Category Archives: Energy and Resources

Energy Board approves Enbridge Line 9 reversal

March 6, 2014Energy and Resources, Oil&Gas, Pipelines and SupertankersfeaturedCanadian Press

The National Energy Board has approved energy giant Enbridge’s plan to reverse the flow and increase the capacity of a pipeline that has been running between southern Ontario and Montreal for years.

The green light for the Calgary-based company is subject to certain conditions and requirements.

A statement from the National Energy Board says “the board’s conditions require Enbridge to undertake activities regarding pipeline integrity, emergency response, and continued consultation.”

Enbridge will also have to submit a plan to manage cracking features in the pipeline, and manage water crossings.

The board says that with these conditions in place, the project will be “safe and environmentally sensitive.”

Pipeline hearings saw heated protest

The decision on the controversial Line 9 comes some four months after the federal regulator held public hearings on Enbridge’s proposal.

During those sessions, a three-member panel heard from a wide range of parties including First Nations, environmental groups, private citizens and representatives from municipal and provincial governments.

Enbridge’s own final submissions were delivered in writing after the board cancelled its final day of Toronto hearings over security concerns stemming from a planned protest.

300,000 barrels flowing East

Line 9 originally shuttled oil from Sarnia, Ont., to Montreal, but was reversed in the late 1990s in response to market conditions to pump imported crude westward. Enbridge now wants to flow oil back eastwards to service refineries in Ontario and Quebec.

It plans to move 300,000 barrels of crude oil per day through the line, up from the current 240,000 barrels, with no increase in pressure.

Opponents — some of whom have staged protests and held sit-ins at pumping stations — argue the Line 9 plan puts communities at risk, threatens water supplies and could endanger vulnerable species in ecologically sensitive areas.

Critics disappointed, not surprised

Officials at Greenpeace Canada said they were disappointed, but not surprised, by today’s decision. Said Keith Stewart, Greenpeace Canada’s energy campaign co-ordinator:

[quote]This decision is no surprise, given how the federal government and the oil industry have rewritten our environmental laws to fast track the approvals of tarsands pipelines. These drastic changes barred thousands of Canadians from participating in decisions that will affect their air, water and health for decades to come and banned any consideration of the climate change impacts of this project.[/quote]

Critics also worry that Enbridge will run what they claim is a more corrosive product through the 831-kilometre-long line — a move which they claim will stress the aging infrastructure and increase the chance of a leak.

Enbridge has insisted that safety is its top priority and has characterized the scope of the reversal as “actually very, very small.”

Previous bitumen spills erode confidence in Enbridge

It has said a reversed Line 9 will not be transporting a raw oilsands product, although there will be a mix of light crude and processed bitumen.

It has stressed, though, that the products that will flow through the line will not erode it.

The company has also said the refineries it supplies can currently only take a small portion of heavy crude and would have to invest significantly in infrastructure to take more.

Despite the company’s assurances, Line 9’s opponents have often pointed to an Enbridge spill in Michigan, which leaked 20,000 barrels of crude into the Kalamazoo River in 2010. There are concerns the same thing could happen in Ontario or Quebec in the future.

Some opponents have also suggested the Line 9 reversal is ultimately so Enbridge can transport oil to the Atlantic coast for export — something the company denies.

A portion of the line has already received approval for reversal and has been sending oil from Sarnia to North Westover, Ont. — about 30 kilometres northwest of Hamilton — since August.

US judge blocks $9 Billion judgement against Chevron over lawyers’ illegal conduct

March 4, 2014Energy and Resources, Oil&GasfeaturedCanadian Press

US judge sides with Chevron over $9 Billion Ecuadorian contamination case — Photo: Teun Voeten/Reporters/Redux

by Larry Neumeister, The Associated Press

NEW YORK – A federal judge on Tuesday blocked U.S. courts from being used to collect a $9 billion Ecuadorean judgment against Chevron for rainforest damage, saying lawyers poisoned an honourable quest with their illegal and wrongful conduct.

“Justice is not served by inflicting injustice. The ends do not justify the means,” U.S. District Judge Lewis A. Kaplan wrote. The judge said it was a sad outcome to have to rule that the Ecuadorean court judgment “was obtained by corrupt means,” because it will likely never be known whether there was a case to be made against the San Ramon, Calif.-based oil company.

Wrote Kaplan in a nearly 500-page ruling that followed a trial last year:

[quote]It is distressing that the course of justice was perverted.

[/quote]

New York lawyer for plaintiff corrupted case

He said a New York City lawyer, Steven Donziger, and Ecuadorean lawyers corrupted the case in Ecuador by submitting fraudulent evidence, coercing a judge and arranging to write the multibillion-dollar judgment themselves by promising $500,000 to the Ecuadorean judge to rule in their favour.

Donziger, criticized heavily in the ruling, said he will seek an expedited appeal of “an appalling decision resulting from a deeply flawed proceeding.”

