Category Archives: Energy and Resources

photo: Kin Cheung/Associated Press

Harper’s China Syndrome: PM in a Pickle Over Nexen Buyout, Trade Deal

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Following an eventful couple of weeks for the Canada-China energy trade file, Stephen Harper finds himself in quite a pickle. The Prime Minster is stuck between his resolute commitment to opening up a carbon corridor to Asian markets and the increasingly politically untenable position of supporting wholesale Chinese state ownership of strategic Canadian resources.

In addition to Harper’s mounting challenges over the proposed $15 Billion buyout of Canadian oil and gas firm Nexen by Chinese state-owned CNOOC, several prominent Canadian voices – including Federal Green Party Leader Elizabeth May and Council of Canadians founder and world-renowned trade expert Maude Barlow – have piped up about a controversial trade deal quietly signed by Prime Minister Stephen Harper last month, which they say would give unprecedented rights to Chinese corporations over Canadian resources.

As the tide of opposition to the Nexen deal continues to rise, Harper was forced to acknowledge this week, “This particular transaction raises a range of difficult policy questions, difficult and forward-looking issues.”

That’s putting it mildly.

The Nexen deal is problematic for the Conservatives for three main reasons:

  1. Public opinion is squarely against it, with some 70% of Canadians opposing it and four in ten viewing China as a threat, according to National Post columnist John Ivison (who nevertheless urges Harper to approve the deal as it’s in Canada’s best long-term interests)
  2. The Official Opposition has finally come out against the deal this week and appears poised to make political hay with its position.
  3. Most importantly, by far, powerful American political forces are lining up against the deal – charging that allowing these resources to flow to China constitutes a national security threat (our own CSIS concurs).

On that last point, Congressman Ed Markey, the ranking Democrat on the House Committee of Natural Resources, wrote to US Treasury Secretary Tim Geithner in July, imploring his office to block the deal (someone needs to inform the congressman that this deal doesn’t technically fall under Geithner’s jurisdiction, but it’s nevertheless a noteworthy and influential objection). Wrote Markey, “Giving valuable American resources away to wealthy multinational corporations is wasteful but giving valuable American resources away to a foreign government is far worse.”

Apparently even the Americans – whose resources these are notrecognize the danger in handing them over to the Chinese!

Meanwhile, with the NDP continuing to nip at the Conservatives’ heels, Harper might do well to ignore the advice of John Ivison and consider the short and long-term implications of accepting such an unpopular deal. Heck, even some of Harper’s own MPs oppose it!

NDP Energy and Natural Resources Critic Peter Julian laid out his party’s opposition to the deal at a press conference Thursday, as reported by the Globe and Mail:

New Democrats “cannot support the rubber-stamping of the CNOOC takeover of Nexen,” Mr. Julian said. “We cannot see the net benefit when we look at a variety of concerns and criteria that have been raised by the Canadian public.” Those concerns, he said, included the environmental and human-rights record of CNOOC, the potential for job losses and the risk of decision-making gravitating away from Nexen’s Calgary head office, plus risks to national security.

It is this “net benefit” test, under the Investment Canada Act, that is at the core of the decision Harper faces – which is expected by October 12, but can and may well be delayed by another month. The NDP has expressed doubt that the Harper Government will conduct this “net benefit” test in a transparent enough manner to reassure Canadians.

According to the party’s industry critic Helene LeBlanc, “By studying this transaction behind closed doors and not specifying what criteria they used to determine what represents a net benefit for the country, the Conservatives have given us no choice. When in doubt, it’s best to back off.”

Conservative Industry Minister Christian Paradis called the NDP’s position “reckless and irresponsible” in a news release.

Meanwhile, Harper’s quiet trade deal with China has drawn heated rebuke the past several weeks, as the two issues inevitably dovetail into each other.

A statement from the Council of Canadians last week noted:

A bilateral investment treaty between Canada and China, which was signed earlier this month and made public by the Harper government yesterday, will put unacceptable constraints on Canadian energy and environmental policy…The organization is once again calling on MPs to reject the Canada-China Foreign Investment Promotion and Protection Agreement (FIPA), and to stop signing what are essentially corporate rights pacts inside standalone treaties and Canada’s broader free trade agreements.

The organization’s National Chairperson, Maude Barlow, drew together FIPA and the Nexen deal, stating, “Canadians need to know that as Harper considers selling off Canadian energy firms to foreign investors in China and elsewhere, he’s also signing investment pacts that let these firms sue the federal government when delays or environmental protection measures interfere with profits.”

Council of Canadians’ Trade Campaigner Stewart Trew suggested these deals do little to promote investment, as is their stated mandate. “They are very useful, on the other hand, for extorting governments when things don’t go their way. That could be delays or cancellations to energy and mining projects, environmental policies that eat into profits, even financial rules designed to create stability or avoid crises can be challenged.”

Green Party of Canada Leader Elizabeth May shared many of these concerns with the House of Commons this week, calling for an emergency debate on FIPA, suggesting it bears “grave and sweeping implications for Canada’s sovereignty, security, and democracy.”

In a statement on her website this week, May said, “I pointed out in my notice to the Speaker that this is perhaps the most significant trade agreement since NAFTA, and the fact that it can be negotiated and ratified behind closed doors is very corrosive to our democracy.”

“I also realize that an emergency debate is far from sufficient under the circumstances, but it might be the only opportunity Parliamentarians have to review and discuss FIPA before we are bound to it for the next 15 years, especially if neither the NDP nor the Liberals focus on it during their Opposition Days.”

Whether FIPA receives its due attention politically – let alone gets cancelled – remains to seen, but the more it becomes connected to the clearly unpopular Nexen deal in the coming weeks, the more scrutiny it will face.

The exploding national debate around theses issues puts Harper in a tough spot. On the one hand, the Prime Minister has been very clear about his policy vision for the country – and expanding energy trade to Asia has been the centre plank in this platform, underscored by a visit to China earlier this year, during which energy issues were the main topic of discussion. He has made public and private commitments to Asian trading partners and to the Canadian oil patch.

