Tag Archives: Alberta Tar Sands

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

September 30, 2012Energy and Resources, Oil&Gas, Tar SandsAlberta Tar Sands, Oil and gasCommon Sense Canadian

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And that’s not Canada’s only problem…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

September 22, 2012Energy and Resources, Oil&Gas, Pipelines and Supertankers, Tar SandsAlberta Tar Sands, BC Oil Pipelines and Supertankers, Enbridge, KinderMorgan, Oil and gasCommon Sense Canadian

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

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

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

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

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

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

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

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

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

US Boom in Oil Production Threatens Market for Canadian Tar Sands

September 15, 2012Energy and Resources, Oil&Gas, Tar SandsAlberta Tar Sands, Oil and gasCommon Sense Canadian

Read this story from The Globe and Mail on a boom in US domestic oil production that threatens to shake the economic foundation of Canada’s Tar Sands. (Sept. 11, 2012)

A torrent of oil pumped from new wells across the U.S. is setting in motion a decade of dramatic change that promises to wean the country off OPEC, and threatens the growth of energy imports from Canada.

The U.S. is now staring at an energy future awash with its own crude, with far-reaching consequences for Canada’s oil sands, the U.S. economy and global geopolitics. This massive shift has been sparked by changing political sentiment and technological advances that have allowed crude to be tapped in new places – from North Dakota to Oklahoma, Colorado, Michigan, and even Florida.

The United States, according to new data released Monday by Bentek, a U.S. energy analysis firm, will see its oil production rise nearly five million barrels a day, or 74 per cent, in the next decade.

In that time, reliance on countries outside Canada will largely disappear. The U.S. today imports 45 per cent of its petroleum, half from OPEC countries. But by 2022, Bentek projects, only a million barrels per day will be delivered to U.S. shores by tanker – down from 6.7 million in 2011 and just 5 per cent of total demand – and at least some of those won’t come from OPEC, but from countries like Mexico and Brazil.

The coming change, according to Bentek, is startling: By 2016, the U.S. will surpass its 1970 oil production peak of 9.6 million barrels a day; by 2022, it will have leapt to 11.6 million barrels a day.

For Canada, the news is both good and grim: Canadian crude, flowing by pipeline, will continue to be a substantial source of U.S. energy. But growth in Canadian exports south of the border could face a wall in 2018, when the combination of U.S. oil output and pipeline constraints raise the possibility for new “Canadian production to get pushed out,” said Jodi Quinnell, one of the Bentek report authors. “What comes in to the U.S. will slow and basically remain flat from 2018 to 2025.”

That projection suggests the coming half-decade will see Canada, and its fast-growing oil sands, struggle against the tide of U.S. oil. It also substantially raises the stakes for a country in the midst of two contentious applications to carry Canadian crude to the British Columbia coast for export to Pacific markets. It should “cause us to, even more than we are today, realize the importance of creating additional channels to the world,” said Wayne Chodzicki, the Calgary-based global head of oil and gas for consulting firm KPMG.

Farewell to Peter Lougheed – A Real Common Sense Canadian

September 15, 2012Canada, Energy and Resources, Oil&Gas, Politics, Tar Sands, Western CanadaAlberta Tar Sands, Oil and gas, PoliticsRafe Mair

If you skipped A20 of Friday’s Province or B3 of the Sun, you would not know that Former Alberta Premier Peter Lougheed had died. Such are priorities of Postmedia.

I first met him at a Western Premier’s Conference, in 1976, at dinner. It was not one of my better moments. Bll Bennett cracked a one-liner just as I was taking a drink of wine and, as has happened to all of us with milk when we were kids, I shot the wine out of my nostrils all over the tablecloth. Bennett quickly said, “You can dress up these Kamloops guys but it doesn’t do any good.”

As minister responsible for constitutional affairs, I sat in too many conferences to count with Lougheed, present and a big force.

One amusing moment occurred at the Western Ministers Conference in Prince George, in 1979, I think it was.

