Read this article from Forbes.com on the growing conflict between China and the US over Canadian oil resources – June 25, 2011
Forbes.com: China vs. USA for Canadian oil resources
Tag Archives: Alberta Tar Sands
Boo Hoo for Big Oil: Tar Sands Promoters Lament Tough Opposition
There’s nothing quite so pathetic as the richest industry in history feeling sorry for itself – and there’s been a lot of that going on lately. Under the strain of coordinated opposition to the expansion of Alberta’s Tar Sands on multiple fronts, Big Oil and its government cheerleaders is increasingly sounding like a bunch of sniveling crybabies – complaining amongst themselves and to the public of being unfairly out-messaged by radical tree-huggers or, alternately, well-funded non-profit groups.
At a recent Tar Sands strategy session – titled “Oilsands: What’s Really Going On” – hosted in Edmonton by the Canadian Association of Petroleum Producers (CAPP) and the Edmonton Economic Development Corp., Alberta Energy Minister Ron Liepert blamed “environmental extremists” for unfairly plugging up the free flow of Alberta bitumen, threatening the future expansion of the industry. “We cannot stand by and let commerce and job creation become secondary to the sensational images used by environmental groups to solicit emotional responses, especially because those images do not portray the reality of our industry,” Liepert implored his audience. Kind of makes you feel sorry for those poor, misunderstood oilmen, now doesn’t it?
Apparently, the efforts of aboriginal and environmental groups, photographers and filmmakers, and diverse citizens opposing key pipelines in Canada and the US are having some effect. Judging by the pep talks flying around industry gatherings and the op-ed pages of conservative media outlets, the industry is seriously worried about the Tar Sands’ future. Even a recent article in the industry publication Alberta Oil Magazine about several major proposed pipeline routes from the Tar Sands (more on these in a moment) refers to them as “radically different but equally controversial.”
What’s at stake is three (potentially four) major new pipelines or expansions designed to amp up the export capacity for the Tar Sands to both the US and Asia. Together they could justify a doubling of total Tar Sands output.
- Enbridge’s Northern Gateway Pipeline from Bruderheim, Alberta to Kitimat on BC’s North Coast (525,000 barrels/day)
- TransCanada Corp.’s Keystone XL Pipeline from Hadistry, Alberta to refineries in Illinois, Oklahoma and the Gulf Coast (would add 510,000 barrels/day to existing Keystone Pipeline)
- Kinder-Morgan’s Trans-Mountain Pipeline from Alberta to the Westridge Terminal in the Burrard Inlet in Burnaby, BC (would raise existing line from 300,000 to 700,000 barrels/day)
- Recent documents show Kinder-Morgan is considering a spur splitting off its Trans-Mountain Pipeline east of Prince George, heading to Kitimat – which could become the default if the Enbridge line doesn’t go through. (450,000 barrels/day)
The latter is becoming a more realistic prospect as Enbridge faces increasingly fierce opposition to its Northern Gateway Project. And the company isn’t doing itself any favours – with three major pipeline leaks in the US last year and a recent one in the Northwest Territories (on top of the dozens of smaller leaks it averages every year). But it’s the First Nations opposition to the project that presents its greatest challenge – one that may well prove insurmountable. Over 60 nations have lined up together against the Northern Gateway – many of them situated along the pipeline or tanker corridor, thus holding considerable constitutional and legal power over the project through their ancestral title and rights.
TransCanada is also facing an uphill battle for its Keystone XL expansion to refineries in the US. The 590,000 barrel/day existing Keystone line is currently shut down under presidential order, following a pair of recent leaks in North Dakota and Kansas. The associate pipeline safety administrator with the U.S.
Department of Transportation, Jeffrey
Wiese, recently wrote to TransCanada
executives: “After evaluating the foregoing preliminary findings of fact, I find
that the continued operation of the pipeline without corrective action
would be hazardous to life, property and the environment.”
These troubles couldn’t come at a worse time for TransCanada, as they are in the midst of seeking approval from regulators to build the expansion Keystone XL line. The Environmental Protection Agency has been highly critical of the proposal to the US State Department, which is charged with making the final decision on the project. According to a recent article in the Globe and Mail, “For the oil patch, the possibility that the XL project will falter is so
outside expectations that many haven’t even considered it. Indeed,
companies have already signed up for the majority of its capacity.” And yet, to the industry’s incredulous horror, failure is now a distinct possibility for the Keystone XL.