Moreover, with US leaders promising to become far more self-sufficient in oil and gas resources over the next decade by massively boosting domestic production, there is increasing pressure on Canada to develop new export markets for its fossil fuels.

And yet, as prospects for the proposed Enbridge pipeline continue to wane and opposition mounts to Nexen and this new trade deal, the Prime Minster is gambling his political future on an increasingly unpopular strategy – whether he believes it’s in the country’s best interests or not. Add to that the concerns raised by CSIS last month about threats to Canada’s national security from such deals and you have a recipe for real political problems if the PM continues down this path.

As University of Ottawa Law Professor Penny Collenette put it in the Globe and Mail’s story yesterday, with the NDP jumping on the issue, “Now it is burst wide open onto the political scene,” and becoming “a kitchen table national debate.”

That’s the last thing Stephen Harper’s energy plan needs right now.

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Elizabeth May Raises Alarm in House Over Controversial Canada-China Trade Deal

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Check out this press release from Green Party of Canada leader Elizabeth May, raising concerns over a new trade deal with China quietly signed by Stephen Harper last month. May rose in the House this week to state her objections to the deal and call for an emergency debate in the House. (Oct. 1, 2012)

Green Party Leader Elizabeth May, MP Saanich-Gulf Islands, will rise today in the House of Commons following the conclusion of Routine Proceedings to request an Emergency Debate on the Canada-China Foreign Investment Promotion and Protection Agreement (FIPA). This follows the delivery of a notice of her intention to Speaker Andrew Scheer on Friday.

In her notice, May stated that the “grave and sweeping implications for Canada’s sovereignty, security, and democracy” posed by FIPA – signed by Stephen Harper on September 9, but kept from the public and Parliament until quietly tabled on Wednesday last week – warrants much greater transparency and debate.

According to the Policy on Tabling Treaties in Parliament, FIPA must be tabled in the House for 21 sitting days before it can be ratified. Then, the Privy Council can, without any public or Parliamentary consultation or review, sign it into law.

“I pointed out in my notice to the Speaker that this isperhaps the most significant trade agreement since NAFTA,” May stated, “and the fact that it can be negotiated and ratified behind closed doors is very corrosive to our democracy.

“I also realize that an emergency debate is far from sufficient under the circumstances, but it might be the only opportunity Parliamentarians have to review and discuss FIPA before we are bound to it for the next 15 years, especially if neither the NDP nor the Liberals focus on it during their Opposition Days.”

Read more: http://elizabethmaymp.ca/news/publications/press-releases/2012/10/01/may-to-request-emergency-debate-on-canada-china-investment-deal/

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BC Liberal Floats Offshore Drilling Amid Enbridge Controversy, Dismissed by Premier

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Read this story from CBC.caon BC Liberal MLA John Rustad’s recent attempt to inject the controversy around the Enbridge Northern Gateway pipeline with a new twist – resurrecting the argument for opening BC’s coast to offshore oil and gas development. The notion, first posted on the MLA’s facebook page, has drawn widespread criticism and dismissal from Rustad’s leader, Premier Christy Clark. (Oct. 2, 2012)

Despite the debate already raging between B.C. and Alberta over the proposed Enbridge Northern Gateway pipeline, one backbench Liberal MLA wants to start a dialogue about offshore drilling in B.C.

Nechako Lakes Liberal MLA John Rustad recently posted a message on Facebook about the merits of oil exploration.

“With the debate raging around pipelines I’m sure there isn’t much appetite for offshore oil and gas,” he wrote. “However, if B.C. is ever going to become debt free, one day this is going to have to happen.”

Rustad wants to put the idea of oil exploration off B.C.’s coast on the table — despite the political consequences.

“If it can be done environmentally sound, if it’s something that can meet our standards, if there’s a significant benefit, then we should have that conversation and it should be considered,” he told CBC News.

No Support from Premier Clark

But the proposition has no support from the premier.

B.C. Premier Christy Clark spoke with Alberta Premier Alison Redford Monday about the five conditions B.C. says need to be met before the province will support Enbridge’s bid to build the pipeline, which would run from the Alberta oilsands across B.C. to the port of Kitimat.

Clark is demanding compensation for the environmental risks involved in the pipeline project.

“I think that we’ve got our hands full with just this Enbridge pipeline,” Clark said, adding it’s not an idea she’s entertaining at the moment.

Still, the B.C. New Democrats have jumped on Rustad’s comments.

“Mr. Rustad is being irresponsible by re-opening a deeply divisive debate about bringing further risks to our coastline that would affect the environment, the economy, First Nations, and all British Columbians,” NDP environment critic Rob Fleming said in a release.

“While the premier has failed to truly stand up for British Columbia on the Enbridge pipeline, I hope she will at least clarify her government’s position on offshore drilling.”

The New Democrats are calling for a continuation of B.C.’s long-term commitment to a moratorium on offshore drilling.

Read original story: http://www.cbc.ca/news/canada/british-columbia/story/2012/10/02/bc-rustad-offshore-drilling.html

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US Geological Survey Confirms Fracking Contaminated Groundwater

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Read this story from Reuters on a new study from the US Geological Survey confirming earlier tests results that showed natural gas fracking operations contaminated groundwater in Wyoming. (Sept. 28, 2012)

SALMON, Idaho, Sept 28 (Reuters) – Government testing of a drinking water aquifer near a tiny Wyoming town has shown concentrations of gases like ethane and propane and diesel compounds, but a natural gas company said it did not cause the contamination.

A report by the U.S. Geological Survey showed petroleum-based pollutants in samples from a monitoring well in the aquifer adjacent to Pavillion, Wyoming, which is at the center of a national debate over hydraulic fracturing, or fracking.

A draft study released in December by the Environmental Protection Agency linked fluids used in fracking, a drilling method that has unlocked vast shale gas deposits across the nation, to pollution in the underground formation that supplies drinking water to residents near Encana Corp’s gas production wells east of Pavillion.

The findings contradicted claims by gas drillers that fluids from fracking, which injects water, sand and chemicals underground to boost extraction of fuel, have never contaminated drinking water.

