1st June 2015

Wealth Fund Ban Betrays Norway’s Awkward Fossil Fuel Goals – by Saleha Mohsin and Mikael Holter (Bloomberg News – May 31, 2015)

http://www.bloomberg.com/

Western Europe’s biggest oil producer has decided coal is too dirty to invest in.

Norway’s $890 billion sovereign wealth fund, built on more than four decades of extracting crude from the North Sea, was ordered by lawmakers on Wednesday to limit holdings of companies that produce or burn coal. That could trigger at least $4.5 billion in divestments of stocks such as RWE AG and Duke Energy Corp.

“There’s this incredible logic that coal is the climate problem, and Norway is helping solve the world climate problem by producing gas that can replace coal in Europe and reduce emissions,” Rasmus Hansson, a lawmaker for the Green Party, said in a phone interview.

“That logic has unbelievably been accepted by the Norwegian majority as credible — which it isn’t.”

The cognitive dissonance is on display in Stavanger, Norway’s oil capital. The local Scandic hotel, which charges around $200 a night, tells guests it runs on wind and hydropower. The view is of the North Sea, where Norway — a country that boasts the highest per capita income in Europe after Luxembourg — spends billions extracting its oil. Read the rest of this entry »

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29th May 2015

Fortune Lost: The short, brutal and costly ride of China Investment Corp. in Canada – by Peter Koven and Claudia Cattaneo (National Post – May 29, 2015)

The National Post is Canada’s second largest national paper.

As May 19th, 2015 approached, China Investment Corp. was faced with a scenario that every pension or sovereign wealth fund dreads: whether to allow one of its key investments to live or die.

SouthGobi Resources Ltd. has become a sad story in Canada’s mining sector. The Vancouver-based company, which operates in Mongolia, is almost entirely out of cash. Its operations are deep in the red. Its CEO recently resigned. And a Mongolian court this year fined the company US$18.2 million in a very dubious tax-fraud case.

SouthGobi had a US$7.9 million interest payment coming due to China Investment Corp. (CIC) on the 19th that it was in no position to pay. State-owned CIC had two options, neither very attractive: call the loan and potentially force SouthGobi into creditor protection, or defer the payment and let the company stagger along for another couple of months trying to seek rescue funding. Not surprisingly, CIC chose the latter.

The mess at SouthGobi is just the latest misfortune among several significant bad calls CIC ended up making in its investments in Canada. Since beginning to stake major capital here six years ago, the corporation’s short experience in Canada is a story of lousy timing, costly miscalculations, and an investment strategy too vulnerable to the allure of speculative ventures talked up by sophisticated stock promoters — and not enough on conservative plays better able to withstand volatile commodity markets. Read the rest of this entry »

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29th May 2015

The world won’t wait for B.C.’s LNG – by Jeffrey Simpson (Globe and Mail – May 29, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

“The window is closing down.” So believes Thierry Bros, one of Europe’s and the world’s leading experts in natural gas, about British Columbia’s ability to build a liquefied natural gas industry.

If Mr. Bros, who was recently in Ottawa, is correct, then British Columbia risks arriving too late for the world’s LNG party. LNG projects are proceeding in Australia, the United States and elsewhere. In B.C., they face regulatory delays, long negotiations with aboriginals that sometimes go nowhere and rising costs.

The world is not waiting on British Columbia. A liquefaction plant will shortly open in Texas, bringing to five the number of LNG export facilities operational or being built in the United States. Federal regulators have received applications for 15 more. Further projects are in the planning stage. This explosion of activity relates partly to increasing world demand and partly to the U.S. shale gas revolution, which has boosted natural gas production by more than eightfold in five years.

Seven LNG facilities have received final investment decision (FID) in Australia, which is set to be the world’s largest LNG exporter by 2018. Aussie gas will arrive in Asia, which is where B.C. would like to send its gas. Read the rest of this entry »

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19th May 2015

B.C. First Nation will accept LNG project – on their terms – by Brian Lee Crowley (Globe and Mail – May 15, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa.

What a brave new natural resource world it is that has such players in it. What else but the Bard’s Tempest could be brought to mind by the storm of consternation and controversy surrounding the decision by one B.C. First Nation to turn down more than $1-billion for their agreement to a liquefied natural gas project on their territory?

