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.

Barack Obama will almost certainly approve the Keystone XL pipeline, predicts a former senior figure in the State Department who recently brought that message to Ottawa.

“I would say the chances are about four-to-one” in favour of the President approving the pipeline from Alberta to American refineries, said David Gordon. He was director of policy planning when Condoleezza Rice was secretary of state, and is currently head of research at the respected consulting firm Eurasia Group.

Domestic political considerations – including a close fight with Republicans for control of the House of Representatives – make approval virtually inevitable, Mr. Gordon said in an interview.

A new poll obtained by The Globe and Mail shows that fully 63 per cent of Americans said that energy security was a higher priority for them than reducing greenhouse gases, while only 30 per cent felt the opposite.

And 70 per cent of Americans had a positive or somewhat positive view of the Keystone XL proposal, said the survey by Nik Nanos who conducted the research at the Woodrow Wilson International Center for Scholars in Washington.

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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 — Keystone XL is “just a pipeline” that will have little impact on the pace of development in the oil sands, says the head of TransCanada Corp., hitting back at opponents who argue that stopping the project is crucial to fighting climate change.

Chief executive officer Russ Girling said the $5.4-billion pipeline has unfairly been cast as the embodiment of the ills of the energy business. But he suggested that oil industry economics, including crude prices and the cost of production, will be more important than one proposed pipeline in determining how quickly Alberta increases its output from the oil sands.

The Keystone project “has become this symbol of everything that’s wrong with the fossil fuel energy industry. And it’s not,” he said. “It transports products from A to B, and it does that safely. It has no material impact on refining markets or supply.”

Mr. Girling’s comments, made in an exclusive interview with The Globe and Mail in advance of TransCanada’s annual meeting this week, illustrate one of the main arguments likely to be employed by the company and its supporters as the Keystone debate heads toward its conclusion.

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

From taking on “radical environmentalists” to selling Canadian oil to the Chinese, rewriting regulations to questioning the need for an Alberta-led national energy strategy, Joe Oliver is shaking up the once-sleepy federal natural resources portfolio like Canada’s future depends on it.

And he’ll tell anyone who’ll listen that it does, because either Canada finds a way to develop and sell its immense resources now, or opportunity will pass to others. “We are engaged in a battle for the country’s future,” the 72-year-old grandfather said in an interview during a stop in Calgary this week.

Direct, relentless, unapologetic, Mr. Oliver is the antithesis of political correctness. Like him or hate him, he’s getting more done than many of his predecessors — through initiatives involving First Nations, tanker safety, red-tape reduction.

Even heart surgery in January didn’t slow him down. Next week he’s off to Washington and New York to defend the proposed Keystone XL pipeline to policy makers and the media, in case there are any more questions to be answered or any doubt about Canada as a responsible resource developer.

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

CALGARY – Federal Natural Resources Minister Joe Oliver said Thursday Canada would accelerate its East and West oil pipeline plans if Keystone XL is rejected by the United States administration.

However, he said he remains “cautiously optimistic” that President Barack Obama will approve the project, since most impediments have been removed. If a second rejection comes, Canada would accelerate its search for new oil markets, he said in an interview.

“We would have to focus even more on moving the oil west and east,” Mr. Oliver said. “Everything we are doing in terms of environmental protection, pipeline safety, aboriginal consultation, advocacy for Canada outside the country — all the things that we have a constitutional responsibility for —we would be doing more [to promote other pipeline options],” he said.

The only exception is to interfere with the regulatory process, which has already been reformed. A Keystone XL rejection would not be positive for the country, but it won’t mean a cooling of relations with the United States, he said.

Speaking to reporters in Calgary, Mr. Oliver said he doesn’t share Alberta Premier Alison Redford’s view that the loss of Keystone XL would damage ties between the two countries.

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

Tired of poor refining margins, Imperial Oil Ltd. has been soliciting buyers for its Dartmouth refinery in Nova Scotia since last May, and the announcement of new eastern pipelines has not led to a change of heart at the company — at least for now.

The company has been saying that it has received multiple offers since last October and now expects to make a decision later this year.

“We are still looking at a variety of options that could include selling the refinery or potential conversion to a distribution terminal operation,” said Pius Rolheiser, Imperial Oil spokesman.

Imperial’s stance underscores that while TransCanada Corp.’s Energy East pipeline and Enbridge’s Line 9 reversal are welcome relief valves for the Canadian energy industry, they may do little to boost the prospects of some refineries in Central and Eastern Canada.

“I would not say it is a panacea,” said Bill Simpkins, an Atlantic Canada representative of the Canadian Fuel Association, an industry body of the country’s refiners including Shell Canada, Suncor Energy Inc. and Imperial.

