Energy Security

Investors urged to kick the tar sands habit

jessie — Wed, 27 Aug 2008 12:16:12 -0700

Investors urged to kick the tar sands habit

James Murray, Julyv 29, 2008, BusinessGreen -- Investors are to be urged to shun controversial projects to extract oil from North American tar fields following the publication of a major new report that claims the carbon intensive processes involved represent an unacceptable environmental and business risk.

The joint report from WWF and Co-operative Investments claims that projects to extract oil from tar-soaked sands or shale in Canada and the US not only result in up to eight times more carbon emissions than conventional oil production, but also use three barrels more water, destroy large tracts of virgin forest and are dogged by numerous business risks.

"The aim of the report was to look at the issue of unconventional fossil fuels from an investment risk perspective," said Colin Baines, ethics advisor at the Co-operative Group. "There are numerous risks such as the legislative risks posed by the requirement to reclaim the land after it has been used, which will prove extremely expensive if not impossible; the reputational risks associated with the toxic tailings the projects create and the damage to local rivers and wildlife; and the economic risk associated with the likelihood of regulations on carbon emissions."

With both US presidential candidates vowing to introduce and carbon cap-and-trade scheme, Baines said that the already marginal business case for tar projects could soon become unsustainable. "The business model for these projects is reliant on high oil prices, a continuing lack of carbon regulations and the assumption among the companies involved that governments will ultimately bail them out over the clean up costs," he said. "It adds up to a very high risk approach."

Most of the oil majors remain committed to unconventional oil projects with Shell having announced its plans to produce 670,000 barrels of oil daily from Canadian oil sand by 2020, and ExxonMobil and BP committed to similar projects. They maintain that while unconventional oils remain more expensive and carbon intensive than conventional oil, rising energy demand means that a significant source of energy situated in a politically stable region cannot be ignored.

However, the Co-operative group is now hoping to secure support from other institutional investors as it seeks to increase pressure on the energy giants to halt plans to expand tar extraction projects.

Baines said the company was working with the UK Social Investment Forum (UKSIF) to organise "collective shareholder action" against the projects and would be hosting a meeting in September to discuss the issue. "We're calling on the oil companies to halt expansion of oil sand operations and instead invest the billions they have ploughed into these projects into renewables," he said. " We're also lobbying governments to introduce legislation that will prohibit all fuels that are more carbon intensive than oil."

End of the Petroleum Age?

jessie — Wed, 02 Jul 2008 08:35:22 -0700

End of the Petroleum Age?

Michael Klare, June 30, 2008, Guerrilla News Network -- Truth and consequences in the last days of cheap oil
At the hastily convened global oil summit in Jeddah, Saudi Arabia on June 28, top officials of producing and consuming nations from around the world attempted to find a combination of solutions that would somehow extricate us from the current crisis over sky-high energy prices. These proposals ranged from increased output by major producers like Saudi Arabia and Kuwait to restrictions on the activities of international oil speculators.

But all were based on the premise that the crisis can be resolved through the right mix of actions, thus restoring an environment of cheap and abundant oil – a premise that is fundamentally flawed. More and more, the evidence suggests that this is not just a temporary crisis. It is the beginning of the end of the Petroleum Age.

How do we know that the Petroleum Age is drawing to a close? Two key indicators tell us that this is so. First, many of the giant fields that have satisfied our massive thirst over so many years are experiencing diminished output. Second, although the major oil producers are spending more money each year to discover new reserves, they are finding less and less oil. Either of these factors by itself is cause for significant worry; the combination is deadly.

Dangerous Reliance

Few people understand how reliant we have become on a relatively small number of mammoth fields for the lion’s share of our daily petroleum intake. Though the world possesses tens of thousands of operating fields, a mere 116 of them – each producing more than 100,000 barrels per day – together account for nearly one-half of total global output. Of these, all but a handful were discovered more than a quarter of a century ago, and most are showing signs of diminished capacity. Indeed, some of the world’s largest fields – including Ghawar in Saudi Arabia, Burgan in Kuwait, Cantarell in Mexico, and Samotlor in Russia – appear to be now in decline or about to become so. The decline of these giant fields matters greatly. Compensating for their lost output will take increased yield at thousands of smaller fields, and there is no evidence that this is even remotely possible.

Signs of decline at the major fields began accumulating this spring when Mexico announced that Cantarell’s output had fallen by 416,000 barrels per day, a 25% reduction over its 2007 output. Though state-owned Pemex was able to boost output at a number of other fields, the decline at Cantarell was so significant that Mexico reported a 9% drop in net oil output for the first quarter of 2008 as against 2007. This is an ominous sign from a country that a year ago was America’s second leading supplier of crude petroleum. A similar sign of alarm came this spring from Russia, until recently the rising star of the oil world. Since last October, output there has fallen about 2%, with no hint of a recovery in sight.

The biggest mystery is the status of Ghawar. This Saudi Arabian field, the world’s biggest by far, accounts for about 7% of global supply. Saudi Arabian officials insist that the field is in good shape and fully capable of sustaining daily output of nearly 5 million barrels for years to come. But many skeptical analysts, including noted Houston investor Matthew Simmons, believe that Ghawar is on its last legs and will soon go into decline. In his 2005 book Twilight in the Desert, Simmons cited technical papers to show that field pressure at Ghawar was being artificially maintained through the heavy use of water injection – a technique that cannot be sustained indefinitely and is usually followed by a rapid plunge in output.