Campaigners, industry and media have started discussing the battle over these pipelines in terms of “choke points”. The idea is that Tar Sands expansion could be curbed indirectly by choking off its avenues for growth – and it has real strategic merit, enough to cause the industry to lose some sleep. Without these new corridors to move diluted bitumen, Tar Sands expansion is unnecessary, as the Financial Post remarked recently in a piece about the “Oilsands: What’s Really Going On” conference in Edmonton.
Andrew Leach, environmental economist and assistant professor at the University of Alberta School of Business, said Alberta faces a future bottleneck as oilsands production is forecast to ramp up while North American consumption wanes. “There’s not enough domestic demand to soak up what the production potential is and not enough pipeline capacity to move it, so you’ll be running up against a wall pretty quickly in the next eight or 10 years,” Leach said.
This is because the real growth in demand for Alberta bitumen lies not in North America, where economic conditions have seen oil demand plateau, but in new markets in Asia – which would be difficult to access without new supply lines carved through BC.
Alberta’s energy minister is far from the only one whining about the rough ride the Tar Sands are getting of late. Premier Ed Stelmach shot back angrily at a provocative billboard campaign in the US last year, which asked Americans to cancel their Banff vacations in protest of the Tar Sands. Stelmach responded with a series of his own taxpayer-funded ads south of the border, bearing the rebuttal: “A good neighbour lends you a cup of sugar. A great neighbour supplies you with 1.4 million barrels of oil per day.” Consider yourself told, America.
Industry nabobs have also been busy rallying the troops and doing their version of image control. Most notable has been the multi-million dollar PR campaign by the industry’s official lobby, CAPP. You know, the one with the happy employees extolling the improvements of an industry recently found to produce (surprise!) among the dirtiest oil in the world.
Then there’s Christy Clark’s advisor and former Encana CEO Gwyn Morgan. In an op-ed published in September of last year in a number of Alberta papers, Morgan wrote:
Environmental zealots are pulling out all the stops to promote a U.S. ban on fuel made from oil sands crude…One thing I learned from my many years as a CEO is that corporations must ensure what they say will stand up as the truth in the face of intense scrutiny, while the innuendo and deliberate distortions of their critics are seldom questioned. But I also learned that you don’t win games back on your heels playing defence. Industry leaders need do more than sitting behind the blue line trying to block shots. They need to take their oil sands story and skate hard up the ice.
Morgan’s message wasn’t directed at the general public. This is the godfather of the Canadian fossil fuels industry sending out the bat signal from his humble $7.5 million abode in Saanich, BC – admonishing his lieutenants and successors for not doing a better job protecting the industry’s image.
Finally, there’s Enbridge CEO Pat Daniel, who addressed a gathering at the Empire Club in Toronto in the lead-up to our recent federal election – urging his fellow captains of industry to get behind the Harper campaign and the oil patch, lest they face a set-back from a Tory loss or another minority government.
According to the Canadian Press, in his speech, “Daniel criticized ‘hard-line’ activists for being hypocritical in ‘saying no’ to the project outright while accepting the benefits that oil brings — ranging from heating their homes to bringing fresh produce to supermarkets.”
Daniel would write an op-ed several weeks later, dismissing voters’ concerns with the Tar Sands and his company’s proposed bitumen pipeline to Kitimat: “Opponents of energy development go so far as to suggest that Canada should be ashamed of our country’s abundant energy resources – the oilsands, in particular. I think this is nonsense. Canada is a leader in the world energy industry in safety, reliability, environmental performance, respect for human rights, regulatory oversight and technological innovation.”
In this time of unprecedented challenge, all the Tar Sands players appear to be reading from the same PR script – particularly several key talking points:
- Play up First Nations interest in pipelines and tankers (even, and especially, when it’s not actually there)
- Exaggerate job benefits, while downplaying the risks and economic impacts of a spill (Enbridge is particularly good at this one, considering all the high-profile spills it keeps racking up and the paltry jobs it would actually yield in BC)
- Dismiss opposition as one of two (seemingly mutually exclusive) things: a) incredibly well-funded environmental foundations who’ve turned opposing the Tar Sands into a lucrative mercenary industry unto itself; b) nothing more than a handful of crazy, socialist, tree-hugging “extremists” (of course, leaving out the part about 80% of British Columbians being in favour of a coastal oil tanker ban).