Is that tempest justified? If the media narrative around the decision were correct, the answer is probably yes. According to that account, yet another First Nation has refused a hugely generous benefits package in order to indulge their environmental and anti-development hobby horses. If this kind of behaviour is allowed to continue, it will spell the end of new natural resource investment in Canada.

That investment, already made nervous by Canada’s high costs, ponderous regulatory apparatus and politicized decision-making, was already close to concluding that Canada doesn’t want to develop its resources and going elsewhere. Adding unreasonable and capricious aboriginal demands to the mix is simply the straw that will break the camel’s back. Read the rest of this entry »

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19th May 2015

THE LUNCH: Christy Clark: B.C. premier has made a big bet on LNG – by Brent Jang (Globe and Mail – May 16, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER — Christy Clark springs out of her chair after she sees four kids waving at her through the restaurant window.

“Hold on a sec,” the B.C. Premier tells me, gesturing to them to meet her inside. She poses for photos with the four smiling elementary school pupils, who are on a family outing to Vancouver from the nearby community of Abbotsford in British Columbia’s Fraser Valley.

We are two-thirds of the way through our lunch, seated in a corner of the Fairmont Waterfront Hotel’s Arc Restaurant with a great view of the North Shore mountains. It’s a convenient spot because it’s across the street from her downtown Vancouver office. I remark that someone was bound to recognize her and want to meet her. “It’s not that often that kids do,” she says. “I kind of thought that I should reward that attentiveness.”

Two years after the B.C. Liberals were re-elected with a majority government, Ms. Clark isn’t showing any signs of rust when it comes to her campaign skills. Whether it’s connecting with kids who are still many years away from voting or telling the server that she loves the soup of the day, her ability to launch a charm offensive won’t be easy for Opposition NDP Leader John Horgan to counter in the next provincial election in May, 2017. Read the rest of this entry »

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19th May 2015

For the Lax Kw’alaams, cultural identity is priceless compared to LNG – by Brent Jang (Globe and Mail – May 16, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LAX KW’ALAAMS, B.C. — Aboriginal artist Lianna Spence will treasure this feast long after the 100 friends and relatives finish their plates filled with B.C. seafood.

It is a special occasion for this late-afternoon potluck lunch at the elders’ lodge in Lax Kw’alaams. On a long table are an array of delicacies, including dried salmon and halibut, smoked black cod, boiled Dungeness crab and fried eulachon – small fish that many natives enjoy eating whole, from head to tail.

It is a day to laugh and cry as residents share memories to celebrate the life of Ms. Spence’s great-grandmother, Vera, who raised her in Lax Kw’alaams, a remote B.C. community accessible by boat or float plane. Ms. Spence, 32, spent months carving and painting an elaborate totem pole in honour of Vera, who died in 2006 at the age of 87.

During this long day full of emotion, Ms. Spence takes time to talk about a subject that has dominated the Lax Kw’alaams people’s thoughts over the past couple of weeks – Pacific NorthWest LNG’s $1-billion cash offer to the 3,600-member band, or the equivalent of almost $320,000 a person. Read the rest of this entry »

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15th May 2015

Canada should be the world leader in energy markets — so why isn’t it? – by Cody Battershill (National Post – May 15, 2015)

The National Post is Canada’s second largest national paper.

Canada is a world leader in democratic freedom, transparency, environmental protection and worker rights. So why is it not also a world leader—the supplier of choice—to energy markets all over the world, selling more oil and gas to global markets, not less?

In a number of recent third-party reports on social and economic performance, Canada ranks at or very near the top of global rankings in every category. In other words, Canada has some of the best resources– and some of the best human, social and economic policies–but it still has trouble cracking world resource markets.

These days, the real obstacles to export growth come from within Canada. The political quagmire in British Columbia surrounding LNG exports is a case in point. While we squabble inside Canada, few countries can claim Canada’s level of achievement.

Just last week, a United Nations Sustainable Development Solutions Network report placed Canada fifth of 158 nations based on measures such as life expectancy, per capita incomes and perceptions of corruption

Earlier in April, the Social Progress Index ranked Canada sixth of 133 countries based on 52 indicators such as crime levels, literacy and gender equality. Read the rest of this entry »

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15th May 2015

Lost in the eelgrass with Canada’s LNG plans – by Peter Foster (National Post – May 15, 2015)

The National Post is Canada’s second largest national paper.

