Read this article in the Sydney Morning Herald about a competition in natural gas development between Australia and east Africa. “Royal Dutch Shell, BG Group of the UK and France’s Total may scale back projects to build liquefied natural gas export plants in Australia and switch to Tanzania and Mozambique, where the new prospects lie and will cost about half as much.” (August 31, 2012)
Read this article by Charlie Smith in the Georgia Straight about the coverage given to David Black’s refinery proposal by the Terrace Standard, a Black newspaper. Excerpt: “Here’s how the editorial ended—and make no mistake, the endings of editorials are often what’s most important because that’s what’s left in the reader’s mind.
“‘Significant economic benefit derived from the pipeline could sway popular opinion, especially [for] people living through hard times in northern B.C., but probably not enough to tip the scales.
“‘Black and Enbridge will have a tough time convincing residents in southern cities that the potential of thousands of jobs in the northern oil sector is worth the risk of a pipeline leak or a tanker running aground on B.C.’s coast.’
“In other words, Enbridge and Black would create thousands of jobs and significant economic benefits, but it’s those southerners who just don’t get it.” (August 25, 2012)
The proposed Enbridge and Kinder Morgan bitumen pipelines through BC are finally receiving the attention they deserve – as is the much-needed corollary conversation on the Alberta Tar Sands and their true impact on Canada’s economic future, elevated to national prominence by Official Opposition leader Thomas Mulcair. Yet, as big of a game-changer as oil pipelines and tankers would be for BC, one could argue that the collection of proposed natural gas-related developments on the table is, taken together, at least as transformative for the province’s future – though you wouldn’t know it from the relative silence on the topic.
Until recently, that is. The past several months have seen a number of highly significant events related to this matter.
First, in mid-June, Apache Canada announced a massive new shale gas find in the Liard Basin, which stretches from northeast BC into the southeast corner of the Yukon. The Liard play, being touted as the “best shale gas reservoir in North America”, is west of the Horn River basin play, already one of the world’s largest. The find is undoubtedly a game-changer, elevating northeast BC to the world’s mecca for the relatively new, yet highly controversial process for breaking open shale gas formations deep underground, known as “fracking”.
The next big development came the day after Apache’s announcement, when the NDP, led by Energy Critic and likely future Energy Minister John Horgan, came out fully supporting an expanded natural gas industry in Northeast BC, downplaying environmental concerns about fracking. In the same breath, the Official Opposition showed clear support for the Liberal plan to build a number of Liquid Natural Gas (LNG) plants in Kitimat to export the resource to Asia.
The party’s position was solidified last week when the Georgia Straight reported it was fully backing a new pipeline from Summit Lake, north of Prince George – Encana, EOG and Apache Canada’s joint venture Pacific Trails Pipeline – to carry natural gas from northeast BC to three proposed LNG refineries in Kitimat.
Finally, Premier Christy Clark announced a week later that her government will be reclassifying previously dirty natural gas as “clean” – but only when it’s burned to power these proposed LNG plants in Kitimat. The Campbell/Clark Government previously banned the development of new gas-fired electrical plants, putting the emphasis on renewable or so-called “clean” energy alternatives – wind, solar, geothermal, biomass and hydro.
The premise for these new multi-billion dollar LNG plants is to access new markets in Asia which currently pay far more for gas than North American customers. Prices in China, Japan and Korea range up to $17 per thousand cubic feet versus a historic low of two to three dollars in North America today – largely thanks to the glut of natural gas flooding the domestic market as a result of new shale gas plays. The idea is to turn some of BC’s plentiful gas supply into liquid, put it on tankers and ship it to Asia to reap big profits. Without these prices, big finds like Apache’s in the Liard Basin simply don’t make sense to develop.
While the plan looks financially (though certainly not environmentally) promising on the surface, it’s fraught with complications:
1. The process of converting gas to liquid is enormously energy intensive. According to Christy Clark, all the the power from BC Hydro’s proposed new 1,100 Megawatt Site C Dam on the Peace River would be required for just Shell’s one proposed LNG plant in Kitimat. That may have changed, now that these plants are allowed to burn their own cheap gas for power, but, curiously, Site C Dam has not been taken off the table in the wake of that announcement. The otherwise energy self-sufficient BC has nowhere near enough electrical supply to power three new LNG plants and all the new mines the Clark Government is pushing forward.
