Tag Archives: Alberta Tar Sands

2012: The Year of Energy Politics

December 21, 2012Canada, Energy and Resources, Fracking, Oil&Gas, Pipelines and Supertankers, Politics, Tar Sands, Western CanadaAlberta Tar Sands, BC Oil Pipelines and Supertankers, Enbridge, FIPA, fracking, Oil and gas, Politics, Stephen Harper, Water and EnergyDamien Gillis

CBC’s Power and Politics has chosen “energy politics” as the top Canadian news story for 2012 and we at the Common Sense Canadian couldn’t agree more.

Energy is the current which runs through a diverse array of issues presently reshaping our country – from omnibus budget bills that have slashed environmental regulations, to foreign trade deals, changes to our labour rules and, perhaps most significantly, the growing mobilization of First Nations, supported by non-aboriginal Canadians, to oppose many of these initiatives.

2012 was a year that began with Conservative Natural Resources Minister Joe Oliver dismissing opponents of the proposed Enbridge Northern Gateway pipelines as “radicals” and ends with the Idle No More rallies sweeping the nation – with support coming in from as far away as Buckingham Palace (or just outside its gates, anyway).

It was a year when two very different visions for the future of Canada and its place in the world collided headlong with each other. One seeking to curb the Tar Sands and new arteries essential to its growth, the other striving to make Canada into a new Saudi Arabia – provider of oil, gas and coal to emerging Asian markets.

Each policy piece from the Harper Government was part of a bigger puzzle, designed to bring its new vision to fruition.

There was the first omnibus budget bill, C-38, which gutted the Fisheries Act, watered down environmental assessment processes and slashed ministry staff in monitoring and regulation. The Common Sense Canadian published retired senior DFO scientist and manager Otto Langer’s first warning of these intended changes to the Fisheries Act, which unleashed a media firestorm and spate of denials from senior Harperites.

We also published the sad farewell letter from one of the world’s top marine pollution experts, Dr. Peter Ross, who lost his job when the Harper Government essentially canned our entire ocean monitoring program. Even one of the world’s top monitoring stations for climate change and arctic ice melt, PEARL, could not escape this government’s ax (for a savings of a whopping million and a half a year).

Clearly, these changes grew out of and helped to further a “see no evil, hear no evil” approach to climate science that is critical to the Harper Government’s hydrocarbon expansion agenda – which also demanded the smoothing of those pesky regulatory hurdles for resource project development.

But one of the Harper Government’s pet projects, the Northern Gateway pipeline, made defending its agenda more challenging, with an unrivaled string of public embarrassments. There was the damning US report on the company’s 2010 disaster in Michigan, then more spills in Canada, a badly bungled PR campaign, the infamous “missing islands”, and repeated blunders at the National Energy Board hearings into its proposal.

Yet, even with these public blemishes on the star of its new energy vision and with mounting evidence of catastrophic, fossil fuel-driven climate change, the Harper Government’s attitude remained unchanged, especially on the international stage. In 2012, we became the first country to formally pull out of the Kyoto Protocol (not that we ever took our commitments serious in the first place). At the same time, Canada was caught by the Guardian, through a leaked memo, working to block a resolution to end to public subsidies for fossil fuels at the Rio+20 summit.

Back in Ottawa, the latest omnibus budget, C-45, picked up where its predecessor left off, slashing the age-old Navigable Waters Protection Act – one of the main beefs of the Idle No More movement.

Provincially, energy politics have dominated the agenda too – from the well-publicized spat between BC Premier Christy Clark and Alberta Premier Alison Redford over revenue sharing from the proposed Enbridge pipeline, to Redford’s new alliance with Quebec Premier Pauline Marois over alternate plans to move bitumen East.

The media and public discourse in BC was particularly infused with with energy – beginning with the NDP and Liberals jostling for positioning on Enbridge, to the emergence of KinderMorgan’s proposed pipeline and tanker expansion for Vancouver as a major urban issue in the lead-up to next May’s election. Add to that natural gas fracking, proposed pipelines and the plan to build multiple Liquified Natural Gas (LNG) terminals on the coast – all of which are increasingly on the media and public’s radar and sure to be election topics. The movement against the proposed Site C Dam, which would power gas and mining operations, is building momentum too.

The NDP has been all over the map on these issues, initially getting behind fracking, new pipelines and LNG plants with few reservations, then, recently, showing signs of feeling some of the public pressure building around these issues. This was evidenced by an op-ed in the Georgia Straight, co-penned by Energy Critic John Horgan and Environment Critic Rob Flemming, promising “a broad public review of fracking” and “immediate changes to protect B.C.’s water resources”.

The party appears caught between the growing concerns about fracking and LNG and a desire not to appear to be too “anti-business” or ignore an opportunity to reboot the BC industry and close the budget gap with increased royalties and related revenues. It will be very interesting to see where the NDP goes on this file in 2013.

Christy Clark, for her part, has left no doubt about her bullish outlook for natural gas and LNG, comparing BC’s potential with this resource to Alberta’s Tar Sands. Some of the nation’s top independent energy experts have poked big holes in Clark’s plan, though, suggesting that her numbers simply don’t add up.

Federally, the NDP’s selection of Thomas Mulcair shook up the political scene and energy debate. Unlike Harper’s former Liberal Opposition challengers, Mulcair seemed to have a firm grasp of energy and economic issues and was prepared to take on Harper on topics others would shy away from.

Take Mulcair’s rendering of the “Dutch Disease” into a Canadian household term. The concept, supported by the OECD and other highly reputable economic institutions and economists, holds that the downside of a petro-state economy is artificial currency inflation, which leads to the hollowing of a nation’s manufacturing sector. New jobs in Fort MacMurray mean layoffs in Hamilton. The fact Mulcair was able to get the traction he did with this discussion and to lodge it – even a little – in the national consciousness is a testament to his oratory skills, political sensibilities, and willingness to take some risks to differentiate himself from Harper. Mulcair also helped to re-frame pipeline politics, opposing Enbridge but getting behind the notion of shipping bitumen East (the source of another emerging public energy debate).

But the reach of energy politics extended far beyond provincial and national borders this year, as the Harper Government negotiated a new trade deal with China, ostensibly to stimulate investment in Canadian energy resources. The Foreign Investment Promotion and Protection Act (FIPA) came under great scrutiny – particularly in these pages – for eroding Canadian sovereignty and enshrining much diminished environmental protections as the law of the land for years to come.

