Oil and Gas Sector-Politics and Image

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

China’s growing influence in oil sands development might be the most important issue facing Canada’s energy sector that nobody is talking about.
 
Canadian companies have happily accepted billions of dollars in investments from Chinese state-owned enterprises in recent years on the basis that the energy-hungry emerging Asian superpower will soon be their best customer.
 
Meanwhile, as the public grows increasingly concerned about the potential importation into Canada of questionable Chinese corporate practices and opposition politicians raise questions of possible interference with Canada’s national interests, industry associations, environmental groups and the government of Canada itself have stayed mute.

“Any enterprise that is owned by another nation state raises sovereignty issues, but in the case of China the security advisors to the government of Canada for a long time have expressed particular concern about Chinese influence,” Elizabeth May, leader of the Green Party of Canada, said in an interview this week.

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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.

When Tom Mulcair, then a prospective NDP leader, wrote in an influential magazine last winter that Alberta’s oilsands have artificially driven up the Canadian dollar and hurt manufacturing in central Canada, his remarks received scant notice.
 
Mulcair was largely adding his voice to a view espoused by Premier Dalton McGuinty and a number of commentators and analysts.
 
When he repeated an abridged version of his Policy Options argument on the CBC last weekend, the reaction in western Canada verged on the hysterical.

Stephen Harper surrogates in right-wing media and think tanks joined Saskatchewan Premier Brad Wall in hurling invective at the NDP leader, accusing him of trying to divide the country, demonizing the West, pandering to Quebec and misunderstanding history and politics.
 
It appears that in a matter of a few months two things had happened to turn an op-ed piece in a policy magazine into a civil war.

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

CALGARY — As if Enbridge Inc. could not hear the cries of protests over the Northern Gateway pipeline at its annual meeting in Calgary last year, what will hit the company in Toronto on Wednesday is expected to be even louder.
 
Public hearings into the $5.5-billion project to bring crude oil from Bruderheim, Alta. 1,172-kilometre west to the Pacific coast town of Kitimat, B.C. — and from there to energy-hungry markets in Asia — have since begun, serving as a focal point for criticism. Canada’s largest crude transporter has also opted to hold this year’s AGM in the country’s financial capital, where many groups opposing the pipeline command a strong presence and where the risk of a public relations backlash affecting the company’s share price is heightened.

As members of the Calgary-based Enbridge executive team make the trip to Toronto this week, a train carrying some of Northern Gateway’s most vocal critics is close behind. Hundreds of protestors are expected to rally outside the AGM, with a “Freedom Train” set to arrive Wednesday carrying dozens of members of the Yinka Dene Alliance, a group of British Columbia First Nations opposed to the project.

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

In the debate about whether Canada should welcome China’s growing investment in our energy, a couple of crucial points have been getting little air time: Canada’s energy isn’t as indispensible to China as some assume, and China is at least as motivated by learning how to operate in a Western market economy as it is by securing energy to fuel its future.
 
Junsai Zhang, China’s ambassador to Canada, drove those points home Friday — a rare attempt by the country to add its voice and bring back to reality a Canadian discussion it feels has gotten way ahead of itself.

“We haven’t imported one drop of oil,” Mr. Zhang said in an interview in Calgary. “It’s too early to say China imports your oil and gas. We are in a very good collaboration with Australia, with other Western countries. No problems. If we don’t import from here, we import from other countries. It’s OK.”
 
It’s a sobering and unexpected message. For all the concern about China’s increasing presence in Canada, not having the option of selling to that market would be a major setback. It would also be a missed opportunity to show global leadership.
 

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

Move over, Middle East: North America looks set to lead the global energy investment drive this year, with companies expected to spend $392-billion on upstream capital and operating expenditures in the region, according to forecasts of IHS CERA, an energy consultancy.
 
“Capex (alone) is expected to reach US$274-billion in 2012, driven by the region’s boom in unconventional production including oil sands, tight oil, shale gas, tight gas and coal bed methane, which are forecast to account for US$128-billion of the 2012 total,” noted IHS CERA in a report published Monday. “Driven by continued investment in unconventional resources, total North America spending is expected to reach US$528-billion in 2016.”
 
Capital spending in the oil sands sector is forecast to reach 28% to US$18.5-billion in 2012, rising US$28-billion by 2016 as high oil prices spurs expansion plans, the Cambride-based consultancy estimates. 

“The U.S. and North America currently make up 50% of all drilling activity in the world,” Candida Scott, senior director at IHS CERA told the Financial Post in an interview.

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

CALGARY — TransCanada Corp. said it’s taking a serious look at converting its underused mainline, Canada’s largest natural gas pipeline, to oil service, a prospect that would give a big boost to the idea of a Canadian solution to anti-oil sands activism by shipping more of Canada’s Western oil to Eastern consumers.
 
