have on resource investment has become a conservative rallying cry in the west, with outgoing Saskatchewan Premier Brad Wall leading the charge. Continue Reading →

Price of iron ore, crude oil and other commodities to take a hit if North Korea crisis escalates: Citibank – by Sunny Freeman (Financial Post – August 11, 2017)

As nuclear rhetoric between North Korea and the United States heats up, Citibank analysts are anxiously watching commodity prices due to the importance of the North Asian market.

Global commodity markets have so far not priced in geopolitical risks even as North Korea threatened to launch ballistic missiles into waters near the American territory of Guam. President Donald Trump warned there would be “fire and fury” against the North if it continued to threaten the U.S.

The VIX, a measure of how much volatility investors expect in stocks, jumped 25.2 per cent, the biggest increase since May on Thursday. The price of gold, considered a safe haven investment, rose more that $12 to US$1,285.40 an ounce by midday against the backdrop of heightened political uncertainty. Continue Reading →

NEP 2.0: ‘Another Trudeau’s’ environmental rules sow seeds of unity crisis, critics say – by John Ivison (National Post – August 8, 2017)

Brad Wall is worried the environmental rules Ottawa is set to introduce later this year will strain national unity in the resource-dependent West.

“The cumulative effect of this and the carbon tax mean we are heading toward an unhealthy debate, just as we did when another Trudeau introduced his energy policy. How is this different from a National Energy Program, in terms of the reality of what it will do to jobs and pipelines and so on? That is starting to sink in,” the Saskatchewan premier said in an interview.

The Liberals are putting the finishing touches to what will be one of their most controversial policies going into the next election – the environmental assessment regulations that will govern natural resource development. Stephen Harper’s intended legacy was to keep government from growing much bigger. Justin Trudeau’s bequest to the nation will be government that is not only bigger but, he hopes, better. Continue Reading →

Natural resources are a win for rural communities – by Sean Speer (Toronto Sun – August 5, 2017)

Some 500 communities across Canada are dependent on mining, forestry and
energy for their livelihood. Public policies that delay or block the
development of these natural resources undermine these communities and
their citizens. It amounts to an anti-regional development policy.

Sean Speer is a Munk senior fellow at the Macdonald-Laurier Institute.

Expanding economic opportunity in rural and remote communities has bedeviled Canadian governments for decades. Various schemes have been tried and failed. Many of the same challenges persist.

Regional development agencies such as the Atlantic Canada Opportunities Agency and Western Economic Diversification are emblematic. Both are marking their 30-year anniversary this year. But it’s hard to find much to celebrate. A considerable body of research casts doubt on their basic usefulness.

Promoting regional economic development isn’t easy. Different regions and cities have pre-existing advantages. There are limits to what public policy can do to change this. Continue Reading →

Canada so ripe with green activism old-fashioned employment has gone out of fashion – by Rex Murphy (National Post – August 4, 2017)

Has there ever been a single energy project — just one — in British Columbia that has not faced protest and demonization?

It’s more than a touch odd or distressing how a project with an overall budget of some $36 billion — billion! — can get cancelled these days, and not kick up as much interest or internet play as, say, Justin Trudeau showing up on the cover of (the much diminished of late) Rolling Stone.

Yet this appears the case with the Pacific Northwest liquified natural gas (LNG) plant in British Columbia, undertaken by the Malaysian company Petronas some years back, and now, despite early expenditures of some billions, cancelled for good.

I don’t suppose there’s any need to point out that all the jobs, technical resources, local development and industry that would naturally follow from an expenditure of this magnitude are good things. Or that Canada hasn’t become so new-age, so ripe with green virtue-signalling as a surrogate for policy, so prideful of its climate change sanctimoniousness, that jobs, employment, old fashioned working for a living has gone utterly out of fashion. Continue Reading →

How to smother a resource economy to death, starting with LNG – by Joe Oliver (Financial Post – August 2, 2017)

Joe Oliver, chairman of investment dealer Echelon Wealth Partners, is the former minister of natural resources and minister of finance.

Last week, Canada received more bad news in its prolonged failure to export energy resources abroad. Petronas decided not to proceed with its $36-billion Pacific NorthWest LNG project, dealing a body blow to B.C. employment, economic growth, funding for social programs and revenue to First Nations. Understandably, the federal and provincial governments sounded defensive, characterizing it as a business decision based entirely on the decline in liquified natural gas prices.

However, Petronas had previously emphasized it considers the industry’s long-term prospects, including costs, not just the current market. Furthermore, LNG projects are moving forward south of the border and in Australia. An initial project description was filed with the Canadian Environmental Assessment Agency (CEAA) in February 2013, raising the question why it could not have been approved sooner when prices were higher and costs potentially lower. Continue Reading →

Shocks to Canada’s natural resource sector should be the real cover story – by John Ivison (National Post – July 27, 2017)

As the prime minister graces the cover of Rolling Stone, the real news this week is how two major natural resources projects have been scuttled by government and the courts

The fawning front cover of the latest Rolling Stone, which features Justin Trudeau and wonders wistfully, “Why can’t he be our President?” also touts a headline promising to explain how the Trump administration is destroying the U.S. Environmental Protection Agency.