Dire Prognosis

To better gauge the status of the world’s largest fields, the International Energy Agency (IEA), an arm of the Organization of Economic Cooperation and Development, is conducting a survey of the top 400 reservoirs. Although the survey is not due to be published until November, early drafts of the report have been leaked in The Wall Street Journal – and the prognosis is not promising. “The world’s premier energy monitor is preparing a sharp downward revision of its oil-supply forecast,” the Journal reported in May, “a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.”

The most troubling finding in the IEA report, according to those who have seen early drafts, is that the rate of depletion in existing fields like Cantarell, Ghawar, and Burgan is far greater than previously thought. In other words, we are running out of known oil reserves at a greater rate than previously assumed. “This is a dangerous situation,” said Fatih Birol, the IEA’s chief economist, in an interview with the Journal.

We could live with the decline of these great reservoirs if we had some confidence that new reserves were being discovered all the time to replace all those now reaching the end of their productive life. But this is not the case. Despite a sharp increase in spending on exploration and development, the rate of new reserve discovery has been falling steadily for the past 30 years. According to the U.S. Army Corps of Engineers, the last decade in which new discoveries exceeded the rate of extraction from existing fields was the 1980s. Since then we have been consuming more oil than we have been finding – a pattern that can only result, eventually, in the complete exhaustion of the world’s known petroleum reserves.

Few New Finds

Only one giant field has been discovered in the past 25 years – Kashagan in Kazakhstan’s sector of the Caspian Sea – and it has turned out to be an unmitigated disaster. With estimated reserves of 7-13 billion barrels of oil and natural gas liquids, Kashagan was originally expected to come on line in 2005 at a cost of $50 billion. As a result of environmental hazards, government intervention, and disputes among members of the consortium established to operate the field, it is now scheduled to begin pumping oil in 2011 at the earliest at a minimum cost of $135 billion.

Recently the Brazilian state firm Petrobras has announced an equally large discovery in the deep waters of the Atlantic, some 150 miles off the coast of Rio de Janeiro. Although very promising, the Tupi field will take many years to develop and will require the use of more costly and advanced technology than any now in widespread use.

These new discoveries may add one or two million barrels of oil per day to existing output in 2015 and beyond, but by that point output from existing fields is likely to be considerably lower than it is today. Nobody can predict exactly where combined worldwide production will stand at that time. But more and more analysts are coming to the conclusion that the output of conventional (i.e., liquid) petroleum will peak at about 95 million barrels per day in the 2010-2012 time-frame and then begin an irreversible decline. The addition of a few million added barrels from Kashagan or Tupi will not alter this trend.

There is, of course, much talk about other, “unconventional” sources of oil: untapped reserves in Alaskan wilderness areas and America’s outer continental shelf, Canadian tar sands, Rocky Mountain shale rock.

True, these various prospects – if brought to fruition and putting aside the massive costs and environmental risks involved – could add anywhere from a 750,000 barrels a day (in the case of Alaskan oil) to a few million barrels (in the case of the others) to global energy supplies in the years ahead. But, when all is said and done, none of this can stop the inevitable closing of the Petroleum Age.

End of an Era

Consider: In 2030, according to the U.S. Department of Energy, world “liquids” demand is expected to reach 117.6 million barrels per day. Of this amount, unconventional fuels – synthetic liquids derived from tar sands, shale rock, and biofuels – may provide a total of 10.5 million barrels. That leaves 107.1 million to be supplied by conventional petroleum. But what if global oil output has fallen to 60-70% of that amount by 2030, as projected by many analysts? Under those circumstances, no amount of oil from Alaska or the outer continental shelf will be able to save this country (or the rest of the world) from a catastrophic energy crisis.

Some say that any palliative is worth the expense as we head toward certain disaster. But this is not a logical response. Knowing that the age of petroleum is drawing to a close, it is far better to devote our talents and investment dollars on hastening the arrival of its successor, rather than prolonging the agony of oil’s decline.

At this point, we cannot be absolute certain of the dominant energy source of the post-petroleum era. Will it be the Solar Age or the Biofuels Age or the Hydrogen Age? But we do know that it will revolve around some constellation of renewable, climate-friendly, domestically-produced supplies. From now on, America’s top priority in the energy field must be to explore all potential components of this new energy future and move swiftly to develop those with the greatest promise.

Michael T. Klare is a professor of peace and world security studies at Hampshire College, the author of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Metropolitan Books, 2008), and a columnist for Foreign Policy In Focus. Klare’s previous book, Blood and Oil: The Dangers and Consequences of America’s Growing Dependency on Imported Petroleum has been made into a documentary movie – to order and view a trailer, visit www.bloodandoilmovie.com.

Utah solons slams congressional oil-shale development moratorium

jessie — Wed, 02 Jul 2008 08:30:09 -0700

Utah solons slams congressional oil-shale development moratorium

Patty Henetz, July 2, 2008, The Salt Lake Tribune -- A congressional moratorium on oil shale leasing and development hurts an established industry's efforts to find investors and imperils the nation's hopes for energy independence, Utah's senators said Tuesday.