Harper seemed caught off guard by the backlash generated by this deal and several concurrent foreign buyouts of Canadian energy companies – which seemed to be the very purpose of FIPA. When he finally approved the $15 Billion purchase of Nexen by Chninese state-owned CNOOC and Canadian gas company Progress Energy by Malaysian giant Petronas, it was late on a Friday afternoon, to avoid the media glare that had been focused on these deals. He promised then, surprisingly, that this marked the “end of a trend and not the beginning of one” with regards to such foreign buyouts of Canadian energy assets (PS we aren’t buying that line here).

Compounding the public and media pressure around FIPA and these energy company buyouts was the controversy that erupted from a coal mine in northeast BC. When it emerged the company, HD Mining, was hiring all imported Chinese workers for its Murray River mine, a heated back-and-forth ensued between the United Steelworkers’ Union and a Chinese worker who has filed a complaint with the Human Rights Commission, alleging the union is “creating contempt for Chinese people”.

In the midst of this fracas, an embarrassed Immigration Minister Jason Kenney promised to review the labour rules that allowed this situation to happen. And yet, it was Human Resources Minister Diane Finley, with Kenney’s support,who just recently made the changes to the Canadian labour regulations that enable companies to hire foreign temporary workers for lower wages than they would pay Canadians.

The Harper Government’s labour policy seems designed precisely to encourage situations like the one at Murray River, directly undermining the government’s “jobs” rhetoric around resource development.

Likely as a result of all this scrutiny, Harper has delayed on ratifying the Chinese FIPA. A campaign led by social media-driven public advocacy groups Leadnow.ca and Sumofus.org generated over 80,000 petition signatures and thousands of letters and submissions to government officials protesting the proposed FIPA.

But the biggest story in 2012 has been the unprecedented coming together of aboriginal and non-aboriginal Canadians to jointly confront these hydrocarbon projects and the Harper Government’s vision for Canada’s future. Even in the waning days of 2012, we saw another victory by First Nations and environmentalists working together to secure a long-term ban on coal bed methane fracking in the Sacred Headwaters. That the Clark Government saw this as politically expedient – or necessary – is interesting in and of itself.

It remains to be seen where the Idle No More movement goes from here. Will its intensity subside in the new year like the Occupy Movement of last year, or will it be forged into a formidable political force, crystallizing the burgeoning sense of discontent amongst many Canadians with the direction our political leaders are taking us?

2013 holds the answers to many other burning energy questions, like how the Enbridge pipeline hearings will conclude or when KinderMorgan will formally file its plans. Will this American company’s experience be smoother than that of Enbridge, or will an unprecedented urban environmental movement rise up to block its path? What role will natural gas will play in BC’s provincial election? Will this new energy alliance between Alberta and Quebec and the vision to pipe the Tar Sands East pan out? Perhaps most interesting, will Harper ratify or abandon FIPA and will he keep his word on nixing future foreign buyouts of Canadian energy assets?

Stay tuned to the Common Sense Canadian in the New Year to find out. Or maybe the evening of December 31st. Knowing the Harper Government, that’s when all the really important changes to our national fabric will be announced.

Despite PM’s Assurances, Floodgates Open to Chinese Govt as Encana, PetroChina Partner

December 16, 2012Canada, Energy and Resources, Fracking, International, Oil&Gas, Pipelines and Supertankers, Politics, Tar Sands, Western CanadaAlberta Tar Sands, BC Oil Pipelines and Supertankers, China, FIPA, fracking, Oil and gas, Politics, Stephen HarperKevin Logan

“For the right price, anything is for sale” -Anthony Lambert, President and CEO of a Canadian arm of Chinese state-owned Sinopec, known as Sinopec Daylight Energy

Canadians are seeing red this week after a series of announcements reinforce concerns about the loss of Canadian resources and sovereignty.

The focus has been the Alberta Tar Sands, but natural gas plays are also in the mix. Four days after Stephen Harper boldly stated that the CNOOC/Nexen and Petronas/Progress takeovers marked the “end of a trend and not the beginning of one,” one of Canada’s largest oil and gas companies, Encana, announced a joint venture in a 4-plus billion dollar gas play in which PetroChina will have a 49.9 percent stake. A “minority” position such as this is seemingly an end-run on the “new,” yet unexplained criteria dictating the level of Chinese/foreign investment the Harper government would support.

CNOOC’s Nexen bid was a full takeover of a Canadian-based company with international holdings, however its mainstay is the Alberta oil patch and part of that takeover also includes a percentage of Syncrude. These companies have enjoyed years of Canadian taxpayer subsidies and support to make them profitable. The benefits of that multibillion dollar effort will now accrue to a Chinese “SOE”, or State Owned Enterprise, turning Canada into what the Alberta Federation of Labour’s recent detailed report describes as “China’s Gas Tank”.

Those supportive of foreign SOE investment in Canadian resource plays dismiss the concerns raised as unwarranted paranoia. A sort of “Reds under the bed” fear being mocked by folks like Bob Rae, outgoing liberal leader and supporter of Chinese investment. But this dismissive attitude shared by the supporters of such investment neglects the heart of the matter.

Joseph Stalin once said, “When we hang the capitalists they will sell us the rope we use,” which is in keeping with the Sinopec President’s view that “anything is for sale at the right price.” This point is pivotal. Chinese investment by SOE’s seems counter-intuitive to a “free enterprise” approach – a central plank in the ideologically driven agenda of Stephen Harper. So why does he abandon such principles along with his base and run far from the centre over to what many view as the extreme left?

It is largely due to the fact that SOEs have deep pockets and are paying real, serious, above-market premiums to snatch up Canadian oil and gas assets, which is enriching longstanding players in the patch and their investors. And it is true that they are doing so because there is profit to be made, and not simply in owning Canadian resources raw and sending them home to China.

But it’s really about the age-old geopolitical game of control over the world’s resources, exploiting them elsewhere while leaving one’s own in the ground, as United States has historically done (however, now you will note that they too are falling prey to exploitation and export of their “Homeland” resources.) All of which will fuel the growth of China’s economy into what people are proclaiming will be the world’s largest economy in as soon as a decade or two.

China has a stake in many nations around the globe and the forces that historically “nation build” are at work once again in boosting China to the forefront of the world, unfortunately their model has even less trickle down to the Chinese people, as they often live in squalor and cities that could house millions remain empty.