Criticism by the oil and gas industry and Wyoming officials of the methods the EPA employed to collect water quality data and regulators’ interpretation of the findings prompted recent retesting under a monitoring plan designed by the state, the USGS and the EPA.

Compared to the 2011 EPA study, the USGS results from testing of one of two monitoring wells in the aquifer indicated higher levels of gases like methane, lower levels of diesel-range organics and the absence of such solvents as toluene, an Encana analysis showed.

The EPA is expected in coming days to release its testing of water from two groundwater monitoring wells, several domestic wells and a public well. The data sets are to be submitted for peer review.

The EPA said the groundwater monitoring data in its 2011 report and USGS findings were “generally consistent.”

But Encana spokesman Doug Hock said the findings are not equal and singled out USGS for providing “credible data” in research whose “implications are not just for Encana but for the whole industry.”

Hock and Simon Lomax, research director of an arm of the Independent Petroleum Association of America, underscored a decision by USGS to discount samples from the second of two monitoring wells because of concerns that low water quantity and other factors might skew results.

“The USGS effectively disqualified one of the EPA’s two monitoring wells,” Lomax said in a statement.

He pointed to a March 1 letter by Donald Simpson, director of the Bureau of Land Management office in Wyoming, that recommended the installation of additional monitoring wells for a “larger and much more robust study effort and investment prior to drawing any conclusions, particularly in the case about the role of hydraulic fracturing use in development of the oil and gas resource.”

Encana’s Hock said the Canadian company denies the pollution in Pavillion is related to its operations.

But Rob Jackson, professor of environmental sciences at Duke University, said his review of USGS data shows it is consistent with EPA’s initial results, “which suggested the contamination at the site from fracking is a real possibility.”

Jackson, co-author of a peer-reviewed paper that showed fracking in the Marcellus shale in Pennsylvania did not pollute adjacent drinking water wells with brine, said the report by the USGS should quiet criticism of the EPA.

“You can’t say that EPA botched the job if USGS goes on and gets similar numbers,” he said.

Read more: http://www.huffingtonpost.com/2012/09/29/usgs-aquifer-tests-pavillion-wyoming_n_1924604.html

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Premiers Christy Clark and Alison Redford (Larry MacDougal/CP photo)

Rafe on Clark’s Embarassing Antics in Alberta and Renewed Calls for Wolf Culls

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Today is a twofer – two for the price of one.

First, I’m beginning to feel sorry for Premier Christy Clark. She is a very nice person, personable and able to speak. What she is not capable of doing is speaking sensibly or making decisions that make sense.

It seems obvious to me that she is getting wretched advice and nowhere is this more evident than on the pipeline issue.

Let me illustrate.

The Premier, some months ago, laid down some rules that would govern her government’s environmental response to pipelines and added that to a demand for money from Premier Alison Redford of Alberta. The conditions were silly motherhood stuff and didn’t contain the one most British Columbians want – public hearings that would let people say whether or not they want these pipelines in the first place. This is, I daresay, a foreign concept to the Liberal government but the public know they are not able to express their opinions on the wisdom of the projects in the first place.

In fact, Premier Clark has avoided that issue like the plague.

She missed the very important Western Premier’s Conference on the lame excuse she needed to be in the House because the pipelines and tanker issues were on the agenda and she would have to make known her position.

Then she missed all the deadlines to get BC status as an intervenor as have Alberta, municipalities and First Nations. Consequently, a short time ago she was rebuffed for trying to intervene.

Reviews like the Enbridge Joint Panel Review – and the Cohen Commission as an example – realize that some entities have a greater issue to deal with than Joe Citizen and grant them the status to call witnesses, cross-examine government and industry witnesses and that sort of thing. This could not possibly be a mistake, but a deliberate decision. I don’t have much use for environmental hearings but at least British Columbians could hear what the evidence is. This was an egregious error obviously designed to let Ms. Clark act like the three monkeys.

Now she has horned her way into Premier Redford’s office to press BC’s case. Here is the part that tells you the abysmal ignorance from which Ms. Clark operates.

She is quoted thusly: “There is no amount of money that can make up for an unacceptable risk when it comes to our oceans, our coast and our land.”

Noble sentiments to be sure, but since Premier Redford supports the pipelines and tanker traffic and is content to have the federal government cram them past BC opposition – and bearing in mind that Premier Redford has made it clear that Alberta won’t give BC a nickel – the only purpose for Ms. Clark to crash Ms. Redford’s office is to make it appear to folks at home that she’s doing something.

She is making a fool of all of us, painting us as supplicants to Premier Redford’s throne and the gold that is there.

This must be borne in mind: the oil revenues from the tar sands belong to Alberta under the constitution. If she were to take some of that money and give it to BC, not only would she be a damned fool – Alberta voters would eat her alive.

Premier Clark’s bleating about “risks to BC” is bullshit as she and the rest of us know. Even Enbridge admits that the chances of a spill are overwhelming. Clark is playing us for fools. it is egregious, disingenuous nonsense rivaled only by Bill Clinton’s assertion that, “I did not have sex with that woman.”

Still Afraid of the Big, Bad Wolf

On another note, the more things change, the more they stay the same.

Back in 1979, the Ministry of Environment was poisoning wolves in northern BC because, allegedly, they were killing cattle. There wasn’t a particle of evidence that this was happening, certainly not on a large scale. Within days of becoming minister I put a stop to the program, hired a man – an elderly fishing buddy of mine whom I trusted implicitly – to go through the area getting evidence, if there was any, of packs of wolves destroying cattle. Sandy was one if these guys who could find out things without anyone realizing he was asking questions.

He reported back to me that he could find no evidence of a major problem .

He told me of the case of a wolf pack driving a herd of cattle onto a frozen lake which caved in from the weight and the wolves devoured them. Interesting that wolves could kill cattle in the water and feast upon them without drowning themselves.

The interesting part is that three different ranchers in three different areas told the same story!

Despite all their bleating, ranchers couldn’t offer any evidence whatsoever.