Sens. Orrin Hatch and Bob Bennett, supporting a Bush administration proposal to enhance U.S. fossil-fuel energy production, said during a news conference at the Utah Capitol that the moratorium imposed on the Bureau of Land Management means no one knows what the rules will be for oil shale and tar sands development.

And that, in turn, means too few investors in what would be a multibillion-dollar industry that would enhance the nation's energy security, Bennett said.

"It is irresponsible, it is malicious, for us not to proceed to open it up," he said.

Bush tied his push for more fossil-fuel drilling and development to high gas prices.

Hatch, however, said that while the companies hoping to develop oil shale "are our nation's energy Minutemen," they cannot bring down the price of oil today.

"But they are going to do what it takes today to get our nation this energy in the future," Hatch said.

The BLM, acting according to requirements in the Energy Policy Act of 2005, has launched a broad oil shale and tar sand environmental analysis. Most of the oil shale is in western Colorado; all of the tar sands are in eastern Utah.

But last year, Sen. Ken Salazar, D-Colo., managed to attach a rider to the appropriations bill that set aside the BLM's leasing program for a year to figure out how extensive leasing and development would affect the environment and the communities in the oil shale and tar sands region.

Attempts to overturn the moratorium have been unsuccessful. Salazar and Rep. Mark Udall, D-Colo., hope to extend the moratorium another year in hopes the resource can be developed with economic stability and environmental protection in mind.

During the news conference Tuesday, however, industry representatives said they are ready to go, and Lt. Gov. Gary Herbert dismissed those who say the unconventional energy can't be developed sensitively.

Oil Shale Exploration Co., the only Utah firm to receive one of six research, development and demonstration leases from the BLM, announced a partnership with Petrobras of Brazil and Mitsui & Co. Ltd. of Japan to study the feasibility of Petrobras' Petrosix technology on Utah oil shale on 40,000 acres of private land in eastern Utah.

OSEC's federal lease so far has allowed it to export waste rock left over from the 1980s shale bust to Alberta, Canada, for testing a different process. Both methods, however, use retorts to roast kerogen - the waxy hydrocarbon that hasn't undergone the geologic heat and pressure necessary to create petroleum - out of the shale.

Amy Hansen, an OSEC spokeswoman, said the 300 tons of shale shipped to Canada yielded 9,000 gallons of kerogen, which can be further refined into kerosene or diesel fuel.

Last year, a RAND Corp. study estimated that the region held the equivalent of 2 trillion barrels of oil, with 800 billion barrels recoverable.

That is more than triple the proven oil reserves of Saudi Arabia.

With current U.S. consumption of oil at 21 million barrels per day, the Rocky Mountain resource could last 400 years, the RAND study concluded.

Oil shale development requires huge amounts of water and electricity and emits tremendous amounts of carbon dioxide, the greenhouse gas emission most responsible for global climate disruption.

The Utah Division of Water Resources has said Utah's share of the Colorado River could soon be fully allocated, so where the water would come from is unclear. Questions also remain regarding what oil-shale extraction would do to surface and groundwater quality.

In March, 26 conservation groups wrote a letter to the U.S. Bureau of Land Management claiming the Bush administration's rush to develop oil shale and tar sands failed to include adequate public information about potential environmental, social and economic harm. The letter called on the BLM to focus on energy efficiency and renewable energy.

Herbert said developing Utah's oil shale and tar sands would "unleash the power of the private sector."

"We can do it reasonably in an environmentally sensitive way," Herbert said. Anyone disputing that "is not thinking clearly," he said.

Gov. Jon Huntsman Jr., in Jackson, Wyo., for the Western Governors Association annual conference, supports oil shale and tar sands development.

But he also joined other Western governors, including those who favor the moratorium, in addressing how to meet future energy demands in a clean manner that won't aggravate climate change.

McCain's Mission to Ottawa: John McCain: Crude politics? US, Canada need to forge a less oily relationship.

jessie — Fri, 20 Jun 2008 11:10:30 -0700

McCain's Mission to Ottawa: John McCain: Crude politics? US, Canada need to forge a less oily relationship.

Aaron Freeman & Matt Price, June 19, 2008, The Tyree -- John McCain will take the stage in Ottawa on Friday to try to draw a clear line between himself and Barack Obama on the North American Free Trade Agreement (NAFTA). You'll remember that Obama and Clinton mixed it up during the primary race about who would go further in renegotiating the trade deal to strengthen labour and environmental standards. McCain, by contrast, wants to portray himself as a free trader, no holds barred.

It's a surprise in itself that a U.S. presidential candidate would give a campaign speech on foreign soil. Given the large Latino population in America, McCain could have chosen to give the speech in Mexico, but that would have invited stories about U.S. factories relocating there at a time when the U.S. economy is flirting with recession.

Instead McCain gets to point to what some Americans would see as a key benefit to them under NAFTA -- access to the second largest petroleum reserves on the planet in the Canadian tar sands. The trade deal effectively prohibits Canada from treating its oil as a national resource, instead letting the market dictate who gets to play and who gets the oil. In practice, this means American oil companies get to play freely and the U.S. also gets most of the oil.

Indeed, McCain has been stumping on the issue of energy security for the past several days, even reversing himself on the issue of offshore drilling in the U.S. to play to the concern over high gas prices. He seems to be gambling that anger at the pump will trump strong feelings against offshore drilling in key election battlegrounds like Florida.

Contradicting himself on global warming?