To accommodate this agenda the Harper government has created a very attractive investment “climate” in the Tar Sands. A much-reduced royalty rate, heavy subsidies, a gutted environmental regime, paralyzed environmental assessment processes. All this while accruing decision making to the top. Cabinet (read Chairman Harper) will decide cross-border pipelines, terms of trade and investment deals, criteria for foreign investment, and he has taken measures to lock in the new legislative framework dictating resource development and exploitation for decades to come.

During the minority reign of the Harper administration, he oversaw the single largest divestiture of a “public asset” in our nation’s history when he constructed the offloading and privatization of Petro Canada. The result was a gift to industry, a huge loss to Canadian taxpayers and it closed the public window we had on this industry from well to pump. Which is why Harper was so precise with his language when he approved the CNOOC/Nexen and Petronas/Progress takeovers.

Indeed, the first thing out of his mouth at the press conference announcing the approvals was, “To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead.” However that is precisely what is occurring, no matter how you slice it.

But Harper ignores this reality and doubles down on his bold misrepresentation of the facts, “It is not an outcome any responsible government of Canada could ever allow to happen. We certainly will not.” And they should not, Harper realizes its not what Canadians want, which is why he takes to the mike and says these things. So why does he do the exact opposite?

Foreign investment is already a serious issue in the oil and gas industry in Canada. Forest Ethics recently released a brief explaining how Canada’s major oil and gas players are on average 71% “foreign owned.” In fact, the major players in the patch are almost entirely foreign owned; it is only the Canadian-based companies that bring that percentage down from fully foreign ownership. But even those Canadian-based companies are owned by foreign interests in the majority. All of this equals an exodus of cash from the country, only outdone by the flow of oil, gas and other raw resources.

If Canadian companies cannot find the money to invest in the oil and gas patch, despite outgoing Bank of Canada Governor Mark Carney’s criticism that corporate Canada is sitting on over 600 billion dollars of “dead money” and Canadian “SOEs” needed to be sliced, diced, demonized and sold off, why are Chinese SOEs all the rage?

Jim Stanford, a highly respected, independent-minded Canadian economist, suggests the notion that Canada cannot capitalize its own resources and must therefore rely on foreign investment is balderdash. Moreover, the Conservatives still boast that Canada and its banking industry are a pillar of stability in a sea of insecurity and crashing economies. All of which runs counter to the oft-repeated cliché that “we need” this foreign investment, and is instead looking much like a foreign takeover of not only our resources but our sovereignty.

This is where the Canada-China Foreign Investment Promotion and Protection Act (FIPA) comes in. This government continues to claim that somehow FIPA is good for Canadian investment in China, yet there is no evidence of that. Preeminent Canadian economist Diane Francis, a polar opposite to Jim Stanford, would probably agree with him on this one, as she has suggested the FIPA should be ripped up. Meanwhile, even Canada-US free trade architect Brian Mulroney states that we are still at least a decade away from free trade with China.

So why FIPA? Why now? In corporate parlance this amounts to a “Friendly Takeover”, as both entities agree there are “synergies” with the syncrude and are supportive of the entire notion, therefore it’s not a hostile takeover.

In promoting this deal, the Harperites will tell you that we have dozens of other FIPAs and this one is simply just another one. However that too is very misleading. The others are largely with countries where Canadian-based companies, typically mining companies, are operating.

Once again, these companies maybe Canadian-based, but they are largely foreign-owned, and they base themselves in Canada because our legislative environment is accommodating to their agenda. Canada is to mining what Switzerland is to banking and the FIPAs we negotiated are in most cases as draconian for the less-developed nations as the Chinese FIPA is for us.

These FIPAs guarantee the exploitation of mineral rights in less developed countries, for Canadian-based mining companies, and ensure the governments are removed from the equation, unable to protect the environment or increase royalty rates. In fact, the governments are reduced to cheerleaders on the “promotion” side of these agreements. Any move to regain sovereignty, charge respectable royalties, protect the environment or impose any restrictions on unbridled exploitation is met with severe financial penalties, meted out by a new corporate judiciary established by these agreements, which works in secret and is entirely profit-motivated.

This is exactly what is happening to Canada with the Chinese FIPA.

However, a huge push back has occurred and Harper seems frozen in his tracks on this one.

After having restructured the very fabric of the nation with two omnibus bills – the largest we have ever seen – he has still not ratified the agreement. Ironically, Omnibus bills have been used very sparingly in history. In 1971 Liberals used the practice to establish the “Department of the Environment,” and then again in 1982 to establish Trudeau’s infamous “National Energy Program.” The Conservatives fought it then and had the bill divided into eight different sections. On the other hand, Conservative governments have used the practice more. They used it once to enact NAFTA, and now twice since Harper obtained his majority – for the opposite purpose of omnibus bills of old, which established our internationally-renowned environmental practices and the nation-building, sovereignty-securing laws of Trudeau’s NEP.

As we pointed out in painstaking detail here at the Common Sense Canadian, the recent Omnibus bills run contrary to the FIPA treaty process and, in our opinion, render it null and void. This could be at the very heart of the delays we are now experiencing. There were many petitions and expressions of outrage, however, the argument we forwarded was indisputable and has put the Harper Cabinet in a box. And now we have an opportunity to follow up and here is why.

If FIPA is ratified, it will mark the end of Canadian sovereignty in the oil and gas patch. It will also ensure that China becomes the major driver of activity in both oil and gas. The terms are so favourable for “Chinese investment” that it will force partnering with them on resource plays as evidenced in the recent PetroChina/Encana joint venture announcement. The FIPA offers such attractive terms that partnering with any other private companies or SOEs would put one at a disadvantage. This essentially makes the draconian FIPA terms the new de facto law of the land and not simply a bilateral investment agreement. Can you imagine the Harper government or any other government making laws – or restoring those recently stripped away – which apply to everyone but Chinese companies?

I raised these points and many others in my submission to the FIPA environmental assessment process and we encouraged you to do the same. The campaign was picked up by savvy internet politicos who run Leadnow and similar organizations. The end result was thousands of submissions to various levels of government on this issue, on top of the 100 thousand-plus petition signatures these groups garnered against FIPA. Others chimed in as well, and the result so far has been positive.

However there is still an opportunity to communicate once again our adamant disapproval of the FIPA agreement. It is important we do so in order to send a message loud and clear that we do not approve locking in subsidies, much-reduced royalty rates, much-diminished environmental processes and reduced protection for over thirty years – an eternity in terms of the timeline required to liquidate our oil and gas resources.

