Oil and Gas Sector-Politics and Image

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 and CALGARY — OPEC ministers put on a brave face when pressed about one of a number of growing threats to the cartel’s influence over world crude oil markets – surging shale oil production in the United States.

At OPEC’s home base in Vienna last week, Saudi Arabia’s powerful oil minister, Ali al-Naimi, played down the impact of the light, sweet crude that is gushing in record volumes from beneath North Dakota’s bald prairie and the scrubby landscape of South Texas. “This is not the first time new sources of oil are discovered, don’t forget history,” he said. “There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?”

Secretary-general Abdalla El-Badri was even more blunt: “OPEC will be around after shale oil finishes.” Despite the bluster from the biggest names in the 12-nation group that supplies a third of the world’s oil, however, it is clear the Organization of Petroleum Exporting Countries is getting nervous, and experts are questioning how long the cartel can act together to hold sway over global oil prices.

At the meeting, where the group kept its production ceiling of 30 million barrels a day, it also took the revealing step of forming a committee to study the impact of the hydraulic fracturing and horizontal drilling.

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

While the oil sands grab all the headlines, conventional oil from Alberta is also likely to emerge as a strong contributor, cementing the province’s position as an energy — albeit landlocked — superpower, leaving other provinces in the dust.

The concentration of output in Alberta means pipelines and railway issues will only magnify as nature appears to have played a cruel joke by bestowing geological riches on the province, but spiked it with geographic constraints.

The Canadian Association Petroleum Producers’ bullish, almost defiant, forecast, published this week, shows Alberta oil sands and tight oil production growing leaps and bounds, almost unconstrained by market access issues.

Oil sand’s production alone will double from current levels in a decade and reach 5.2 million barrels per day of production by 2030. Total Canadian crude production will hit 6.7 million barrels per day, expected to be the fourth largest in the world by that time.

That’s nearly 500,000 barrels per day more from CAPP’s previous estimate, and 800,000 bpd higher than the International Energy Agency forecast. “Of the 500,000 bpd of additional capacity, 300,000 bpd is from conventional tight oil production, and only 200,000 bpd from the oil sands,” said Greg Stringham, vice-president, markets and oil sands at CAPP.

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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.

CALGARY — In the eyes of the energy sector, Fort McMurray, Alta., has never looked so promising.

The oil sands are entering a period of remarkable growth, doubling output in a decade – tripling in 15 years – and blowing past expectations from only 12 months ago, according to a sunny new industry forecast.

Recent months have seen the oil patch hit by waves of bad omens: industry leaders, concerned about unsustainable costs, have abandoned giddy growth targets. Efforts to sell oil sands properties have been abandoned, unfulfilled, amid buyer skepticism. Canadian oil prices have spiralled, then recovered – although worries remain about the value of Alberta crude.

The possibility of an expanded Alberta carbon tax threatens new costs. TransCanada Corp.’s Keystone XL project remains mired in a lengthy U.S. review; if it isn’t built, analysts say, billions of dollars of spending will vanish or slow and, with that, as much as one-third of near-term growth expectations.

But optimism ranks among Calgary’s most abundant commodities, and on Wednesday the Canadian Association of Petroleum Producers (CAPP) offered a far less dour view.

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

Those who hoped the re-election of Christy Clark’s Liberal government in British Columbia would mean her eventual endorsement of the proposed Northern Gateway pipeline were reminded Friday the project has a long way to go to win the province’s essential backing.

In its final submission to the Northern Gateway Pipeline Joint Review Panel, B.C. says it cannot support the project as presented because proponent Enbridge Inc. has been unable to address British Columbians’ environmental concerns.

“We have carefully considered the evidence that has been presented to the Joint Review Panel,” B.C. environment minister Terry Lake in a statement. “The panel must determine if it is appropriate to grant a certificate for the project as currently proposed on the basis of a promise to do more study and planning after the certificate is granted. Our government does not believe that a certificate should be granted before these important questions are answered …‘Trust me’ is not good enough in this case.”

While environmental organizations applauded the tough talk, B.C. also said its position on Northern Gateway is not a rejection of heavy-oil projects. It says all proposals, such as Kinder Morgan’s Trans Mountain Pipeline Expansion or David Black’s Kitimat Clean refinery project, would be judged on their merits.

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

VICTORIA, B.C. – It has been two years since West Coast newspaper mogul David Black started travelling to Alberta, arguing with the oil community that its plans to put bitumen in tankers would never be accepted in British Columbia, pining for support for his alternative plan to build a giant heavy oil refinery in Kitimat, B.C. to export fuels that are less environmentally harmful and enhance the Canadian economy.