During an intervention by Manitoba Premier Sterling Lyon he said, “As the Duke of Marlborough said, ‘publish and be damned.'” As is often my wont, I blurted out, “it was the Duke of Wellington.” This lese majesty brought silence for a second or so, then Premier Bennett said, “Some ministers can be replaced.” Hereupon Lougheed said, “Bill, I’ll trade you three of mine for Rafe.” Calm was restored!

Peter Lougheed was known as a stout defender of Alberta’s sole right to its natural resources. This, perhaps one might say obstinance, had deep historical significance.

Alberta had not come into Confederation as a political entity as had all the others, but by a federal division of federal crown land in 1905 that created Saskatchewan and Alberta. They did not, then, have control over their natural resources until they were ceded to them in 1930. After that, it was part of the Alberta psyche to demonstrate that control at every appropriate moment. At every First Minister’s Conference dealing with the patriation of the Constitution, Loughheed would make it plain that any attempt, however slight, to deal with Alberta’s resources would mean Alberta opposition.

Lougheed had reason to suspect the feds as evidenced by Pierre Trudeau’s Energy Program of 1980, where the feds did clearly interfere with Alberta (and BC) natural resources. Premier Lougheed responded by cutting back oil production. This head to head confrontation continued until 1984 when Prime Minister Mulroney repealed the program. It was the time Albertans had bumper stickers reading “Let the eastern bastards freeze in the dark.”

It was a more progressive development of the Tar Sands that happened on Lougheed’s watch. What a pity his policy wasn’t continued, for he stood squarely for this project to be developed by Canadian refineries to be used for Canadian needs. Had his policies been followed, there would be no discussion of pipelines in BC nor tankers on our coast. Lougheed argued this point to his last days, calling for local refineries – and moderation in developing the resource.

It was he who created the “rainy day” fund putting oil revenues away for moment when the revenues weren’t there and Albertans would need some extra money.

British Columbia scarcely agreed with Lougheed – especially on constitutional issues – but always respected him and listened.

Peter Lougheed demonstrated his ongoing influence in the recent Alberta election when with a week to go, he endorsed Premier Alison Redford. This move was the kiss of death for the Wildrose Party.

The word “great” is much abused and misused but it belongs properly on Peter Lougheed – he was truly a great Albertan, great Canadian and great man. I feel highly privileged to have known him and witnessed his contributions to his province and his country.

Alberta’s bogus labour shortage

August 28, 2012Energy and Resources, Tar SandsAlberta Tar SandsCommon Sense Canadian

Read this article by Tony Clark at rabble.ca which deflates the idea that foreign workers need to be brought in for Alberta projects. Excerpt: “The Certified General Accountants Association of Canada released its own report with similar findings. Their findings include ‘Labour shortages are difficult to observe and measure directly’ and ‘Where sufficient data exists, an assessment shows that labour shortages occurred rather sporadically and did not persist for more than one year at a time over the past ten years.’
These bad numbers lead to bad public-policy decisions.” (August 7, 2012)

First Nation says Alberta oilsands plan will ‘annihilate’ its lands and future

August 26, 2012Energy and Resources, Tar SandsAlberta Tar Sands, First Nations, The TyeeCommon Sense Canadian

Read this article from Canadian Press, published by The Tyee. Excerpt: “Your plan, your land, your future? This is not our plan, it’s the governments plan to annihilate our lands and our future.” – Chief Allan Adam (August 24, 2012)

National Energy Strategy a Deception of EPIC Proportions, Designed to Fleece Canadians

August 20, 2012Canada, Energy and Resources, Oil&Gas, Politics, Tar Sands, Western CanadaAlberta Tar Sands, Oil and gas, PoliticsKevin Logan

In this piece, the first of a series of three, we explore why a National Energy Program is political suicide, yet something called a National Energy Strategy is all the rage.

