Oil and Gas Sector-Politics and Image

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.

Campbell Clark writes about foreign affairs from Ottawa

Meet the new boss: Jiang Jemin, the 55-year-old chairman of China National Petroleum Corp. He’s about to become an Alberta employer.

This week, Athabasca Oil Sands Corp. triggered an option on a 2009 deal with CNPC subsidiary PetroChina, so the Chinese oil giant is not just a shareholder but also the owner and operator of the MacKay River oil sands project, to open in 2014. In December, another Chinese firm, Sinopec, closed a $2.2-billion deal for Daylight Energy Ltd.

This is new and will have a lasting impact. Chinese firms aren’t just buying stakes, they’re buying whole operations. It’s a new phase of China’s step-by-step Canada strategy. It will change not just the oil patch but Canada’s foreign policy. And a game of international energy politics is afoot in Canada’s West.

These deals are different because Canadians will see how Chinese firms operate, not just invest. They’re state-controlled companies, with executives such as Mr. Jiang who have moved among the Communist Party, government and big oil.

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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.

The acquisition by the state-controlled PetroChina Co. Ltd.’s of 100 per cent of the MacKay River oil-sands project is a vivid reminder that the federal government’s review of Investment Canada’s foreign-takeover criteria has not yet been issued – more than a year after the messy episode in which BHP Billiton was not allowed to proceed with its bid for Potash Corp. of Saskatchewan Inc.

In fact, Tony Clement, who was then the minister of industry, approved this same PetroChina acquisition two years ago – because the transaction already included an option to turn a 60-per-cent interest into sole ownership, and it was Athabasca Oil Sands Corp., not PetroChina, that exercised its option – to sell, that is.

The government has sent mixed signals over the years. In 2007, it introduced new rules for state-controlled foreign companies so that they would do business on commercial principles, rather than as agents of their home country’s policies. And in the 2008 election, the Conservatives said they would not permit export of bitumen from the oil sands for processing elsewhere – which might be justifiable on commercial grounds. On the other hand, the proposed Northern Gateway Pipeline, which the government favours, would facilitate the export of that same bitumen to China.

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

The friendly “divorce” announced Tuesday between PetroChina and Athabasca Oil Sands Corp. puts a Chinese company in charge of a Canadian oil sands project for the first time. Is it ready?

Yes, says Zhiming Li, president and CEO of Dover Operating Corp., the company that will operate the asset on behalf of a PetroChina subsidiary, Cretaceous Oilsands Holdings Ltd.

In an interview, Mr. Li said Dover’s strategy is to establish itself as a Canadian company staffed predominantly by Canadians. “Some 90% of the employees are Canadian experts,” he said. “These people are well experienced with lots of knowledge in developing SAGD projects. We will use local talent to do the project execution. We expect no problem.”

With a staff of 90, Dover plans to add 50 to 60 people this year as it moves ahead with its first project in Alberta, MacKay River. Its strategy is to ramp up to 150,000 barrels a day in four phases. The first phase, 35,000 barrels a day, is scheduled for startup in late 2014.

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

Just when it seemed the Earth was serving up its last drops of oil, squeezing from tough spots such as the oil sands in northern Alberta and the deepest seas offshore Brazil, a new oil age is emerging.

Tight oil, a catch-all for oil trapped in shale, carbonate or sand formations recoverable with the type of drilling methods that revolutionized the natural-gas side of the business, is reviving the oil sector on a scale that only a couple of years ago would have been unthinkable.

“It turns out there are a lot of big piles of oil in North America,” said Denver-based John Schopp, vice-president for the North Rockies and new ventures at Encana Corp., one of the companies in a hurry to turn it into new revenue.

Calgary-based Encana, a pure natural-gas producer that is feeling the pinch of low gas prices, hopes its new oil thrust will make it a more balanced gas/oil producer.

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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 AND CALGARY— Canada’s energy industry saw markets for its two main products head in sharply different directions in 2011: Global oil prices averaged a record high $111 (U.S.) per barrel for the year, while natural gas prices in North America languished.