2. The whole plan is contingent on this high price differential carrying forward – which is doubtful for a number of reasons. China’s economy is already showing signs of slowing down, while Japan is looking to restart its nuclear program; where will its energy demand be in 10 years when these plants are built and supplying the Asian market with LNG?
3. We’re not the only horse in the race. China has its own shale gas plays – which it is now starting to develop. Moreover, a number of other countries are thinking the same way we are – chief among them Australia, which is much further along and has already secured contracts to sell LNG to China.
4. The main method of supplying these plants – gas from fracking operations – is coming under increased scrutiny globally, with various moratoria having been instituted in other regions, relating to concerns over water use and contamination, earthquakes, and myriad human and animal health concerns. Fracking producers may well (and should) face increased regulation – meaning added costs and further reduced profits – or, worse, outright restrictions and shutting down of operations as awareness and evidence build against this controversial technique.
LNG and Mines Mean Site C
As befuddled and full of flip-flopery as the Liberals have been on this file, the NDP are in quite a pickle too. First, they give their environmental seal of approval to shale gas, while supporting the massively risky undertaking that is building and fueling multi-billion dollar plants on BC’s coast to turn this gas into liquid and ship it to new markets in Asia. But when the Liberals reclassify gas as “clean” (remember, the NDP just did as much themselves not a week previous) in order to allow these plants to use their own gas to power the enormously energy-intensive liquid compression process, the Opposition cries foul. Why? Because burning gas isn’t clean. So which is it, Mr. Dix?
I filmed a rally in Victoria two years ago led by First Nations and farmers from the Peace Valley in opposition to Site C Dam. NDP Energy Critic John Horgan, to his credit, attended the rally and spoke – but he stopped short of outright opposing the dam. He would only say that it required a full environmental assessment and that it should only proceed if the science supports it.
Then, in January, 2011, Horgan told the Georgia Straight that he didn’t think Site C was “necessary” at the time – though still leaving the door open to the project:
They want some peace in the valley, and as long as the spectre of Site C hangs over their head, there’s never going to be a comfort level in the community,” Horgan said. “They want a full-fledged, full-on environmental assessment, so that they can put on the table the science of the sloughing, the costs of dredging, and the total costs on ratepayers of a $6- to $7- to $8- or even $9-billion project.
Earlier this year, my colleague at the Common Sense Canadian, Rafe Mair put NDP leader Adrian Dix on the spot regarding Site C and got more of the same fence-sitting.
To my understanding, the NDP is on the fence or publicly committed to the above schemes – Site C, fracking, LNG – for three main reasons:
1. It is conscious of not allowing itself to be branded by its political opponents as “anti-progress” or “anti-industry”, especially after having taken a strong position against the Enbridge pipeline
2. It is wary of not stepping on the toes of First Nations who have signed onto to the LNG scheme – particularly the Haisla Nation of Kitimat, who have also been vocal opponents of the Enbridge pipeline.
3. It recognizes how much the province’s coffers have come to depend on royalties, licenses and other fees related to the natural gas industry and doesn’t want to disturb that flow, leading to big deficits that will play into its opponents’ hands.
While these are all politically understandable reasons for supporting this massive industrialization of northern BC, they do not excuse the arguments against this program.
In the very least, the environmental and health concerns associated with fracking and the loss of vital farmland and fish and wildlife habitat from Site C – not to mention the notion of massive public subsidies for an industry on less than solid ground going forward – should argue for a more mature position from the province’s government-in-waiting. They know this whole scheme is fraught with complications and this outright endorsement of it shows the NDP is ready to put short-term politics ahead of reasoned, long-term policy for the province.
Subsidizing Energy for Industry
Clearly, Site C, mining, fracking, LNG are all interrelated. Even if Site C isn’t used to power LNG, there are over a dozen proposed new mines in northern BC – each of which is hungry for taxpayer-subsidized electricity. This begs the question – one answered by economist Erik Andersen in a recent interview with Rafe Mair: should the public be subsidizing new industry at all, with skyrocketing power bills and new $10-plus billion dam projects like Site C?
