Oil and Gas Sector-Politics and Image

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

The New York Times has urged President Barack Obama to reject the proposed Keystone XL pipeline, in an editorial that serves to underline the weakness of the opposition case.

“Saying no to the pipeline will not stop Canada from developing the tar sands,” the Times concedes, before arguing: “but it will force the construction of new pipelines through Canada itself. And that will require Canadians to play a larger role in deciding whether a massive expansion of tar sands development is prudent.”

That’s the crux of its case: that blocking a $7 billion project that would create jobs in an economy that is desperate for them, would allegedly make Canadians think twice about expanding the oil sands.

Canada, of course, has pondered that very question for a very long time. The oil sands are not some new project that popped up on the prairie a week ago, while Canadians were looking the other way. Large-scale development has been under way for decades, and has weathered many a political and economic storm along the way. Oil booms have come and gone, prices risen and collapsed, political and environmental crusades launched and allowed to fade.

The National Energy Program sought to seize the proceeds from provincial hands. The Green Shift attempted to turn profits into a social welfare program.

Read more

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

 The dreams are ­coming fast and furious, as are obstacles and risks

Every nation needs dreams and dreamers. For some reason Canada is suddenly awash in grand projects and industrial schemes, the product of a new national dream created some seven years ago by Prime Minister Stephen Harper.

In a 2006 speech, Mr. Harper floated the idea that Canada should aspire to become a global energy superpower. We are witnessing, he said, “Canada’s emergence as a global energy powerhouse — the emerging ‘energy superpower’ our government intends to build.” Based on the oil sands, the project involves “Brobdingnagian technology and an army of skilled workers. In short, it is an enterprise of epic proportions, akin to the building of the pyramids or China’s Great Wall. Only bigger.”

The energy pyramid schemes are now coming fast and furious, with industrialists, bankers and others talking up pipelines, ports and industrial installations from coast to coast. Also coming just as fast, however, are signals, obstacles and indicators that suggest the grand megaprojects and pipeline proposals run grave risks of becoming pipe dreams.

As the Financial Post’s Claudia Cattaneo notes, the death of Hugo Chavez could trigger a return to more normalized U.S./Venezuela relations and a return of large flows of Venezuelan oil into the United States, oil that could displace Canadian production. (See also the accompanying article by Ryan W. Lijdsman.)

Read more

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

 
Oil is critical to Venezuela’s earnings, so there could be the potential for a change in approach to foreign investment in the sector
Brent crude prices didn’t move much as traders absorbed the death of Hugo Chavez who ruled the world’s sixth largest OPEC producer, but it may mask a long-term shift that could impact North American energy trading patterns.

“Over the longer term, changes in policy towards the energy sector might eventually allow Venezuela’s oil production to return to the much higher levels seen in the late 1990s,” said Tom Pugh, commodities economist at Capital Economics. “However, any such recovery would take many years.”

Venezuela is home to the world’s largest proven oil reserves of around 296.5 billion barrels, but its production has steadily fallen under Mr. Chavez who diverted Venezuela’s oil revenues to his pet projects and weakened the state-owned Petróleos de Venezuela, which is responsible for developing the country’s enormous riches.

Evan as 40% of Venezuelan oil exports headed towards the United States, Mr. Chavez’ despised Washington’s policies and was actively pursuing a policy to shift exports to China, the Caribbean, Central America and other Asian markets.

“U.S. imports of Venezuelan petroleum products peaked in 1997, at 379,000 bbl/d, and have since fallen to as low as 23,000 bbl/d in October 2012,” the U.S. Department of Energy said in a January note.

Read more

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

Barely five years ago, when Canadian pipelines could do no wrong and Canada was the darling of the United States’ oil industry, a joke making the rounds at Enbridge Inc.’s expanding Houston base was that Hugo Chavez had been named Employee Of The Year.

“He’s done a lot to help us,” Stephen Letwin, who was in charge of Calgary-based Enbridge’s U.S. operation, said at the time.

Indeed, it was thanks to Venezuela’s nationalization policies under Chavez that companies such as Enbridge were expanding aggressively to bring more Canadian oil to refineries in the U.S. Gulf, while oil majors that were pushed out of the South American country were redeploying their money and heavy oil expertise to Canada’s oil sands.

For Exxon Mobil Corp., Royal Dutch Shell PLC, Statoil ASA, Total SA, BP PLC, Canada was a good backup: it offered similarly large deposits, access to the U.S. market, as well as stable fiscal and political regimes.