McCain is also walking a tightrope on global warming. He is running ads highlighting his break with the Bush administration on wanting to address global warming, which is where things get interesting with regards to the Canadian tar sands.

While giving money to friendly Canadians for oil may seem more attractive than giving it to some regimes in the Middle East, the problem is that extracting oil from the Canadian tar sands comes at a huge environmental cost. The deposit is wrapped in clay and sand, so a massive amount of energy is needed to get the oil out, whether by using the largest machines on the planet or by using huge amounts of natural gas.

The impacts of extraction include extensive landscape scarring, the dumping every day of 1.8 billion litres (480 million gallons) of toxic tailings into artificial lakes now so large you can see them from space, air pollution creating acid rain across the prairies, and a huge global warming problem.

Producing a barrel of tar sands oil gives off three times the greenhouse gas emissions as producing a barrel of regular oil, making the tar sands the fastest growing source of new emissions in Canada and the main reason politicians in Ottawa are refusing to meet their international commitments on global warming.

The bottom line is that looking to the tar sands to guarantee U.S. energy security puts candidates on a collision course with their commitments to tackle global warming. And, as a blue-ribbon panel of retired U.S. military leaders has pointed out, global warming itself threatens to disrupt global stability, thereby undermining energy security. In this regard, the tar sands are a false promise.

Towards a less oily relationship

What's to be done? As with any trading relationship, Canadians and Americans both share some responsibility in this equation. There are huge gains to be made in U.S. vehicle efficiency that is both the cheapest plank in the energy security platform and a way to substantially reduce U.S. emissions. There is, in fact, an economic revolution waiting to happen to retool the U.S. economy and put it on a low carbon footing.

Canada meanwhile needs to figure out whether there is a responsible way to exploit the tar sands that does not jeopardize the world's climate nor leave behind a massive toxic mess for future generations to clean up after the party is over. Carbon capture and storage may be a part of this equation, but so far Canadian politicians are not talking about this at the scale and timeline necessary to be useful.

Politicians will come and go but the U.S. and Canada will continue to share the world's largest unguarded border and to trade peacefully. We have a common interest in ensuring this trade is environmentally sustainable, since this is the true foundation of security.

Company courts Alaska for pipeline license

jessie — Fri, 20 Jun 2008 10:58:44 -0700

Company courts Alaska for pipeline license

Seve Quinn, Associated Press, June 18, 2008, JUNEAU, Alaska -- TransCanada Corp. has 36,000 miles of pipeline moving natural gas throughout North America, enough pipe to circle the earth along the equator with about 11,000 miles to spare.

Now the Calgary-based company says it wants to build a 1,715-mile line that will be rooted in the Arctic oil fields on Alaska's North Slope and ship natural gas to markets in the Lower 48, where it will power homes and business for decades.

Their plan is to move 4.5 billion cubic feet of natural gas daily -- or about 7 percent of the nation's daily demand -- with the prospects of expanding to 6.5 billion cubic feet.

So far, TransCanada Chief Executive Hal Kvisle has Gov. Sarah Palin's support and is vying for the Legislature's blessing on a license to build the line.

"I would argue TransCanada is the right company to make this happen because we are the largest pipeline company in North America by any measure," Kvisle said. "We are the only company who has built gas transmission projects of this scale, this length, this magnitude before."

But TransCanada is not the only player in this game. Global oil giants ConocoPhillips and BP PLC recently joined forces on a competing pipeline, and those companies already hold leases to North Slope natural gas.

Additionally, some Alaska lawmakers and industry analysts question whether TransCanada has the financial wherewithal to handle a project that could reach $30 billion -- or $10 billion more than TransCanada's market capitalization, a figure used to determine a company's size.

Most people are familiar with BP and ConocoPhillips -- especially every time they drive past the pumps -- but they haven't heard of TransCanada.

But an analyst says a lack of name recognition doesn't mean TransCanada can't be trusted with getting domestic supplies to the Midwest markets.

"They are better qualified for building this type of pipe than the two producers," said Edward Kallio, analyst for Ziff Energy Group, a consulting group with offices in Calgary and Houston.

"They understand this business," he said. "They can build and operate a pipeline that goes through inhospitable terrain. They can engineer, they can build, they can operate pipelines of this size. That's what most important."

Last November, TransCanada applied within the bid requirements of the state's Alaska Gasline Inducement Act, which called for bidders to guarantee progress toward construction of a pipeline and be friendly toward new energy exploration.

BP and ConocoPhillips found the law, passed by the Legislature last year, too restrictive. Two months ago, they joined forces to proceed with their own project, but have released little details about it.

The Alaska Legislature has until Aug. 2 to either support or reject TransCanada's bid for a state license. For the last two weeks, lawmakers have been engaged in a spirited debate over the prospects of TransCanada getting a license.

The license is not a contract for construction. However, the license does come with $500 million in seed money from the state of Alaska as seed money, and presumably, puts the company on the hook to pursue federal permits to build the pipeline.

Supporters say that's just as good as a commitment to build because why would a company spend hundreds of millions toward permits, then not build?

Rejecting the license could leave the state back at the bargaining table with producers like BP and ConocoPhillips. That effort failed two years ago when former Gov. Frank Murkowski agreed in principle with oil companies on a long-term contract on fiscal terms, such as taxes. But the Legislature never voted on it, saying it was too generous for the companies.