That disconnect prompted North American companies to focus their exploration on crude, and on natural gas plays that offer the prospect of extremely low-cost supply or “liquids-rich” gas that contains high-value propane and butane.

In 2012, companies are likely to continue that shift, while high-profile battles over the oil sands, pipeline projects and fracking will also persist. At the same time, both crude oil and natural gas prices may reverse course modestly during the year, as natural gas demand picks up and supply growth slows, and as global suppliers boost production as developed economies struggle out of recession.

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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.

TEHRAN, Iran— The Associated Press – The U.S. warned Iran Wednesday that it will not tolerate any disruption of naval traffic through the Strait of Hormuz, after Iran’s navy chief said the Islamic Republic is capable of closing the vital oil route if the West imposes new sanctions targeting Tehran’s oil exports.

Iran’s Adm. Habibollah Sayyari told state-run Press TV that closing the strait, which is the only sea outlet for the crucial oil fields in and around the Persian Gulf, “is very easy” for his country’s naval forces.

It was the second such warning by Iran in two days, reflecting Tehran’s concern that the West is about to impose new sanctions that could hit the country’s biggest source of revenue, its oil sector. On Tuesday, Vice President Mohamed Reza Rahimi threatened to close the strait if the West imposes such sanctions.

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

CALGARY — Albertans know all about the B-word: boom. For much of the past decade the economic pace was blistering, led by massive projects in the oil sands. The result was scores of high-paying jobs, a red hot real estate market and an influx of thousands of new migrants.

The party was good while it lasted. But in 2008, Albertans were blindsided by another B-word: bust. A collapse in energy prices, the result of the U.S. financial crisis, took the steam out of Alberta’s once-buoyant economy.

The oil patch shelved or cancelled billions of dollars worth of projects, jobs evaporated virtually overnight and ordinary Albertans struggled to pay their mortgages.

But after sputtering for much of the last three years, Alberta appears poised to regain its position as Canada’s economic juggernaut.

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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.

WILLISTON, N.D.— Kim Lindsay looks up at the gleaming steel of Precision Drilling Corp.’s Rig 560, dusted in snow and towering above the North Dakota prairie, and smiles.

“This is hot off the press – been out a month,” said Mr. Lindsay, a U.S. manager with the company. The yellow paint on the rig’s Caterpillar engines is unsullied. The technology is state of the art, with a driller operating a joystick in front of rows of flat-panel monitors that look like something out of NASA mission control. Built in Canada, the rig was trucked across the border to drill for oil.

By March, Precision intends to have 33 of these rigs running – their drill bits aimed at a lucrative payload nearly three kilometres beneath the earth. It is the Middle Bakken formation, known to most as simply the Bakken, a reservoir jammed with so much oil that companies have flocked from all over the world to profit from it.

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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.

WILLISTON, N.D. AND WINNIPEG – In the icy parking lot of the Wal-Mart in Williston, N.D., the next wave of economic refugees is washing in, counting down the hours until they can turn their back on a past they’d like to forget.

On one chilly day in December, there’s the family from North Carolina, which has crammed mom, dad, teenage son and two dogs into an old Winnebago, driving some 3,000 kilometres in hopes of finding work. And there is Eric Larsson, who has come more than 1,000 kilometres from eastern Idaho in a truck loaded with tools, looking for a job after his position vanished – along with his house – three years ago. He’s pulling a trailer he just bought so he can have a place to sleep.

“I pretty much spent $10,000 on a wing and a prayer to get here,” he says.

These people, and thousands of others whose stories bear a striking similarity, have come to join the frenzy – by plane, by ratty truck, by train. Williston, with a population of around 20,000, was a quiet North Dakota town, surrounded by oil fields that had been in decline for decades.

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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.

WILLISTON, N.D.— The drilling rigs puncture the horizons and tuck into the valleys of the bald North Dakota landscape. Their steel towers have taken root on a tableau of badlands and treeless plains that extends for more than 100 kilometres.