But much like Venezuela’s loss was Canada’s gain when Hugo Chavez was alive, his death on Tuesday could take some lustre away from oil sands if it leads to a more pragmatic approach to oil development in Venezuela, as some expect.

In addition, if oil production in Venezuela stabilizes, and U.S. production from tight oil continues to increase, the U.S. could feel less pressured to get in bed with Canada over the long term for its energy security as it prepares to decide whether to permit the Keystone XL pipeline from Alberta to Texas.

Read more

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.

Many Canadians must have wondered if George Orwell was alive and well this week as they read that the Alberta oil sands were being pitched to U.S. officials as “green” by Natural Resources Minister Joe Oliver.

“Canada is the environmentally responsible choice for the U.S. to meet its energy needs in oil for years to come,” the minister told an audience in Chicago – a message he repeated over and over in his U.S. tour, part of a calculated mission to associate Alberta bitumen with ecological benefits.

At a time when climate scientists are urgently telling us to significantly scale back the burning of fossil fuels, having a minister promote exactly the opposite really does feel like being told that two plus two equals five.

Yet this is what we’ve come to expect from our federal government, which, as documents released this week through an Access to Information request revealed, has “aligned” its interests with the pipeline industry instead of with the voters who elected it. And Joe Oliver has emerged as the most prominent spokesman for this alignment.

It was Mr. Oliver who, a year ago, opened an offensive by trying to label those opposed to the Enbridge Gateway pipeline proposal as “radicals,” ignoring the deep public opposition to the project.

Read more

http://www.canadianbusiness.com/

Time to find a new buyer.

When Alison Redford was forced to admit last month that her province was running short of cash due to low oil prices, it was frightening for Alberta and worrisome for the entire nation.

For the past decade, Canada has thrived on the good fortunes of the oil and gas industry, but those times, Redford made clear, are coming to an end. “Because of the rapidly growing levels of oil production in the United States and the fact that we’ve virtually nowhere else to sell our oil than the U.S. market, Alberta is getting just over $50 a barrel for our oil,” Redford said. “This bitumen bubble means that the Alberta government will collect about $6 billion less in revenue this year alone. To put that in context, that’s equivalent to all of our government spending on education each year.”

Redford’s fireside chat was intended to prepare citizens of her province for service cuts and possible tax increases expected on budget day, March 7. But the bitumen bubble’s effect will reach far beyond the borders of the Wild Rose Province. Two weeks after Redford’s remarks, federal Finance Minister Jim Flaherty told reporters lower government revenues follow from lower commodity prices like “night follows the day,” meaning a hard line of spending as he approaches his own coming budget.

The price drop is an unexpected turn of events for an industry that for decades has operated under the assumption of Peak Oil—geophysicist M. King Hubbert’s theory, first proposed in 1956, that the United States’ then soaring oil production would peak and begin to decline around 1970. Hubbert was proven right within the century in which he lived.

Read more

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 — The British Columbia government is promising its fledgling natural gas export industry that an estimated $30-billion in new taxes will not drive companies out of a business they have yet to build.

But an analysis by a U.S. economic firm suggests that liquefied natural gas shipments from Canada will be among the most expensive in the world, leaving the industry “vulnerable” long before it has loaded it first ship.

And companies pursuing LNG projects in Canada say B.C. is comparing itself to the wrong place when it looks to Australia as it sets its own new taxes. Australia, they say, is yesterday’s news. Canada today is competing with the U.S. and massive new offshore gas finds off the east coast of Africa.

Those factors add a substantial wrinkle to B.C.’s effort to close a taxation gap, with the government saying its current “resource rent” system is set up to take in a third less than Australia on LNG exports. Behind closed doors, the government has proposed a new tax system that would collect, in rough terms, an extra $30-billion over the next 30 years from the LNG industry, according to government sources – although that number is preliminary and likely to change as negotiations proceed with industry.

Read more

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

Two years after the earthquake, tsunami and nuclear meltdown in Japan that prompted a hard look at natural-gas rich British Columbia as an alternative energy supplier to Asia, plans for a liquefied natural gas hub on the north coast are progressing at great speed.

Five terminals have been proposed, and more could be on the way. The resource, now estimated at 1,200 trillion cubic feet, is massive; it’s located closer to Asia than other suppliers such as the U.S. Gulf Coast or East Africa; and because average temperatures are cooler, plants are more productive than in warmer parts of the world, Betsy Spomer, senior vice-president, global business development, at BG Group, said in an interview Monday.

But as plans get closer to reality, proposals for fiscal terms are surfacing at the provincial and federal level, and they could douse the enthusiasm shown so far.

