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.

CALGARY — Royal Dutch Shell PLC is scrambling to develop a recovery plan for a grounded drilling rig and its toxic cargo, in what has become the latest flashpoint in the debate over the industry’s ability to safely operate in the environmentally fragile Arctic.

About 143,000 gallons of diesel fuel, as well as other petroleum products such as lubricants, is on the rig, which is stuck off the Alaskan coast. It was being pulled to Seattle for servicing when “near hurricane” weather and engine failures on the tugboat thwarted the voyage late last week.

Towlines separated earlier this week, and the emergency backup plan – towing it by the stern – also faltered. The Dutch company did not have a contingency plan if both towing blueprints failed.

While the grounded rig, named Kulluk, was not drilling when trouble struck, even its transportation woes demonstrate how difficult it is to operate in the Arctic. The vast region’s delicate ecosystems are a key point in the debate, with critics arguing it is impossible to safely extract hydrocarbons in the area and operators saying they can do so successfully and responsibly.

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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.

Washington’s epic battle over the “fiscal cliff” would be tragic if it weren’t so pathetic. It reminds me of a cartoon in which the duelling combatants hurl themselves off the precipice and keep fighting until they look down and go splat.

The Republicans and Democrats are desperately hoping that cartoon physics applies to them, too. So long as they deny reality, they won’t go splat – or so they hope. This week’s alleged “deal” simply postponed the inevitable day of reckoning. And it confirmed that the American people’s vast contempt for their legislators is richly deserved.

Is the U.S. finished? It’s awfully tempting to think so. Political dysfunction, crushing debt, a bad economy and a sinking middle class are not exactly signs of vigour. Two failed wars have dealt huge blows to its reputation and prestige. Not to mention the gun culture and the junk food and the [fill in your favourite example of American pathology here].

But if the U.S. were a stock, I’d buy it. Despite the gloomy news, its future is looking brighter than it has in years. One reason is the new energy revolution, a phenomenal reversal of fortune that nobody foresaw. The country is awash in cheap new supplies of unconventional oil and gas that are being unlocked with new technologies. This unexpected bonanza is rocket fuel for the economy.

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

As Alberta continues to feel the pinch of a deeply discounted bitumen price, it’s perhaps no surprise the provincial government and oil companies are looking for an alternative to politically contentious pipelines to get crude to market.

The provincial government said Monday it is considering spending $10-million to study building a new railway to deliver landlocked oil to an Alaska port.

If it did get built, there would be no shortage of irony: Fewer pipelines won’t keep oil in the ground; if anti-Keystone XL and Northern Gateway campaigns were successful, it would just force producers to rely on rail, and other more expensive, incident-prone options.

“Pipelines are the safest way to move crude. That’s the bottom line and that’s why most of it does move by pipeline today,”said Travis Davies, a spokesperson for the Canadian Association of Petroleum Producers. “Rail can be safe [but] you’re looking at volumes that aren’t as high as what’s moving through a pipeline everyday.”

Although pipelines are politically unpalatable, their safety record is massively better than every other option, including railways. Trains are currently seen as a complementary method to pipelines; something to ease the hurt as more pipeline infrastructure comes on line.

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Mr. Yergin, vice chairman of IHS, a global market information and analytics company, is author of “The Quest: Energy, Security and the Remaking of the Modern World” (Penguin, new edition, 2012).

The impact of the U.S. energy revolution is only beginning. It is already providing a foundation for a domestic renaissance in manufacturing.

An unconventional oil and gas revolution is under way in the United States, but its full ramifications are only beginning to be understood. The basic facts are clear enough. Half a decade ago, it was assumed that the U.S. would become a large importer of liquefied natural gas; now the domestic natural gas market is oversupplied, thanks to the ability to produce shale gas through hydraulic fracturing and horizontal drilling technologies.

Shale gas alone is now 10% of the overall U.S. energy supply. And similar technologies to recover so-called tight oil trapped in rock formations are largely responsible for boosting U.S. oil production by 25% since 2008—the highest growth in oil output of any country in the world over that time period.

So far more than 1.7 million jobs are the result, according to a report titled “America’s New Energy Future,” released Tuesday by my research firm, IHS.