He said Kaplan was “wrong on the law and wrong on the facts.” He accused Kaplan of letting “his implacable hostility toward me, my Ecuadorean clients and their country infect his view of the case.”

In a statement, Chevron Corp. called the decision “a resounding victory for Chevron and our stockholders” and said any court that respects the rule of law will find the Ecuadorean judgment “illegitimate and unenforceable.”

The case resulted from a long-running court battle between Amazon rainforest residents and oil companies.

Ecuadorian court cut initial judgement from $18 billion to $9.5 billion

In February 2011, a judge in Ecuador issued an $18 billion judgment against Chevron in a lawsuit brought on behalf of 30,000 residents. The judgment was for environmental damage caused by Texaco during its operation of an oil consortium in the rainforest from 1972 to 1990. Chevron later bought Texaco.

Ecuador’s highest court last year upheld the verdict but reduced the judgment to about $9.5 billion.

Chevron has long argued that a 1998 agreement Texaco signed with Ecuador after a $40 million cleanup absolves it of liability. It claims Ecuador’s state-run oil company is responsible for much of the pollution in the oil patch that Texaco quit more than two decades ago.

The Ecuadorean plaintiffs said the cleanup was a sham and didn’t exempt third-party claims.

The decision came in a lawsuit Chevron brought in Manhattan against Donziger and two of his Ecuadorian clients to prevent any of them from profiting from what the oil company characterized as a fraud.

Kaplan on Tuesday barred Donziger and the other defendants from trying to collect the judgment through U.S. courts and said they may not take any actions to profit from the judgment.

A lawyer for Donziger — Richard Friedman — said the ruling was disappointing but not unexpected. He predicted it will be reversed on appeal.

Donziger’s appeals lawyer, Deepak Gupta, said Kaplan’s ruling amounted to “what is in effect a global anti-collection injunction that would preclude enforcement of a judgment from another country in every jurisdiction.” He said it was indistinguishable from a ruling by Kaplan in early 2011 banning collection of the judgment anywhere in the world. That was decision was struck down on appeal.

No ‘Robin Hood’ defence

During the trial, Donziger acknowledged that he stood to make about $600 million if the $9 billion judgment was approved.

Donziger said in his statement Tuesday that his clients will try to collect the judgment in other countries.

“The villagers deserve justice, and I am confident they will get it despite Chevron’s effort to flout the rule of law,” he said.

Kaplan said in his decision that it did not matter if the efforts by the villagers came in a just pursuit, writing:

[quote]There is no ‘Robin Hood’ defence to illegal and wrongful conduct. And the defendants’ ‘this-is-the-way-it-is-done-in-Ecuador’ excuses — actually a remarkable insult to the people of Ecuador — do not help them.[/quote]

“The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador — and they knew it.”

Nova Scotia and UK team up to study tidal power

March 4, 2014Energy and Resources, RenewablesfeaturedCanadian Press

Nova Scotia and UK team up to study tidal power — The world’s first commercial-scale tidal power generator, in Northern Ireland (Photo courtesy of Siemens)

HALIFAX – Nova Scotia and the United Kingdom have agreed to work together on research aimed at generating electricity from high tides like those in the Bay of Fundy.

Energy Minister Andrew Younger and Corin Robertson, the acting British deputy high commissioner to Canada, announced a memorandum of understanding today in Halifax.

Under the agreement, the Offshore Energy Research Association of Nova Scotia and the United Kingdom’s Technology and Strategy Board will each contribute $250,000 towards research.

Younger says the agreement will increase the province’s research capacity and create business opportunities in Nova Scotia and the U.K.

The agreement will also result in joint proposals being issued for research projects in both Canada and the U.K.

Northern Gateway: The unlikely pipeline

March 2, 2014Energy and Resources, Pipelines and SupertankersfeaturedRay Grigg

Northern Gateway-The unlikely pipeline — The 3-member panel for the Northern Gateway pipeline overruled 98% opposition to the proposal

The approval of Enbridge’s Northern Gateway pipeline by the National Energy Board’s Joint Review Panel (JRP) landed with a dismal and predictable thud. It is a view that needs to be reviewed, an assessment that needs to be reassessed, a decision that still needs multiple other decisions. “After weighing the evidence,” the JRP announced with an unconvincing finality, “we concluded that Canada and Canadians would be better off with the Northern Gateway Project than without it.”

[quote]Of 1,179 oral submissions, 1,159 were opposed to the pipeline and the resulting supertankers.[/quote]

98% opposition ignored

The pronouncement is filled with ambiguities, uncertainties and deficiencies. What evidence was weighed that supported the JRP’s conclusion? Of 1,179 oral submissions, 1,159 were opposed to the pipeline and the resulting supertankers. As noted by Stephen Hume in The Vancouver Sun, “Scientists and environmentalists who wanted to address the hearings were excluded from the process by NEB fiat.” The hearings did not consider “upstream” or “downstream” effects, except as economic factors — but even these were only conjectural or “likely”.

