Oil and Gas Sector-Politics and Image

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

CALGARY — Canadian Press – The inability to get oil sands crude to the right markets is costing the Canadian economy dearly, according to a new report paid for by the Saskatchewan government.

Each stalled pipeline project means a loss to the Canadian economy of between $30-million and $70-million every day, said the report penned by the Canada West Foundation, a Calgary-based think-tank.

“The loss to the Canadian economy will be devastating if we don’t dramatically expand our pipeline capacity to multiple markets,” said Canada West Foundation CEO Dylan Jones. “Abandoning this industry to oil producing countries with lower standards is not leadership.”

The report was commissioned by the Saskatchewan government, whose premier has been an outspoken supporter of new pipeline projects. Most recently, Brad Wall, along with 10 U.S. governors, signed a letter urging U.S. President Barack Obama to approve the Keystone XL pipeline.

In recent months, oil sands crude has been trading at a painfully steep discount to both U.S. and global light crude benchmarks. It’s a trend that has both eroded oilpatch profits and caused the Alberta government to warn of a $6-billion budget shortfall.

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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.

Suncor Energy Inc. has taken a writedown of nearly $1.5-billion on its Voyageur project, a massive oil sands plant that is now at serious risk of cancellation. And in an additional potential blow, Suncor faces a $1.2-billion tax bill, which it is disputing.

The $11.6-billion Voyageur upgrader is designed to process 200,000 barrels per day of heavy oil sands bitumen into a lighter oil. The project was 15 per cent built, and Suncor had already spent $3.5-billion, when Suncor halted work in 2009.

Though Voyageur has not yet been abandoned, the writedown was accompanied by pessimistic commentary in Suncor’s fourth-quarter results, which were released Tuesday evening.

“Suncor’s view is that the economic outlook for the Voyageur upgrader project is challenged,” the company said. It added: “The partners have been considering options for the project, including the implications of cancellation or indefinite deferral.”

A decision is expected by the end of March, Suncor said. The company will also, with its partner Total, make a decision on whether to build its Fort Hills oil sands mine in the second half of this year.

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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.

OTTAWA — Ottawa’s finances are taking a hit from discounted prices for Canadian oil, and Finance Minister Jim Flaherty says this will force him to hold a harder line on spending as he prepares the 2013 budget.

The Finance Minister said lower commodity prices and persistently low inflation are combining to have a negative effect on government revenues. Still, the minister insists he expects to balance the books before the 2015 election without dramatic spending cuts.

“We have to do more on the controlling our own spending side, but we don’t have to slash and burn,” Mr. Flaherty told reporters after a speech to an Ottawa business audience that outlined the focus of the 2013 budget, which is expected in the next several weeks.

Spending cuts are already scheduled to ramp up to $5.2-billion a year over the coming two years as part of a phased-in plan to scale back spending announced in the 2012 budget. The upcoming budget is not expected to include major additional spending cuts. Rather, Mr. Flaherty is signalling that Canadians shouldn’t expect much new spending.

Still, the government has faced continued challenges from Parliamentary Budget Officer Kevin Page, who says Ottawa is not being transparent about its cuts. The PBO has said Ottawa appears to be cutting front-line services in spite of Mr. Flaherty’s assurances that cuts would affect only the “back office” of the federal bureaucracy.

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

The energy superpower field becomes more crowded as U.S. output grows

Seven years ago, Stephen Harper declared Canada an “emerging energy superpower.” This week, the American Petroleum Institute suggested that the U.S., too, was turning into an “energy superpower.” Whether that represents national brand infringement, it certainly reflects challenges on the policy front.

“Superpower” status used to be measured exclusively in terms of destructive potential, so we should perhaps be grateful that the term is now as often linked to resource development. This reflects two quite different meanings of “power.” Economic power means the ability to offer inducements to provide goods and services.

Political power means the potential or actual use of coercive force. Mr. Harper in fact noted the difference when taking a dig at Vladimir Putin on his way to a G8 meeting in Russian in July, 2006. “We believe in the free exchange of energy products based on competitive market principles,” he said, “not self-serving monopolistic political strategies.” The Russian government had recently shut off gas supplies to Ukraine to exert political pressure.

When it comes to the U.S., it is already both a political and resource superpower, but technical advances have opened vast new petroleum potential. This promises to achieve the elusive — although often misguided — goal of energy independence (for North America).

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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 and CALGARY – It was a notion some say was a long time coming: Alberta should sweeten the pot for U.S. lawmakers weighing approval of the Keystone XL pipeline by boosting environmental performance in the oil sands.

But one day after a suggestion from an Alberta envoy to Washington that the province would do just that, officials backed away from the idea. Instead, Alberta will continue to “tell its story,” as Premier Alison Redford put it, leaving the Keystone approval up to the U.S. State Department and TransCanada Corp., the company behind Keystone XL.

At the same time, some in Alberta say a new look at green rules is exactly what the province should contemplate if it hopes to persuade others to open their land to pipelines bearing oil sands crude.