CEO Russ Girling said Friday refiners in Eastern Canada and oil producers in Western Canada are keen on the concept and have asked TransCanada to look into the feasibility of converting parts of the system.
 
“We are going to actively pursue it and see if we can turn it into an opportunity for both, the oil and gas industry and TransCanada,” Mr. Girling told reporters after addressing the company’s annual meeting.
 
The giant pipeline is TransCanada’s original business and is one of Canada’s nation-building infrastructures. For decades, it is has moved natural gas from Empress, Alta., down to the U.S. northeast and into Ontario and Quebec.

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

In 2008, Kinder Morgan Canada added 75,000 barrels of capacity to its Trans Mountain pipeline from Edmonton to Vancouver at a cost of $750-million, which included 13 new pump stations, twinning the system through Jasper National Park in Alberta and Mount Robson Provincial Park in British Columbia.
 
It faced little opposition, completed its regulatory hearing within a week, and provided contracting and employment to the Aseniwuche Winewak and Simpcw First Nations and the Alberta Metis Zone IV community. When the project was completed, the Town of Jasper and the Village of Valemount thanked Kinder Morgan Canada for the opportunity.

Today, the company’s president, Ian Anderson, has cleared his deck and plans to dedicate the next five years of his career to a single goal — win support for and build a $5-billion expansion of the same pipeline, which has been in operation for 62 years. He is planning a campaign of unprecedented magnitude for his company, a unit of the Houston-based infrastructure giant, Kinder Morgan Energy Partners.

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

VICTORIA – During the past few months, the main front in the fight against development of the Alberta-based oil sands has moved to British Columbia. It’s a situation the westernmost province is uncomfortable with and an expansion it’s unmotivated to defend.

The aggressive push by the oil sands industry and the Alberta and federal governments to open a new market for Canadian oil through shipments from the West Coast has been met by equally forceful resistance starting at the AlbertaB.C. border.

Anger has escalated since the start of public hearings in January into the Northern Gateway pipeline, proposed by Calgary-based Enbridge Inc., interrupting years of friendly relations between the neighbouring provinces, particularly on energy development.

Indeed, condemnation of the pipeline through B.C.’s rugged north and its associated oil tanker traffic has erupted into the type of popular revolt that is becoming a B.C. mainstay – from the campaign against the harmonized sales tax to the fight to preserve the Great Bear Rainforest and the moratorium on oil tanker traffic and offshore drilling.

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

Joe Oliver, the federal Natural Resources Minister, will find a partner in Alberta’s newly re-elected Premier in his efforts to promote the oil sands at home and abroad, a strategy he said is beginning to show results in Europe and in the United States.

Alison Redford’s Conservatives held on to power by a wide margin in Monday’s provincial vote, fending off a threat from the upstart Wildrose party.

Ms. Redford is pushing for a Canadian energy strategy to promote a national dialogue to encourage co-operation on energy and plans to spend billions in oil sands research to ensure environmentally responsible development. “This election was about choice, a choice to put up walls or build bridges,” Ms. Redford told supporters Monday evening. “Tonight Alberta chose to build bridges.”

While the federal government doesn’t see the need for an energy strategy, Mr. Oliver said Canada has a huge opportunity to sell its oil to new markets looking for energy security, but it will take a sustained and broad communication effort to defend the unconventional resource and he expects Alberta’s Premier to do her part.

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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.

Gillian Steward is a Calgary writer and journalist, and former managing editor of the Calgary Herald. Her column appears every other week.

For once the outcome of an Alberta election was completely unpredictable. Right up until the end the two leading contenders — Alison Redford’s PCs and Danielle Smith’s Wildrose party — were locked in a bitter battle for control of government. But one outcome was entirely predictable.

No matter which party won there would be no sudden changes when it came to oil sands development and all the risks and rewards that go with it, not just for Alberta but for the rest of Canada. The oil sands and energy policy in general were simply not on the election agenda.

Party leaders barely mentioned the oil sands; it wasn’t a big issue in the news media; at the public forums I attended not one person questioned candidates about oil sands policy. Official oil industry voices were noticeably silent for the entire campaign.

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

Albertans will know who their next premier will be Monday and the winner of the hotly contested provincial election between the Wildrose Party and the ruling Conservatives will have a big impact on the rest of Canada.

Both right-of-centre parties are well-liked by the province’s dominant oil-and-gas industry because of their favourable views of development, particularly of the oil sands.

But they project different styles, espouse different levels of government involvement and push different pet projects that have the potential to reshape Canada’s energy priorities.

If Danielle Smith’s Wildrose overthrows Alison Redford’s Conservative dynasty, as polls suggest, Canadians should expect a bolder approach by Alberta to develop and sell its energy riches. It will closely reflect that of Stephen Harper’s federal Conservative government.

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