The ranchers were claiming their losses were due to wolves to cover up their own bad husbandry.

It’s interesting to ask what the hell were all those cattle doing out on the range in temperatures that would freeze a lake?

A Socred back bencher, Cyril Shelford, and his seemingly unlimited number of brothers organized a huge rally and dared me to show my face.

I did – not through bravery but because Premier Bill Bennett would likely have fired me if I didn’t appear.

It was a very ugly meeting and I admit I was scared. When I was finally permitted to speak I said, “this is the first time in history where a man has been run into town on a rail.”

The humour of the remark escaped the 500 incensed ranchers.

The moratorium I imposed remains. Now the ranchers have popped up with claims that seem, after 33 years, to have suddenly re-appeared. Once again, the ranchers, by their own admission, are utterly unable to supply one scintilla of evidence.

The Minister of Environment should politely give the ranchers the international words for “go away”.

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Caleb Behn, the subject of the forthcoming film

Canada’s Carbon Corridor Part 2: From the Sacred Headwaters to Kitimat LNG

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The following is the second half of the introduction to Damien Gillis’ multi-part series, “Canada’s Carbon Corridor”read part 1 here.

In part 1 of this introduction to what my colleagues and I have termed “Canada’s Carbon Corridor” – an interconnected web of major oil, gas, coal, mining and hydroelectric projects across northern BC and Alberta – I traced the first half of a recent journey by the team producing the documentary Fractured Land, of which I am the co-director. We began our trip amidst proposed coal mines and Site C Dam on the Peace River and through the heart of natural gas “fracking” operations in northeast BC, winding up at Liard Hot Springs.

From there, after passing briefly into the Yukon via the Alaska Highway, we turned south and headed for Tahltan country in northwest BC. There, we spent four days investigating proposed mining projects and more unconventional gas – this time Shell’s plans to develop coal bed methane in the Sacred Headwaters, the birthplace of three vital arteries for the province, the Skeena, Nass and Stikine Rivers.

We spent one day with Wade Davis, National Geogrpahic Explorer-in-Residence and recent author of the book Sacred Headwaters, and the rest of our time with a number of First Nations who have put themselves on the line to block coal bed methane and mines like Imperial Metals’ proposed Red Chris.

This particular project would involve a massive mountaintop removal mine for gold and copper, amid the continent’s largest population of Stone’s Sheep. As such, it has ignited much local opposition. But we also learned that there are many members of the various Tahltan communities who are in favour of this and other mines for the jobs and economic opportunities they promise. This conflict will likely play out for some time to come in these communities, though the tide may be turning against Red Chris for a number of reasons, which I’ll get into in a future chapter of this series.

From the Sacred Headwaters, we travelled south to Kitimat, documenting along the way the construction of the Northwest Transmission Line. This $400 million project is designed to plug BC’s electrical grid into the region in order to power these mining projects – of which Red Chris is but one of many. (Which is why it’s odd that a significant portion of the line’s funding came by way of a federal “green energy” fund!). The transmission line is yet another connection between northwest BC and the proposed Site C Dam in the territory of our central character Caleb Behn – which our provincial government justifies with the contention it is needed to provide power to gas and mining operations.

We were all alarmed at the pace of development of the transmission corridor, with upwards of ten different crews working simultaneously to clear sections of the line – carving a 100 or so meter-wide swath through spectacular mountain valleys. Fifty-foot tall teepees of logged trees rim the highway for long stretches, waiting to be burned.

In Kitimat, we met with former Haisla elected chief and recent president of the Coastal First Nations, Gerald Amos, to get a look at the LNG plants proposed and under construction in his territory, along the Douglas Channel. Gerald and his wife graciously took us out on their boat to show us the three main proposed projects – one led by Shell, with partners Korea Gas Corporation, Mitsubishi Corporation and PetroChina Company Limited; another by a consortium of Encana, Apache Canada and Enron Oil and Gas (known as Kitimat LNG); and the third a joint venture in which the Haisla Nation itself is a partner. (It should be noted there are as many as eight LNG plans for Kitimat, but these three would appear to be the most serious and viable).

Only the Kitimat LNG project is under initial construction – clearing the banks of the channel of trees and brush – though its completion has been pushed back by a year, as the consortium has yet to sign any contracts for the product.

Meanwhile, the Haisla just signed a deal with the province to expedite their plant. While his elected leadership is moving quickly forward with its plans to welcome LNG into their territory, Gerald was eager to hear from Caleb about how these decisions will affect his people at the other end of the pipeline. This is some of the much-needed dialogue currently missing around these issues, which we hope our project will continue to foster.

While the Haisla have led the battle against the proposed Enbridge pipeline on their lands and supertankers in their waters, natural gas has proven a different story. Deals signed by the Haisla and the Carrier-Sekani Tribal Council, which provides political and technical support to eight member First Nations in the northern BC interior, appear to have been done with far less communication with other First Nations and the public than that which surrounded Enbridge.

We learned the Carrier-Sekani signed last year a 25-year deal estimated to be worth over $500 million in shared revenue and job training benefits with the proponents of the Pacific Trails Pipeline, which would carry fracked northeast BC gas from a junction point at Summit Lake, north of Prince George, to Kitimat, along virtually the identical right-of-way as the proposed Enbridge Pipeline.

On that note, during one of our final stops on the trip, we visited the grassroots resistance camp on the Morice River, southwest of Houston, where members of one clan of the Wetsu’et’en First Nations, the Unist’ot’en, have constructed and are occupying a cabin directly in the path of the proposed Pacific Trails Pipeline. But as they pointed out to us, they’re not opposed to just one pipeline, rather as many as eight different ones, each proposed to pass through essentially the same energy corridor:

  • Enbridge’s twin lines – one for diluted bitumen, the other for condensate
  • Kinder Morgan’s “Rearguard” bitumen pipeline to Kitimat – introduced last year to shareholders as a backup plan to the controversial Enbridge Northern Gateway line and to Kinder’s own plans to twin its existing Trans Mountain Pipeline to Vancouver (the Unist’ot’en camp is prepared for this line to include a twin condensate line as Enbridge is proposing)
  • Pembina Pipelines has a plan – temporarily shelved for “commercial uncertainties” – to run a condensate line from Kitimat to Summit Lake (the Unist’ot’en camp is bracing for this plan to come to the fore again should Enbridge be rejected, and for the possibility it too will include a bitumen line) 
  • The Pacific Trails gas pipeline (already approved by the province, along with the related LNG plant in Kitimat)
  • Shell Canada and its Asian partners’ gas pipeline from northeast BC to their proposed LNG facility in Kitimat (Shell has already selected TransCanada Pipelines to build this line)

Moreover, Spectra Energy recently announced plans to run a gas line to Prince Rupert, north of Kitimat, to connect to their own proposed LNG plant and tankers there.