As for being beneficial to “Canada”, it is a land mass, a geographical territory endowed with natural features that don’t need scarring by pipelines, inevitable oil spills, threats to species and ecologies, wholesale removal of a non-renewable resource, massive environmental trauma from the tar sands development, not to mention additional greenhouse gases that are exacerbating climate change.

“National Interest”

As for the benefit of the Northern Gateway pipeline to “Canadians”, this is both conjectural and questionable. The evolution of Canadians toward oil as their single, dominant, economic driver moves us toward the status of a petro-state with all the accompanying financial instabilities, budgetary uncertainties and democratic corrosion.

Although the JRP finds that “the project, if constructed, would likely deliver economic benefits by expanding and diversifying the markets available for western Canadian crude oil exports”, it also acknowledges that it is “difficult to determine, with certainty, the effect the Northern Gateway Project may have on broader market prices once it is placed in service…”. In other words, the addition of Alberta dilbit to the international market may lower the price of oil, reduce Canadian royalties, and challenge the viability of the pipeline itself.

Enbridge could leave Canadians paying more for their own oil

Alternately, “new pipelines connecting producing regions with consuming regions change market dynamics in ways that cannot easily be predicted”, so “if constructed, the project would significantly expand and diversify the market options for western Canadian crude oil supply which would contribute to the realization of full market value pricing over the long term.” This translates to mean that Canadians could pay more for their own oil.

Canada alienating itself from global community

All these uncertainties are compounded in a country that has no coherent energy policy, is producing dilbit by furiously burning limited supplies of natural gas, is still importing “unethical” oil for its eastern needs, and is alienating itself from a global community becoming increasingly desperate to wrestle down carbon dioxide emissions. Indeed, as the world’s climate situation continues to worsens during the next decades, the pressure to reduce oil production and consumption will only intensify.

A global tax on carbon is almost inevitable, “dirty” oil from the tar sands will almost certainly be subject to increasing censure, and Canada could even be confronted with trade sanctions as it promotes a product that is deemed unacceptable by international judgment.

The dilbit wildcard

And this doesn’t even address another profoundly important environmental issue. The JRP acknowledges that no studies have been done to assess the impact of dilbit on river or marine ecologies. Nonetheless, in a leap of blind faith and an expression of amazing understatement — despite finding “there is some uncertainty regarding the behaviour of dilbit spilled in water — the Panel finds that the weight of evidence indicates that dilbit is no more likely to sink to the bottom than other heavier oils with similar physical and chemical properties.” So, uncertainty about the impact of dilbit on marine ecologies is dismissed by the Panel as inconsequential because it may not be worse than any other spill of “similar” crude.

To reassure everyone that all will be well if the Northern Gateway is built, the Panel recommends “a scientific advisory committee to study what happens to diluted bitumen when released into the environment.” Good idea. But this is essential information, required before the pipeline is approved, not after.

Besides, the Panel’s adroit use of words focuses attention on the bitumen and not the environment — surely the issue is not “what happens to the diluted bitumen” but its impact on ecologies into which it is spilled.

The JRP’s Orwellian language

But this evasive language is common in the JRP’s Report. Uncertain environmental impacts are disguised in verbal obscurity. Consider the following sentence:

[quote]The type and duration of effects would be highly variable and would depend on the type and volume of product spilled, location of the spill, exposure of living and non-living ecosystem components to the product spilled, and environmental conditions.[/quote]

This is a wonderful example of linguistic nonsense. It simply admits, that given a spill of “product” — a much more benign term than diluted bitumen — neither the Panel nor anyone else knows what will happen. Nonetheless, despite the long-term damage to Prince William Sound from the Exxon Valdez disaster more than 20 years ago, the Panel is able to conclude from no substantial information or studies “that the adverse [environmental] effects would not be permanent and widespread.”

Environmental reviews become a mere formality

Approval of the Northern Gateway by the JRP is little more than a routine formality wrapped in a symbolic gesture. Recent legislation passed by the federal government has radically altered the Canadian Environmental Assessment Act and the National Energy Board Act, transferring decision-making power to the federal cabinet.

Given its political, economic and environmental ideology, final approval of the Northern Gateway is inevitable. But a host of other obstructions lie between approval and completion. Building the actual pipeline is more unlikely than it seems.

Peter Mansbridge tries to come clean on Oilsands talk

February 28, 2014Energy and Resources, Media, Oil&Gas, Tar SandsfeaturedCanadian Press

Peter Mansbridge tries to come clean on Oilsands talk — CBC anchor Peter Mansbridge giving a talk paid by CAPP (image: facebook)

by Paola Loriggio, The Canadian Press

TORONTO – CBC News anchor Peter Mansbridge defended himself Thursday after a report that he made a paid speech to petroleum producers, saying he has never publicly promoted or opposed oilsands development.