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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 Associated Press – ANCHORAGE, ALASKA— The U.S. Coast Guard was trying to determine Tuesday whether a strong Alaska storm had abated enough to allow for a helicopter to assess the condition of a drilling rig that ran aground in shallow water off a small island.

If conditions are safe, the helicopter would also lower experts to the Kulluk to get a close look at the rig and determine if it is leaking fuel, said Curtis Smith, a Royal Dutch Shell PLC employee speaking for a unified command center set up in an Anchorage hotel.

The Kulluk was built in 1983 and had been slated to be scrapped before Shell bought it in 2005. The company has spent $292 million since then to upgrade the vessel.

About 250 people from the Coast Guard, Shell, state responders and others were involved in a response effort and waiting to know for sure what environmental impact the grounding might have caused.

Storm conditions remained severe Tuesday morning with the grounded rig likely taking a pounding. Winds were reported at up to 112 km/h, with waves 11-metre and 14-metre swells. Some waves overnight reached 15 metres, the National Weather Service said.

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DICKINSON, N.D.—North Dakota officials have a challenge many states would love to face: figuring out how to manage big permanent investments such as roads and bridges for an energy boom that is drawing hordes of newcomers.

Already home to some of the fastest-growing towns in the country, according to Census Bureau estimates, the oil-rich western half of North Dakota is likely to experience a population jump of more than 50% over the next two decades, a state study predicts. That works out to a rise of about 110,000 in a state that as of last year had just 684,000 residents.

The draw is high-paying jobs, and lots of them—last year, workers in the state’s energy industry made $91,400 on average, more than double the state average of $41,800. And with a state unemployment rate of just 3.1% there is much demand for more workers.

Behind the boom is the extraction of vast amounts of oil from the rock formation called the Bakken Shale, made possible by the drilling technique known as hydraulic fracturing, or fracking.

The drilling has created tremendous demand for new roads and housing, law enforcement and sewer lines as oil workers have flooded into North Dakota. The state expects demand for electricity to double by 2017.

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

In the first of a series on the most interesting ideas to emerge over the past year, the National Post’s Jen Gerson explores how pipelines became politically toxic.

For decades, pipelines were the invisible infrastructure, the veins that stretched across the continent to feed a North America ever-hungrier for energy and growth. Oil companies pulled crude from the ground and shipped it between refineries and wells with little comment.

A small leak was rarely noticed in the media, much less reported on. Then came Keystone XL, and the massive environmental campaign to stop the line from Alberta to the Gulf Coast. Then, everything changed.

Now opposition to pipelines has grown so intense that the completion of Northern Gateway, a line that would ship Alberta bitumen to the B.C. coast at Kitimat, is looking increasingly unlikely.

Some politicians — including B.C. premier Christy Clark and little-known Liberal leadership candidate Joyce Murray, a B.C. MP — have scored points with the public by playing to pipeline hysteria.

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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 and EDMONTON — With no place to transport burgeoning supplies of crude oil, Canada’s energy industry, and the provinces and investors that depend on it, has reached a moment of crisis as profits bleed from one of the country’s most economically important sectors.

Alberta Premier Alison Redford on Thursday said there’s been a “monumental shift” in the economics of Alberta oil, as delays in the construction of new pipelines pinch the thick profits that have long sustained both the energy industry and the broader Western economy. Alberta this week warned depressed prices for its crude resulting from choked markets for its landlocked oil could lead to bigger deficits and spending cuts for the government.

Alberta needs new pipelines to reach new markets and give its oil sector a boost, “because this is about a product that we need to get to market,” Ms. Redford said. Economic woes are spurring a “profound change in the way that Canadians look at the world, the way we look at our economy,” one she hopes will win support for pipeline projects.

Record discounts for Albert crude in recent weeks are now spurring a strong new push by the oil patch to make the case that more needs to be done, and fast.

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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.

AUSTIN, TEXAS—Protesters trying to save the world by sitting in trees or blocking equipment used to build the Keystone XL oil pipeline are learning that environmental activism can be a ticket to lengthy jail time in East Texas.

