Oil and Gas Sector-Politics and Image – Page 126

The Oil Sands PR War – by Chris Turner (Marketing Magazine – August 13, 2012)

July 30, 2012

http://www.marketingmag.ca/

For a column about the dismal image of Canada’s mining sector by Stan Sudol, click here: http://republicofmining.com/2011/11/29/the-horrible-image-of-canada%e2%80%99s-mining-sector-%e2%80%93-by-stan-sudol/

The down and dirty fight to brand Canada’s oil patch – Chris Turner

Not long ago, a half-page ad appeared on page three of The Globe & Mail. Over an image of a bucolic forest glade lit by a golden sunrise, a headline read, “Energy the world needs. The approach Canadians expect.” The ad was short on specifics—a block of smaller type spoke of Canada’s perception in the wider world and “a constant effort to improve our environmental performance.” The only appearance of the word oil was in the URL for the campaign’s website: OilSandsToday.ca.

The ad had been placed by the Canadian Association of Petroleum Producers (CAPP), and it was the latest effort in an ongoing, two-year campaign to improve the public image of Canada’s oil industry—particularly the lucrative but much-maligned bitumen extraction business in the oil sands of northern Alberta. The bucolic forest glade, the ad’s fine print noted, was a “reclaimed mining operation” in Alberta’s vast boreal forest, executed by Syncrude.

If Globe readers didn’t come away from their morning scan thinking of CAPP’s golden meadow, that might be because it wasn’t the only story about Canadian oil in the front section of the paper that day. “Spate of spills pushes Alberta to harder look at pipeline safety,” read a front-page headline.

Fresh anger in U.S. as Enbridge races to clean up Wisconsin oil spill – by Brendan O’Brien (Reuters/Globe and Mail – July 29, 2012)

July 30, 2012

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.

GRAND MARSH, Wis. — Reuters – Canada’s Enbridge Inc on Sunday worked to repair a major pipeline that spilled more than 1,000 barrels of oil in a Wisconsin field, provoking fresh ire from Washington over the latest in a series of leaks.

The spill on Friday — almost two years to the day after a ruptured Enbridge line fouled part of the Kalamazoo River in Michigan — has forced the closure of a major conduit for Canadian light crude shipments to U.S. refiners and threatens to further damage the reputation of a company that launched a more than $3 billion expansion program just two months ago.

On Sunday, an Enbridge spokesman said the company was working diligently to carry out inspections to Line 14 and repairs to ensure a safe restart. The company did not say what had caused the incident and provided no estimate on when the 318,000 barrels-per-day Line 14 would resume service.

Only Harper can end pipeline politicking – by John Ibbitson (Globe and Mail – July 30, 2012)

July 30, 2012

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.

Stephen Harper is going to have to talk to the provinces about energy. And he hates that sort of thing.

In Saturday’s Globe, Premier Christy Clark succinctly outlined her key demands before the British Columbia government will support the Northern Gateway pipeline proposal. Most of them are eminently reasonable: The project must clear the National Energy Board review; there must be the most stringent possible controls to prevent and mitigate spills; first nations in B.C. must benefit from the project.

The final demand, however, is the deal-breaker: “B.C. must receive its fair share of the fiscal and economic benefits,” from the pipeline. B.C. wants a piece of the action.

Alberta Premier Alison Redford made it abundantly clear at last week’s premiers’ meeting that Ms. Clark can have all the revenue she wants, so long as not one penny of it comes from Alberta’s take.

Oil-patch ironies aside, many questions for Harper – by Jeffrey Simpson (Globe and Mail – July 28, 2012)

July 30, 2012

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.

Those who have discussed the issue with him report that Prime Minister Stephen Harper has been worried a state-owned company, likely from China, would take a run at a major Canadian energy producer.

Now that the massive China National Offshore Oil Corp. (CNOOC Ltd.) has bid $15.1-billion for Nexen Inc., it’s easy to understand the Prime Minister’s uneasiness. His initial statements were properly guarded, as befits the complexity of the file and his own apparent hesitations.