In other words, call it everything except that which it is: a well-organized, yet organic movement comprised of a broad cross-section of society – everyone from wilderness tourism operators, community groups and citizens to provincial and international environmental organizations and, most importantly, a coalition of over 60 different First Nations. It’s a campaign based on creativity, culture, and a deep concern for the future of this precious province and coastline – not to mention the local and global eco-footprint of the Tar Sands. It’s British Columbians (and Americans, now, with the opposition to the Keystone XL proposal) realizing they have a role to play – and an unprecedented opportunity – in crimping the growth of the Tar Sands. Call them “choke points” if you like – whatever it is, it’s damned inconvenient for an industry used to getting its way.
As Alberta’s energy minister told the “Oilsands: What’s Really Going On” conference, “If we don’t get moving on these projects, our greatest risk in Alberta is that by 2020 we will be landlocked in bitumen.”
Perish the thought.
Alberta Oil Magazine: Three pipeline builders race to reach new markets
Read this June 1, 2011 article from Alberta Oil Magazine on the three major pipeline proposals to enable the Tar Sands to expand delivery to Asia and the US.
The cost of oil on B.C.’s priceless coast – Sun op-ed
From the Vancouver Sun – June 18, 2011
by Chris Genovali and Misty MacDuffee
If the Enbridge Northern Gateway project is approved, an estimated
225 supertankers a year would enter Kitimat to load about 318 million
litres (two million barrels) of oil for shipment to American and Asian
markets (“Pipelines to prosperity,” Harvey Enchin, Issues & Ideas,
June 16). Loaded tankers would pass directly through Wright Sound, a
body of water with more than 5,000 vessels moving through it annually.
More than 400,000 vessel movements occur annually on the B.C. coast, so
it is not surprising that accidents are common, including collisions,
groundings and fires on board. Even vessels with state-of-the-art
navigational equipment are vulnerable.
The marine approaches to
the coast of northern B.C. and the port of Kitimat are dangerous. This
area is at least as dangerous as Prince William Sound, where the Exxon
Valdez hit Bligh Reef in Valdez Arm, in a navigable channel almost 10
kilometres (6.2 miles) wide. To enter Kitimat, supertankers will need to
transit Douglas Channel, which is 1.35 kilometres (0.84 miles) wide at
the narrowest point. Severe weather heightens the risk of shipping
accidents.
Should an accident occur involving a large ship,
serious inadequacies in response capabilities would hinder rescue and
containment operations. The south coast, for example, relies heavily on
the availability of American rescue tugs based out of Washington state
to respond to problems. Moreover, procedures between the provincial
government and the federal government to coordinate responses to large
vessel incidents at sea are not well harmonized. In the past, this has
resulted in considerable delays, as evidenced in the Leroy Trucking
barge incident, or no response at all, as in the sinking of the Queen of
the North.
A November 2010 article by Postmedia News revealed
that, according to an internal audit, “The Canadian Coast Guard lacks
the training, equipment and management systems to fulfil its duties to
respond to offshore pollution incidents such as oil spills … The audit
paints an alarming picture of an agency that would play a key role in
Canada’s response to a major oil spill off the world’s longest
coastline.” The article also identifies the relatively paltry budget of
$9.8 million for the coast guard’s environmental response unit.
Enbridge
manager of engineering Ray Doering’s recent claim in the Kitimat
Northern Sentinel that a spill “is likely never going to occur”
contradicts Enbridge CEO Pat Daniel’s statements in an April 2010 Globe
and Mail article in which he said, “Can we promise there will never be
an accident? No. Nobody can.”
Enbridge officials assert they
would not be financially liable for any oil spill at sea, while a June
2010 Vancouver Sun report revealed that owners of the tankers are liable
for the costs of oil recovery, cleanup and compensation for
environmental damage ― but only to the limit of their liability
insurance. Economists have tried to predict the costs of an oil spill
cleanup.
Globally, the cost to industry for spill cleanup averages
$16,000 US per tonne, not including the costs to restore habitat or
repair socio-economic damages to the communities impacted.