State Rep. Mike Kelly, a Fairbanks Republican and former chief executive for a utility company, said keeping TransCanada in the game means maintaining a competitive field.

"I want to keep both of the girls at the dance until we get this thing done," Kelly said. "And I'm convinced TransCanada can do it. When it comes to scope, scheduling and budget, they are notoriously good at keeping those things under control."

But critics say the $500 million backing is too high, even for a state awash in cash from soaring oil prices, and especially when BP and ConocoPhillips aren't asking for any upfront money.

Further, they question why a company like TransCanada with its $1.22 billion net income last year -- a 13 percent boost from 2006 -- needs any state help.

State Rep. Jay Ramras, also a Republican from Fairbanks, has also challenged TransCanada's financial stability and ability to sustain the project over 10 years, the projected timeline to get natural gas flowing in the pipeline.

He cited his own business experience as a hotel and restaurant owner when going toe-to-toe with TransCanada Vice President Tony Palmer on the company's decision-making process.

"In the private sector, if this were a board room instead of two legislative bodies trying to consummate a business transaction, this notion would be dismissed," Ramras said during a hearing. "This is a fool's errand that we are on."

Palmer didn't flinch.

"TransCanada does operate in the private sector," Palmer said. "This decision went to our board. And they made a commercial a decision to participate in the process established by this Legislature one year ago."

If TransCanada does get the license -- and that appears likely -- the next step is securing long-term financial commitments from producers to ship gas. These underpin the project's financing.

Producers argue these commitments -- ones that can last 25 to 30 years -- represent the largest risk of the project. Failure to reach an agreement could kill the project.

Kvisle, the company's CEO, cites a recent agreement between ConocoPhillips and TransCanada to build an oil line as an example of the company's ability to reach a deal.

The Keystone pipeline will ship oil in a 2,148-mile pipeline ultimately capable of delivering 590,000 barrels of crude daily from Hardisty, Alberta, to Midwestern markets.

"ConocoPhillips would have to have a very high opinion of them or they wouldn't have done that," said Steven Paget, FirstEnergy financial analyst who tracks TransCanada performance.

TransCanada must also convince lawmakers it will be diligent in controlling construction costs. The company estimated the project at $26 billion, but the state's own consultants put the project closer to $30 billion.

Lower costs translate into lower transportation fees -- tariffs -- and that means more royalties and production taxes for the state.

Producers have repeatedly told lawmakers that pipeline companies have no motivation to watch construction costs because they will simply recover those expenses in the tariffs.

Ken Medlock, energy fellow at Rice University who once worked in the pipeline industry, said that's a weak argument.

"A company like TransCanada would have every incentive to keep the costs down because producers are going to look at this project the same way as if they were building it," he said.

"Pipeline companies can't charge more than what the producers are willing to give up. If that happened, producers would move to the next best option."

A North Slope gas line has been discussed since oil first moved down the 800-mile trans-Alaska pipeline in 1977. Now, suddenly there's two projects being discussed.

The prospects gained momentum these last several years with natural gas futures currently trading in the mid-$11 range per 1,000 cubic feet.

Analysts said any project of this size is too big for one, even two companies, and two pipelines aren't likely to get built.

"Chances are TransCanada would end up have some sort of partnership in this pipeline," said FirstEnergy's Paget. "The question is what shape will it take?"

Mackenzie faces new setback; Governmental panel postpones release of environmental report till 2009

jessie — Thu, 22 May 2008 12:45:49 -0700

Mackenzie faces new setback; Governmental panel postpones release of environmental report till 2009

Norval Scott, May 16, 2008, Globe and Mail -- The Mackenzie gas pipeline has been slapped with a new significant regulatory setback, delaying the $16.2-billion project by at least a year and highlighting the increasing roadblocks facing companies seeking to develop major oil and gas projects.

The joint federal and provincial panel evaluating the environmental impact of the giant pipeline now won't publish its report on the Mackenzie project until some time next year. The panel, known as the Joint Review Panel or JRP, had been scheduled to publish the review - which is needed for the project to go forward - in October.

The setback is the second big regulatory blow this week for Imperial Oil Ltd., which is taking the lead in developing the Mackenzie pipeline and will be one of the main suppliers. On Wednesday, the Calgary-based company received a court ruling delaying its $8-billion Kearl oil sands mine for at least several months, a decision that stemmed from an error by the government regulatory panel.

For the energy industry, regulatory reviews are becoming more rigorous and projects are facing greater scrutiny.

That's ramping up costs, as companies seek to meet the stricter standards to ensure their new developments are approved.

Imperial had planned to finish building the pipeline by 2009, but has been hit with a series of complex and frustrating hurdles that have set back its plans to bring Arctic gas to North American markets.

While the company has been trying to build Mackenzie since 2004, it has yet to resolve aboriginal land access issues or the financial terms for constructing the massive project with the government.

Meanwhile, the JRP, an independent body appointed by the Minster of Environment, was originally supposed to publish its impact report on the potential pipeline by August, 2007.

But the scale of the task has consistently forced it to push that deadline back, meaning the group is now about two years behind schedule, delaying Imperial from resolving the other regulatory issues that surround the development.

The JRP's report won't appear this year because of the vast amounts of information that the panel needs to go through, said Annette Bourgeois-Bent, manager of communications for the Northern Gas Project Secretariat, a body created to assist with the regulatory process for Mackenzie.