It has been said that the CNOOC bid is a standard business transaction: one company taking over another, in this case with the support of the Nexen board. CNOOC trades on stock exchanges. It has made commitments about keeping headquarters in Calgary, maintaining staff and conducting business pretty much as before.

National energy strategy must address B.C. pipeline worries – by Christy Clark (Globe and Mail – July 28, 2012)

July 30, 2012

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.

CHRISTY CLARK is the Premier of British Columbia.

This week, my government outlined five bottom-line requirements that must be met for British Columbia to consider support of any heavy oil pipeline project, including Enbridge’s Northern Gateway. We know that Alberta’s oil sands are an important resource and getting them to new markets represents a great economic opportunity for that province and our country. But as a premier, I am focused first and foremost on what’s best for my province, and Northern Gateway currently contains far too great an imbalance of risks over benefits for B.C.

British Columbia’s five bottom lines are as follows:

1. Successful completion of an environmental review process. In Enbridge’s case, this means a recommendation by the Joint Review Panel that the project proceed.

2. World-leading marine oil-spill prevention and response systems to protect our coastlines and ocean. With the Enbridge project, British Columbia is taking 100 per cent of the marine risk. We need to make sure we improve our response and resource capacity. That means the federal government and industry are at the table and prepared to step up their support.

CSIS said to be probing financial links between First Nations, China – by Jen Gerson (National Post – July 25, 2012)

July 28, 2012

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

CALGARY — Canadian intelligence services appear to have probed financial links between First Nations groups and Chinese companies as scrutiny continues to mount on China’s interest in this country’s natural resources sector.

This week, Chinese oil company CNOOC Ltd. announced a $15-billion takeover bid for Calgary-based Nexen, a proposal that will have to pass scrutiny under the Canada Investment Act. The deal seems to be raising warning flags among politicians who fear the energy-hungry superpower’s influence in Canada’s oil patch. But scrutiny of China’s investment reach appears to stretch back several years.

Vancouver-based lawyer Merle Alexander said he was approached by Canadian Security Intelligence Service agents twice, in 2010 and in 2011, after presenting seminars on a memorandum of understanding signed between the Kaska Nation and Silvercorp., a B.C. company with Chinese links.

He said they identified themselves with CSIS badges and “appeared interested in determining whether there is direct involvement or influence between the Chinese government and First Nations governments,” he said.

Stop state-backed foreign buyouts in Canada’s resource sector – now – by Diane Francis (National Post – July 27, 2012)

July 28, 2012

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

The proposed takeover of Nexen Inc. by China National Offshore Oil Company, or any other like it, cannot be allowed. If the acquisition of Canada’s resource companies is not banned, then much of Calgary’s skyline will be snapped up by the world’s gigantic state-owned enterprises.

Resource companies are as important as banks or the stock exchange. The same ownership ring fence must be drawn around them, or a limit of 10% foreign ownership imposed. If that policy had not been adopted years ago by Ottawa, Toronto’s skyline would be very different.

The reality is that Canada is a small economy that must be protected, from potash to the TMX, from the foreign governments that have more money than Ottawa and bankroll enterprises and investment portfolios.

The new Game of Thrones is not about military conquest but about picking off trophy assets from countries, like Canada, that are Boy Scouts and naïve enough to let them do so. And growing and nurturing large successful entities is essential to any nation-state. Size matters.

Chinese all about the marketplace – by Terence Corcoran (National Post – July 27, 2012)

July 28, 2012

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

State oil companies operating abroad are becoming more and more akin to independent corporations driven by market forces

In Halifax Friday, B.C. premier Christy Clark walked out of the premiers’ conference over the Northern Gateway pipeline that supposedly will take Canadian oil to China. “It’s not a national energy strategy if I don’t sign on,” Ms. Clark said.

She continued: “Until we see some progress in discussions between British Columbia, Alberta and the federal government with respect to the Gateway pipeline through British Columbia, we will not be participating in the discussion of a national energy strategy.”