With visions of scooping a windfall in resource revenues similar to the one reaped in Alberta from the oil sands, B.C. Premier Christy Clark’s government has proposed an LNG export tax, which it plans to finalize over the next year.

The premier also announced Monday $120-million in royalty credits in exchange for building new roads and pipelines.

Read more

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.

In the late 1800s, a group of independent oil producers in Pennsylvania came up with a radical idea to foil their nemesis, John D. Rockefeller. The Standard Oil baron had tied up the railroads, stopping his fledgling rivals from getting their oil to market. So, the landlocked independents teamed up to build the world’s first long-distance oil pipeline.

Although their Tidewater pipeline was an engineering feat, it was ultimately futile as a competitive gambit. Before long, the irrepressible Rockefeller controlled Tidewater and almost every other U.S. pipeline, with a network from the Appalachian Basin to the Gulf of Mexico coast.

That would be the same coast to which Canada’s bitumen-bubbling oil producers are now desperate to pump their product through TransCanada’s proposed Keystone XL pipeline, the much-maligned conduit that threatens to launch a Canada-U.S. Cold War. If the oil companies can’t ship raw Canadian resources using that 150-year-old technology, they will rely on an even older one – rail. And if not rail, they might just float their bitumen on barges down the Mississippi.

Huckleberry Finn might have marvelled at this inventiveness, but it doesn’t quite cut it as a 21st-century national strategy for wealth creation. Yet our frantic obsession with exporting minimally processed bitumen is sucking up all the oxygen in the national conversation.

Read more

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.

OTTAWA — Imagine if the Voisey’s Bay nickel mine in Labrador had gone ahead without a deep water port to ship the ore to smelters.

Or if Hydro-Quebec had opened the floodgates on its massive James Bay project before installing transmission lines and lining up U.S. customers. By the same token, you likely wouldn’t buy a car if you lived in a roadless Newfoundland outport.

Sinking billions into extraction projects without lining up a dependable way to get the resource out is reckless, if not downright stupid.

Oh, wait. Isn’t that the awkward spot Canada’s oil patch has put itself in? “Access to tidewater” is the new and increasingly forlorn mantra of oil executives and their political backers in Ottawa and the Western provinces.

There’s a sudden panic about the dearth of options to get that heavy crude to refiners, and ultimately to customers. Alberta Energy Minister Ken Hughes declared recently that securing market access for the province’s oil is his government’s “single most important imperative.”

There are now proposals for at least three different pipelines – to Atlantic Canada, to British Columbia, and of course, the stalled Keystone XL that would carry the heavy crude south to refineries on the U.S. Gulf Coast.

Read more

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.

Strip away “possible” and “speculative” reserves, add in surging demand and costs, and a century’s worth of resources plunges to 11 years’ worth of supply. The fantasy of “Saudi America” may end up making one of the speedier exits in the history of catchphrases.

As recently as last year, the U.S. petroleum industry was boasting of a new, 100-year supply of oil and gas, mostly from advanced extraction technology — namely, hydraulic fracturing, or “fracking,” of underground rock formations.

The industry’s irrational exuberance migrated to the industry-friendly International Energy Agency (IEA). The IEA predicted in 2011 that burgeoning U.S. oil production would overtake that of Saudi Arabia and Russia by 2020, and that America could achieve self-sufficiency in energy by 2035.

“OPEC should find it challenging to survive another 60 years, let alone another decade,” a giddy Ed Morse, global head of commodities at Citigroup Inc., said of the Organization of Petroleum Exporting Countries in a Bloomberg interview earlier this month. “The U.S. should see its role in the world as a singular superpower enhanced and prolonged.”

Read more

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.

Toronto council wants a say in Enbridge’s proposal to pipe western Canadian oil, including oil sands crude, through Toronto

Toronto council wants a say in a proposal to pipe western Canadian oil – including oil sands crude – through the city.
A report from city lawyers warns that a study by local conservation authorities shows a bad spill could threaten the city’s drinking water and air.

On Thursday, city council authorized the city’s legal staff to take part in hearings on the proposal to pump more oil through the pipeline. The line crosses every major watercourse in the city, and a city report notes that a pipeline break “is a potential threat to City of Toronto water treatment plant intakes.”

“We need to be there, we need to be at the table,” said Councillor Anthony Perruzza, who proposed the motion at council.
“We have a pipeline that currently exists, it’s 40 years old, it runs through the entire city and we’ve seen in other jurisdictions what can happen if the line breaks.”

Read more