“If I leave a speech and those in attendance think they know where I stand on any controversial issue, then they’re guessing. Because they won’t find it in the words I’ve spoken,” he wrote in a blog post on the CBC website.

[quote]I would not, do not, and have not, given a speech either promoting oilsands development or opposing it.[/quote]

The anchor of The National said he gives about 20 speeches each year, about half of them unpaid. When he receives a fee, he often donates part or all of the money to charity, he said.

Mansbridge said the network’s senior management has always approved his speaking engagements and known when he is paid for them.

Some media watchers have suggested it’s not appropriate for journalists to accept money from groups or industries that are the subject of their reports.

CBC management vetted speech

On Wednesday, a CBC report on its president Hubert Lacroix’s appearance before a Senate committee said the anchor’s speaking engagements are vetted in advance.

“And each one is looked at to make sure there is no conflict of interest with respect … to editorial coverage and to make sure that our rules are respected,” Lacroix told the committee.

“He knows that he never offers up his opinion or takes a position on anything that is in the news when he makes those speeches.”

Murphy, Mansbridge both paid to speak by oil industry

This comes after a published report said Mansbridge was paid to speak to the Canadian Association of Petroleum Producers in 2012.

He is the second CBC personality recently to face questions for reportedly receiving payment in exchange for speaking at events organized by members of the oil industry.

The network has acknowledged that Rex Murphy, who hosts the show “Cross-Country Checkup,” has given speeches supporting oilsands development.

Murphy stood by his comments in a column published last week in the National Post, saying he always speaks his mind and his opinions can’t be bought.

To suggest otherwise is “an empty, insulting slur against my reputation as a journalist,” he wrote.

News Ombudsmen beg to differ

The executive director of the Organization of News Ombudsmen told CBC Radio that neither journalist should have accepted money — and that in doing so, they’ve undermined the broadcaster’s credibility.

“The problem is in the money received,” Jeffrey Dvorkin, a former managing editor for CBC Radio, told “As It Happens.”

“In the end, there is a suspicion laid on all of the CBC,” he said.

[quote]It’s about reputation here and what Rex has done, he has, frankly, I think, sullied the reputation of all CBC journalists by doing that and Peter Mansbridge hasn’t helped particularly in taking money from that source either.[/quote]

CBC defends Murphy

The CBC has defended Murphy’s actions, saying he is a freelance commentator paid to take a “provocative stand” on issues.

In a blog post published earlier this month and updated Thursday, CBC News editor-in-chief Jennifer McGuire said freelancers are given more leeway to express their views.

Full-time staff, however, must abide by an internal policy that states “CBC journalists do not express their own personal opinion because it affects the perception of impartiality and could affect an open and honest exploration of an issue,” she said.

Joe Clark blasts PM Harper for attacks on environmentalists

February 27, 2014Canada, Energy and Resources, Pipelines and Supertankers, PoliticsfeaturedCanadian Press

Joe Clark blasts PM Harper for attacks on environmentalists — On a US book tour, Joe Clark had some strong words from one Conservative PM to another

by Alexander Panetta, The Canadian Press

WASHINGTON – Former prime minister Joe Clark says he can’t understand why the Harper government would bar the opposition from a delegation to Ukraine and suggests its combative approach to international issues sometimes hurts the country.

Speaking to a U.S. audience, Clark, who also served as foreign affairs minister, said he regularly involved opposition parties on foreign missions — and Canada benefited as a result.

He cited one example in particular: his co-operation with former NDP MP Dan Heap. Clark said the Mulroney government was on the outs with some key left-wing actors in Central America, and the Toronto New Democrat helped establish valuable connections through his NGO contacts.

“Let me tell you what we did: we involved opposition parties regularly in activities overseas. We relied on them, heavily,” Clark said.

“I do not understand why there is this exclusion of parliamentarians (in Ukraine) — if it happened.”

He made the remark when asked about reports that Canada’s main opposition parties had been refused spots in a delegation to Kyiv this week. The Conservatives called it a government trip, and added that the opposition didn’t even deserve to go after Liberal Leader Justin Trudeau told a joke about Ukraine.

Clark spent an hour taking questions about his new book on foreign policy, “How We Lead.”

The book is deeply critical of what it describes as the Harper Tories’ “megaphone” approach to international affairs — in other words, plenty of loud grandstanding and not much constructive work on the ground.

Clark questions Harper’s attacks on environmentalists

He was equally critical when asked about the Keystone XL pipeline.

He said the government deserves some of the blame if the project is stalled. If the Harper government hadn’t spent a couple of years shouting at the environmental movement, he said, it might not have attracted such opposition.

Clark told the audience that the belligerence began with verbal attacks by Natural Resources Minister Joe Oliver after the Conservatives won a majority in 2011, and continues to this day with environmental groups having their tax status threatened.