Decades ago Canadians were treated to a strategy that involved the oil and gas industry called the National Energy Program – its implications still resonate today. The program entailed Canada getting its fair share of the abundant natural resource wealth while establishing Petro-Canada as a vertically integrated, well to pump, crown corporation and an integral component of the industry. At no point did this move represent nationalizing the industry, as most of the world’s industry is, but instead simply aimed to have Alberta’s resource bounty diversified throughout the nation, while working in conjunction with private industry and its major players. What James Laxer explains as a “Canadianization” of the industry.

Through price controls that kept domestic consumption affordable and taxation on exports, which filled coffers in Ottawa by targeting foreign-owned players in the Canadian oil and gas patch, the federal government was able to offer a wide array of attractive incentives designed solely to encourage the upstart, growth and stability of wholly owned Canadian firms, while at the same time developing the public crown corporation to serve Canadian domestic needs and Interests.

This allowed for a threefold approach which involved: limiting the excessive dominance of foreign oil majors, creating “Oil independence” from the international – OPEC led – market, and encouraging development of private Canadian owned oil companies while nationalizing some of the benefits in an effort to facilitate a strong Canadian stake in the game, important operational inroads into the industry, and a handle on its reserves and future direction.

Since Harper’s regime was installed by the oil giants operating in Canada, a much diminished and demonized Petro-Canada was quietly privatized for a song (marking the single largest share divesture in history). Five years later, in what was billed as a bid to bolster Canadian Nationalism, Suncor, the Tarsands behemoth, sucked up Petro-Canada in a merger that saw share prices rise once again, a reoccurring event after the public divesture of the remaining 45 million plus shares. The 2004 dumping of Petro-Canada marked the end of reasonable policy making in the oil and gas patch and the final victory for an unbridled global corporate free-for-all.

Under the NEP of old, foreign operators such as CNOOC would not be anywhere near the Tar Sands control-and-command centre, let alone slowly becoming a dominant player. Instead, they would have a place in developing the resource and exporting it but that would come at a significant cost in the form of export taxes going directly to Ottawa, something domestic companies could avoid. Moreover, had we still run with NEP-style policies, domestic prices would be capped and Canadians would enjoy both a secured supply into the future, eastward flowing supply lines (limiting our reliance on imports) and affordable petroleum products, while at the same time encouraging wholly owned and private Canadian companies to be at the very center of the growing industry, with the resulting fiscal rewards remaining within our borders and in the pockets of Canadians.

That is the fundamental difference between a National Energy Program stickhandled in Ottawa on behalf of Canadians and a National Energy Strategy stickhandled by oil majors on behalf of Global Corporate interests and executed by our politicians. Fundamentally speaking, the NEP goal was a fully integrated domestic industry shielded from the whims of the global market place, while a National Energy Strategy is the exact opposite. It is instead fully integrated with the global markets and largely owned and operated by foreign interests. One offers the people of Canada an integral role, adequate returns and a myriad of perks, while the other is a complete capitulation to some of the most powerful forces on earth in lieu of governments standing down and implementing the strategy drafted in corporate board rooms and rolled out by the EPIC corporate “think tank” (the secretive group of energy and political power-brokers previously detailed in these pages).

It is not difficult to comprehend the stark contrasts between the two approaches and why the rhetoric resulting from them is drastically different. When governments implement policies such as the NEP of old, people will benefit in the form of stronger public budgets, greater control over the resource and its extraction processes and policies, secure energy supplies into the future and a greater share of the pie, not to mention perks like affordable petroleum by-products and a much reduced price at the pump.

By contrast, the policies being ushered in by EPIC and its compliant politicians result in the mirror opposite. A reduction in our ability to protect the environment and a gutting of processes designed to uphold Canadian values. Exposure to globalized petroleum markets resulting in high prices at home, little control over the development and export of the resources and royalty regimes that cater to multi-national interests as Canadians are left exposed to the whims of market volatility. And, of course, there is the over all socializing of losses, costs and environmental impacts, as well as, a privatization and off-shoring of the wealth that is generated while governments are left to file deficits and increase debt.