In
2003, the cost of cleaning up a 378,000-litre heavy fuel oil spill in
San Francisco Bay was an estimated $93 million. Forty to sixty per cent
of the estimated cost was attributed to restoring habitat and
compensating for socio-economic losses. However, in 2007 when the Cosco
Busan spilled a little over half that amount into the bay, the cost for
the cleanup alone was $70 million. In other words, true costs
dramatically exceeded the estimates.
Attaching a dollar value to
the damage that spilled oil does to marine and terrestrial ecosystems is
an extremely difficult task. The Exxon Valdez spill was the most
expensive in history; the true costs were estimated to be $9.5 billion,
of which only $2.5 billion were related to the cleanup. While
Exxon-Mobil paid more than $1 billion, U.S. taxpayers ended up footing
the bill for the rest.
But does any oil spill damage cost estimate
even begin to cover the price of a pod of killer whales driven to
extinction or the demise of a coastal fishing community’s way of life?
Chris
Genovali is executive director of Raincoast Conservation Foundation.
Misty MacDuffee is a conservation biologist with Raincoast.
Site C Would Destroy Prime Farmland, Fuel Fracking & Tar Sands
At a recent event in Vancouver, biologist and Peace Valley Environment
Association representative Diane Culling discussed the enormous
consequences of the proposed Site C Dam – including the flooding of
prime farmland at a time when the province faces major food security
challenges. Culling also pointed out that much of the electricity
generated from the project would go to fueling destructive shale gas
development in northeast BC, and, by extension, the Alberta Tar Sands. (3 min)
MarketWatch: Regulatory fight in a Canadian oil-sands box
From MarketWatch.com – May 26, 2011
By Bill Mann
PORT TOWNSEND, Wash. (MarketWatch) — A big battle is shaping up over
environmental regulation of Canada’s oil sands, the second-largest oil
deposits in the world. And, surprisingly, it’s Conservatives against
Conservatives.
In this corner, it’s Prime Minister Stephen Harper’s federal
Conservatives, who just gained a majority government. In that corner,
it’s Alberta’s conservative provincial government, led by hard-nosed,
oil-industry friendly premier Ed Stelmach.
A diplomatic cable recently released by Wikileaks highlights the
problems: It revealed an exchange between then-Canadian Environment
Minister Jim Prentice and U.S. Ambassador to Canada David Jacobsen, in
which the American said he believed Ottawa was being “too slow” about
regulating the expansive oil sands.
The U.S. wants a big part of that “non-terrorist” Alberta oil but it
doesn’t want its chief supplier to look environmentally dirty, for
obvious political reasons. Canada is now the U.S.’ largest oil supplier.
Canada, being a helpful vendor, apparently agrees, so last week, new
Canadian Environment Minister Peter Kent announced that Ottawa will
introduce environmental regulations later this year for the oil-sands
sector designed to reduce greenhouse gases spewed from one of the
country’s most polluting industries.
The water quality at the oil sands — or, as environmentalists call the
bitumen mines, the tar sands — is also very much an issue. A leak that
fouled the water and killed hundreds of waterfowl in the far-north oil
fields two years ago may have spurred the U.S. ambassador’s plea for
Ottawa to toughen up environmental controls.
Part of this new Ottawa vow to assume environmental control over what
the Alberta government insists is a provincially-owned resource may well
be tied in to Harper’s visit this week to the G8 summit in France.
There’s a good chance environmental groups will show up with pictures —
or billboards — of oil-soaked Alberta waterfowl. Harper doesn’t want
Canada to be known on the world stage as the world’s “dirty-oil”
producer. (Although extracting crude from bitumen is indeed, at best, a
dirty, water-and-energy consuming business).
A group of U.S. Senators visited the oil sands last December and said,
not surprisingly, they were satisfied with the environmental protections
in place in Alberta. Ottawa apparently isn’t, despite Alberta’s belated
environmental-protection moves.
Alberta will fight back
Alberta isn’t going to give up in this battle with fellow Conservatives without a fight.
Provincial finance minister Lloyd Snelgrove criticized Ottawa for
regulating a provincial resource, which would add “multiple layers of
government trying to the same thing, [where] nobody wins.”
Snelgrove
told the Calgary Herald
that Stelmach’s Alberta government has been worried for some time
Ottawa would step in and regulate the provincial resource, adding
unnecessary duplication and costs to the multibillion-dollar sector.