The oil and gas industry has been comprehensively outplayed by the environmental
movement, which has cleverly stoked and exploited concerns about accidents, along
with aboriginal resentments and legal uncertainties, to achieve its
anti-development goals. (Peter Foster – National Post)

Remember Stephen Harper’s commitment to streamline regulatory approval for resource megaprojects? I’m not sure whether the process has in fact been sped up, but regulatory approval seems increasingly irrelevant.

This week, the Lax Kw’alaams band of Northern B.C. may have dealt a severe blow to the Pacific NorthWest LNG project (PNW) — a massive $36 billion development, including related pipelines – by rejecting outright a benefits package worth more than a billion dollars to its 3,600 members over 40 years.

The Supreme Court’s decision last year in the case of B.C.’s Tsilhqot’in Nation extended the scope of aboriginal title, and stressed consultation, but claimed that it did not give native groups a veto. Not de jure, perhaps, but de facto? Read the rest of this entry »

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15th May 2015

CSIS warns of ‘extremist’ opposition to oil and gas sector – by Alex Boutilier (Toronto Star – May 15, 2015)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

An internal threat overview by CSIS warns the federal government of “extremists” that have “converged” to oppose natural resource development.

OTTAWA—Canada’s spies are warning the federal government about an “extremist” threat to natural resource development, internal documents show.

“Extremists” have united both in person and online in their opposition to Canadian natural resource projects, according to a September 2014 “threat overview” prepared by CSIS for Public Safety Minister Steven Blaney.

The heavily censored document does not outline specific threats or projects, nor does it single out particular groups. But it lists the threat between sections on terrorist travellers and a growing anti-Muslim movement advocating violence in Canada.

The CSIS report, obtained under Access to Information law, mirrors strong language in a January 2014 report from the RCMP warning of an “anti-Canadian petroleum movement.” Read the rest of this entry »

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14th May 2015

Iron ore is not like oil – by Jonathan Ratner (National Post – May 14, 2015)

The National Post is Canada’s second largest national paper.

Investors may be tempted to think the recent increase in oil prices foretells similar gains in iron ore, but Ben McEwan at CIBC World Markets says these expectations are based more on hope than anything of substance.

For one thing, the analyst found little historical correlation between the two commodities since it is lower than the correlation between other industrial commodities such as copper, nickel, aluminum and metallurgical coal. Over both 12- and five-year periods, only met coal demonstrates a lower correlation to oil than iron ore.

There is also an argument that large iron ore producers are on the verge of supply-side discipline, which should support prices as it has in the oil sector.

McEwan compared Saudi Arabia’s position in the oil market to China’s in the iron ore sector, noting that both are significant producers that have avoided making material output cuts. “However, this is where the similarities end,” the analyst said.

Chinese iron ore production remains near the top of the cost curve, while Saudi oil production is far more economically even at lower oil prices. Read the rest of this entry »

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14th May 2015

Pacific NorthWest working to keep B.C. LNG export project alive – by Brent Jang (Globe and Mail – May 14, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER — Pacific NorthWest LNG is scrambling to come up with a Plan B after the Lax Kw’alaams First Nation soundly rejected the Malaysian-led project’s $1-billion cash offer aimed at securing its support for a B.C. liquefied natural gas terminal.

The company said project leader Petronas and its five Asian partners are willing to make changes in response. A key option is to relocate a planned suspension bridge and trestle that the native people said was too close to the environmentally sensitive habitat of juvenile salmon in Flora Bank, which is part of the traditional territory of Lax Kw’alaams.

“It’s about doing the right thing,” Pacific NorthWest LNG president Michael Culbert said in an interview on Wednesday. “We have heard there are concerns about Flora Bank and the stability of Flora Bank.”

The overwhelming opposition by Lax Kw’alaams members in three rounds of voting illustrates the many hurdles – from aboriginal criticisms to environmental concerns – that even the most prominent project among 19 B.C. LNG proposals must clear before becoming reality. Read the rest of this entry »

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14th May 2015

With its clean-burning LNG in the unwanted pile, B.C. is suddenly in an uncomfortable situation – by Claudia Cattaneo (National Post – May 14, 2015)

The National Post is Canada’s second largest national paper.

Having put all its efforts behind homegrown liquefied natural gas, while snubbing not-good-enough-for-us oil pipelines needed by Albertans, British Columbia is now in an uncomfortable situation.