The debate was sparked Monday when Alberta’s envoy to Washington, David Manning, suggested in a Reuters interview that Alberta has “much more in our toolbox” to push for a pipeline approval. By Tuesday, senior government leaders were disputing that notion.

Alberta will continue to push for technological improvements and better oil sands monitoring, said Cal Dallas, the province’s Minister of International and Intergovernmental Relations. But “is there something that’s imminent that’s directly related to the [Keystone] decision the Secretary of State is weighing in on? No,” he said. Mr. Dallas stressed: “The conversation … doesn’t involve sweetening the pot.”

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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.

MONTREAL — To say that I am a football fan is an overstatement as big as New Orleans’ Superdome, though I’ve always had a soft spot for the San Francisco 49ers. But I gave up on “my team” and on the Super Bowl when the Baltimore Ravens’ lead reached 22 points, and switched to Tout le monde en parle, the talk show that normally rules Quebec airwaves on Sundays.

So I missed the power outage and the 49ers’ spectacular comeback. But I did see Quebec’s Natural Resource Minister, Martine Ouellet, throw a couple of Hail Marys.

This may come as a surprise to those who have heard of Quebeckers’ widespread disdain for the oil sands, but the province of cheap, abundant hydroelectricity has some big oil ambitions of its own.

On the Radio-Canada talk show, Ms. Ouellet talked about the revenues that could be extracted from Quebec’s oil reserves. The Gaspé region could generate $35-billion, she said. The Anticosti Island? Between $200-billion and $300-billion. The Old Harry offshore deposit in the Gulf of St.-Lawrence? A whopping $500-billion! (A press officer corrected her Tuesday and said she had meant to say $50-billion, but still.)

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http://www2.macleans.ca/

How the most valuable resource in our history get mired in politics, protests and logistical nightmares

Prime Minister Stephen Harper first dubbed Canada an “emerging energy superpower” back in 2006. He was talking, primarily, about Alberta’s oil sands. “We are a stable, reliable producer in a volatile, unpredictable world,” he said, sending a clear signal that Ottawa intended to realize the oil sands’ full economic potential, as well as the geopolitical clout that comes along with it.

It was music to Albertans’ ears. With the world’s third-largest proven crude oil reserves, some 175 billion barrels, behind Saudi Arabia and Venezuela, the province had long been aware it was sitting on a gold mine. All that was needed were global oil prices above US$80 a barrel (needed to offset the expense of separating gooey bitumen from the sandy soil) and the necessary political vision to make it all happen. Canada finally had both. Industry forecasts predicted that, over the next quarter-century, the oil sands would draw more than $364 billion in investment, create some 3.2 million “person-years” of employment and add $1.7 trillion to Canada’s GDP.

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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.

OTTAWA – Canada’s resource boom is outpacing Ottawa’s ability to safeguard important ecosystems from dangerous levels of pollution, the federal environment commissioner reported Tuesday.

In a series of audits, commissioner Scott Vaughan revealed a litany of shortcomings, including the failure to regulate toxic chemicals used by the oil industry and a lack of preparedness for major accidents, particularly off Canada’s East Coast.

Mr. Vaughan detailed Ottawa’s hands-off approach to hydraulic fracturing – a rapidly-growing and controversial oil industry practice in which companies inject chemically-laced water deep underground to extract natural gas and oil. His report noted the resource boom brings risks as well as opportunities.

“Given the central role of natural resources in the Canadian economy, it is critical that environmental protection keeps pace with economic development, Mr. Vaughan said in a statement Tuesday. “I am concerned by the gaps we found in the way federal programs related to natural resources are managed.” At the same time, Ottawa continues to subsidize the oil industry, though the level of support is declining, the auditor reported.

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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 — For the Canadian energy industry desperate to pump oil and natural gas through British Columbia, the single greatest obstacle has been the dozens of first nations fighting to ensure pipelines are never built.

Now, some of the leading figures in Canada’s aboriginal business community are offering a bridge across the province’s difficult political landscape. They have formed Eagle Spirit Energy Holdings Ltd., a company quietly working to create a first nations-owned energy corridor across northern B.C. that could serve as a physical line across the province to move natural gas, electricity and oil.

It’s an idea that promises first nations a much greater involvement in moving Canada’s energy, from large equity stakes in pipelines to major construction contracts, tugboat work, and engagement in spill response. In exchange, it promises the energy industry a possible route to the B.C. coast with less of the opposition that has confronted major pipelines in B.C., such as Enbridge Inc.’s Northern Gateway.

At a time when Canada faces seemingly intractable conflict between first nations and a resurgent resource sector, Eagle Spirit also presents a shimmer of hope that a third way may be possible. And the company has some deep-pocketed backers, including the Aquilini family, which among other assets, owns the Vancouver Canucks.

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http://www.reuters.com/

WASHINGTON, Feb 4 (Reuters) – U.S. independence from OPEC could be a reality if the U.S. government opens more lands for oil and gas development, speeds permitting and approves the Keystone XL pipeline, the top Republican on the Senate energy committee said in a policy report on Monday.

Senator Lisa Murkowski, of Alaska, laid out a wide-ranging plan to take advantage of the United States’ energy bounty.