Sounds brave and nationally divisive, but in the end Ms. Clark may be left holding a dead cat. A year or two from now, the story is likely to be that nobody needs Northern Gateway, mainly because the Chinese companies that own some of Canada’s oil would rather sell oil to the United States than ship it through the Rockies to China.

That seems more than plausible. We appear to be entering a new era of high political melodrama over China and national energy strategies. Canada vs. China, China vs. the United States, the U.S. vs. China, and so on around the world.

Where are the gains for Canada in CNOOC-Nexen deal? – by Claudia Cattaneo (National Post – July 27, 2012)

July 28, 2012

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

Encouraged by federal and provincial government overtures, Canada’s vague ‘net benefit’ test for foreign transactions and Canadians’ general indifference to the deluge of foreign deals in the oil patch, China’s state-controlled CNOOC Ltd. bid US$15.1-billion this week for Nexen Inc. with confidence it will get Ottawa’s green light.

China’s boldest step yet into Canada is drawing plenty of support from those who see it as just another foreign purchase in a country that is open for business, needs new markets in Asia for its oil and gas, needs the capital to develop its resources, wants to be friends with China and is itself a big investor abroad.

What’s missing is the big picture, and for Canada it’s not an encouraging one. Stand back and you’ll see that CNOOC’s purchase of Nexen is not just another foreign takeover and must not be viewed in isolation.

There’s big politics at play, and Canada has to be careful not to overplay its hand. Canada has been courting increased trade with the Chinese as part of Prime Minister Stephen Harper’s agenda to make Canada an energy superpower, while reducing its dependence on the volatile United States.

The global (sled) race for the Arctic’s oil and gas riches – by Yadullah Hussain (National Post – July 27, 2012)

July 27, 2012

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

Part 2 of a two-part series on the prospects and challenges of exploring oil and gas in the greater Arctic region.

The greater Arctic region is one of the world’s last few unexplored energy frontiers: foreboding and risky but irresistible to world powers given its treasures beneath.

A combination of high oil prices, the global race for new discoveries and climate change has lured oil majors to dip their toes in the frigid waters in the hunt for the estimated 90 billion barrels of oil and 1,670 trillion cubic feet of natural gas, despite a backlash from environmentalists.

While many fear the region’s rapid development will destroy its fragile and unique ecosystem forever, the Arctic has the potential to generate at least US$100-billion in oil and gas and mining investments within a few years, a Chatham House report says.

“There is a wide range of potential scenarios for the Arctic’s economic future, depending principally on local investment conditions and global commodity prices,” wrote Charles Emmerson, who co-authored the Chatham report and wrote The Future History of the Arctic. “Oil and gas, mining and the shipping industries will be the biggest drivers and beneficiaries of Arctic economic development.”

Nexen deal: The only standard is reciprocity – by Roger Martin (Globe and Mail – July 26, 2012)

July 26, 2012

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.

Roger Martin is dean of the University of Toronto’s Rotman School of Management.

The CNOOC takeover bid for Nexen demonstrates once again that while a given government policy tool may have a bright, sunny face, it often simultaneously casts a dark, problematic shadow.

The Canadian policy tool that will be used to determine whether this takeover will be permitted is “net benefit.” This means that after all the capital-market formalities are taken care of – which should be pretty straightforward due to the 61-per-cent premium being offered – the government will declare whether the takeover produces net benefit for Canada.

Thus far, the net benefit tool has been all happiness and light for Ottawa. The handy thing is that the government can make up any conclusion it wants under the as-you-like-it construct of net benefit. The prima facie evidence for making stuff up is the BHP Billiton bid for PotashCorp, where the government determined that the bid didn’t provide net benefit to Canada and disallowed the takeover. I suspect the government felt pretty chuffed about the power of the net benefit tool.

Nexen deal: Canada must remain open for business – by Jim Prentice

July 26, 2012

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.

Jim Prentice is senior executive vice-president and vice-chair of CIBC, and a former industry minister.

A few months ago, The Economist magazine opined that the defining battle of the 21st century would not be between capitalism and socialism, but between different versions of capitalism – market capitalism on the one hand and state-owned enterprises (SOEs) on the other.