As it turns out, LNG, the clean-burning fuel embraced by the Liberal government of Christy Clark, whose development was promoted up and down Asia and that was supposed to be acceptable to the province’s green/aboriginal/nimby cohort, is not good enough either.

It has landed on the unwanted pile, right next to Enbridge Inc.’s proposed Northern Gateway oil pipeline and Kinder Morgan’s proposed TransMountain oil pipeline expansion.

The boot came this week from the Lax Kw’alaams First Nation near Prince Rupert, population 3,733, which rejected $1.14 billion in benefits over 40 years offered by Malaysia’s state-owned Petronas in exchange for consent to build the Pacific NorthWest LNG project.

For sure, other aboriginal bands are supportive of LNG development, but the Lax Kw’alaams vote and the band’s combative tone can’t inspire confidence among the 20-or-so LNG proponents trying to make the business take off. Read the rest of this entry »

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13th May 2015

Shell given okay to resume controversial Arctic drilling – by Paul Koring, Jeffrey Jones and Jeff Lewis (Globe and Mail – May 12, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

WASHINGTON and CALGARY — In a move that buoyed big oil but enraged environmentalists, the Obama administration has given the green light for Royal Dutch Shell to resume offshore drilling in the remote Arctic waters, off Alaska’s northwestern coast.

Monday’s decision, which is conditional on Shell’s getting approval for remaining drilling permits for the project, is a major win for Shell and other petroleum companies, which have sought for years to drill in the harsh waters of the Chukchi Sea, which is believed to hold vast reserves of the world’s undiscovered oil and gas.

Shell’s Arctic drilling program and the Keystone XL pipeline to funnel Canadian oil sands crude across the United States have been the top two targets for environmental groups seeking to hold U.S. President Barack Obama to his pledge to cut greenhouse-gas emissions causing climate change. Although Mr. Obama has pursued an ambitious environmental agenda, he has also tried to balance that by opening up untouched federal water to new exploration. Read the rest of this entry »

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12th May 2015

Relax. Alberta’s NDP isn’t the energy deal killer – the market is – by Tim Kiladze (Globe and Mail – May 12, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

My dear friends in the wild rose province: Deep breaths.

Instead of offering Alberta’s premier-designate time to absorb her party’s shocking majority win, some provincial big wigs – including energy executives, who should know better – have pounced on Rachel Notley, suggesting her victory will spell the end of Canadian energy. The morning after the New Democrats won the election, there were already suggestions the incoming leader must reassure the public that she won’t nationalize the oil and gas industry.

I’m assuming most Albertans aren’t in such a panic – the NDP wouldn’t have won in a landslide otherwise. But there seems to be an underlying fear that the provincial NDP government and its pending royalty review will demolish any hopes of developing energy assets – and by extension, will destroy future deal flow.

What a knee-jerk reaction. Across the country, the NDP may not be cozy with producers of energy from conventional sources, but political parties almost always move to the centre once they are elected. And their reputation for killing deals can just as easily be slapped on their rivals. On this front, let’s not forget that Conservative governments are no pushovers, either. Read the rest of this entry »

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12th May 2015

ALBERTA: Rachel Notley’s victory shows the system does work – by Margaret Wente (Globe and Mail – May 12, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Back in 1990, in a fit of pique, I cast my vote in Ontario for Bob Rae and the NDP. I never expected him to win. I was just mad at the other guys. Imagine my surprise when I woke up the next morning and discovered he was premier. The entire province was aghast. I thought it would be a train wreck, and it was.

Will Rachel Notley be a train wreck? I don’t think so. Unlike Mr. Rae, she doesn’t feel like the leader of a left-wing horde of crazies who got in by mistake. She feels like a gust of fresh air blowing the cobwebs out of all those stale backrooms where old boys lurked.

When Albertans woke up the day after the election, a lot of them were smiling. Ms. Notley is by all accounts level-headed, smart and down-to-earth, like her dad. Even though most of them didn’t vote for her, she’s riding an upswell of goodwill.

Mr. Rae’s crew were red-diaper socialists who really did think that capitalism and big business were the root of all evil. They despised the private sector so much that the poor saps who happened to work on Bay Street couldn’t even get an audience with the government. Ms. Notley has set a different tone. She has been courteous to the oil and gas people, some of whom have practically gone into cardiac arrest. Read the rest of this entry »

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