“The federal government has sat on the sidelines for years and years and
years. Now they see their little golden goose is under attack and they
want to be the voice for Canada on the world stage and we respect that,”
Snelgrove told the Calgary Herald.
The Wikileaks cable, little-reported in U.S. media, which is a bit
surprising, considering its importance to the U.S. energy future, also
revealed that the Obama administration inquired about a possible
moratorium on new oil sands development as global criticism mounted over
the second-largest proven oil reserves in the world.
A San Francisco-based environmental group has run anti-oil sands
billboards and newspaper ads in Canada, the U.S. and in Europe, urging
tourists not to come to Alberta. Stelmach, who recently announced he’ll
be leaving office soon, replied angrily, buying billboards and print ads
of his own saying Alberta is addressing environmental concerns.
Read full article
Kinder Morgan proposes SECOND KITIMAT BITUMEN PIPELINE
From Northwest Coast Energy News – June 2, 2011
by Robin Rowland
In a story broken early Thursday, June 2, by the Vancouver website Tyee
and confirmed by Northwest Coast Energy news, another major energy
player, Kinder Morgan is proposing a second pipeline to carry bitumen
from the Alberta oil sands to the port of Kitimat.
The proposal
was part of a presentation to industry analysts during a conference on
March 24, 2011, with a PDF of the Power Point presentation posted on the
Kinder Morgan Website.
The likely controversial proposal was not picked up by the media until Tyee broke the story.
The
presentation says the proposed pipeline is one of several alternatives
proposed for the expansion of the existing Kinder Morgan Transmountain
Pipeline. In this scenario the pipeline to Kitimat would branch off
from the Transmountain Pipeline go through Prince George and then
apparently follow existing pipeline routes to Kitimat and not follow the
proposed Enbridge Northern Gateway route.
The Kinder Morgan presentation says the Transmountain pipeline branch to
Kitimat would cost $4 billion, compared to the $5,5 billion that
Enbridge has budgeted for the Northern Gateway project. The
Transmountain pipeline would have a capacity of 450 thousand barrels a
day compared to the Northern Gateway capacity of 550 thousand barrels a
day.
Tyee says:
A power point presentation
for investors by Ian Anderson, president of Kinder Morgan Canada Group,
provides a wealth of information that has not been widely shared with
the general public or local governments:
Tyee says Kinder Morgan is also asking the National Energy Board for a
immediate jump in the bitumen going through the port of Vancouver
They are also requesting to divert more Alberta crude and bitumen
capacity to the Westbridge tanker terminal in Burrard Inlet and away
from existing land-based refineries in B.C. and Washington. If approved,
this would immediately expand crude capacity through Vancouver from
52,000 bpd to 79,000 bpd — an increase of more than 50 per cent
.
According to the documents seen by Tyee, the Vancouver end of the
project would require the dredging of Second Narrows to allow large
supertankers to visit the port. Tanker traffic in Vancouver would
increase, Tyee says
Tanker transits through Vancouver will increase to 216 per year in 2016, up from 71 in 2010 and 22 in 2005.
All this is being propelled by increasing energy demand from China. It
also appears that Kinder Morgan wants to increase the Vancouver capacity
because of the delays in the Enbridge Northern Gateway project, which
means that Alberta oil patch is seeking new ways to get the raw bitumen
to China.
Links:
Kinder Morgan Canada presentation on the Kitimat pipeline and the Vancouver port expansion (PDF)
Kinder Morgan application to the National Energy Board (PDF))
Read original article
Without Keystone XL, oil sands face choke point
From the Globe and Mail – June 8, 2011
by Nathan Vanderklippe and Shawn McCarthy
Amid the controversy engulfing TransCanada Corp.’s (TRP-T42.02-0.43-1.01%)
Keystone XL pipeline, which this week suffered another potential
setback at the hands of the U.S. Environmental Protection Agency, an
uncomfortable prospect is arising for Canada’s oil patch.
If the
$7-billion (U.S.) project is not built, the energy sector faces the
prospect of being “landlocked in bitumen,” with no way to get mounting
crude production to market. Without the massive new line, whose
environmental impact has become the subject of heated debate in the
U.S., existing pipelines could be constrained in as little as four
years.