If that is so, the battleground has now shifted to Canada’s oil sands. To be clear, I do not have a horse in this race. I personally favoured a Canadian outcome for Nexen. Its assets lay in the shop window for months, arguably years, but no Canadian energy company emerged to buy them.

Instead, CNOOC, one of the world’s largest SOEs, has stepped forward with a blockbuster offer. This transaction represents the largest outbound Chinese deal to date and has been carefully insulated to provide commitments for Canadian investment, Canadian jobs, a Canadian hemispheric headquarters and a Canadian domiciled public listing.

B.C. calls on Alberta, Ottawa to join pipeline talks – by Jane Taber (Globe and Mail – July 26, 2012)

July 26, 2012

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.

LUNENBURG, N.S – British Columbia Premier Christy Clark opened another front in her demand for a “fair share” of benefits from the proposed Northern Gateway pipeline, calling on the Harper government to sit down at the negotiating table along with Alberta.

Ms. Clark laid out the new terms as Canada’s premiers met with aboriginal leaders in the historic fishing town of Lunenburg ahead of the annual Council of the Federation meetings, which begins Thursday in Halifax. “My basic request is for Alberta and Canada to come to the table and sit down and figure out how we can resolve this,” she told reporters after the meeting.

But the province’s push for a greater slice of oil-sands prosperity comes as the sector’s prospects dim. Suncor Energy Inc. is backing away from its plans to produce a million barrels of oil a day by 2020, amid growing concerns from investors about the profit outlook for the oil sands. The Calgary-based giant’s hesitation stands in contrast to a bold play by China’s state-controlled CNOOC, which this week proposed a $15-billion takeover of oil and gas producer Nexen Inc.

CNOOC’s Nexen bid an indication of how far goal posts have moved – by Jeff Rubin (Globe and Mail – July 24, 2012)

July 25, 2012

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.

Jeff Rubin is an author and former chief economist of CIBC World Markets. His second book is The End of Growth.

CNOOC Ltd.’s blockbuster deal for Nexen Inc., if nothing else, is a stark indication of how far the goal posts have moved not only for Canada’s oil patch, but also for world oil demand.

Only four or five years ago, the notion that a state-owned Chinese company could buy–lock, stock and barrel of bitumen–one of Canada’s premier oil names was politically unthinkable. Any such deal was sure to be turned down by Ottawa under its Foreign Investment Review Act (not to mention the hue and cry that would come from Alberta’s provincial government).

Today, that’s all changed. CNOOC’s $15-billion offer for Nexen follows a number of major foreign transactions in Canada’s energy sector. Among others, Malaysian energy giant Petronas is paying $5.5-billion to get at Progress Energy’s natural gas reserves in British Columbia. Earlier this year, PetroChina Co. Ltd. completed a two-pronged deal for Athabasca Oil Sands Corp. that tallied $2.5-billion. In 2010, Sinopec paid $4.65-billion for a 9 per cent stake in Syncrude, which runs Alberta’s largest oilsands mine.

Limit state takeovers – by Jack M. Mintz (National Post – July 24, 2012)

July 25, 2012

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

Canadian oil and gas markets are being rocked by a lot of news lately, whether it involves building pipelines in Canada or potential economic turmoil in Europe. The latest is Monday’s announcement that China National Offshore Oil Corp. will pay $15.1-billion in cash to take over Nexen at a 66% premium relative to the 20-day average stock price.

The immediate consequence is to make a lot of Nexen shareholders richer, since the share price shot up from $17.29 to $26.35.

The Nexen takeover also lit up the chattering political classes in Ottawa. The federal government will need to make a critical decision over whether to approve this takeover under the Investment Canada Act. In my view, the worst decision would be one based on poor economics and perceptions. The best decision would be a clear policy focused on “net benefits” when assessing takeovers of Canadian companies by foreign state-owned enterprises and sovereign wealth funds.

Certainly, the usual nationalists will be out in full force, pushing to block the takeover. My skin crawls with dubious concepts such as “strategic assets,” “national champions” and “hollowing out.”