They are like steeples in the French countryside, erected in ever greater numbers, more every month, by an industry whose only deity is oil. Near many are the flares, the votive candles of the hydrocarbon age, where natural gas not worth enough to save is burned in enormous fireballs, some the size of small cars, so brilliant they blind drivers at night.

Cutting through it all are the roads – paved, gravel, red rock – that carry the rumbling parade of trucks, some burdened with supplies for the rigs, others with the oil they have prodded from the earth.

This is the place the energy companies call the Bakken, an oil play that has erupted across a forgotten corner of the U.S. It is a frenzy of drilling and pumping and moneymaking.

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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— Half-a-decade before TransCanada Corp.’s  Keystone XL ran into a wall of political and environmental resistance, a key stretch of the route linking Canada’s oil sands to refineries in the southern U.S. emerged as a tricky, though seemingly surmountable, problem.

The route crossed a landscape of prairie and farmland, far from mountains, tundra, permafrost and other features that make it tough to dig trenches and lay pipe. But there was one obstacle.

Engineers working for another proposed pipeline project called Altex closely examined a route similar to Keystone XL’s and identified a trouble spot. Glen Perry, a pipeline entrepreneur who steered Altex, remembers the warning he received from an engineer in 2006.

“I said, ‘What are the route issues here?’ He said, ‘There’s really only one.’ I said, ‘What’s that?’ He said, ‘You have to go through the boiling sands of Nebraska.’”

Boiling sands are areas where sandy soil is so thin that groundwater can bubble up through it to the surface.

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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.

MURMANSK, RUSSIA—An Arctic winter storm is a vision of terror for seamen: hurricane force winds battering heaving decks encased in thick ice, an ordeal that can drag on for days cloaked in darkness.

So far north, rescue teams are usually a very distant hope. The sinking of a Russian oil rig Sunday in a howling gale off the coast of Sakhalin, on Russia’s Far East coast, left 53 crew members confirmed dead or lost at sea, and added a new chapter to the harrowing lore of Arctic navigation.

Yet as the Arctic climate warms, and vast polar ice sheets melt, international shipping companies are eagerly eyeing two routes across the top of the world — one along Russia’s northern coast, the other through waters claimed by Canada.

Russia has a decades-long lead in controlling its Arctic coast. If Canada doesn’t catch up in claiming territory, the country may not have the power to decide who navigates the Northwest Passage through a sweeping archipelago of more than 19,000 Canadian islands.

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

It’s official: Ottawa has gone bananas.

In recent days, a war of words has erupted over a campaign by a website called EthicalOil.org that urges consumers to stop buying fruit from Chiquita Brands International Inc., following an announcement by Chiquita that it would like its business partners to reduce their use of high-greenhouse-gas fuel sources, including Canada’s oil sands.

Conservative Ministers Jason Kenney and Rona Ambrose tweeted their support for the banana ban, while NDP leadership candidate and MP Megan Leslie accused the government of ignoring climate change. (Meanwhile, most Canadians breathed a sigh of relief that Chiquita doesn’t sell cranberries, and got on with their Christmas shopping.)

The Chiquita saga is only the latest protest to hit the world of petropolitics over the past year. 2011 saw actresses getting arrested, pipelines encircling the White House, ranchers teaming up with environmentalists, and Saudi Arabia taking legal action against television ads.

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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 public relations battle over Canada’s oilsands has reached new heights with the Harper government setting its sights on an unlikely foe: Chiquita bananas.

Several high-profile government MPs, including Immigration Minister Jason Kenney and Public Works Minister Rona Ambrose, have urged Canadians not to buy bananas distributed by Chiquita Brands International after the Ohio-based company said it would avoid using fuel for its trucks derived from Alberta’s oilsands.

And now the pro-oilsands group EhticalOil.org is taking the fight to the airwaves with the launch of a new radio ad this week urging consumers to stop buying bananas or premade salads from Chiquita, a company the group calls a “foreign bully.”

“The Chiquita banana company says it’s boycotting oil from Canada’s oilsands. Apparently they like oil from OPEC dictatorships better,” an announcer’s voice says over orchestra music.

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