The “benefit” to Canadians accrues to the very few plugged into the higher levels of the petroleum industry, their lackies and those lucky enough to obtain the few high paying “jobs.” In the final instance of jobs it seems those lucky few will in fact be American service men and veterans as apparently the talent pool in Canada does not exist, even with the swelling unemployment lines resulting from the 500,000 manufacturing jobs shed during Harper’s oily regime.

These fundamental underpinnings are never raised in the corporate media. Instead we are treated to a now decades-old demonizing of the NEP and similar policies while celebrating a new “National Energy Strategy” which is designed to fleece Canadians as illustrated above. Our mainstream media and politicians are only too happy to dish up an array of ridiculous rhetoric which amounts to hollow grandstanding and politicking while avoiding the real issues Canadians care about, all the while paving the way for the aggressive globalization of the agenda.

This is done through the implementation of the National Energy Strategy which has seen its most pivotal times occur during the height of the Summer vacation season in Kanaskis and again this summer on the east coast, in a less than transparent bid to keep the protests at bay and the implications under wraps.

With these fundamental points established, I will continue explore the details of the new National Energy Strategy offered up by EPIC and dutifully carried out by Canadian politicians on behalf of the corporations interested in transitioning Canada into an Energy Superpower in the remaining two pieces of this three-part series.

Canada’s Shrinking Oil and Gas Profits

August 19, 2012Energy and Resources, Oil&Gas, Tar SandsAlberta Tar Sands, Oil and gasCommon Sense Canadian

Read this story from the Huffington Post on the shrinking profit margins from Canada’s oil and gas sector and how that could be a sign of things to come. (July 25, 2012)

The talk coming out of Canada’s oil patch in recent months has been increasingly tinged with panic. Industry leaders are growing worried about the oil sands’ future prospects, and the earnings reports coming out this week are a good sign of why that may be.

Oil producer Cenovus on Wednesday reported a 40-per-cent decline in profit in the latest quarter, falling to $396 million from $655 million a year earlier.

Things were even worse for Calgary-based natural gas producer Encana, which recorded a whopping quarterly $1.48 billion loss. It had recorded a profit of $383 million in the same period a year earlier.

(And Canada’s largest energy producer — Suncor — said on Wednesday it’s mulling delaying some of its new projects. The company denied market conditions were behind the move, saying only that the company is “looking at how we get the best economics for those projects.”)

On the surface, the reason for this is obvious: Declining energy prices. Natural gas prices are at rock bottom, and prices for oil have been under downward pressure as the world economy faces a tough summer thanks to Europe’s credit crisis and a slowdown in China.

But beneath the surface is a rapidly-changing global energy industry. With the U.S. rapidly developing its shale oil and gas deposits, Asia increasingly looking to renewable energy, and the controversy over the environmental impact of the oil sands showing no signs abating, Canada’s energy exporters could find themselves in a seemingly unthinkable situation: Lots of oil, and few markets to sell it.

All this is happening just as Canada’s dependence on energy exports has been reaching new heights. As the Globe and Mail reported, oil and gas sales, as well investment in oil sands infrastructure, accounted for one-third of Canada’s economic growth in 2010 and 2011.

So what happens to Canada when energy and commodity prices go down? One thing that happens is it becomes cheaper to tank up your car. But at a certain point, as prices come down, the benefit to Canada of lower gas bills and cheaper commodities is overtaken by the cost to the economy of lost exports.

“If oil prices get to a point where they are going to deter investment in the [energy] sector, the negatives outweigh the benefits,” TD Bank economist Diana Petramala told the Globe.

That scenario — unthinkable just a few years ago — may be exactly what Canada’s natural resource sector may be facing. And it’s not just a temporary blip in prices Canada is facing — it may be a permanent and revolutionary shift in energy extraction that makes Canada’s oil sands far less desirable than they seemed until now.