All of that, Clark said, got noticed by U.S. environmentalists who carry some influence in the White House. Clark told the forum at the Wilson Center:

[quote]One of the real problems that I think lingers over that pipeline is, before the pipeline question arose, the Government of Canada deliberately went out of his way to be seen as an adversary of environmentalists.[/quote]

“It just seems to me to have been an unwise way to set the stage for the case that we had to make… The steepness of the hill that Canada has to climb was created, in part, by the attitude of the Government of Canada on environmental questions.”

A little praise mixed in with criticism

Clark was complimentary of the government on some fronts.

He credited Foreign Affairs Minister John Baird for his sustained effort on behalf of homosexuals being persecuted around the world.

He also applauded the prime minister for embracing a free-trade agenda that includes the signing of a potentially historic pact with the European Union, and involvement in talks toward a 12-country Trans-Pacific Partnership.

But there was plenty of criticism — just like in the book.

Canada’s ‘adolescent’ tone in foreign affairs

The book calls for a more creative approach to foreign affairs, retooled for a new age, and suggests better outreach with increasingly powerful non-state actors like NGOs.

He laments that the current government, too often, leans toward disengagement.

The book cites as one example Canada closing its Iran embassy. Clark contrasts that with the Mulroney government’s refusal to close its South African embassy in the 1980s, which he says helped it successfully fight apartheid.

“Canada now talks more than we act and our tone is almost adolescent — forceful, certain, enthusiastic, combative, full of sound and fury,” says the book.

[quote]That pattern of emphatic rhetoric at the podium, and steady withdrawal from the field, raises a basic question: What does the Harper government consider the purpose of foreign policy?[/quote]

Time for open debate on big ideas

Clark also bemoans a broader reluctance in Canada to debate big ideas.

He told his audience Thursday that, by the early 1990s, Canadians were tired of activist government following a Mulroney era marked by battles over free trade and the country’s constitutional makeup.

He drew laughs by noting that Jean Chretien promised not to do anything with the constitution — and voters rewarded him with a majority.

“The problem is that, since then, Canada has not talked about much.”

Clark was also asked about a provincial issue — the Parti Quebecois values charter.

He called the plan alarming. He said it’s even more alarming that the PQ might be winning support because of it. A Quebec election is expected this spring, and the PQ has jumped to a strong lead in the latest polls.

NEB audit exposes gaps in TransCanada’s pipeline safety

February 26, 2014Energy and Resources, Oil&Gas, Pipelines and SupertankersfeaturedCanadian Press

NEB audit exposes serious safety flaws for TransCanada — TransCanada CEO Russ Girling announces Energy East pipeline on Aug. 1 (photo: (Jeff McIntosh / CP)

CALGARY – Problems flagged in the National Energy Board’s audit of TransCanada Corp.’s pipeline safety practices should have Canadians worried, a group fighting that company’s proposed Energy East pipeline said Tuesday.

The audit report, released Monday, found TransCanada (TSX:TRP) to be non-compliant in four of nine areas it examined: hazard identification, risk assessment and control; operational control in upset or abnormal operating condition; inspection, measurement and monitoring, and management review.

“It’s a real cause for concern considering that they want to build the biggest pipeline in Canada, the Energy East pipeline. People should be very worried about that,” said Mark Calzavara, Ontario regional organizer with the Council of Canadians.

Calzavara said the NEB has tended to be “lenient” when it comes to energy companies.

[quote]When they finally do come out and say ‘hey, you’ve got to get your act together,’ it’s an indication of some very serious, serious problems.[/quote]

Energy East would involve converting a portion of TransCanada’s existing natural gas mainline between Alberta and Quebec to oil service, and then laying down new pipe all the way to Saint John, N.B. TransCanada expects to file a regulatory application for the $12-billion proposal this summer.

The NEB audit was also released against the backdrop of a long-running and intense debate over TransCanada’s Keystone XL proposal, which would send 830,000 barrels per day of mostly oilsands crude to Texas refineries.

The energy watchdog said in Monday’s report that it’s looking into whether some steel pipe and fittings need to be improved on the existing Keystone system, which started delivering crude to the U.S. Midwest in 2010. It says that investigation is ongoing.

In an emailed statement Tuesday, TransCanada spokesman Davis Sheremata said: “Extensive field testing of the strength of the fittings we are discussing with the NEB has confirmed that there are no safety or integrity concerns with these fittings and there is no risk to the environment or the public.”

The NEB gave the company 30 days to file a plan detailing how it will fix the problems. TransCanada spokesman Shawn Howard said Monday that the company has already taken action to address many of the issues.

“We share the NEB’s focus on protecting public safety and the environment,” he said. “We take our responsibilities to anticipate, prevent, mitigate and manage any and all hazards and risks associated with our operations seriously.”

LNG Pipedreams: Global investors getting cold feet?