"It's a monumental task. ... There's thousands of pages of evidence, and the panel is committed to doing a thorough job and analyzing the information to the best of its ability," she said. "Maybe people didn't appreciate the depth and breadth [of the task]."

Companies participating in the pipeline said they were aware that the report was likely to be delayed, but hadn't been informed of the reasons why.

"We've had no indication, and at this point don't understand the reasons for the delay," said Imperial spokesman Pius Rolheiser.

While he added that it is too early to evaluate the impact of the adjournment on the overall timeline for Mackenzie, and emphasized that Imperial is still committed to the project, Mr. Rolheiser said that "a delay is not a positive or desirable ... not many things in life get less expensive over time. It wouldn't be accurate to say that we are pleased."

Sources familiar with the project said the in-service date of the pipeline - the date on which gas starts flowing through the pipeline - currently set at around 2014, could be pushed back by at least a year because of the JRP's dilly-dallying.

Northwest Territories Premier Floyd Roland said the new delays were creating "concern" in the territory over the progress of the pipeline, which he categorized as "the next big economic development for our constituency."

"There's frustration with these delays. We all know we need to get on with this ... we need to find out what's driving the delays and get some momentum going," he said.

One solution might be to add people to the seven-man JRP group to expedite its activities, Mr. Roland added.

Oilsands pipelines to the U.S. blasted

jessie — Thu, 15 May 2008 11:45:47 -0700

Oilsands pipelines to the U.S. blasted

Carol Christian, May 14, 2008, Fort McMurray Today -- The president of a national union was "shocked" and "dismayed" this morning to learn of the federal government's approval of two pipelines via a phone call from Today.

A further twist shortly after that phone call revealed the National Energy Board had also not been informed of the government's decision. That board gives final approval for pipeline applications.

These applications, according to Dave Coles, president of the Communications, Energy and Paperworkers Union, were not supposed to have been approved before considering a request from the federal natural resources standing committee. CEP has a formal petition before cabinet asking that the pipelines not be approved.

A press release issued by Enbridge Tuesday lauding the decision is what prompted the call to CEP, a known opponent of the pipelines, citing the need for better Canadian energy security.

One pipeline will run from Hardisty, Alta. to Superior, Wis.; its initial capacity will be 450,000 barrels per day of crude oil.
The other pipeline will transport diluent, a liquid used to allow non-upgraded oilsands to travel by pipeline, from the U.S. Midwest to Edmonton.

The standing committee urged the federal government to delay the decision of the two applications "until the standing committee has reviewed all of the implications on this, and other proposed pipelines on Canada's energy security ... development, public interest, and that the standing committee has reported its findings to the house."
The request was only tabled, not passed, and remains on the books.

"This is an official government standing committee (asking) the gov to hold on until they get to look at it, and make recommendations to the government -- they get the centre finger .... they gave them the royal salute," said Coles from his Ottawa office.

A response from the federal government about the approvals isn't expected until later this afternoon.

Coles said he can't understand why the prime minister wouldn't listen to his own standing committee, chaired by a Conservative, on such an important issue.

"These guys are like drunken sailors just doing the bidding for big oil.

"I was in Louisiana when (Stephen) Harper went on about the huge role Canada has to play in the energy security of the United States ... Canada has no national energy security; people in eastern Canada are completely at the mercy of the Yanks.

"What is going on here?"

Asked what he was going to do now, Coles replied first, "Get over the shock of having you tell me."

Then "We are not going to sit on our hands," he promised. "Why is the prime minister concerned about the energy needs of the U.S. and not the energy needs of Canada? Why is that question not in the public eye?"

The Alberta Federation of Labour is another opponent to the pipelines which it has likened to a bitumen superhighway, taking Alberta resources and jobs south.

Disappointed but not surprised at the federal approval, Gil McGowan, president, said the federal and provincial governments seem to be blind to what's going on.

"The energy companies are in the process of establishing a continental energy system in which Alberta is being assigned the role of low value extractor, and the Americans are reserving for themselves, the role of high value upgrader and refiner."
And that is neither in the Alberta public interest nor the broader Canadian public interest, said McGowan.
"Our leaders, both at the federal and provincial level, don't seem to care. We feel very strongly they're letting the public down."

"Instead of letting energy companies, and the American state department determine our energy future, our leaders should be blazing their own path, but clearly that's not happening."

IT'S TIME FOR ALBERTANS TO DRAW A LINE IN THE (TAR) SAND

jessie — Thu, 15 May 2008 09:40:01 -0700

IT'S TIME FOR ALBERTANS TO DRAW A LINE IN THE (TAR) SAND

BILL MOORE-KILGANNON / pialberta.org, Vue Weekly -- There once was a thin red line on a map. That may sound like the start of a fairy tale, but in fact it is the real beginning of a critical debate about Alberta's energy future.

You see, high up in a corporate tower someone has decided to draw a red line that runs from the town of Hardisty east of Edmonton across Saskatchewan and Manitoba and then straight South all the way to the southern United States. This line is called the Keystone Pipeline, and it is part of a proposal from TransCanada Pipelines to ship 435 000 barrels of bitumen from Alberta's tar sands per day to be processed into oil and other petrochemical products in the United States.