One thing threatening Canada’s energy sector is the new American oil and gas boom. With new extraction techniques like hydraulic fracturing coming online, U.S. energy companies are busily starting to drill on domestic soil again. The oil industry in Texas is booming in a way it hasn’t in more than three decades, and plenty of other, less expected, places are becoming oil meccas. Meanwhile, new supplies of natural gas have pushed prices for the energy source down to near-record levels.

This boom is already having tangible effects on Canada’s oil industry. Insiders estimate that Canadian exporters, unable to export to markets other than the U.S., are facing a $15 per barrel discount on the oil they sell, when compared to international Brent crude prices.

But it’s not just supply and demand that’s cutting into Canadian energy profits — it’s Canada’s lacklustre response to the world’s concerns about oil sands carbon pollution.

Audio: Damien Gillis Discusses Energy and BC’s Economy on Co-op Radio

August 18, 2012Canada, Energy and Resources, Fracking, Pipelines and Supertankers, Politics, Tar Sands, Western CanadaAlberta Tar Sands, Audio, BC Oil Pipelines and Supertankers, Enbridge, fracking, KinderMorgan, LNG, PoliticsDamien Gillis

Check out this interview from Aug. 15 on Vancouver Co-op Radio’s “Discussion”, with host Charles Boylan. Guest Damien Gillis and Boylan cover a wide range of topics relating to energy and the future of the BC and Canadian economy. The pair discuss the myriad alternatives popping up of late to the embattled Enbridge pipeline, including Kinder Morgan’s planned twinning of its Trans Mountain Pipeline to Vancouver, and shipping bitumen by rail. They also cover natural gas development in northern BC – including controversial hydraulic fracturing and the building of a new pipeline to carry this gas to Kitimat and covert it to Liquified Natural Gas to sell in Asian markets – plus an alternative economic vision for BC that doesn’t depend on becoming a major fossil fuel corridor to the world. (Aug. 15 – 1 hr)

Refining the Black Stuff in Kitimat Doesn’t Make Sense

August 18, 2012Energy and Resources, Oil&Gas, Pipelines and Supertankers, Tar SandsAlberta Tar Sands, BC Oil Pipelines and Supertankers, Oil and gasRafe Mair

One must, I suppose, take newspaper tycoon David Black’s offer to build a refinery near Kitimat seriously, although the idea is preposterous on several fronts.

For openers, he doesn’t tell us who will be behind such a refinery. He admits he doesn’t have the money – an important matter.

Of course, Mr. Black tosses out employment as jelly bean for us to enjoy, citing 6,000 jobs over the six year construction period and 3,000 long-term in the operation of the refinery. He doesn’t mention any research on this issue – one must take these numbers with the skepticism which always rightly greets announcements of undertakings like this.

Mr. Black ignores the fundamental issues here.

He ignores the certainty that the pipeline will continue to have spills of bitumen – Enbridge averages one per week – and BC will watch as its wilderness is incrementally destroyed.

It’s interesting to note that Mr. Black doesn’t deny the dangers from oil tankers but allays our fears by saying that because refined oil and gasoline will be replacing bitumen, that our worries are over!

What also is puzzling is the timing of this announcement.

Mr. Black is a self-made billionaire who admits that he knows bugger all about refineries. This suggests that he has some backers in the oil business who are a bit shy about having their pictures in the papers.

Wasn’t the deal that the main customers were Chinese who want the raw bitumen to refine themselves?

Was this idea from David Black? If it means anything at all it must be a diversion to focus on jobs! Jobs!

The announcement attracted attention – but when one reads it, it’s a damp squid.

In my view, the public will have no trouble seeing this proposition for what it is – environmentally unacceptable and as not only no improvement on the Enbridge proposal but, on analysis, worse.

Mr. Black should stick to publishing newspapers.

The Common Sense Canadian

Critical discussion of key issues shaping our economy and environment.