It may have made sense in the beginning to give the resource away and subsidize its growth, in an effort to get a capital-intensive exercise on a solid economic footing, but at a time where balanced budgets elude us, debt is racking up at any amazing pace and our standard of living is eroding, we cannot afford to allow these conditions to persist so long into the future. It will spell our demise.

So take the time and visit this link related to the Chinese FIPA and share these concerns with them. At this point the Minister of Industry has stated uncertainty around the ratification of FIPA, therefore we need to continue to apply pressure in order to at the very least delay, if not entirely avoid, ratification of this treaty. Our future and our kids depend on it.

You can visit this link and copy and paste the letter there, as it is still relevant and they invite more comments to that final FIPA Environmental Assessment, despite the closing of the public window for submissions.

Comments on this report may be sent by email, mail or fax to:

Environmental Assessments of Trade Agreements
Trade Agreements and NAFTA Secretariat
Foreign Affairs and International Trade Canada
125 Sussex Drive, Ottawa, Ontario K1A 0G2
Fax: (613) 992-9392
E-mail: EAconsultationsEE@international.gc.ca

Enbridge’s Line 9: Shipping Tar Sands Crude East

November 22, 2012Canada, Energy and Resources, Oil&Gas, Politics, Tar Sands, Western CanadaAlberta Tar Sands, Enbridge, Oil and gas, Politics, Thomas MulcairDamien Gillis

This article is republished with permission from Watershed Sentinel.

In a move that could cost him significant political support, federal NDP leader Thomas Mulcair has endorsed controversial west-to-east pipeline proposals that would move tar sands crude from Alberta through Ontario and Quebec to Atlantic Canada and points beyond.

During a Sept. 28, 2012 speech to the Canadian Club of Toronto, Mulcair said, “Let me be clear, New Democrats support recent proposals to increase West-East pipeline capacity. This is an initiative, led by industry, that will pay economic dividends for every region of our country: new markets for [tar sands] producers in the West, high-paying value-added jobs and lower energy prices in the East.”

Mulcair called this a “pro-business common sense solution.”

With a bottleneck of crude at the storage hub in Cushing, Oklahoma, pricing discounts for diluted bitumen (dilbit) at US Midwest refineries, and strong opposition to tar sands export pipelines in both BC and the US, the industry has seized upon “eastern access” to Atlantic tidewater as a solution. Canada’s top two pipeline/utilities companies – Enbridge and TransCanada Corp. – are each developing plans to pipe crude east, while environmental groups across Ontario, Quebec and New England have been gearing up for a major fight on the issue.

The “Wrong Product”

Ironically, only hours before Mulcair’s speech, Alberta Federation of Labour president Gil McGowan issued a press release (Sept. 27) stating: “The bottom line is Alberta is selling the wrong product [dilbit]. The glut of bitumen on the market is a result of bitumen looking for appropriate refineries. If the product was SCO [synthetic crude oil], we could be selling the product to any refinery in North America.” As well, many pipeline safety issues could be avoided (see March-April 2012 Watershed Sentinel).

Tar sands producers generally produce either “synthetic crude,” which has passed through an on-site upgrader, or dilbit, which is raw bitumen thinned with lighter petroleum products and proprietary chemicals. With increased production over the last few years, tar sands producers (which are mostly foreign-owned) are now piping out more dilbit in order to cut their costs. According to Alberta Energy, there are only five operating upgraders in Alberta, and in 2011, “about 57% of oil sands production was sent for upgrading to synthetic crude oil within Alberta,” a percentage that will rapidly decline as production vastly increases. Over the next decade, tar sands producers reportedly plan to triple the amount of dilbit they pipe.

On July 23, 2012, the US National Academy of Sciences began hearing expert briefings on whether dilbit increases the risk of pipeline spills, as environmentalists claim. Gil McGowan’s point is a crucial one: not all refineries in North America can handle dilbit, nor can all refineries in eastern Canada. That fact is significant to understanding who would benefit from “eastern access” pipelines plans.

Line 9 Reversal

Enbridge is now moving quickly on a plan to pipe tar sands crude through Ontario, Quebec, and New England to Atlantic tidewater in Portland, Maine. From there it would be shipped by tankers to refineries in the US and elsewhere.

In May 2012, Enbridge announced a $3.2 billion expansion of its North American pipeline system, including expansion of its Lakehead system which pipes dilbit from Alberta to US Midwest refiners. Some of that dilbit also reaches refineries in Sarnia, Ont., via Enbridge’s Line 5 (which brings dilbit from Superior, Wisconsin, across northern Michigan to Sarnia), and Line 6B (which pipes dilbit from Chicago across Michigan to Sarnia). Both Line 5 and Line 6B extend from the tar sands across Alberta, Saskatchewan and Manitoba before entering the US at Superior, Wisc. According to rabble.ca (Sept. 11, 2012), in Sarnia “tar sands are already being refined [by Imperial Oil and Suncor] at an estimated rate of 225,000 barrels per day.”

It was Enbridge’s Line 6B that ruptured in Michigan in 2010, spilling 20,000 barrels of dilbit into the Kalamazoo River. During repairs, Enbridge has quietly been increasing the capacity of that pipeline to 500,000 barrels per day (bpd).

Enbridge also intends to reverse Line 9, which currently carries 240,000 barrels per day of imported conventional oil from Montreal to Sarnia. On July 27, Canada’s National Energy Board granted approval for the reversal of a portion (9A) of Line 9 between Sarnia and Westover, Ont. (where an oil hub is located that diverts crude to Imperial Oil’s refinery in Nanticoke, Ont. and to Pennsylvania refineries).

Enbridge intends to file for the reversal of the remaining portion (9B) between Westover and Montreal this autumn. On Oct. 23, Enbridge filed a document with the NEB showing it plans to increase the capacity of Line 9 to 300,000 bpd and switch it to carrying “heavy crude,” which includes tar sands oil.

In order for tar sands crude to reach the Atlantic, another pipeline – the Portland/Montreal Pipe Line (PMPL – which brings imported conventional oil from Portland, Maine to Montreal) – would also have to be reversed. The PMPL passes through Quebec, Vermont, New Hampshire, and Maine.

The Portland/Montreal pipe is majority-owned by Imperial Oil and Suncor. Officials with PMPL have reportedly been in talks for over a year to reverse that line.

Enbridge also intends to export tar sands crude from Portland, Maine. According to the Globe and Mail (June 1, 2012), “In a recent conversation with Streetwise, Stephen Wuori, Enbridge’s president of liquids pipelines, said his company believes it can export crude from the US without consequence. Asked if it would be possible to send oil to international markets from Maine, he said the answer is yes.”