One of the key bones of contention at this year’s failed Rio climate conference was the matter of ending subsidies for hydrocarbon production. Plainly, this is a no-brainer, if we are to get on with the necessary transition away from fossil fuels to more sustainable energy sources. Moreover, the wealthiest corporations in history are the last entities that should be receiving public subsidies. And yet, we learned through a leaked memo that the Harper Government was leading the charge against the move to end hydrocarbon subsidies. So much for the “free market” Stephen Harper and his fellow Milton Friedman disciples keep railing on about!
So in that regard, it makes abundant sense for the natural gas industry to use some of its own product to supply the enormous energy needs of these LNG plants. And yet, anyone should be able to recognize the environmental folly of reclassifying gas as “clean” to enable its burning, to ship more gas half way around the world to be…burned. And that’s ignoring the myriad environmental problems associated with the initial extraction of the gas through fracking.
A Looming Boondoggle
No matter the degree to which Site C or our public hydroelectric system are used to power this LNG program, the taxpayers of BC, as shareholders in our gas resource, are impacted by the choices the industry makes on numerous levels. We need to ask whether this LNG-Asian market vision is an economically viable, environmentally responsible idea, or an epic resource boondoggle in the making, as we have seen in the past with similar forays into the Asia market with our coal and timber.
These political parties and the industry are banking on achieving a higher price for their gas in Asian markets – particularly China and Japan. But China has its own shale gas potential and is only just beginning to develop it. On top of that, China’s economy – and thus energy demand – is showing real signs of faltering. It will take us 5-10 years to build all these LNG plants and the additional energy assets to power them. Will China still be paying premium prices for LNG a decade from now, given the volatility of the various factors which enable that pricing today?
There are other players, such as Korea and Southeast Asia who might. Petronas Energy of Malaysia recently scooped up Candian gas company Progress Energy for over $5 Billion.
But this raises another question: how will this benefit the BC and Canadian economy – especially in light of new labour laws from the Harper Government that allow companies like Petronas to import foreign workers and pay them 15% less than Canadian employees. So under this system, we could see many jobs going to foreigners (excepting those that are too technical to be done by cheap, imported workers), while these new profits flow out of Canada, along with the energy resource.
This LNG scheme – as with plans to export Alberta bitumen to Asia – should be viewed as a hail mary pass to try and get the Canadian oil and gas industry out of the financial pit into which it is presently sinking. With prices where they are, there is a real danger that BC’s once-thriving industry could collapse, without a North American market willing to pay a reasonable price for its product. And yet, Site C, LNG and fracking, taken together – as they should be – constitute a massive gamble for the citizens of Birtish Columbia, both environmentally and economically. As such it’s time we have a frank conversation about the issue before rushing headlong into a potential boondoggle of unprecedented proportions for our province.
Perhaps what needs to happen here – from both an environmental and economic perspective – is a planned ramping down of the North American natural gas supply, until prices begin to stabilize again. As energy economists like Jeff Rubin argue, the most effective way to regulate energy consumption is through price. Clearly, at $2-3/unit of energy, there is no incentive for the North American public or industry to conserve natural gas. Nor does this price point benefit the gas industry or the public, who are partners in the resource through the royalties and tax dollars we receive from its sale – all of which are significantly diminished in this climate. And yet, reducing supply in the North American market would be a tremendous undertaking that requires a level of collusion – and may not be practical, regardless, with hundreds of companies looking out for their own short-term interests.
In any event, while the public reaction and much-needed discussion around these issues have been delayed, there are signs they are now developing quickly. The political discussion surrounding the issue is intensifying, as is the media’s coverage of it. Already, the bubble shows signs of bursting, as Kitimat LNG – the joint venture between Encana, EOG and Apache – was recently delayed by another year as the consortium has yet to sign the contracts it needs with Asian buyers to finance the project. Meanwhile, some First Nations and environmentalists are beginning to organize protests against the consortium’s Pacific Trails Pipeline – the primary connector between fracked gas of northeast BC and this and other proposed LNG plants on the coast. Opposition to Site C Dam has been steadily growing as well, as I documented at this year’s record-setting ‘Paddle for the Peace’.
It’s high time this issue generated some of the intensity that the Enbridge project has received – as it would likely have as big, if not an even greater cumulative impact on the future of this province, environmentally and socioeconomically.