“They were tone deaf,” he said. “They just didn’t understand the difference in mentality between Alberta and B.C.” Today, Mr. Black’s grand plan remains poorly received in Alberta, while advancing in many right places in his home province and elsewhere, including support from the newly re-elected provincial Liberal government and promises of $25-billion in financing from the Chinese.

Meanwhile, the oil community’s two pipeline projects between Alberta and the West Coast are mired in controversy, raising the question: Can a shrewd newspaper publisher from Victoria beat the oil industry to the Asian market?

In an interview in his century-old, ocean-front mansion overlooking the Juan de Fuca Strait, Mr. Black said he’s dead serious about moving forward with his plan, even if it means going at it alone.

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

The premiers of Canada’s three westernmost provinces are getting together to talk pipelines.

As the National Post’s Claudia Cattaneo reported on Thursday, B.C. Premier Christy Clark, Alberta Premier Alison Redford and Saskatchewan Premier Brad Wall expect to meet “shortly” as part of their New West Partnership to discuss several pipeline projects, including how to make them “more economically relevant” to British Columbia.

It might seem natural that the leaders of three provinces sharing a strong economic interest in the growth of the energy industry would meet to share ideas and strategies. But not in this case, for the typical Canadian reason that provincial rivalries and political gamesmanship have heretofore been allowed to intrude on the greater interests of all involved.

Alberta and Saskatchewan both have a need for new markets for their oil production, and for the means to transport it economically and efficiently. In addition to the Keystone XL pipeline now awaiting approval from Washington, two other proposals — the Northern Gateway and Trans Mountain projects — are on the table. The Northern Gateway would ship 525,000 barrels of oil a day from Alberta to the B.C. coast, for shipment to Asia. Trans Mountain would twin an existing pipeline from Alberta to the lower mainland.

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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.

Canada’s energy policy is a MESS, and rare is the government that has sorted it out. MESS is an acronym coined by Prof. Monica Gattinger, a political scientist interested in energy policy at the University of Ottawa. Each letter of MESS stands for an important element of any energy strategy: markets, environment, security and social acceptability (or licence).

Governments invariably stress one or perhaps two parts of MESS, and pay less attention to the others. Increasingly, it’s clear that all of most of the four parts of MESS have to be pursued simultaneously. If not, either nothing happens, or happens only with great difficulty, as Canadians are seeing with energy projects at home.

The oil industry and its political boosters, such as those in Edmonton and Ottawa, start from M, market. No market, no production, no transportation, no jobs, no revenues. Market forces are their favourite paradigm.

For decades, it was assumed M would be always easy to locate. Oil and gas pumped in Canada would be snapped up by the United States. More recently, Asia was added as a sure-fire market. Within North America, the same was true for hydro. Build capacity and the Americans will buy. The market would prevail.

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

With the British Columbia Liberals back in power — thanks in part to the implosion of the opposition NDP over its hard line against heavy oil pipelines — Canada’s three Western provinces are working on a renewed push to make the proposed Northern Gateway and Trans Mountain pipeline projects work.

B.C. Premier Christy Clark, Alberta Premier Alison Redford and Saskatchewan Premier Brad Wall are planning to meet as part of their New West Partnership to discuss the projects, including how to make them more economically relevant to British Columbia.

The inclusion of Premier Wall should help lighten up the cool relationship between the Alberta and British Columbia premiers. Like Alberta, Saskatchewan is an oil producing province that has been hard hit by Canadian oil-price discounts. A vocal supporter of the Keystone XL pipeline, Mr. Wall has been less involved in the West Coast debate.

On Wednesday, during a visit to Alberta that included a stop in Calgary and one in the oil sands, Terry Lake, B.C.’s environment minister, said the premiers’ meeting will happen “shortly” and B.C. has left open “a pathway to yes” to the projects. It involves meeting the five requirements he laid out last July.

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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.

CALGARY — There’s a buyers’ strike in the oil sands. At least a half dozen energy companies have come up dry in efforts to attract the rich bids they envisaged when they put oil sands assets on the auction block in the past year, showing downward pricing pressure on a sector touted as the cornerstone of Canada’s economic growth.

Would-be buyers and joint venture partners are balking at deals amid a combination of wildly volatile Canadian crude prices, rising development costs and weakening returns, a situation that could force the industry to temper heady expectations for long-term oil sands production growth.

Marathon Oil Corp., Murphy Oil Corp. and Athabasca Oil Corp. had sought buyers and partners in the Northern Alberta oil sands, but now have changed their minds – or in Athabasca’s case, have told investors to hang tight after the company failed to clinch deals that had once appeared imminent.

Those companies join ConocoPhillips Co., Koch Industries Inc. and Royal Dutch Shell PLC in being disappointed after putting properties up for sale that may have once attracted bids totalling in the billions of dollars. Those three say they have rethought their plans after offers failed to meet expectations.

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