More recently, the Globe and Mail reported (Sept. 6, 2012) that Enbridge “has met with officials from refineries in Quebec City and Saint John to discuss their appetite for Western Canadian crude. Companies could barge oil from Montreal to Quebec City, and then perhaps ship it by rail to Saint John.”

TransCanada’s Mainline to the East Coast

TransCanada Corp.’s natural gas Mainline runs 14,000 kilometres from the Alberta/Saskatchewan border to where Quebec meets Vermont. The Mainline, which pipes natural gas to Ontario, has been operating at only half-capacity in recent months because of competition from US shale gas. Canadian Natural Resources Ltd. and others have been urging the company to switch to carrying crude in its gas Mainline. TransCanada Corp. is also one of the owners of Ontario nuclear power-generator Bruce Power, which has been pushing the nuclear option for tar sands/energy production in Alberta and Saskatchewan.

TransCanada Corp. has not disclosed much about its west-to-east pipeline project, but recently Globe & Mail reporters Nathan Vanderklippe and Shawn McCarthy provided (Sept. 6, 2012) some details on “a massive $5.6 billion new pipeline system that would carry large volumes of western crude to refineries in Ontario, Quebec, and beyond.”

Their news report states:

The East Coast project described to [us] by industry sources would involve converting roughly 3,000 kilometres of underused natural gas pipe – the Mainline is made up of a series of parallel pipes – into oil service. It would also involve building at least 375 kilometres of new pipe from Hardisty, the Alberta oil hub, to the Mainline at Burstall, Sask., and from near Cornwall [Ont.], at the other end, to Montreal. Another 220 kilometres would be required to reach Quebec City. Oil could be loaded onto ocean-going vessels either on the St. Lawrence River, or destined for American refiners via Portland, Maine, through a pipeline [PMPL] to Montreal whose flow could be reversed…The TransCanada proposal would send 625,000 barrels a day across the country to Montreal, Quebec City and potentially Saint John, NB, where Irving Oil Ltd. runs a large refinery. Tanker exports could then also take the crude to Europe or Asia.

In late July 2012, RBC Capital Markets urged that TransCanada Corp. stop focusing on the controversial Keystone XL pipeline to Texas and instead convert its Mainline to carry 900,000 barrels per day of tar sands crude to Sarnia, and then use Enbridge’s Line 9 to move it to Montreal.

So potentially, more than 1.4 million barrels per day of tar sands crude could be piped through southern Ontario and Quebec – the most populated area of Canada – to points east. The industry considers “eastern access” pipelines to be in addition to projects like Northern Gateway.

Upstream/Downstream

Refining is currently considered a financially viable business in North America mainly for companies that both produce (“upstream”) and refine (“downstream”), largely because they can buy dilbit and other feedstock cheaply and then sell the refined petroleum products for a high price internationally.

In the tar sands, companies with both upstream/downstream facilities in North America include Imperial Oil, Suncor, Shell, Husky, Valero, Marathon, ConocoPhillips, Cenovus, BP, and Flint Hills Resources/Koch Industries. Many of these companies have already invested billions to convert their refineries in the US Midwest and Gulf Coast for processing tar sands crude.

In 2010, Royal Dutch Shell closed its Montreal refinery and converted it into a fuel storage terminal. Imperial Oil put its Dartmouth, NS refinery up for sale on May 17, 2012, but is also considering converting it into a storage terminal. By the terms of its sale to Korea National Oil Corp., the North American Refinery in Newfoundland only refines the province’s offshore oil, with most of its refined petroleum products exported to the US. As of March 2012, Shell is considering upgrading bitumen at its Ontario refinery and Suncor is considering the same thing for its Montreal refinery. The resulting “synthetic crude oil” would still have to go to another refinery to be made into products like gasoline, diesel, and jet fuel.

Peter Boag, president of the Canadian Petroleum Producers Institute – which represents the refining and marketing sector – told the Globe and Mail (Sept. 6, 2012), “Significant changes to the crude diet to really ramp up the volumes of western-based heavier crudes in Eastern Canada is going to require some significant investment in refinery reconfiguration.” As Gil McGowan put it, Alberta is selling “the wrong product.”

The Irving Empire

According to the University of Calgary’s Jack Mintz (Financial Post, Dec. 16, 2011), the only refinery on the Atlantic that can currently process “heavy sour diluted bitumen [dilbit]” is “the Irving Refinery” in New Brunswick. Otherwise, he said, “this type of crude cannot be processed in eastern North America.”

Enbridge has been planning its “eastern access” pipeline since at least 2008. On March 11, 2008, Reuters reported that “Enbridge Inc. is looking at moving oil sands crude to the US Northeast and Eastern Canada,” and quoted Enbridge CEO Patrick Daniel: “If we move to reverse Line 9 [in Ontario], that could come before [Northern] Gateway [in BC]. If it is a large volume, 400,000 barrels a day, [Northern] Gateway would come first.”

In 2011, Enbridge appointed to its board a director of Irving Oil, which now owns 50 per cent of an oil terminal in Portland, Maine.

The Globe and Mail reported (Aug. 23, 2012) that Irving Oil “unveiled a proposal three years ago to build [another] 300,000 barrels-a-day [refinery] facility to serve the northeast United States,” and later partnered with BP on the idea – which is currently shelved. According to the same newspaper (Sept. 6, 2012), the Irving Refinery in Saint John buys about $10 billion per year of imported conventional oil, refines it, and then sends “eighty per cent of the plant’s production” south of the border.

Obviously, tar sands producers like Canadian Natural Resources Ltd. – which owns no downstream refineries – are eyeing that annual $10 billion in hopes that it will be used to buy crude piped east. Canadian Natural Resources Ltd. plans to greatly increase its tar sands production to one million barrels per day over the next decade. Frank McKenna – the former premier of New Brunswick and a current director of Canadian Natural Resources Ltd. – has been one of the most vocal proponents of west-to-east pipelines from Alberta, and has called for a new oil pipeline from Montreal to Saint John.

In mid-July, Canada’s Parliamentary Standing Senate Committee on Energy, the Environment and Natural Resources (with 7 Conservative and 5 Liberal members) endorsed west-to-east tar sands pipelines as a “nation-building” project.