Eastern Canadian refineries can process synthetic crude oil from Alberta and even some heavy crudes, but only Imperial’s 121,000-barrels-per-day Sarnia, Ont. refinery has a plugged-in coking facility that can process raw bitumen, Mr. Simpkins said.

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

The discovery of tight oil has been a confidence booster for the United States, promoting talk of energy independence from the old, Saudi Arabia-centred oil establishment, as well as reduced need for Canada’s oil sands.

But with surging tight oil supplies dampening prices, you’ve got to wonder whether it’s becoming a victim of its own success, much like shale gas, and whether producers have the staying power to continue to fuel investment.

One of the skeptics is long-time world oil market insider Rilwanu Lukman, the former secretary-general of the Organization of Petroleum Exporting Countries (OPEC) and a former oil minister of Nigeria.

In an interview in Calgary, the 74-year-old mining engineer, who has seen more than his fair share of oil fads and price swings, warned it’s too soon for the U.S. to declare it no longer needs imported oil, let alone to dream of exporting oil.

For one thing, tight oil requires very high prices to be economic, he said, in contrast to imported oil that is cheap and abundant. For another, tight oil has too little history to be counted on as a replacement for other oil sources.

“The so-called oil from shale, it’s still not fully studied,” he said before addressing a conference at the University of Calgary’s School of Public Policy. “We don’t really know to what extent these reserves will be produceable and at what cost.

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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 — As the Canadian oil industry fights against rising costs and blocked pipelines, it finds itself facing new threats from an old competitor.

The Alberta oil sands were once seen as the last big oil reserve available to be exploited in a stable, democratic country. But that is no longer the case as companies bore in on new pools of oil in the United States. The latest is the Permian Basin, an oil-rich region in Texas that has produced crude since the 1920s.

Using new technology, the industry has now begun to to unlock parts of that reservoir they say are amongst the largest ever tapped.

“This is the second-largest discovery in the history of the world,” said Scott Sheffield, the chief executive officer of Pioneer Natural Resources Co., which is based in Irving, Tex.

The Permian has attracted rising interest in recent years, and Pioneer is the largest landholder in an area of the basin known as the Spraberry/Wolfcamp. In a presentation earlier this month at the DUG Permian Basin conference, Mr. Sheffield startled some participants by suggesting that the basin could hold 50 billion barrels of economically recoverable oil.

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

After nearly a decade of calls for a national energy strategy by a cacophony of interest groups with different priorities, the idea seems to have drifted to the sidelines. Even Alberta, which recently led the charge, has recalibrated its views and efforts to a more realistic level.

In short, Alison Redford’s government is pursuing engagement on energy — i.e. conversations — with other provinces rather than a Canadian Energy Strategy in the traditional sense — a pact that requires consensus from all interested parties.

Ken Hughes, Alberta’s energy minister, said the approach is working — and the proof is in initiatives such as the conversion of TransCanada Corp.’s natural gas Mainline to bring Alberta oil sands oil to Eastern Canada.

“That didn’t come out of the blue,” Mr. Hughes said in an interview. “That proposal … came from TransCanada, but in the context of many conversations and much work between the government of Alberta and the government of New Brunswick, much engagement initiated by Premier Redford with [Quebec Premier Pauline] Marois, and much engagement at the official level with the province of Quebec.”

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

Adam Waterous is Global Head of Investment Banking, Scotiabank.

$50-billion in infrastructure investment could be needed

The Canadian natural gas market is a game in transition, with new key players, new rules, new winners and the potential for higher prices and an improved industry structure.

With new horizontal drilling and multi-stage fracking – or hydraulic fracturing technology pioneered over the last few years to develop shale gas – we now have close to a 100-year supply of gas in Canada. Canadian natural gas prices have been on a tear in March. After trading at $2.85 per thousand cubic feet (mcf) as recently as February 15, 2013, spot prices have jumped about 20% to about $3.40 mcf.

Despite the recent run-up, however, Canadian natural gas continues to sell at a little more than half of the average price over the previous 10 years. The number of gas drilling rigs in Canada dropped 50% in 2012. Investors in natural gas-weighted companies over the last several years have been crushed, with the value of the Toronto Stock Exchange (TSX) gas-weighted companies falling more than 40% since peaking in 2008. The Alberta and British Columbia governments are forecasting deficits in part because of falling gas royalties.

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

The Beaufort Sea may soon see oil drilling activity as the Northwest Territories tries to pry open yet another resource front in a bid to attract oil and gas companies.

“In the near term you will see an application to drill,” said David Ramsay, Minister of Industry, Tourism and Investment for the Northwest Territories. “And I would expect that would come sooner rather than later. I have talked to a number of companies that have leases in the Beaufort — there has been some seismic work that took place last summer.”