February 25, 2014Energy and Resources, LNGfeaturedCommon Sense Canadian

by Anna C. Novacek

The projections supporting the BC Liberals’ prosperity fund rest on the assumption that there will be indefinite demand to buy into BC’s fledgling LNG market. However, as the Common Sense Canadian has reported, the numbers guaranteeing prosperity to Canadians, while assuring maximum profit for investors, aren’t adding up. The indicators below demonstrate examples of a rapidly shifting LNG market and early signs of hesitation from international proponents.

The BC Liberals are likely considering these factors as they race against the clock to get construction rolling before the alluring, yet ambiguous, projections behind the ‘100 billion dollar’ prosperity fund are a faded memory.

LNG proponents were probably never too concerned that provincial and federal regulatory bodies would be giving them much trouble as they applied to start operation and export. The uncertainty, however, lies in the stability and viability of international consumer markets to justify the significant costs associated with construction and export. From the proponent’s perspective, even after gaining regulatory permits, the risk-benefit analysis continues until the construction of LNG terminals actually starts.

Increasing Competition

As the Canada West Foundation discusses in Managing Expectations: Assessing BC’s LNG Industry, there may soon be more natural gas available to Asia than it needs, and other competitors are based in better geographic positions to access Asian markets.

[quote]Australian projects, although higher cost than originally projected, are much closer to completion than the BC projects. There will also be competition from Africa, the US, and potentially South American and Middle Eastern projects. China also has plans to develop its own shale gas industry, contributing 150 billion cubic metres of new supply by 2030.[/quote]

Energy editor for the Financial Times, Yadallah Hussain states that Canada comprised a smaller percent of total global upstream transaction value in 2013 (7% of total global, versus around 15% in 2012) as merger and acquisition activity shifted to emerging regions where there has recently been prolific deep water oil and gas discoveries, such as Africa (15% of global total in 2013).

Canada will face pressure to design an export tax and royalty regime that can compensate proponents for the added costs required to compete with facilities in closer proximity to Asian markets.

We learned recently that the BC Liberal government’s LNG export tax, unveiled after many delays in last week’s budget, will enable proponents to deduct capital costs for plant construction.

Early Stages of an ‘Asian Buyers Club’: Getting More for Less

There is no arguing that demand for LNG in Asian-Pacific markets has resulted in high LNG prices – the question now is how long will they last.

On December 5^th-9^th, 2013, countries importing 69.3% of the world’s LNG met in New Delhi to discuss how to get a better deal on LNG. India called on large consumers in the region like China, Japan and Korea to forge an Asian buyers’ block to extract price discounts. The Financial Post referred to this conference as “the early stages of an Asian buyers club”:

[quote]Most LNG is bought on long-term contract and it is the cost of these supplies that Asian buyers are trying to reduce. They also want to delink contracts from oil prices and eliminate the clauses that restrict the destination of shipments and prevent them from selling excess cargo.[/quote]

The article cites the historical precedent of the formation of the International Energy Agency, which was set up by western economies to counter OPEC after the first oil shock in the 1970s.

Anyone Feel Like Sharing?

The majority of proposed LNG projects in BC are located in the Prince Rupert and Kitimat areas on the province’s north coast, an area which intersects with the traditional territories of several First Nations in the region. While the duty to consult rests with the Crown, the procedural aspects of this legal obligation are often delegated to the project proponent. This means that the proponent must be proactive in engaging with potentially affected First Nations.

As Selina Lee- Andersen writes:

[quote]If it is determined that the project will have impacts on local First Nations, the Crown and project proponent may be required to accommodate Aboriginal rights or interests. At law, accommodation can include mitigating, minimizing or avoiding adverse effects of project activities on Aboriginal interests. A common business practice that has evolved in various industries across Canada is the negotiation of so-called impact and benefit agreements (IBAs) between project proponents and First Nation groups. IBAs aim to provide benefits to the local Aboriginal community and may include training and business opportunities, profit sharing, equity participation and other economic incentives.[/quote]

While this is a fundamental and important aspect of Canadian law, it may not be all that appealing to international project proponents scouting their options to develop LNG facilities in a location that will allow them to transport the resource to Asian-Pacific markets with maximum gain and minimum effort.

‘Drastic Drop in Volume’ of Merger & Acquisitions Activity

After allowing China’s CNOOC Ltd. to buy Canadian energy firm Nexen Inc., Harper brought in new rules outlining that state-owned companies will only be able to buy majority stakes in Canadian oil sands in exceptional circumstances. Uncertainty regarding the precise nature of these rules is causing hesitation in foreign investors looking to invest in Canadian oil and gas, including LNG.

Alison Redford cites this legislative uncertainty as the impetus for a ‘drastic drop in volume’ of merger and acquisition activity from foreign investors. Yadallah Hussain writes that Canadian mergers and acquisitions plunged 80% last year to US$10.2-billion compared to US$50-billion in 2012, a five-year low, according to IHS Herold Mergers and Acquisitions data. Hussain writes that lower commodity prices and competition from U.S. basins resulted in a reluctance of oil majors to open their chequebooks to acquire Canadian assets in 2013.