Besides Frank McKenna and the Senate Committee, other outspoken proponents include Derek Burney (a director of TransCanada Pipelines Ltd.), Eddie Goldenberg (a lawyer with Calgary law firm Bennett Jones), the “ethical oil” people, and now the NDP’s Thomas Mulcair. Some commentators consider the west-to-east pipeline plans to be the centre of Alberta Premier Alison Redford’s “national energy strategy.”
But the plans by Enbridge and TransCanada Corp. seem largely to be a strategy for Big Oil to get a higher price for dilbit by export via the Atlantic – most likely to the US Gulf Coast, where their downstream profits would be highest.

Environmental organizations across Quebec, Ontario, and New England, along with some First Nations and landowner organizations residing along Line 9, have been rallying in opposition to these west-to-east pipeline plans.

All this is happening mainly because the Alberta government is too timid and subservient to require that all tar sands production be upgraded or refined on-site. Instead, it keeps allowing Big Oil to pipe out more and more of “the wrong product.” As a result, tar sands pipelines will continue to be fought across North America.

***

Joyce Nelson is an award-winning freelance writer/researcher and the author of five books.

One Step Forward with Fish Farms, Two Steps Back with Proposed Fossil Fuel Exports

November 17, 2012Canada, Energy and Resources, Oceans, Oil&Gas, Pipelines and Supertankers, Politics, Salmon Farming and Aquaculture, Tar Sands, Western CanadaAdrian Dix, Alberta Tar Sands, Aquaculture, BC Oil Pipelines and Supertankers, LNG, Oil and gas, Politics, SalmonRafe Mair

A couple of thoughts today.

A promising article on fish farms appears in today’s Vancouver Sun. At face value it looks like great news – the story of fish farming on land with no contact with the ocean.

As I say, it looks great but I want to hear what Alexandra Morton has to say.

The objection industry has always made is that it’s too expensive for them to compete that way. The answer to that, according to the Sun article, is that excrement can be recycled for profit and that expenses such as fish lost to predators, or to kill sea lice are avoided.

There is only one fair way to compare the two approaches: charge fish farms an appropriate rent for their leases to include ALL the environmental losses. This levels the playing field and is only fair.

The market for farmed fish is there as we deplete wild stocks around the world. The trouble is that our wild stocks are not depleted by over-fishing anymore but by allowing poisoned farmed fish to mingle with the wild.

Bringing the farms on land will only happen if ocean farms are taxed their appropriate due.

On another note, no sooner had the news been out that the US was looking to be self-sufficient in energy than the bottom feeders rose as one to tell us this means we must update our mining of the tar sands and the piping of it though BC to the coast then shipping by tanker to Asia. The US will no longer need our filthy bitumen so we must redouble our efforts to bugger up the environment in BC to ship even more of the stuff down our fjords.

What ever happened to weaning ourselves off fossil fuels?

If the rapacious industry must continue to mine bitumen, send it to a refinery in Alberta. Irrespective of US capabilities, there will always be a world market for oil.

Moreover, there is an economic reality being ignored. The price of fossil fuels will reduce considerably over what we figure makes a profit. It’s an open ended market. China takes our bitumen if that’s the cheaper way to get energy, it abandons us if it’s not.

I invoke Mair’s Axiom I: “You make a serious mistake assuming that people in charge know what the hell they’re doing!”

Here we are in BC doing everything we can to press forward with LNG plants to convert natural gas to liquid to ship it to new markets while the gas prices plummet. With “fracking”, supply around the world has dramatically increased. Do we really believe that the third largest country geographically in the world, China, doesn’t have fracking capability either at home or closer than Canada? In fact, they are just getting started.

China has it both ways – it can import from us when supply is short (don’t hold your breath for that to happen) or produce it cheaper closer to home.

We are idiots.

This neatly segues into the question of the next BC budget.

Going into the May election the Liberals will want a balanced budget. One of the main factors will be, of course, income and no prize for guessing where that will come from.

You got it – natural gas. The government hasn’t a clue what that figure will be but you can bet the ranch that they will generously err on the high side.

We must all remember that in 2009 they were more than $2 BILLION short of the real numbers and they got away with it.

Desperate people do desperate things and the false card the Liberals play is that they are better stewards of the economy than are the NDP – even though the evidence is quite to the contrary.

The NDP, in the meantime, have completely lost their minds. They are, you see, going to help the Liberals prepare the next budget! This all from Adrian Dix‘s desire to make the legislature more cooperative.

(I wrote a two-part series in The Tyee, recently on how that can be accomplished and this is not the way).

Randolph Churchill (father of Winston) once said, “it’s the duty of the Opposition to oppose”, and he’s right. My series suggests how that can be done safely.

The greatest fear of any legislator is the “unforeseen consequence” of his policy. Now the NDP are going to join the process so that we will not get the value of “the other side” and the NDP will deprive themselves of any ability to question the budget in the next election because, it will be said, it was the NDP’s budget too.

I, for one, am becoming quickly disillusioned with Dix and Co. Not only are they onside with the government’s energy policy – or prepared to go easy is areas like LNG – they seem to be laid back polishing up the crown they’re sure to get next May.

This isn’t helpful for the public but also puts the NDP into a sort of “drift”. The Liberals can see that and you can bet they will be in better political shape next May than they now are, helped along by the total collapse of the Conservatives.

Mr. Dix, in politics 6 weeks is an eternity and in this old pol’s view you are looking to inherit that which you must earn.

‘Canada’s Carbon Corridor’: Multi-Media Dialogue in North Vancouver Nov. 14

November 12, 2012Energy and Resources, Hydropower, Mining, Oil&Gas, Pipelines and Supertankers, Tar SandsAlberta Tar Sands, BC Oil Pipelines and Supertankers, carbon corridor, Enbridge, Mining, Oil and gas, Site C DamDamien Gillis

This Wednesday evening, the Vancouver International Mountain Film Festival is hosting a multi-media discussion of “Canada’s Carbon Corridor” at Centennial Theatre in North Vancouver. The event is part of the festival’s Fall Series – a week of films and presentations on outdoor adventure and environmental themes.

The title for Wednesday’s event comes from a term developed by the team producing the forthcoming documentary film Fractured Land – of which I am co-director. We came up with the concept to articulate a big-picture view of the interconnected web of major oil, gas, coal, mining and hydroelectric projects proposed and in development across northern BC and Alberta, and the Harper and Clark governments’ grand plan to export these resources to new markets in Asia. I view the Carbon Corridor as the biggest transformation to Western Canada’s socioeconomic, cultural and environmental fabric since the colonial, “nation building” days of the railroads of the last century. And I don’t think that’s an understatement.