That’s in part because oil sands producers likely only have until
2015 before they run out of customers in existing markets, as refineries
in the Midwest reach their capacity for processing Canada’s heavy oil.
They would then be stuck with growing volumes of oil, waiting for other
options to materialize. Some of those alternatives would be uncertain
and could take years to achieve, such as building new pipe across
contentious areas of British Columbia.
And a backup in crude, if
it were to happen, would almost certainly lead to diminished profits.
History has shown that pipeline restraints can lower the price of a
barrel of oil by multiple dollars – a consequence that speaks to the
importance the industry has placed on getting XL built. Billions of
dollars in spending are predicated, in part, on having that new pipeline
capacity in place.
“Unless we get increased [market] access, like
with Keystone XL, we’re going to be stuck,” said Ralph Glass, an
economist and vice-president at AJM Petroleum Consultants in Calgary.
“We’re
heading into the same situation with crude oil as we did with natural
gas, in that we’re going to hit a wall at some point in time and our
production is going to be the one backed out of the system, like natural
gas has been backed out of the U.S. system. I think it will have a
dramatic impact.”
For the oil patch, the possibility that the XL
project will falter is so outside expectations that many haven’t even
considered it. Indeed, companies have already signed up for the majority
of its capacity.
“None of us are really planning for that,” Devon Canada president Chris Seasons said.
TransCanada
argues that the pipeline’s contributions to U.S. employment and oil
supply will prove too compelling for the Obama administration to turn
down.
“We do not believe there will be a ‘world without Keystone,’
” TransCanada spokesman James Millar said in an e-mailed comment. “We
cannot see a scenario where the U.S. would say no to jobs and energy
security in getting oil from a stable nation in Canada.”
Yet the
pipeline has stirred a rancorous debate in the U.S., with critics
questioning whether it would imperil key water resources and further tie
that country’s economy to hydrocarbons. More questions arose this week
when the U.S. Environmental Protection Agency sent a letter to the State
Department, which is charged with approving the project. The letter
outlined a lengthy list of concerns about XL and argued that the State
Department’s draft environmental impact statement is seriously flawed
and needs more work.
That has set the stage, some believe, for a
likely delay in the final approval decision, although the State
Department still expects to make that decision later this year.
On
that decision hangs not just a major source of future revenue for
TransCanada. In many ways, Canada’s entire oil and gas industry could be
affected. For example, Brian Ferguson, the chief executive officer of
Cenovus Energy Inc., has said Keystone XL is essential to allow future
oil sands growth. Tens of billions of dollars hang in the balance.
Building
new pipelines is so critical to Alberta’s future that the province’s
Energy Minister, Ron Liepert, thinks it needs national consideration.
“If
there was something that kept me up at night, it would be the fear that
before too long we’re going to be landlocked in bitumen,” he said.
“We’re not going to be an energy superpower if we can’t get the oil out
of Alberta.”
Mr. Liepert, who is co-hosting a meeting of federal
and provincial energy ministers in Kananaskis, Alta., in July, is urging
his counterparts to adopt an energy strategy that would make the
development of crude oil-export pipelines a matter of national
importance. He is also hoping Ottawa will strike a continental energy
pact that would commit the U.S. to providing market access to Canadian
oil in return for security of supply.
Were such a strategy to be
struck, it might alleviate “these project-by-project delays that I think
are just going to get longer and longer,” Mr. Liepert said, noting that
oil sands growth forecasts suggest several more XL-sized projects will
be needed in future years.
For Canadian producers, some other
options are available, including expanding and reconfiguring Enbridge
Inc.’s pipeline system to push oil farther east, where it can displace
some Atlantic imports.
But one of the most serious concerns lies
in getting heavy oil sands crude to refineries that can process it – an
issue likely to grow in importance in coming years. Keystone XL would
bring oil to the Gulf Coast, home to the world’s largest refining
complex. Most of today’s exports flow to the Midwest; several proposed
new pipes could bring more volume to the Gulf Coast – although it may be
a brief reprieve, since the Canadian Association of Petroleum Producers
expects existing pipelines to be full by 2017 or 2018.
Problems
are likely to arise long before then, however, especially since
Midwestern refineries are likely to reach their heavy oil limit by 2015
amid a surge in U.S. domestic light crude production, according to work
by IHS CERA.