So, When Do We Start Construction?

One might think that after Christy Clark was re-elected in a haze of prosperity fund glory that construction of approved LNG facilities would be underway. As Brent Jang writes for the Globe and Mail, the NEB has already granted export licenses for seven BC LNG projects and is reviewing applications from another five. Kitimat LNG, for example, has all the necessary approvals to start construction but has not done so yet. Jang explains proponents have stated that approved projects are not yet in construction stage because they are still doing “internal assessments on the economics of proceeding”.

In a rapidly shifting economic climate, these internal assessments may result in cost-benefit analyses that see the BC Liberals’ prosperity fund projections go down in economic history as a nothing but a pipedream.

Anna C. Novacek earned an Honours LL.B from Durham Law School in England and has interned with West Coast Environmental Law in BC. Today, she works at Stevens and Company on Vancouver Island and co-publishes the Energy Law BC blog.

Oilsands tailings ponds leaking toxic chemicals: federal govt study

February 20, 2014Energy and Resources, Oil&Gas, Tar SandsfeaturedCanadian Press

Oilsands tailings ponds leaking toxic chemicals-federal govt study — Syncrude tailings pond (David Dodge, Pembina Institute)

Bob Weber, The Canadian Press

EDMONTON – New federal research has strongly backed suspicions that toxic chemicals from Alberta’s vast oilsands tailings ponds are leaching into groundwater and seeping into the Athabasca River.

Leakage from oilsands tailings ponds, which now cover 176 square kilometres, has long been an issue. Industry has acknowledged that seepage can occur and previous studies using models have estimated it at 6.5 million litres a day from a single pond.

The soil around the developments contains many chemicals from naturally occurring bitumen deposits and scientists have never able to separate them from contaminants released by industry.

The current Environment Canada study, accepted for publication in the journal Environmental Science and Technology, used new technology to discover that the mix of chemicals is slightly different between the two sources. That discovery, made using a $1.6-million piece of equipment purchased in 2010 to help answer such questions, allows scientists to actually fingerprint chemicals and trace them back to where they came from.

“Differentiation of natural from (tailings water) sources was apparent,” says the study.

The scientists took 20 groundwater samples from areas at least one kilometre upstream and downstream from development. They took another seven samples from within 200 metres of two of the tailings ponds.

Samples were also taken from two different tailings ponds.

The analysis was focused on so-called acid-extractable organics, which include a family of chemicals called naphthenic acids.

“Their enhanced water solubility makes them prime candidates for possible migration beyond containment structures via groundwater,” the report says.

Those toxins were found in groundwater both near and far from development. But their chemical composition was slightly different nearer the mines — closer to that found in the water from the ponds.

“Analyses all demonstrate a close similarity between these two (near) samples and (tailings water), as opposed to the natural far-field groundwater,” the report says.

“The resemblance between the (acid-extracted organics) profiles from (tailings water) and from six groundwater samples adjacent to two tailings ponds implies a common source. These samples included two of upward-flowing groundwater collected (less than) one metre beneath the Athabasca River, suggesting (tailings water) is reaching the river system.”

The study doesn’t quantify the amount of tailings ponds water that is escaping. It noted that even at the sample sites near development, pond water was diluted by natural groundwater.

The research was conducted under the auspices of the Joint Oilsands Monitoring Program run by the federal and Alberta governments and funded by a $50-million levy on industry.

Industry is working to address the tailings issue, budgeting more than $1 billion in tailings-reduction technology.

Groundwater is monitored at all tailings sites to ensure it’s flowing as expected.

Operators use ditches and cut-off walls to capture seepage and runoff water, and install groundwater interception wells. Captured water is pumped back into tailings pond.

Mark Cooper, spokesman for the Canadian Association of Petroleum Producers, said the quality of water in the Athabasca River remains good.

“Current tailings pond and groundwater monitoring in the oilsands shows no substances being released or predicted to be released in quantities or concentrations that would degrade or alter water quality,” he said. “This study does not change that.”

Cooper said the association supports research such as the Environment Canada study and echoed its call for more research in the same vein.

“While the research technique used in this study shows some potential, further detailed work is required to evaluate its accuracy and adequacy for tracking oil sands process water.”

Exploding BC LNG Myths – Part 2

February 20, 2014Energy and Resources, LNG, Oil&GasfeaturedKevin Logan

Exploding BC LNG Myths-Part 2 — BC Minister of Natural Gas Development, Rich Coleman (BC Govt photo)

“The opposition wouldn’t know LNG if it came up and bit them, they’re totally uninformed.” – Rich Coleman, BC Minister of Natural Gas Development.