I will be sharing the stage with six other “inspiring Canadians who are working to protect our coast, our environment and indigenous community’s rights and cultures”, according to VIMFF’s web page for the event. That list includes event organizer Megan Martin, young First Nations singer/songwriter Ta’Kaiya Blaney, Ben West of the Wilderness Committee, photographer Zack Embree, Great Bear Rainforest eco-tour guide and activist Norm Hann, and Kim Slater, who ran 1,177 km run across BC in search of alternatives to Enbridge’s Northern Gateway Pipeline.

My 25 min presentation, titled “Traveling Canada’s Carbon Corridor Through Film: The Making of Fractured Land“, will feature a series of short clips from our forthcoming film, which explores the industrialization of northern BC and Alberta through the eyes of a young First Nations law student, Caleb Behn. I’ll be retracing a recent two and a half week filming journey with Caleb across the Carbon Corridor – through the conversations we had with people in the various communities affected by these projects and visuals of both industrial activity and the spectacular, untouched wilderness threatened by this plan.

In addition to the series of presentations on stage Wednesday evening, a number of environmental organizations will be on hand with additional information about these important issues.

The evening promises to be a dynamic, compelling discussion on the challenges and solutions facing the future of Canada’s economy, society and environment.

Tickets for the “Canada’s Carbon Corridor” event can be purchased here for $15.00 or $17.00 at the door. The show takes place on Wednesday, November 14 at Centennial Theatre in North Vancouver (2300 Lonsdale Avenue). Doors open 6:30 pm, show starts 7:30.

URGENT FIPA UPDATE: Public Comment Period Still Open for Canada-China Trade Deal

November 3, 2012Canada, Energy and Resources, Oil&Gas, Pipelines and Supertankers, Politics, Tar SandsAlberta Tar Sands, BC Oil Pipelines and Supertankers, FIPA, Oil and gas, Politics, Stephen HarperKevin Logan

UPDATE: Step-by step ininstructions on how to submit your comments to the FIPA EA process by November 11 – act now!

The Common Sense Canadian posted a detailed breakdown of the Environmental Assessment process for the Foreign Investment Promotion and Protection Agreement (FIPA) between Canada and China earlier this week.

In that piece we noted the fact that the final Environmental Assessment seemed absent in the soon-to-be-ratified FIPA.

Since publishing the story we have learned that indeed the final EA report has not been completed AND there is still time for input from Canadians.

We urge our readers to share their concerns about the process and inform the Government of Canada about the significant environmental impacts of FIPA.

Learn more about the FIPA EA at this government website.

And submit your comments by emailing: EAconsultationsEE@international.gc.ca

We will soon be posting more details about FIPA impacts that people can include their submissions.

Tar Sands Pipeline to New England Being Plotted Behind Closed Doors, Envrionmental Groups Allege

October 16, 2012Energy and Resources, Oil&Gas, Tar SandsAlberta Tar Sands, Oil and gasCommon Sense Canadian

Read this story from commondreams.org on the concerns of a group of US environmental groups that Exxon Mobil, Suncor and Enbridge are plotting behind closed doors to reverse the flow of a pipeline to allow Tar Sands bitumen to be pumped from Alberta to a deep water port in Maine. (Oct. 10, 2012)

A new analysis released today by national and regional environmental groups shows that US oil giant Exxon Mobile and Canada’s Suncor hold a majority stake in a pipeline system that local residents along its route fear could soon be used to transport tar sands from western Canada to the New England coast.The central concern of the report (pdf) surrounds a 2008 proposal by Canadian oil giant Enbridge to reverse the flow of existing east-to-west oil pipelines that would allow transport of tar sands oil—categorized by many as the “dirtiest oil in the world”—from Alberta to the deepwater harbor of Portland, Maine.

The local companies who manage the pipelines companies insist the idea has been shelved for economic reasons, but multiple recent actions lead the environmental groups to believe that the proposal is now being quietly revived behind closed doors. Pointedly, the groups argue that the oil giants who own these local pipeline subsidiaries should not be trusted.

“Unbeknownst to most of the public,” said the groups in a statement, “a major portion of the proposed tar sands pipeline that would cut across the Great Lakes, Ontario, Quebec and New England to Portland, Maine, is actually owned by oil giants Exxon-Mobil, Imperial Oil, and Suncor Energy – all of whom have a deep stake in tar sands extraction.”

As the report explains:

The line has two direct corporate owners: Montreal Pipe Line Limited (MPLL), which owns the stretch in Canada, from Montreal to the U.S. border; and the Portland Pipe Line Corporation, which owns the U.S. section and is a wholly-owned subsidiary of MPLL. In turn, Montreal Pipe Line Limited’s ultimate parent is ExxonMobil: Exxon subsidiary Imperial Oil Limited holds a majority interest in the pipeline. A smaller portion is owned by the Canadian giant Suncor Energy. Imperial and Suncor are among the biggest developers of Alberta’s tar sands and stand to benefit greatly from this project to transport tar sands oil across the region for export.

With regionally-anchored names like “Montreal Pipe Line Limited” and “Portland Pipe Line Corporation,” the ten environmental groups involved with the report—which represent members in Maine, New Hampshire, and Vermont—claim that the international oil giants who own these subsidiary companies would rather hide the fact that some of the world’s most notorious polluters are operating in their backyards.

Harper Govt. Delays Chinese Nexen Takeover Decision by a Month

October 11, 2012Canada, Energy and Resources, Oil&Gas, Pipelines and Supertankers, Politics, Tar Sands, Western CanadaAlberta Tar Sands, BC Oil Pipelines and Supertankers, Oil and gas, PoliticsCommon Sense Canadian

Read this story from CBC.ca on the federal government’s announcement today that it is postponing its decision under the Investment Canada Act as to whether to permit the purchase of Canadian oil and gas company Nexen by Chinese state-owned CNOOC. (Oct. 11, 2012)

Industry Minister Christian Paradis has extended the federal government’s review of China National Offshore Oil Corp.’s proposed takeover of Nexen Inc. under the Investment Canada Act by 30 days.

CNOOC, one of three Chinese oil companies controlled by the Chinese government, is trying to buy Calgary-based Nexen in a $15-billion takeover.

Shareholders have already signed off on the deal, but any deal worth more than $331 million to take over a Canadian company requires regulatory approval from the Canadian government.

“Extensions to the review period are not unusual,” Paradis said. “In general terms, the Act provides an initial 45 days for the review, which can be extended for an additional 30 days.”