Read this article by Mitchell Anderson at The Tyee about an interview with Rolf Wiborg, a principal engineer for the Norwegian Petroleum Directorate. Excerpt: “I never figured out why such a resource-rich nation would let foreign companies come in and take most of the profits.” (August 22, 2012)
Read more: http://thetyee.ca/News/2012/08/22/Rolf-Wiborg/
Gordon Gibson used to be Liberal until he fell in with those proponents of consensual slavery, The Fraser Institute. While I find myself in great sorrow saying this, Gibson has become a all out capitalist suck.
Witness his article today on the op-ed page of the Globe and Mailas he talks about David Black’s idiotic plan to build a $13 billion oil refinery near Kitimat.
The Gibson I knew would never have allowed this Gibson to utter such tripe.
Gordon waxes lyrical about this “project”, uncritically accepting the numbers put out by Black’s flacks (neat little rhymer, don’t you think?)
Here’s paragraph 2:
The startling development is a proposal; for a $13 billion oil refinery… that would provide 6000 construction jobs for five years and 3000 direct jobs thereafter, as well as thousands of service soon-offs. Hundreds of millions of dollars in new tax revenues be generated annually. In effect, our resources would have value added here instead if China. No government could ignore that kind of opportunity”.
This is precisely what Black’s flacks said.
Gordon, had I made such a statement in the Legislature when you were a member of the opposition, you would have eaten me alive. You would have demanded to know what research developed these figures.
The thing that separates a journalist from a flack is the search for proof of statements made. You take these numbers as a given – what the hell has happened to you? Your column today should have been a paid advertisement for David Black.
You go on to say:
“On the environment side, there idea would vastly reduce concerns about tanker accidents. No longer would the floating behemoths be carrying heavy bitumen. Instead the cargo would be diesel, gasoline our jet fuel which evaporate quickly after a spill. Environmentalists should be overjoyed.“
The Exxon Valdez didn’t carry bitumen.
As to environmentalists being overjoyed – let me explain things to you, Gordie.
I can only speak for myself though I believe that most of your despised environmentalists would agree on these points.
I’m not against development per se although like Jeff Rubin in his recent best seller The End Of Growth, I believe that we had better get rid of the notion that we must always develop or fall far behind. There are limits, this pipeline and tanker traffic being just that.
What I’m against is this entire exercise, on environmental grounds.
Pay attention, Gord:
1. Spills from the pipeline are not risks but certainties. Enbridge admits that.
2. Spills from tankers are inevitable – I know of no one whom would say different. And even diesel, gasoline and jet fuels do colossal damage, especially to fish, birds and other wildlife.
3. And here, take off your Fraser Institute dark glasses, for this is the crunch –
We are talking about 1100 kms. through two mountain ranges and the Great Bear Rain Forest – all areas unreachable by clean-up equipment. Even if they could be reached, the Kalamazoo horror teaches us that if nothing else, bitumen spills can not be cleaned except by cosmetic efforts like putting turf over the bitumen to make it look OK for awhile.
Moreover we’re talking about a company, Enbridge, that averages more than a spill per week. Moreover, because these spills cannot be cleaned up, we’re talking ongoing piling of one disaster upon another – a serial environmental crime.
Is it unreasonable to stand 100% against a project that will do this permanent damage – despite all efforts to avoid it and clean it up if they don’t?
The tendency is to demand compromise and mitigation (a despicable weasel word) but what is there to compromise? It’s rather like striking a happy balance between life and death.
As a piece of journalism your article is a piece of shit.
As an act of the Fraser Institute kissing the ass of environmental despoilers, it is a masterpiece worthy of being in the public relations hall of fame.
Erratum: Gordon Gibson is no longer associated with the Fraser Institute.
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.
Read this article by Lauren Krugel in the Calgary Herald about a dozen significant oil and gas leases in the central Mackenzie area. (August 12, 2012) “(Chief Wilfred) McNeely said some residents are concerned about how much water would be drawn from the Mackenzie River for the fracking process, in which producers inject water, sand and chemicals into the rock at high pressure in order free the oil and gas. He said some have also expressed concern over chemicals contaminating the river.”
During nearly three decades of fruitless negotiating, the political leaders of the international community have failed to find an effective way to price carbon dioxide emissions and thereby ameliorate global warming and climate change. But simple causality guarantees that we will pay a carbon tax, even if we don’t have an official one. So a carbon tax is levied and collected by nature, usually inequitably and sometimes very cruelly.
