Energy Security

The case for an electric car industry in Canada

jessie — Thu, 17 Feb 2011 08:01:21 -0800

The case for an electric car industry in Canada

By Richard Girard, rabble.ca feature
| February 17, 2011

Over the past two years a serious buzz has built over the electric car. The high-profile marketing and release of the Chevy Volt and the Nissan Leaf in the United States has prompted much of this attention while the mainstream press in Canada and the United States has been scrutinizing these products in reports and editorials. Every car show around the world is featuring electric vehicles, and it seems that they could become the next big thing in personal mobility.

Electric propulsion of automobiles has been around for over 100 years, so why are electric vehicles only now making a serious run at the buying public? One answer is that automobiles have become one of the most pervasive symbols of the fossil fuel economy that is devastating the natural environment. Cars have therefore become a regular focal point in environmental debates about "what is to be done" about green house gas emissions and climate change, issues that have now entered into mainstream consciousness.

A sense of urgency exists that action needs be taken by individuals, institutions and corporations in order to curb emissions. This has created a system where material objects are either perceived as friendly to the environment or damaging. The automobile industry is racing to capitalize on this notion with electric cars leading the way as the number one "green" solution.

In the United States, the confidence in electric cars shown by the traditional auto manufacturers is driven in part by President Barack Obama's plan to help build the clean energy economy, which is seen by the administration as a key to the country's competitiveness in the 21st century. The U.S. government has already invested US$5 billion to stimulate an industry and market for electric cars.

Ottawa, on the other hand, has yet to earmark significant funds to this industry, thereby leaving the country in a chicken-and-egg situation: without the government funds to foster an electric car industry and stimulate a market plus help develop the infrastructure to serve it [e.g. charging infrastructure], electric vehicles may not emerge as a viable option. In the event that electric cars come into general use, Canada's well-established automotive sector -- a major employer -- could be adversely impacted if not properly prepared. More action by the Federal government to support this sector will be needed, or Canada could be left behind other auto-producing centres.

But should Canadian tax money be used to stimulate a burgeoning electric car industry, or would government funds be more successful in reducing emissions if they went to developing more accessible public transportation or to encourage people to simply walk more often or create more and safer bicycle lanes? One way of approaching this question is to look at what kind of effect electric cars could have on reducing carbon emissions.

At first glance, zero emissions cars look like real solutions to stopping growing carbon emissions in a society and culture that is obsessed with cars as a prime form of transport. In reality, however, the answer is much more complex and depends on whether one explores the collective versus the individual benefits of this technology, or, in other words, what overall impact the modest adoption of electric vehicles will have on cutting tail pipe emissions.
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For example, if 500,000 -- or 2.6 per cent of the roughly 19 million diesel and gasoline powered light vehicles in Canada -- had been substituted with zero tail pipe emissions battery electric vehicles (like the Nissan Leaf), Canada's overall green house gas emissions for 2008 would have only been reduced by 0.14 per cent. This is a relatively insignificant reduction in overall green house gas emissions from tailpipes.

However, one individual electric vehicle powered with electricity from a renewable source represents an 80 per cent reduction in green house gas emissions when compared to a gasoline or diesel powered automobile.

While proponents of the electric car will use the notion of a reduced individual carbon footprint represented in the higher figure to entice consumers to purchase these vehicles, the reality is that collectively, significant reductions in emissions from tailpipes will not be realized unless every car in Canada miraculously turned into a Nissan Leaf overnight.

Also, depending on where you charge you electric vehicle, pollution could simply move upstream from the tailpipe to the coal-fired power generator. Another factor is that large amounts of lithium will be needed to power electric motors representing a horizontal shift in reliance from one extractive industry, oil, to another -- lithium. And simply "greening" the automobile will do nothing to curb the destruction caused by roads, parking lots and traffic congestion.

Alone they are not a real solution, but viewed as part of a transition strategy, the electric car could play a pivotal role in weaning society off of its reliance on fossil fuels. With an injection of public funds, Canada is well positioned to emerge as a significant supplier of electric vehicles to the North American market. However, given the contradictions highlighted above, the hope would be that these products are only seen as interim step in a widespread shift away from individual mobility to more collective and sustainable forms of transportation.

Clearly, Canadians are not going to give up driving cars anytime soon, so some kind of greening process needs to take place. Electric cars are not a silver-bullet solution to the negative impact of traditional gas or diesel powered vehicles, but could play an important role in a broader societal shift towards truly sustainable mobility solutions, such as public transportation, bicycling, walking and better forms of urbanization.