Is this somehow a conspiracy theory? Hardly. I reported in The Common Sense Canadian over a year ago that Enbridge CEO Pat Daniel has publicly expressed interest in exploiting pipeline “right-of-way synergies”, in building both its twin pipelines and the Pacific Trails gas line together. Enbridge also bought Encana’s controlling stake in the Cabin Gas Plant in Northeast BC last year. And the proposed routes of the above pipelines essentially stack on top of each other for long stretches.

My concern is that while all this attention is being payed to Enbridge, virtually no one – amongst First Nations, the conservation community, or the political opposition (the NDP has publicly supported fracking, the Pacific Trails Pipeline and LNG projects in Kitimat and is at best on the fence about Site C Dam) – is talking about this larger energy corridor, of which Enbridge is merely one small piece.

The Pacific Trails line is approved and the companies are into pre-construction work already. Once the corridor is logged and cleared, it will be far more difficult to stop any one, let alone all of these pipelines and the development to which they connect.

From Site C Dam, powering gas and mining operations, to expanded fracking, which connects to the Alberta Tar Sands through natural gas and condensate, to oil and gas pipelines to our coast and the tankers that would transit our waters carrying these fossil fuels – bitumen, LNG, coal – to new markets in Asia, this is a big deal. The biggest, by far, that this province has ever seen in 150 years of colonial establishment.

It’s time we expand our horizons and broaden our discussion beyond Enbridge – and our team hopes our Fractured Land film project and subsequent columns in this series will act as a catalyst for that much-needed dialogue.

Thanks to Rivers Without Borders for their support with this portion of our recent filming tour for Fractured Land.

Watch for part 3 of the “Canada’s Carbon Corridor” series on this past week’s “Keepers of the Water” conference in Fort Nelson.

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The Bakken Oilfield, the SEC and Why the Tar Sands May be on their Way Out

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Read this blog from gold trade journal Bullion Vault on the powerful financial forces and competing oilfield that threaten to squeeze out the Alberta Tar Sands. (Sept. 24, 2012)

Why Alberta’s tar sands look set to be squeezed out…

FOR DECADES, the US Securities and Exchange Commission (SEC) wouldn’t allow Canadian oil-sands promoters to call their assets “oil reserves.” Instead, the SEC required them to be classified as “mining reserves.” It was a distinction that cost them billions of Dollars, writes Porter Stansberry for the Daily Wealth

The SEC’s policy erased the equity on these promoters’ balance sheets, taking away most of the value of their resources. This regulatory roadblock made it hard for companies trying to extract petroleum from Canada’s oil sands to access capital and secure loans.

 The SEC had its reasons, of course. Extracting the extremely heavy oil trapped in the sand of places like Canada’s Athabasca region of Alberta is expensive. You have to dig the tarry sand out of the ground and super-heat it to separate the oil. Even then, it’s lower-quality than the light, sweet crude that flows from wells in Texas and the Middle East.

 Total extraction costs for oil sands can exceed $50 a barrel. Extracting regular oil can cost half that (or less)… So it seemed unlikely that the “oil mud” in Alberta would ever become a profitable source of oil. SEC rules say to count as “reserves,” the oil has to be economical to produce. If the promoters of Canadian oil sands couldn’t profitably produce the oil, why allow them to count it as a proven oil reserve?  

The logic held for a while. But by 2008, with oil trading for much more than $100 a barrel, these assumptions seemed obsolete. The Peak Oil theory had convinced everyone – even the SEC – that even the most marginal source of crude oil was now a crucial resource and could no longer be ignored from a financial and accounting standpoint. 

After intense lobbying on behalf of the Canadian oil mud industry, the SEC began to bend. And on June 26, 2008, the promoters got their fondest wish – official recognition from the SEC.

The Securities and Exchange Commission today announced that it has proposed revised oil and gas company reporting requirements to help provide investors with a more accurate and useful picture of the oil and gas reserves that a company holds.

In anticipation of this change, shares of Suncor – the biggest and best-known publicly traded oil-sands company – hit $72 that May. The stock had appreciated 2,900% over the previous 15 years. Its vast reserves of mud… bought for pennies… were now worth billions of Dollars… if you believed the SEC. 

Not surprisingly… the SEC ruling marked the high water mark in the shares of Suncor.

Within a year… a real oilfield was discovered almost next door. A real oilfield, with real, liquid crude oil that didn’t require bulldozers and super-heated steam for production. 

They called it the Bakken. And we hope those SEC lawyers have gone out to see it, just so they’ll finally learn what a real oilfield looks like. 

The Bakken is potentially the largest oilfield in North America. It covers parts of North Dakota, South Dakota, and Montana in the United States. In Canada, it reaches parts of Saskatchewan and Manitoba. 

Bloomberg predicts that combined with the nearby Three Forks and Sanish formations, the great Bakken region could be the largest oil producer in North America over the next 30 years. 

Production is currently skyrocketing. As of June 30, 4,141 producing oil wells were at work in the Bakken. Production has gone from around 100,000 barrels per day (bpd) in 2009 to 594,000 bpd today. We believe that production will double from here to more than 1 million bpd in the next 18 months. 

This same trend is happening all across the US in the new shale oilfields. For the first time since the 1970s, the amount of oil being produced in America is significantly increasing.   