This line is important to a lot of powerful people. In particular, this line is seen by many of the largest oil companies as a critical foundation in their plan to keep rapidly expanding Alberta's oil sands to feed the United States' "addiction to oil" while keeping declining US processing plants functioning.

The Keystone pipeline is just one of many such projects that are in the works to lock Alberta's economy into being merely an exporter of raw materials, but it is a crucial line that will determine which direction we are going to go as a province. Perhaps this is why whoever drew that line on the map decided to call it "Keystone," which, according to the dictionary, means a "piece at the crown of an arch that locks the other pieces in place, or something on which associated things depend for support".

This would explain why the pipeline and oil companies had close to 40 corporate lawyers and senior staff out to defend their pipeline at the National Energy Board (NEB) hearings last week in Calgary. Normally, the NEB is a mere speed bump on an oil company's path to developing their plans, but this time the NEB hearings have become the scene for serious interventions from the Alberta Federation of Labour (AFL), the Communications Energy and Paperworkers Union (CEP) and the Parkland Institute. The three groups have used the only venue that is available to highlight some facts and pose some critical questions about whose interest will be served by this pipeline.

At the hearings, AFL president Gil McGowan asked "Why, for example, should we settle for the 17 long-term jobs that the applicant says will be created in Canada by this pipeline when we could have 18 000 jobs? Why should we sit on the sidelines while big, US-controlled integrated oil companies use our oil to revive their aging refineries in the US mid-west and on the Gulf Coast when that oil could be used, instead, to transform Alberta into North America's newest hub for upgrading and refining."

Not only does Alberta lose out on jobs, we lose control over how we develop our own resources. Where does this leave a provincial government-appointed committee who have been consulting Albertans for the past nine months about the future of the tar sands? The overwhelming feedback that they have received from all sectors is that the uncontrolled expansion of the tar sands is creating huge problems for the environment, for cities throughout Alberta who cannot expand the services and infrastructure, and for the average Albertans who are not benefiting from the boom and who can no longer afford to pay the skyrocketing rents.

This process of public consultation has delivered a clear message from Albertans that they expect the government to stop the uncontrolled development of the tar sands and to make sure that it is Albertans who are deciding how we should be developing our energy resources. Ironically, at the same time the oilsands committee is about to release its report, the Keystone pipeline is in the final stage of being approved at the NEB.

When Premier Ed Stelmach was running for the leadership of the Alberta Progressive Conservative party, he said exporting unrefined bitumen was equivalent to scraping off the topsoil of a farm and selling it. Now that he is the Premier, he has yet to stand up to the multinational oil companies and pipeline industry and commit to defend the public interest.

If the government of Alberta is not going to stop this project from locking us in place as nothing more than a supplier of raw products to the US, then it is time Albertans get ready to stand up and draw our own line in the tar sands. It is time we stop believing in the fairy tale that the invisible hand of the market should make all the decisions and to start to write our own story.

Bill Moore-Kilgannon is the executive director of Public Interest Alberta, an Edmonton-based, non-partisan, province-wide organization focused on education and advocacy on public interest issues.

Aboriginal partners sought for hydro plan; Run-of-river power project years away, but could replace coal-fired plants

jessie — Fri, 09 May 2008 13:24:59 -0700

Aboriginal partners sought for hydro plan; Run-of-river power project years away, but could replace coal-fired plants

Gordon Jaremko, May 8, 2008, The Edmonton Journal -- Aboriginal ownership partners will be sought for a mammoth hydroelectric development proposed on the Slave River, Canadian Utilities Ltd. president Nancy Southern said Wednesday.

Native participation is a top priority of the drive to revive the dormant megaproject left over from the last Alberta energy boom three decades ago, Southern said in an interview.

It will be five to seven years before CUL's Atco and industry partner TransCanada Corp. are ready to unveil construction plans for the site about 800 kilometres northeast of Edmonton, she told her firm's annual shareholder meeting.

But government greenhouse-gas emissions reduction targets will fuel the marathon attempt to build an environmental replacement for coal-fired Alberta power stations, Southern told The Journal.

Instead of generating exports, the reincarnated Slave River development is meant to fill a gap that planned retirements of aging thermal plants are projected to leave in Alberta supplies, she said. "We're going to need really big projects in order to hit those emissions targets," she predicted.

Electric service is still scrambling to catch up to economic and population growth sparked by accelerating oilsands development since the late 1990s.

Most of $3 billion in construction planned by CUL's Atco gas and power subsidiaries over the next three years will go into stringing new transmission wires in rapidly industrializing areas north of Edmonton, Southern said.

The commitments could grow.

The budget does not include a potential alternative route to replace a hotly contested AltaLink project with a line in Atco's thinly populated and less hostile service territory east of the Queen Elizabeth II Highway between Edmonton and Calgary.

The arid plains region is well suited for long-range development of a major new power and pipeline corridor as Alberta communities and industry keep growing, CUL chairman Ron Southern said.

Power from the proposed Slave River project would flow along the proposed eastern corridor and across spur lines to cities and industrial sites. Sales to other provinces, and eventually exports to the United States, are eventually possible, he indicated.

CUL-Atco agents are currently introducing the Slave River plan to northern Alberta communities. The community relations program and aboriginal partnership invitations will reach into the Northwest Territories, the Southerns said.

Detailed designs, cost estimates, employment forecasts and community benefit projections are not yet available, although TransCanada has forecast a price tag in the $5-billion range for a 1,000-1,500-megawatt installation.