To date, the Northwest Territories has been more about potential rather than gushing commercial production, but the conclusion of devolution talks with the federal government in March gives the government in Yellowknife provincial powers and a fresh impetus to take control of its destiny — and its resources.

“It means that the NWT government will be making decisions on land, water and resource management in our territory,” the minister told the Financial Post. “And those decisions will be made by elected officials here in the NWT instead of Ottawa by April 2014.”

Barely in the driver’s seat, NWT is looking to attract Asian companies into the region.

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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.

Alberta Premier Alison Redford shows up in Washington for a final round of lobbying on behalf of the controversial TransCanada Corp. pipeline project.

WASHINGTON—The drive to bring Alberta crude to the United States will continue no matter what the Americans decide about the KeystoneXL pipeline, Alberta Premier Alison Redford said Tuesday.

In Washington for a final round of lobbying on behalf of the controversial TransCanada Corp. project, Redford cautioned that outright rejection by the Obama administration when the issue comes to a head this summer could transform KeystoneXL into a never-ending diplomatic thorn, likely to rise anew every time Canadian and U.S. politicians meet.

Cancellation of the Alberta-to-Texas pipeline would not mean “the matter fell off the table,” Redford said in remarks at the Brookings Institution.

The cross-border business community invested in oilsands development, she said, would likely proceed unfazed, because it involves “very tight relationships” where “everyone understands what the opportunities are.”

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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.

Province desperate to win U.S. approval for Keystone bitumen pipeline.

Alberta Premier Alison Redford will be in Washington this week trying to convince legislators and other decision-makers that the controversial Keystone XL Pipeline should get the green light despite a well-organized and liberally funded campaign in the U.S to stop it.

This will be Redford’s fourth trip in 18 months, a sign of just how desperate the Alberta government is to get this project approved so diluted bitumen from the oilsands can be delivered to refineries on the U.S. gulf coast.

Not surprising then that on the eve of this trip word leaked out that government and oil industry representatives were discussing an increase in Alberta’s carbon emission taxes that would see them more than double. The move is obviously designed to prove to pipeline opponents in the U.S. that Alberta is serious about reducing greenhouse gases associated with the production of bitumen and their impact on climate change.

At this point it’s all talk, but certainly timely talk given Redford’s upcoming visit to the U.S. It also signals that perhaps the Alberta government and the oil industry are finally recognizing that their view of the world outside the province’s borders has to change if they want to get the tarry bitumen to market.

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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.

CALGARY — The kid with the YouTube rant is young and approachable. He’s an actor sporting a black leather jacket, strolling through a West Coast forest and talking about pipelines.

“The environment. The economy,” he intones. “People think you have to have one or the other. But do you? So many things to think about.”

And then, he tells us how we might want to think about those things. How we don’t have to worry about pipeline spills, since pipelines are monitored 24/7 “by trained experts.” Tankers, too, shouldn’t cause sleepless nights, since they’re equipped with “state of the art navigation systems,” steered by “well-trained local pilots” and escorted by tugs.

“As a British Columbian, we want to make sure that we’re protecting our beautiful environment. But here’s the thing. Canadian pipelines have a 99.9-per-cent safety record.”

The YouTube video has all the hallmarks of a campaign orchestrated by big-money oil companies, with slick graphics and accompanying social media accounts and slick websites translated into Punjabi, Mandarin and Cantonese.

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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.

EDMONTON — Tom Steyer is a man at odds with himself. He made his fortune by founding a hedge fund with a keen interest in the energy sector, including leading oil, pipeline and mining companies. The firm also gobbled up stock in BP a year after its Deepwater Horizon oil spill in the Gulf of Mexico. All this should hardly make him a darling of environmentalists.

Yet there’s a green streak to Mr. Steyer – one that led last year to something of an existential crisis: Climate change, the American billionaire decided, was the “defining issue of our generation.” And so he left the firm he had spent a quarter-century building, Farallon Capital Management, because it valued a company’s bottom line, not its carbon footprint.

“I have a passion to push for what I believe is the right thing,” Mr. Steyer, 55, said in an interview with The Globe and Mail this week. “And I couldn’t do it in good conscience and hold down a job – and get paid very well for doing a job – where I wasn’t directly doing the right thing.” The Harper government and Canada’s oil patch might have wished he had stayed at Farallon.

Mr. Steyer has since set his sights on the proposed Keystone XL pipeline. He has waded into the Democratic primary in Massachusetts by lampooning a pro-Keystone Democrat, Stephen Lynch, for being in the pocket of “big oil.” Mr. Steyer also accused him – in the form of a cheeky banner, pulled by a plane through Boston’s skies – of a loyalty akin to treason: being a Montreal Canadiens fan.

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