“We no longer should view energy policy from a perspective of scarcity, but rather, from a perspective of increasing abundance,” the 120-page report from Murkowski’s office said. “With the right policies, abundant and affordable energy is achievable.”

Murkowski’s vision called for the government to embrace the nation’s shale oil and gas boom and various other fuels, rein in regulations, and eschew new mandates on the use of renewable resources.

Many of the policies, such as opening parts of Atlantic coast and the Arctic National Wildlife Refuge to drilling, are perennial Republican objectives. These goals are likely to face strong opposition in the Democratic-controlled Senate. Many Democrats vehemently oppose expanded drilling.

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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.

Over reliance on one resource and one market has boomeranged on province.

Alberta Premier Alison Redford brought her sad tale of budgetary woe to Ontario last week. Her province isn’t collecting enough money for its oil. It suffers from overreliance on a single export market.

That market is not as needy as it once was. And so Alberta is headed for a $6-billion surge in its deficit. Her finance minister described the situation as a perfect storm. Cry me a Bitumen Bubble. Has ever there been a province so lax in its fiscal management and so derelict in its policy duties as Canada’s petro-superpower?

Perfect storms arise from an unusual array of natural forces. What’s happening in Alberta is the predictable outcome of three decades of policy indifference and political pandering. If these were storms, they would go by the names of Don, Ralph and Ed — the province’s three premiers from the mid-1980s till 16 months ago. Will Alison be blown off course, too?

Redford’s so-called bitumen bubble is a familiar phenomenon more commonly known as the price differential. Alberta’s sludgy crude requires extra processing. So it sells at a discount to the benchmark West Texas Intermediate price. The situation is aggravated by swelling U.S. production and plugged pipelines. As a result, the differential has widened to $30-$40 a barrel, more than twice the province’s expectation.

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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.

The town has, in effect, outlawed the Haldimand 4 project, leading to a pitched battle for the hearts and minds of Gaspe residents.

MONTREAL—The incessant hum of the generators continues, but the drills, trucks and heavy machinery have returned to their outposts in northern Ontario, Newfoundland and Alberta.

What remains is sky-high unemployment that rivals that of Portugal, Ireland or Zambia and the century-old dream of pulling oil from the rocky treasure chest that is Quebec’s Gaspé region.

That, and a raging dispute pitting Gaspé Mayor François Roussy against Petrolia, a Quebec-based firm that was set to begin pumping the 8 million barrels of oil it discovered on the edge of town. The find is worth an estimated $1 billion, but the mayor says it’s only enough to meet Quebec’s gasoline demands for 28 days.

The dispute has been simmering since Petrolia received a provincial permit to begin work last spring. But the town of 15,000, in a region with 15 per cent unemployment, brought the battle to a head.

A last-minute municipal regulation in mid-January to protect drinking water has, in effect, outlawed the project.
Known as Haldimand 4, Petrolia was just a few days from the start of an estimated 15-year drilling operation. It’s located 350 metres from the home that Pelope Adzakpa bought two summers ago with his wife and two children.

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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.

NEW YORK — Is oil like red meat, or is it like tobacco? Your answer signals how you feel about the North American boom in unconventional sources of fossil fuel, particularly the Alberta oil sands.

If you think oil is like tobacco, it is a noxious commodity that seriously harms its users and those around them. We should stop consuming it at once and at all costs. But if you think oil is like red meat, you take a more nuanced view. For the health of the planet, we should find greener alternatives to it, but used wisely and in moderation, it has an honourable role in the 21st-century economy.

This debate is being acted out with great intensity in the fight over the proposed Keystone XL pipeline, which would stretch from Canada to the Texas Gulf Coast.

“Keystone is really a symbol of oil, it is very emotive,” Daniel Yergin, the Pulitzer Prize-winning energy expert and chairman of IHS Cambridge Energy Research Associates, told me. “It is a symbol around which the opponents of hydrocarbon have rallied.”

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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 — It was, in many ways, the signing of a corporate peace treaty. On March 1, 2012, the heads of 12 of the largest energy companies in Canada sat on a downtown Calgary stage and agreed to a legal détente. No longer would they fight each other in court over patents or intellectual property on matters related to the environmental performance in the Fort McMurray area.

Instead, they would agree to work hand-in-hand on ways to make the oil sands cleaner and greener. It was, they said, quite likely the most important collaboration agreement between competitors in any industry, anywhere. It may be their single best chance to beat back a sea of criticism that threatens the very existence of their industry.

What got less mention was that the splashy signing ceremony – complete with a big-screen live-video feed of each executive signing documents – had settled little of the big issues. And no one mentioned that the months ahead would be filled with painful meetings, with a dozen companies each sending legal teams for multiple weekly meetings to sort out how, precisely, they would establish a détente that went against the instinct of most people in the room. Nor did they predict that nearly a year later, some of the thorniest questions confronting the oil sands would remain unresolved, like how high the industry should aim its ambitions to prune its dirtiest excesses.

Yet behind the scenes, the man tasked with quietly making progress – a man who arguably has one of the most delicate jobs in all of Calgary – said he is surprised at what Big Oil is accomplishing.

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