“The review period may be extended again, with the consent of the investor. A decision can be made at any time within this period,” he said.

Under the terms of the act, the transaction must be assessed on six factors, including whether or not it is of “net benefit” to Canada. That clause was most recently invoked with BHP Billiton’s $40 billion offer to buy PotashCorp. in 2010, which Ottawa nixed.

The proposed Nexen takeover has sparked concern across Canada, with Prime Minister Stephen Harper having said it “raises a range of difficult policy questions.”

The NDP is opposed to the deal, citing national security and environmental concerns in urging Ottawa block the transaction.

Canada’s Resource Sector Prepares for Slowdown as Global Market Uncertainty Grows

October 11, 2012Energy and Resources, Mining, Oil&Gas, Tar SandsAlberta Tar Sands, Mining, Oil and gasCommon Sense Canadian

Read this story from the Globe and Mail on the anticipated slowdown of Canada’s resource-based economy as global commodity prices show signs of serious decline. (Oct. 9, 2012)

Canada’s resource-fueled economy faces the threat of a swooning commodities market at a crucial point in the economic recovery.

From Europe to the United States and especially in China, the outlook for commodities is diminishing heading into 2013, with the impact already being felt abroad.

Evidence is mounting that Canada, where commodities drive about 20 per cent of the gross domestic product, will not be spared some hardship. Canada is a major producer of potash, coal, iron ore, nickel, copper, gold, zinc and uranium, among other base and precious metals that have been hit especially hard as a decade-old commodities market starts to lose steam.

Resource companies account for about half the weight of the Toronto Stock Exchange, and some are feeling the pinch in profits.

On Wednesday the Organization of Petroleum Exporting Countries and the U.S. Energy Information Administration both shaved their forecasts for crude-oil consumption in 2012 and 2013, citing ongoing weakness in the global economy and hitting a key economic driver for Canada.

“I think over all there is a particularly large impact if you are looking at Canadian equity markets,” said Peter Buchanan, senior economist with the Canadian Imperial Bank of Commerce. “Quite clearly, subdued prospects there do provide some downside risks for some of the metals.”

The International Monetary Fund said this week it had trimmed its forecasts for economic growth in Canada – to 1.9 per cent this year and 2 per cent next, down in each case by 0.2 percentage points from earlier projections – and warned unemployment will remain at 7.3 per cent.

That came just days after Toronto-listed Thompson Creek Metals Co. said it was cutting $100-million in spending at an Idaho mine in order to be able to finance construction of a new mine in British Columbia.

Suncor Energy Inc. said in July it was rethinking billions of dollars of planned spending because of increasing costs.

Lower capital spending by the resource sector, about one-quarter of total business capital spending, could end up having a significant impact on Canada because it is such an important driver of the economy.

“The prospects that one of the other sectors, consumption or government spending, could accelerate to offset that is virtually zero,” said George Vasic, chief economist and strategist at UBS Securities Canada Inc. Mr. Vasic said he is not yet alarmed about the potential impact on Canada, but that his outlook could change if business capital expenditures fall off in Canadian resources. “So, it is a significant potential development, which I think is only partially reflected in forecasts,” he said.

The world’s third-biggest diversified miner, Rio Tinto PLC, started the week by saying it had become more cautious about the business outlook than even a few months ago. It says it will delay new project approvals in the near term.

Why the New ‘Golden Age of Oil’ Has Been a Bust

October 11, 2012Energy and Resources, Fracking, Oil&Gas, Tar Sands, Water and HydrocarbonsAlberta Tar Sands, fracking, LNG, Oil and gasCommon Sense Canadian

Read this story from alternet.org on the various environmental and economic factors restricting the development of “extreme energy” – from fracking to shale oil and bitumen. (Oct. 4, 2012)

To reach their ambitious targets, energy firms will have to overcome severe geological and environmental barriers — and recent developments suggest that they are going to have a tough time doing so.

Last winter, fossil-fuel enthusiasts began trumpeting the dawn of a new “golden age of oil” that would kick-start the American economy, generate millions of new jobs, and free this country from its dependence on imported petroleum. Ed Morse, head commodities analyst at Citibank, was typical. In the Wall Street Journal he crowed, “The United States has become the fastest-growing oil and gas producer in the world, and is likely to remain so for the rest of this decade and into the 2020s.”

Once this surge in U.S. energy production was linked to a predicted boom in energy from Canada’s tar sands reserves, the results seemed obvious and uncontestable. “North America,” he announced, “is becoming the new Middle East.” Many other analysts have elaborated similarly on this rosy scenario, which now provides the foundation for Mitt Romney’s plan to achieve “ energy independence ” by 2020.

By employing impressive new technologies — notably deepwater drilling and hydraulic fracturing (or hydro-fracking) — energy companies were said to be on the verge of unlocking vast new stores of oil in Alaska, the Gulf of Mexico, and shale formations across the United States. “A ‘Great Revival’ in U.S. oil production is taking shape — a major break from the near 40-year trend of falling output,” James Burkhard of IHS Cambridge Energy Research Associates (CERA) told the Senate Committee on Energy and Natural Resources in January 2012.

Increased output was also predicted elsewhere in the Western Hemisphere, especially Canada and Brazil. “The outline of a new world oil map is emerging, and it is centered not on the Middle East but on the Western Hemisphere,” Daniel Yergin, chairman of CERA, wrote in the Washington Post . “The new energy axis runs from Alberta, Canada, down through North Dakota and South Texas… to huge offshore oil deposits found near Brazil.”

Extreme Oil

It turns out, however, that the future may prove far more recalcitrant than these prophets of an American energy cornucopia imagine. To reach their ambitious targets, energy firms will have to overcome severe geological and environmental barriers — and recent developments suggest that they are going to have a tough time doing so.

Consider this: while many analysts and pundits joined in the premature celebration of the new “golden age,” few emphasized that it would rest almost entirely on the exploitation of “unconventional” petroleum resources — shale oil, oil shale, Arctic oil, deep offshore oil, and tar sands (bitumen). As for conventional oil (petroleum substances that emerge from the ground in liquid form and can be extracted using familiar, standardized technology), no one doubts that it will continue its historic decline in North America.

The “unconventional” oil that is to liberate the U.S. and its neighbors from the unreliable producers of the Middle East involves substances too hard or viscous to be extracted using standard technology or embedded in forbidding locations that require highly specialized equipment for extraction. Think of it as “ tough oil .”