Given the tremendous amount of higher-quality oil now being produced at a lower cost… what do you think the future holds for the oil mud of Canada?   

Here’s a hint: We believe the SEC will soon change its mind again and rule that Alberta’s muddy prairies aren’t actually oil at all. You will not want to own those stocks when that happens, as their access to capital and much of the equity on their balance sheets will disappear. 

And that’s not Canada’s only problem… 

If you believe the SEC and oil-sands promoters, Alberta’s muddy fields hold more than 174 billion barrels of proven crude-oil reserves. That’s the world’s third-largest reserve total after Saudi Arabia and Venezuela. If it were really oil – the kind of liquid hydrocarbon that flows from traditional oil wells – that would be an incredible asset. But it’s not. It’s oil mud – known as “bitumen” in the industry – that’s difficult and expensive to extract and refine. 

Canada produced 3 million bpd in 2011. Western Canada produced 2.7 million bpd… and 59% of that came from the oil sands. Domestic demand in 2011 for western Canadian crude oil was 878,000 bpd. Canada exports the rest – approximately 2 million bpd to the US, making it our largest supplier… 

The Midwest is the traditional market for Canadian oil-sands producers due to the close proximity and pipeline infrastructure. But the price of oil is collapsing in this market because of the soaring Bakken and Eagle Ford production. 

Over the last year, West Texas Intermediate (WTI) crude, the benchmark crude oil in the United States, has sold at a discount of more than $20 compared to the international standard, North Sea Brent crude. Synthetic Crude Oil (SCO), another term for the heavy stuff from the Canadian oil sands, sells at an additional discount. Over the past year, the discount varied between $12 and $15 per barrel to WTI.   

In the past six months, those spreads are widening even more. For example, Suncor issued corporate guidance on July 24 that it expects the 2012 spread to be in the $13-$18 range. Historically, the discount between SCO and WTI has peaked at $30.   

You must remember… this is the discount to WTI. Think about that for a minute. If WTI oil sells at $100, SCO sells for around $80. WTI oil sells for around $96 today. That puts SCO at around $76. At $76 a barrel, that’s only about $10 above the all-in costs for the oil-sands producers. A 20%-30% price drop from here will absolutely kill any profits the Canadian oil-sand producers might make today. 

The United States is the world’s biggest market for crude oil, with a total refining capacity of almost 18 million barrels per day. 

As we mentioned above, the Midwest has been the oil-sands producers’ best customer. But domestic producers – like those from the Bakken – are creating competition. The oil-sands producers could ship the stuff to the Gulf Coast refineries. The only problem is… those facilities are more than 2,000 miles away. 

The Canadian supply hubs are at Edmonton and Hardisty. Four major pipelines connect these hubs to transport oil out of Canada: the Enbridge Mainline, the Kinder Morgan Trans Mountain Pipeline, the Kinder Morgan Express, and the Keystone Pipeline. 

These four pipelines report total capacity of 3.5 million barrels per day. The oil-sands producers’ access to that pipeline capacity is limited by demand from downstream locations. In other words… the more transportation capacity Bakken producers require, the less capacity available for the Canadian producers. 

As various transport agreements expire and the Bakken continues to increase production, more and more of this capacity will be taken over by those “real” oilfields, whose crude is more valuable and vastly cheaper to produce. 

How do we know? Because right now, Bakken producers are using trains to ship oil out of the fields. Rail transportation in the Bakken was used to ship out 8% of production in 2010. So far this year, that’s increased to 28% of production. 

Obviously, pipelines are far more efficient. As soon as pipeline capacity can be arranged, this new, higher-quality, cheaper-to-produce Bakken crude will squeeze out the SCO oil coming from Canada. So not only is Canadian oil mud likely to be uneconomic to produce… it could also become impossible to transport to refineries because of a lack of pipeline capacity. 

That would leave the oil mud industry with an uneconomic, largely obsolete product.

Read More: http://goldnews.bullionvault.com/end-of-canada-oil-sands-092420123

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Truth and Competency Still Escape Clark Govt on Enbridge File

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The joke used to be, “How can you tell when a lawyer isn’t telling the truth? The answer is when you see his lips move”. Now substitute politician and you’ve got it right.

Premier Clark will just happen to be in Edmonton next week and hopes that the Alberta Premier would like to have a bit of a chat with her about pipelines.

At the same time Terry Lake, Minister of Environment, tells us that the only consideration he has re: the Enbridge project will be the environment – from which one must infer he means the idiotic standards laid down some months ago by his boss.

The question is, Madam Premier, what more do you need to know?

Leaving aside the tanker traffic for a moment, last week Enbridge was angered at the suggestion that over the next 50 years there was a 93% chance of a spill and told us that it was “only” 70%!

Are we not all relieved at this news? “Only” 70%!

What isn’t ever mentioned is what damage these spills will cause.

I use the example of the revolver with 100 chambers and just one bullet. In making the decision as to whether or not you put the gun to your head you would calculate the odds at 99-1. But that’s only half the story, for if the revolver only had marshmallow in the chamber, you wouldn’t give a damn about the odds.

But, Madam Clark – these pipelines don’t carry marshmallow but a deadly poison!

But it’s even more than that, Premier – when these spills occur, how will the company get to the spill with heavy equipment? You commented on Enbridge’s handling of the Kalamazoo spill and called it a “disgrace”. And it was, but, Ms. Clark, this spill occurred in a populous state and was easily accessible.

Mr. Lake talks about the environment being the only consideration. Again, what is there that leaves any doubt about the horrendous consequences resulting from an oil spill?

Why doesn’t the minister tell us about all the investigations his ministry has done?

Surely he’s done a great deal, bearing in mind that looking after water is his responsibility. Has he assessed even superficially the 1,000 rivers and streams that will be impacted by an Enbridge pipeline?

My guess is that he has been told to cool it because Ms. Clark entered a deal with the feds that its Joint Review Panel should be considered as binding in BC as well.

Let’s end with a bit of a truth telling exercise. The truth of this horrendous environmental disaster is that the Liberal government did agree to accept the Joint Review Panel’s findings and thus surrendered its environmental jurisdiction to Ottawa.