Matthew Almonte, Glen Collins and Isabel Brooks landed in jail in Tyler on Dec. 3, charged with misdemeanor criminal trespass, resisting arrest and illegal dumping, following efforts to stop work on the TransCanada Corp. pipeline. Each has asked for a reduction in the $65,000 (U.S.) bond that must be posted to get out pending trial, without success.

The trio joined more than 30 others arrested since October near Tyler and Nacogdoches as they tried to halt work on the $7.6 billion (U.S.) pipeline that would bring products of Alberta oilsands to Houston-area refineries. President Barack Obama blocked the northern U.S. leg, citing environmental risks in Nebraska. An updated review of a revised route may be released in days. The southern end runs from Oklahoma through Texas.

“This is the front line where the climate debate comes onto the ground and you can come over and kick it,” said Eddie Scher, a Sierra Club spokesman. The Washington-based group calls itself the largest, most effective U.S. environmental advocate. “There isn’t an inch of space between us and the blockaders.”

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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.

Edmonton, Ottawa and Calgary — Oil-rich Alberta is dialling back its budget forecasts, saying that slumping commodity prices could mean belt-tightening, bigger deficits, broken election pledges and a slower national economic recovery.

The warning Wednesday from Finance Minister Doug Horner is the latest signal that Canada’s economy will not turn around as swiftly as governments across the country had hoped. British Columbia, Saskatchewan and the federal government have pulled back on revenue projections in recent weeks because of sluggish growth and low commodity prices, particularly in oil and gas.

Mr. Horner blamed the gap between the price of Alberta’s oil and the North American benchmark. Alberta’s typically sells at a discount, one that has widened lately. “I’m very, very concerned about where those numbers are headed,” Mr. Horner said, adding the province needs new export pipelines to reach new buyers and fetch the higher price.

Any commodity downturn is felt most strongly in the west, but provincial forecasts across Canada are being revised as the U.S. economy remains sluggish and energy prices slump.

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

A couple of weeks ago, as anti-oil sands activists were in the headlines for their blockade in Texas of the Keystone XL pipeline, TransCanada Corp. president and CEO Russ Girling was nearby, surveying progress on the right of way and talking to his new recruits.

Four thousand of them were digging ditches and welding pipe in the southern portion of the controversial project to transport oil from Alberta to Texas — the only part that was allowed to proceed by U.S. President Barack Obama this year.

Many were recently unemployed, were looking forward to buying Christmas presents, and were expressing frustration at the few dozen protesters, largely from outside the area.

“On the ground, in Texas and Oklahoma, where we are under construction, you are starting some push-back from people who are saying: ‘I want to go to work. I don’t want you to be in my way every day’,” Mr. Girling said in an interview.

The workers are part of the grassroots TransCanada believes will step up in Keystone XL’s defence as a re-routed project lands before the U.S. President in the spring for a decision on whether it can move forward and contribute to North American economic revival and energy independence — or be rejected yet again as part of a broader stance against climate change.

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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 — The massive price discount energy companies producing oil in Canada receive for their crude will linger throughout 2013 even if the industry is able to build and expand pipeline networks in the United States, experts say, noting that the domestic economy’s potential is being held back.

A barrel of Western Canadian Select is worth $47.20 (U.S.) a barrel right now – a whopping $40 discount to the North American benchmark, known as West Texas intermediate (WTI). Further, the global benchmark, known as Brent crude, sits at $109.62 a barrel, giving it a gaping $62.42 advantage over much of the oil coming out of Western Canada.

Low prices for Canadian crude are caused by a traffic jam of oil in the U.S. Midwest. But even if relief valves are opened thanks to the Seaway pipeline expansion and construction of the southern leg of the Keystone XL pipeline, the glut will merely shift from the Midwest to the Gulf Coast, CIBC World Markets predicts.

Industry optimists long hoped that new pipelines would ease the gap between Canada’s heavy crude and WTI, making expansion in the oil sands more financially sound. Projects such as Seaway and the southern chunk of Keystone XL may get heavy oil to refining markets, but the recent light oil boom, centred in North Dakota, means excess oil will remain in North America.

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