The firms emphasize the Slave River project's reincarnation uses improved technology known as "run of the river." Instead of towering dams, lake-sized reservoirs and artificial cataracts into generators, the modern approach channels and amplifies natural flows with less intrusive submerged structures.

The original 1,800-MW dam proposal was shelved as too big and expensive for the smaller Alberta power grid of the early 1980s, said retired Atco Electric executive Dick Frey.

The province instead approved staged construction of the Genesee and Sheerness coal-fired plants west of Edmonton and northeast of Calgary, he recalled.

The first Slave River project would have increased total Alberta generating capacity by about 35 per cent in one jump. The multibillion-dollar cost would have caused an unacceptable bulge in consumers' electricity bills, Frey said.

The proposed new version is about a 15-per-cent addition to an Alberta grid that has more than doubled in capacity and will need new generators as aging coal plants approach scheduled retirements.

"It's a good project," Frey said.

Evolving national and provincial greenhouse gas emissions reduction policies make the Slave River waterpower scheme look better all the time, he added. "It wouldn't take much of a carbon tax to make this thing fly."

Keeping U.S. tanks full; 2007, Canada shipped an astonishing average of 1.848 million barrels of oil a day to the United States

jessie — Wed, 07 May 2008 09:11:48 -0700

Keeping U.S. tanks full; 2007, Canada shipped an astonishing average of 1.848 million barrels of oil a day to the United States

Brent Patterson, May 07, 2008, The Windsor Star -- In 2006, the Security and Prosperity Partnership called for a fivefold expansion of tarsands oil production.

While right-wing pundits are claiming the SPP is dead, the new pipeline network announced by TransCanada Corps last month to connect Alberta oil to southern U.S. markets shows that plans for North American energy integration are going full steam ahead.

But the federal Conservatives and the Alberta government are worried that the rising call to reconsider the existing trade model to ensure that the environment and workers' rights trump corporate interests will affect the U.S. appetite for Alberta oil.

Ron Stevens, Alberta's deputy minister and minister of International and Intergovernmental Relations, is heading for Washington this week to promote oil from the province's tar sands as "environmentally sustainable."

The Alberta government is investing millions of taxpayer money in a U.S. ad campaign bearing the same message.

At the news conference that wrapped up the recent North American Leaders' Summit, Prime Minister Stephen Harper stated, "Canada is the biggest and most stable supplier of energy to the United States in the world. That energy security is more important now than it was 20 years ago when NAFTA was negotiated, and will be even more important in the future."

This was a clear warning from Mr. Harper to hopeful Democratic presidential candidates Barack Obama and Hillary Clinton, as well as the American people, that they should stop any consideration of the idea that NAFTA be renegotiated.

Mr. Harper's strategy here seems to be informed by comments made by US Ambassador David Wilkins in November 2006. At that time, Mr. Wilkins said, "Secretary Bodman told the Alberta oil executives that if they could produce five million barrels per day they would have the United States' attention. I believe that the investors and producers in the oil sands and the government of Alberta and Canada have every intention of meeting that goal in the future. So stay tuned."

Canada is already the biggest supplier of crude oil to the United States. In 2007, Canada shipped an astonishing average of 1.848 million barrels of oil a day to the United States. But the United States wants even more, and Mr. Harper seems determined to provide it to them -- at whatever the cost to our own energy security and the environment -- and in spite of public opinion.

In terms of our own security of supply, Canada is increasingly importing oil for our own needs from countries that are not as "stable" or "secure" as Canada, as Mr. Harper might put it. In fact, Statistics Canada reported in February that while Canada remains a net oil exporter, our imports have increased to 851,000 barrels of oil per day. About half of this amount comes from Algeria, Saudi Arabia and Iraq. Additionally, a November 2007 National Energy Board report found Canada will become a net importer of natural gas by around 2028 if production and price trends continue, with the shortfall being met by liquefied natural gas from overseas.

The same day that Mr. Harper made his comments in New Orleans -- which was also notably Earth Day -- Statistics Canada released a report saying Canada's greenhouse gas emissions from the production of exported energy jumped by 146 per cent since 1990. And in order to get this oil to the United States, we are now hearing that Kinder Morgan Canada is constructing a pipeline through Jasper National Park and Mount Robson National Park in order to ship some 40,000 barrels of oil a day from the tarsands to them.

And while Mr. Harper likes to describe Canada as an "energy superpower." Canadians are feeling the pinch. The latest national price survey shows the average price for gasoline in Canada is now $1.23 a litre. This is approaching an all-time high for Canadians to be paying at the pump.

So it should be no surprise that Canadians reject the course that Mr. Harper and Alberta Premier Ed Stelmach want to take us on. Recent polling conducted by the Environics Research Group for the Council of Canadians demonstrates that 89 per cent of Canadians agree Canada should establish an energy policy that provides reliable supplies of oil, gas and electricity at stable prices and protects the environment, even if this means placing restrictions on exports and foreign ownership of Canadian supplies.

Canadians and Americans are telling their leaders that they want a debate on NAFTA and our energy future. Mr. Harper should take these concerns seriously instead of continuing to cling to NAFTA and a vision of Canada that is seemingly limited to being America's gas tank.

Brent Patterson is director of campaigns and organizing at the Council of Canadians