“Therefore it is even more important that heavy crude
like the Canadian oil sands can get to a market that can process it,”
said Jackie Forrest, Calgary-based director of global oil for the
international research firm.
Read original article
Globe & Mail: Enbridge still short on pipeline support from First Nations
From the Globe and Mail – June 9, 2011
by Nathan Vanderklippe
Enbridge Inc. (ENB-T30.42-0.32-1.04%)
is struggling to win aboriginal support for its Northern Gateway
project, despite major financial promises and efforts to curry support
through sponsoring golf tournaments, powwows and rodeos, regulatory
documents filed by the company show.
The $5.5-billion pipeline, designed to transport Alberta crude to the
B.C. coast for export to Asia and California, has garnered major
industry support, but substantial opposition from first nations that
believe it will endanger the environment.
Enbridge has pledged some $1-billion in financial sweeteners to first
nations, including a 10-per-cent equity stake in the project and
promises of hiring guarantees and hundreds of millions in spending on
aboriginal businesses. It has promised economic benefits to any B.C.
group with reserve land within 80 kilometres of the proposed right of
way.
But documents filed with the National Energy Board by Enbridge, which is
seeking regulatory approval for the project, show that a surprising
number of groups do not appear interested in the offer, which was first
made public in February.
Enbridge has presented its benefits-package offer to 35 groups and first
nations. As of March 31, another 13 had not received the benefits
package. Many, including a series of coastal nations, have outright
refused to meet with the company.
And even some of those who initially agreed to look over the offer now
say they aren’t interested. Take the Tl’azt’en Nation. It is listed as
having received the benefits package. But its chief, Ralph Pierre, says
bluntly that his people have “rejected it and refused to even go through
the package.”
The Enbridge documents say the Tl’azt’en have invited Enbridge to speak
with leaders about financial specifics in the package. But Mr. Pierre
said the package is “still sitting right here in front of me right now
and I’m just not interested in opening it, to tell you the truth.”
Discerning how many first nations actually support Northern Gateway has
been challenging, in part because Enbridge has declined to provide
numbers. But the document suggests the tally is low.
Two groups – the Macleod Lake Indian Band and the Alexis Nakota Sioux
Nation – have requested that the company relocate pumping stations onto
their land, as a way of increasing the benefits that could flow their
way.
But when Enbridge held an all-expenses paid weekend in Banff earlier
this year for a “Best Practices in Aboriginal Business and Economic
Development” conference, only five nations were represented. Enbridge
spokesman Paul Stanway says the company invited only half a dozen whose
“fit was established based on the focus of the Banff program and
corresponding identified aspirations of invitees.”
Critics, however, took the short list – which included several nations
known to be pipeline supporters, as well as the Tl’azt’en, where a
leadership change has eroded support – as evidence that Enbridge has few
on its side.
“What it indicates to me is that, after six years of trying, they’ve got
five nations showing up to these things. So for love or money, they
can’t get solid support,” said Eric Swanson, a campaigner for the
Dogwood Initiative, a Victoria-based environmental lobby group.
Enbridge, however, says first nations interest in business opportunities
are substantial. An aboriginal business summit held in early 2010
brought out representatives of 42 communities along the pipeline route.
“In March, 2011, Northern Gateway polled some of the aboriginal groups
to determine the level of interest for a second aboriginal business
summit,” the company says in the filings. “All aboriginal groups
contacted expressed a strong interest.”
Read original article
New York Times: Oil Sands Project in Canada Will Go On if Pipeline Is Blocked
From the New York Times June 7, 2011
by Ian Austen
OTTAWA — One way or another — by rail or ship or a network of pipelines — Canada will export oil from its vast northern oil sands projects to the United States and other markets.
So the regulatory battle over the proposed Keystone XL pipeline, which
would link the oil sands to the Gulf Coast of the United States, may be
little more than a symbolic clash of ideology, industry experts say.
Even if the Obama administration rejects the Keystone plan, the pace of
oil sands development in northern Alberta is unlikely to slow.
Oil producers in Canada have several alternatives for reaching the
United States market. And recent investments by Chinese companies in the
oil sands suggest that a growing alternative market lies across the
Pacific.