To make matters worse, BC did not become part of the the Joint Review Panel by becoming a government intervenor as did First Nations – which would have given our province (the province most impacted) “standing” so that they could call witnesses, cross examine witnesses and make a formal argument. The province has no more rights than a private citizen.

Now Premier Clark tries to recapture a piece of the pie by trying to make Alberta’s premier Alison Redford into the bad guy in the picture.

Lest this may have missed our premier’s notice, Ms. Redford also depends upon citizen approval in order to get elected and one must assume that her citizens would cry out like stuck pigs if she gave away money that she didn’t have to.

BC then is in a dunghill of their own making and it could only happen by a huge cock-up by a government that has become an expert in that field.

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Caleb Behn, the subject of the film

‘Canada’s Carbon Corridor’ Part 1: Connecting the Dots Across Northern BC

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I recently returned from a whirlwind tour across northern BC, one of many legs of filming for a documentary and multi-media project I’ve been co-directing for the past year and a half, called Fractured Land. The people we spoke to along the way, the sights we witnessed and documented finally brought into focus the real story about energy development in BC.

It is clear to me that the proposed Enbridge Pipeline, which has been the target of so much activism and media attention of late, is merely one piece of a much bigger puzzle that promises to transform this province like nothing since the days of colonial, railroad-driven “nation building.”

Our film and the multi-media series that will accompany it through our website, FracturedLand.com, and various social media tools, is the story the industrialization of northern BC – told through the eyes of a talented, eloquent young First Nations law student named Caleb Behn.

The two sides of Caleb’s family are rooted in the epicentres of both major natural gas hydraulic fracturing (or “fracking”) plays in northeast BC – West Moberly Territory near Hudson’s Hope, under which the Montney shale gas field extends; and Echo Dene Territory around Fort Nelson, home of the Horn River shale gas field. Taken together – along with the recently discovered neighbouring Liard Basin play – form one of the world’s meccas for “unconventional” gas (read: highly experimental and dangerous).

We began our film by focusing on fracking – a relatively new method of natural gas extraction that involves burrowing deep into shale formations and blasting them with a toxic mixture of high-pressure water, chemicals and sand to crack open the shale and release the gas. But throughout our adventure, we’ve come to see that fracking doesn’t exist in isolation. Neither does the proposed Site C Dam on the Peace River in the same region, nor gas and bitumen pipelines proposed to cut across BC’s wilderness en route to Kitimat and Prince Rupert, nor myriad, massive proposed Liquified Natural Gas (LNG) plants on BC’s coast, nor the dozen or more serious coal and metals mines proposed throughout the north, nor the Alberta Tar Sands.

It is a serious mistake to put any of these projects in a silo. They are all, in fact, systemically interconnected in what my colleagues and I have come to think of – at least until a more apt description emerges – as “Canada’s Carbon Corridor”. Before this article and its second part conclude, I will briefly illustrate this interconnected web of energy projects that extend from BC’s coast to the Alberta Tar Sands – covering virtually the entire top half of the two provinces. However, the real work of fleshing out the components of this carbon corridor and how each piece relates to the next will be accomplished through a subsequent series of stories over the next two months – each exploding a different piece of the big puzzle – all cross-published through The Common Sense Canadian and the blog for Fractured Land.

Both this film project and my colleagues at The Common Sense Canadian – which has made its mission to inform the public about the energy, environmental and public policies reshaping BC and Canada – will seek to lodge this big picture view, with all its socioeconomic and cultural implications, on the agenda of the public and media in the lead-up to a pivotal provincial election next May. This is a sorely needed conversation that so far has been lost in the simplistic rhetoric championing the project of opening Western Canadian oil and gas resources to new markets in Asia and the one-track chorus of opposition to the Enbridge proposal.

If that seems unfair, allow me to state my case herewith.

We began our recent two and a half week journey in northeast BC, before traveling along the Alaska Highway through Fort Nelson, Liard Hot Springs, Watson Lake just over the Yukon Border, then down Highway 37 through the Sacred Headwaters and Tahltan First Nations country, southwest to Kitimat, east to the Morice River near Houston, and finally to Prince George to deliver a presentation to faculty and students at UNBC, before heading home to Vancouver (an approximately 5,000 km journey, all told).

Over the past several years, I’ve made seven trips to northeast BC (I’m currently here again for the “Keepers of the Water” conference in Fort Nelson) and more than that to northwest BC and its coast, but this trip – as it tied together both sides and centres of development in the province – felt like the quintessential journey through BC’s proposed economic future. Through it, we traced the interconnections of this carbon corridor and met people on both sides of the arguments around these individual projects.

If there’s one thing that has become abundantly clear to our production team, it’s that this is a conversation which defies easy polarities. The fracturing we reference in our title, taken literally from the process of fracking, serves as a metaphor for the conflict within individuals, families and communities torn between developing economic opportunities and protecting their core values  and ancestral practices on the land.

Far from shying away from this tension, we are drilling deep into it.

After driving 15 hours north from Vancouver, we began our experience at Carbon Lake, near Hudson’s Hope – at a camp once owned by my great uncle, Penn Powell, who operated it as a fly-in fishing lodge for years. Today, it is owned and operated by the Saulteau First Nation – the people of our central character Caleb’s grandmother.

Caleb comes here in the summer to hunt moose and reconnect with his land. Unfortunately, the moose are slim pickings these days – likely partly related to all the roads for logging that bisect the onetime wilderness surrounding the lake. Now, a large open pit coal mine threatens to finish the job. Carbon Lake gets its name for a reason. One can pick up large blocks of metallurgical-grade coal from the bed of nearby Carbon Creek, the site of one of a number of proposed new coal mines throughout the Peace River Coalfield.