Many Canadians will rejoice at the contrast — and, it’s true, few would exchange Trudeau’s golden aura for Trump’s tangerine tincture. But the idea that Trudeau is getting everything right — particularly when it comes to balancing environmental protection and growing the economy — is fallacious. The government is touting the International Monetary Fund’s forecast that Canada will lead the G7 in growth this year. But there is a lag before government action affects the economy.

The warning this week from the Chamber of Commerce that Canada’s climate-change plan and other measures are raising the cost of doing business in this country to breaking point is a canary in the coal mine, gasping from exposure to the toxic gases of too many taxes and too much regulation. Continue Reading →

NEB can fulfill duty to consult Indigenous groups, top court rules – by Shawn McCarthy (Globe and Mail – July 27, 2017)

OTTAWA — The Supreme Court of Canada affirmed Wednesday that Indigenous people do not have a veto over resource projects affecting their traditional territory, even as it quashed a regulatory permit for an oil-exploration program that Inuit residents of Baffin Island feared would damage their hunting rights.

Residents of Clyde River – population 1,100 – fought an uphill battle against a consortium of multinational oil service companies that planned to conduct seismic testing to assess the oil and gas potential of offshore sites. The top court agreed that the regulatory agency had failed to adequately assess the risk posed by the seismic testing to the community’s treaty rights to hunt bowhead whales, narwhal, seals and polar bears.

In a companion ruling, the Supreme Court rejected a challenge by a First Nations community that argued the government had failed to properly consult and accommodate its concerns when the regulatory agency approved Enbridge Inc.’s project to reverse the flow of its existing Line 9 pipeline through Ontario to Quebec. Continue Reading →

Globe editorial: The ‘duty to consult’ Indigenous Canadians, and its limits (Globe and Mail – July 27, 2017)

Indigenous Canadian communities have unique rights under Section 35 of the Constitution. These protections, covering pre-existing rights and those acquired by treaty, are extensive – but some are also limited.

That’s the takeaway from a pair of Supreme Court rulings released Wednesday. One considered the National Energy Board’s approval of an oil and gas exploration project, over the objections of an Inuit community; the Court struck the project down. The other case looked at the NEB’s approval of the Line 9 pipeline reversal in Ontario; the Court said that, even though an affected Indigenous community was opposed to the project, the regulator had properly consulted and properly approved it.

At issue in both cases is the Crown’s “duty to consult.” When a development – like a pipeline or an oil-exploration project – has an impact on an Indigenous community’s rights, such as the right to hunt or fish on traditional native territory, they must be adequately consulted. Continue Reading →

‘A tragedy for Canada’: Petronas cancels $36B LNG project as B.C. jacks up demands – by Claudia Cattaneo (Financial Post – July 26, 2017)

British Columbia’s new NDP/Green coalition government was in damage control mode after the most ambitious of the province’s proposed liquefied natural gas (LNG) projects, the $36-billion Pacific NorthWest LNG, was cancelled Tuesday.

Both the province and the Malaysian company that proposed it blamed poor global LNG market conditions. The truth is that what should have been a magnificent new Canadian industry, building middle-class jobs from exporting Western Canada’s world-class Montney shale gas to reduce carbon pollution in Asia, has unraveled due in large part to government mishandling — plus fears it would have only accelerated under the new, anti-development provincial government.

The proof is that the LNG export industry is thriving in the United States under the same global market conditions, while B.C. has yet to see the construction of a single project out of 20 or so proposed since 2011. Dennis McConaghy, a former senior executive at energy company TransCanada Corp., called the decision “a tragedy for Canada … a real condemnation of this country and the utterly unproductive entities in it that simply make any development virtually impossible.” Continue Reading →

How Canada blew its chance for a multibillion-dollar industry – by Nelson Bennett(Business Vancouver – July 25, 2017)

B.C. natural gas producers who can’t move gas to the West Coast could be supplying LNG producers on the U.S. Gulf Coast

While companies like Petronas and Shell haven’t formally abandoned their plans to build liquefied natural gas (LNG) plants in B.C. yet, and Nexen – owned by China’s CNOOC Ltd. (NYSE:CEO) – recently restarted the review of its Aurora LNG project in Prince Rupert, the prospects for a West Coast LNG industry appear to be growing dimmer by the day, especially now that Canadian projects have been beaten to market by Cheniere Energy Inc. (NYSE: LNG) in the U.S.

If B.C. gas ends up being exported to foreign markets, it might not be from the West Coast, but from the Gulf Coast. Cheniere, which has a three-train LNG terminal in production on the Sabine Pass River in Louisiana, and four more trains under construction, has already inked a contract with at least one natural gas producer on the Alberta side of the Montney region and is said to be actively courting producers in B.C.

“We’re very happy to get as many molecules from Canada as we can logistically supply to our two facilities at Sabine and at Corpus [Christi],” Cheniere executive vice-president and chief commercial officer Anatol Feygin recently told Bloomberg. Continue Reading →