“The Canadian oil sands will continue to be developed irrespective of
whether the pipeline goes ahead,” said Russell K. Girling, the president
and chief executive of TransCanada, the company behind the $7 billion project.
That determination to proceed has become almost beside the point in the
battle over Keystone XL’s fate, which has dragged on since November
2008.
Environmentalists are using the project as a proxy for their general
antagonism toward oil sands production, which consumes large amounts of
water and energy and can be destructive to the boreal forest that sits
on top of the tarry rock from which the oil is extracted.
“This is really a campaign against tar sands expansion rather than a
single pipeline,” said Susan Casey-Lefkowitz, the director of the
international program at the Natural Resources Defense Council, an
environmental group that is a leading American critic of the process.
Advocates, meanwhile, say that oil sands extraction is getting cleaner
and represents a potentially major source of oil from a politically
stable ally that will help ensure America’s energy security.
The stakes are enormous. The oils sands have reserves of 171.3 billion barrels, according to estimates
by the provincial government of Alberta — enough to change the balance
of world oil markets, some energy experts say; by comparison, Saudi
Arabia has reserves of 264.2 billion barrels.
Because of that, the debate over the pipeline has been unusually
protracted and fractious, and, according to some analysts, characterized
by hyperbole on both sides.
“This situation has reached such talismanic significance that whatever
the U.S. government does will be read far more deeply than the substance
merits,” said Michael A. Levi, the senior fellow for energy and the
environment at the Council on Foreign Relations.
The State Department, which must approve the project because it crosses
international borders, is nearing the end of its environmental review
and then will examine national interest questions. It has said it
expects to make a ruling by the end of the year.
As the world’s largest importer of oil and a next-door neighbor of
Canada, the United States is the most attractive and logical market for
oil sands crude and already buys virtually all that Canada exports. But
producers are eager to move their product all the way to the Gulf of
Mexico, where there are more refineries capable of handling the
unusually thick crude.
It is now shipped through an existing pipeline — an earlier part of the
Keystone project — to Cushing, Okla., where large storage facilities are
fed by a variety of pipelines. There, it is priced against lighter oil
and generally commands a lower price.
Because demand for oil in the United States is unlikely to fall
significantly in the foreseeable future, Canadian producers are sure to
look for other ways to ship their oil south if the Keystone XL project
is rejected. While backup plans are not fully developed, other options
do exist.
Shipping by rail is one. Last October, in a joint venture with the
Canadian National Railway of Montreal, Altex Energy, an oil shipping
company, began shipping relatively small amounts of tar sands crude
along Canadian National’s tracks directly to the Gulf of Mexico.
Not only does rail avoid billions of dollars in infrastructure
investment, it also escapes any regulatory reviews in the United States.
“It’s no different than shipping grain,” said Glen Perry, the president of Altex, which is based in Calgary, Alberta.
Mr. Perry acknowledged that rail was considerably more expensive than
pipeline shipping. Pipelines, however, require the oil sands crude to be
diluted with chemicals that thin it and make it flow more easily. Rail
cars do not.
In addition to rail, there are other pipelines available. The Trans
Mountain pipeline owned by Kinder Morgan already moves Alberta oil,
including tar sands production, to ports on Canada’s Pacific Coast. Some
of that travels by sea to refineries in the United States.
While that pipeline is operating at near capacity, Kinder Morgan is considering increasing its capacity to the coast and has already upgraded the line inland.
Enbridge, another large Canadian pipeline company, is proposing its own
line, from just north of Edmonton, Alberta, to the northern British
Columbia port of Kitimat.
While both of those projects have encountered opposition from
environmentalists and some aboriginal groups, the political climate
favors the energy industry. Last month Canadians re-elected a
Conservative government that has its traditional power base in Alberta,
which has staunchly promoted the oil sands.
Other pipeline projects could develop if Keystone XL does not. It is technically feasible to convert one of two natural gas
pipelines to eastern Canada to carry oil. Once there, shipments could
enter the United States through existing trans-border crossings in
Ontario and Quebec.
Ronald Liepert, the energy minister in Alberta, said that while Canada
would prefer to sell its oil to the United States, “this commodity will
go someplace.”
In particular, he said, China is already a major consumer of other
Canadian natural resources and a small investor in the oil sands. “I can
predict confidently that at some point China will take every drop of
oil Canada can produce.”
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