To get to the lake, we had to drive over Williston Reservoir and WAC Bennett Dam – the first major dam in the region, which helped set the stage for the resource boom that followed. Caleb and my families have much in common beyond this camp at Carbon Lake, as we’ve learned throughout the making of our film. Another thing we share is that both our families lost our land in the flooding of Williston Reservoir in 1968. My family’s land, upon which it settled in 1914, was known as Goldbar Ranch at 20 Mile. Today, many of my uncles who remain in the region work in the gas patch. As do many of Caleb’s relatives. Such are the complexities inherent in the sort of large-scale resource decisions being made today – mostly without the broad-based knowledge and will of the public.

That said, Bennett Dam was built to provide affordable, “clean” (or so we thought at the time) electricity and new economic opportunities for all British Columbians. I believe my family understood that, even as we watched our barns and hand-crafted cabins and grand old log home burned to the ground and drowned forevermore.

Today, two fracking companies – Talisman Energy and Canbriam Energy – have a 20-year license to suck 10 million litres a day of water from that same reservoir (before it’s converted to power for British Columbians!) for their nearby fracking operations.

Moreover, Site C – which would be the third dam in the Peace Valley, stretching 80 km east from Hudson’s Hope to Fort St. John and flooding some 13,000 acres of agricultural land and a comparable amount of Boreal Forest wildlife habitat – is not being proposed to power BC’s homes and businesses. We have access to plenty of electricity for those purposes. Rather, this power will go to the myriad proposed mining operations across the north and, according to Premier Christy Clark, compressing natural gas into liquid to sell to Asia. All of these industrial operations are enormously energy dependent – to the point we would need multiple Site C Dams to even begin powering them.

From Carbon Lake, our team traveled north to Fort Nelson, where we visited with the other side of Caleb’s family. Fort Nelson is the jumping off point for the Horn River shale gas operations, which have been slowing down of late, due to the cratering price of natural gas, but contain enormous development potential and have been wildly active in recent years. The Cabin Gas Plant, North America’s largest, is just nearing completion after several years of furious construction. The adjacent Liard Basin formation was recently touted by Apache Canada as “the best reservoir in North America” for gas fracking.

Yet little of this development will occur unless a higher price can be obtained for the resource. This relatively new method of fracking has flooded the North American market with supply, driving down the price for gas, which is why new markets are being sought in Asia, where gas prices are currently much higher.

Unlike the gas plays around Fort Nelson, the Montney play – in Caleb’s mother’s territory, where we began our journey – often produces what is considered as “wet gas”, meaning it contains other products, such as sulfur and condensate, both of which have considerable value on their own. Condensate is used to dilute bitumen from the Alberta Tar Sands, which is too viscous to pump through a pipeline on its own.

This is another way in which Canada’s Carbon Corridor is interconnected – both natural gas and condensate go from BC to Alberta to melt and extract bitumen and to dilute it for transport.

But the big idea, for now, is to open up new markets for northeast BC gas. If these LNG plants and the pipelines connecting northeast BC gas to northwest BC refineries proceed, you can bet Horn River activity will ramp up to new heights and the Liard Basin will be cracked wide open.

We drove near these proposed Liard operations en route to the northwest corner of the province and it is some of the most exquisite country any of us has seen. We passed through pristine valleys coursing with crystal-clear water from the Northern Rockies and by herds of majestic wild bison and various ungulate species. Our soak in the Liard Hot Springs was one the trip’s big highlights – I would highly recommend it to anyone who finds themselves in that neck of the woods.

Watch for Part 2 of this introduction to Damien Gillis’ “Canada’s Carbon Corridor” series Saturday – completing the journey across northern BC to the northwest, examining everything from mining and unconventional gas proposals in the Sacred Headwaters to the construction of the Northwest Transmission Line, the Pacific Trails gas pipeline to Kitimat and proposed LNG facilities there.

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Foreign Companies Circle Alberta Tar Sands and BC’s Gas Assets

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Read this story from the Globe and Mail on the rush by Asian and European state and publicly owned energy players to scoop up Canadian oil and gas assets in advance of anticipated tightening of regulations on foreign direct investment. (Sept. 21, 2012)

A number of foreign companies are flocking to Canada’s oil patch in search of acquisitions and investments as Ottawa weighs the $15.1-billion takeover of energy company Nexen Inc. by China’s CNOOC Ltd.

While it is not unusual for companies to circle the oil patch, interviews with a dozen industry sources and deal makers over a month have revealed a picture of an industry set for a massive influx of foreign capital while the window to foreign investment remains open.

Industry executives and advisers say offshore buyers are currently in discussions or touring the operations of a wide variety of Canadian oil sands, conventional petroleum, natural gas, oil service and refining operations.

Some of these potential acquirers include state-owned entities such as Korea National Oil Corp. (KNOC) and others from China, Malaysia and Kuwait, sources said. A handful of private-sector oil and gas giants are also on the hunt, including France-based Total SA. Joining these suitors is a new class of Asian buyers believed to include privately held Chinese companies and one of China’s largest cities, Tsingtao.

The takeover interest has been sparked by a combination of recent declines in oil and gas prices and a perception in some international circles that Canada favours foreign investment to help finance production, particularly in the oil sands, where the cost of development is expected to crest $100-billion over the next decade.

“If you think Nexen is something of a big deal, you ain’t seen anything yet,” said Wenran Jiang, a special adviser to Alberta’s Department of Energy on Asian energy markets. “The new trend is large-scale Chinese private capital that will come into the Canadian market.”

A wide variety of international acquirers are looking for investments in the oil patch. France’s Total has been searching for – and making – oil sands deals for a few years. According to people close to the Nexen negotiations, Total was a bidder for the Calgary company, but stepped out of the race after CNOOC tabled an offer with a rich premium of more than 60 per cent above the Calgary company’s stock price. Sources said Total is still seeking a Canadian acquisition. A spokesperson for the company did not return calls.

State-owned KNOC is also on the hunt for a multibillion-dollar acquisition to expand its holdings in the oil sands, according to sources. Its search comes three years after it acquired Harvest Energy Trust in 2009 for $4.1-billion. A Calgary-based official with KNOC said he was unaware of any acquisition plans.

Read more: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/foreign-suitors-circle-oil-patch-as-ottawa-weighs-nexen-deal/article4558270/

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