For over three years, Rich Coleman has led the BC LNG charge; however, he has taken a back seat in recent weeks as his self-imposed deadlines for progress on LNG development have repeatedly blown up.

Very little mention has been made of the non-disclosure agreements Coleman has with 12 or so companies lined up to exploit BC’s massive natural gas reserves – but that apparently does not stop him from admonishing his critics for being “totally uninformed.”

After missing his third self-imposed deadline to finally let the rest of us in on his non-disclosed, high-level negotiations, Coleman continues to hold his cards close to his chest.

While this week’s Liberal budget finally included some details on the long-promissed tax regime for LNG, it has yet to become legislated or locked in. This should be viewed as trial balloon – a proposed “framework” enabling the Liberals to say they’ve “delivered” on something. And the terms themselves show what raw deal taxpayers can expect under the Liberals’ LNG scheme (more on that in a bit).

In this, the second part of “Exploding BC LNG Myths” (See part one here), we examine the few details we have to work with to try to understand what Coleman is doing and how BC intends to launch itself to the forefront of a trillion dollar worldwide LNG industry.

[quote]While Clark campaigns for a Debt Free BC, she alone will have booked over half of the debt accumulated since we started calling the place British Columbia.[/quote]

Yet another budget of promised “Prosperity”

Claim: BC Liberals are keeping their election campaign promises of a “Debt Free BC”, balanced budgets, job creation and a prosperous future due to LNG.

False: When Clark became Premier in 2011 and began her “Debt Free BC” Campaign, total Provincial debt was 45.2 Billion dollars. Despite her government’s claims of balanced budgets with surpluses – past, present and future – BC’s total debt will climb over 50%, from 45.2to 68.9 Billion dollars.

In other words, while Clark campaigns for a Debt Free BC, she alone will have booked over half of the debt accumulated since we started calling the place British Columbia! And she will do it all before the next election. And that’s not counting the $100 Billion in additional contractual obligations they’ve racked up for taxpayers, hidden from public view.

That is a staggering, unprecedented growth in debt and there will not be one nickel of promised prosperity funds booked from LNG revenues before the next election.

Liberals fail in job creation too

The BC Liberal Government has also lost a staggering 21 000 full-time jobs since Clark was elected less than a year ago – despite the multi-million dollar “Job Creation Plan” that was the center of her campaign of a strong economy, secure tomorrow, smaller government and thriving private sector.

Most new job creation during the entirety of the now almost three-year-old “Jobs plan” has been in in the public sector.

BC Liberals Give away the Farm

Claim (Rich Coleman): “I think people will be surprised how smart we have been with the establishment of a taxation regime for the budding LNG industry.”

Partially True: It is true that Coleman and his repeatedly-promised, non-disclosed terms still have yet to be fully divulged and legislated but what little has been disclosed and floated by the finance minister is very clever indeed.

Effectively, BC will not realize any serious revenue from LNG until – wait for it – not this mandate, nor the next administration, but beyond the election after that!

The two tier tax regime floated by the finance minister does not start until ships are leaving our coast full of LNG, and for 3-5 years after that it is “tier one” rates of 1.5%. However, the kicker is that every nickle paid to BC under the pathetic 1.5% tier one rate is given back to the companies once tier two is reached.

And tier two is not much better. Tier two taxation is achieved once the LNG companies we let set up shop have recovered 100% of their costs. (Remember, Petronas alone claims investment of 36 billion dollars!) And once they have recovered costs, the tier two taxation rate of “up to” 7% kicks in – at the same time all the tax paid under tier one is given back to the companies through rebates.

At this rate, economists and experts have claimed that erasing BC’s fast-growing debt, lowering taxes and filling a 100 billion dollar prosperity fund while also underwriting the services we have come to rely on is a total impossibility, based on reasonably expected LNG revenues. And even if it was achievable, it would not begin to happen for three elections after it was promised.

“Very smart” indeed Mr Coleman – to run and get re-elected on prosperity for British Columbians, but instead deliver massive giveaways to the largest most profitable multi-national companies on earth.

Time to act: Demand an inquiry and full disclosure

Our governments have already committed to export more natural gas than we have ever produced throughout all of Canada, through as many as 11 export permits, totalling 105 mtpa for twenty five years – an oil equivalent that doubles current Tarsands production. Seven of the eleven await cabinet approval, so now is the time to be heard.

Now, as of this most recent budget, they are promising to pick up the tab for large portions of total investments, with clever tax incentives and rebates that leave the resource owners holding the bag.

They have done all of this under non-disclosure and handed it all over without even so much as a commitment from a single potential investor – not even a non-binding memorandum of understanding has been produced for the largest deals in our history.

It’s time British Columbians put the breaks on this debacle, demand full disclosure and an inquiry into the secret negotiations that have resulted in taxpayer giveaways of such unprecedented, gargantuan proportions.

Our public purse, energy security, environment and economy depend on it.