In anticipation of this rising tax, the cities of Toronto and Halifax have already instituted expensive “adaptation” strategies to accommodate an increase in street flooding, storm water runoff, sewer backups, heat-related illness and storm emergencies.
Vancouver is the latest city to consider costly preventative measures that should reduce the astronomical costs associated with more active weather. The city is still stinging from a 2006 windstorm that left 250,000 people without electricity and required infrastructure repairs of $10 million. Then a 2010 rainfall flooded many homes, which resulted in lawsuits against the city. Said Sadhu Johnson, the deputy city manager, “The key for us is to be proactive. It will save us billions in the next century” (The Vancouver Sun, July 21/12).
And how much will it cost Vancouver to be “proactive”? Just the risk assessment studies for coastal flooding, urban forest management and fresh water challenges could be $1.3 million. The “adaptation” strategy is expected to cost $84 million for the years 2012 to 2014. All these re-engineering costs can be attributed to global warming. “The climate is clearly changing,” concludes Vancouver’s study, “and, in many instances, we are observing changes at the most extreme end of the projections made a decade ago.”
And what are the expected changes? Wetter winters with a 28 percent increase in “extremely wet days” by 2050. Heavy rainfall events that occurred every 25 years will occur every 10 years. Summers will get correspondingly dryer. Temperature increases will average 1.7°C by 2050 and 2.7°C by 2080. “Extreme heat events” that occurred every 25 years will occur every 8 years. Sea level rise, difficult to predict because of so many variables, could be from 1 metre to 2 metres by 2100, a change that could cause havoc with drainage systems, wharfs, buildings, roads, waterfront facilities and low-lying residential areas.
Although inland cities do not have to contend with rising sea levels, they often have to contend with flooding rivers, and may be subjected to more extreme weather because of their continental location — Manitoba recently spent $1 billion on dikes and flood management. So multiply Vancouver’s initial “proactive” costs by the number of other cities in Canada to get a vague estimate of the hidden carbon taxes that will either be payed in prevention or repairs. Then add the rest of North America’s cities and those of the world. “Adaptation” is a term describing people’s efforts to make the best of a bad situation. Call these costs a carbon tax.
Other carbon taxes are more severe. The four people who died in BC’s Johnsons Landing mudslide on July 12, 2012, were just a few of those paying a heavy carbon tax. Unusually heavy winter snowfall and torrential rains during warm summer weather created the conditions that brought down a mountainside on their idyllic homes in the Kootenays. But floods in China, Thailand, Brazil, France, Poland, Japan, India, Australia and the Philippines in the last two years have exacted a much heavier toll.
The floods in Pakistan in 2010 drowned thousands, submerged one-fifth the country and displaced 20 million people. These floods were followed by record high temperatures of 53.5°C. Saudi Arabia had temperatures exceeding 47°C in 2010, and Mecca had rain this summer when the city was sweltering at 42.8°C — the highest temperature at which rain has ever been recorded. Russia had 172 casualties from extreme rainfall on July 7th. Britain ended an extraordinary spring drought with incessant rain. A drought is presently parching much of the US corn belt, more damage to add to the $5 billion that Texas recently lost to drought.
Climate change deserves so much attention because the impacts are pervasive and fundamental, affecting almost everything related to our security and prosperity. The science of this process is indisputably clear. More than 40 different supercomputer models consistently predict nearly identical weather outcomes for rising levels of atmospheric carbon dioxide, confirming repeatedly that the extreme weather events we have been experiencing in recent months and years are wholly consistent with the new reality we are inflicting upon ourselves. Much of this damage can be counted as carbon tax.
This tax cannot be negotiated or postponed. It is levied in accordance with the laws of physics. A rise of a single degree in temperature increases humidity by 8 percent. Humidity over oceans has already increased by 5 percent. More humid air coupled with higher temperatures transfers greater amounts of energy into storm systems and causes more extreme weather. More heat means more evaporation. Climate science requires that increasing amounts of evaporated moisture must eventually come down as precipitation. For some places, this means more droughts; for other places, this means more floods. The distribution is not based on any human notion of fairness. Nonetheless, it is a carbon tax, duly levied and dispassionately collected. Our own version would likely be less painful and more equitable — if ever the international community should find the foresight to implement one.
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.
Read more: http://www.huffingtonpost.ca/2012/07/25/canada-oil-gas-shrinking-profits_n_1702807.html
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.