Richard Girard is the research and communications Co-ordinator at the Polaris Institute, where he has worked since 2003. His research has focused on exposing corporate influence on public policy, primarily on water and energy issues in Canada and internationally

Climate Justice Ottawa Drops Banner in Parliament "If They Won't Take Action on Climate Justice, We Will!"

jessie — Tue, 16 Nov 2010 09:12:38 -0800

Climate Justice Ottawa Drops Banner in Parliament "If They Won't Take Action on Climate Justice, We Will!"

Cameron Fenton, November 16, 2010--At 11:00 a.m. this morning organizers with Climate Justice Ottawa dropped a banner in the rotunda of the Canadian Parliament reading "If They Won't Take Action on Climate Justice, We Will!"

The youth also began a sit-in "Peoples Assembly" calling for Canadian politicans to begin open and sincere consultations with communities across the country. They delivered 5 demands to parliament

1. Lead, follow, or get out of the way
At the upcoming UN Climate Summit in Cancun, Canada should be the first nation from the global north to adopt the emissions reductions and temperature rise limitation targets of 300ppm and 1.5 degrees celsius, presented by the largest gathering in history of directly impacted communities at the April 2010 World People's Summit on Climate Change and Mother Earth in Cochabamba, Bolivia. The first step to achieving this and repaying our climate debt is accepting the Cochabamba Declaration text presented at the UN Summit.

2. Shut Down the Tar Sands
Tar sands developments are on course to destroy a section of the boreal forest the size of England, and are Canada's fastest growing source of greenhouse gas emissions. The direct pollution from tar sands developments is poisoning the Athabasca River watershed and surrounding lands, and is a health catastrophe for impacted communities who are experiencing high rates of cancer and a loss of traditional food sources. Therefore, we call for an immediate moratorium on present and future tar sands expansion projects, a phase out of existing projects, and to hold corporations responsible for environmental destruction while facilitating a just transition for workers out of destructive industries.

3. No more Tax Breaks or Subsidies for Oil Companies
Oil companies received more than $2.8 billion dollars in government tax breaks and subsidies in 2008. These subsidies lower the cost of oil and promote the use of dirty fossil fuels when we should be transitioning to clean forms of energy. Therefore, we call for an immediate end to government financing of environmentally and socially destructive industries.

4. Invest in Community Solutions
Community-based renewable energy sources like wind, solar, and hydro need to be developed in a way that does not damage natural ecosystems, meaning energy production must be controlled by communities and not corporations. Current subsidies and systems of agriculture decrease healthy food choices, contribute to ecological destruction, and hurt small scale farmers, while a shift towards community-controlled diversified agriculture leads to healthier people and ecosystems. There are more efficient ways of transporting people and products than building mass highways; Canada needs to invest in solutions that re-imagine how we move around within and between cities through the localization of production, bicycle infrastructure, and accessible public transit. Ultimately, federal

5. Reject False Solutions
Canada currently relies heavily on technofixes, such as promoting biofuel projects where the amazon rainforest is slashed and burned to grow corn to put in our cars and investing over $3 billion in expensive and unproven carbon capture and storage technology. Furthermore, solutions such as carbon trading and offsets turn our atmosphere into a commodity to be bought and sold, allowing corporate lobbying to export responsibility for reductions to elsewhere and perpetuating inequality. Instead of wasting billions on band-aid solutions that ignore the root of the problem, Canada needs to take action at changing unequal and unsustainable systems of production, consumption, and distribution....

Ontario pays price in jobs as loonie rises on tide of oil

jessie — Tue, 21 Sep 2010 08:46:03 -0700

Ontario pays price in jobs as loonie rises on tide of oil

By Tony Clarke, September 21st 2010

Op-Ed in the Toronto Star.

This week, the Alberta government is launching a campaign in Ontario to defend Alberta's mega oilsands development against a growing chorus of public criticism of the project's environmental and social impacts.

Three Alberta cabinet ministers — Energy Minister Ron Liepert, Environment Minister Rob Renner and Intergovernmental Relations Minister Iris Evans — will be in Toronto and several southwestern Ontario cities along with senior oil and gas officials to make their sales pitch on the economic benefits of the Alberta oilsands, highlighting the spinoff jobs generated in this province.

To be sure, some new jobs have been created in recent years by Ontario industries supplying goods and services for the big petroleum companies in the Alberta oilsands. Yet these economic benefits pale in comparison to the massive job losses incurred recently in this province's manufacturing sector, the causes of which can be traced back to Alberta's oil boom.

Since 2002, it's generally well known that more than 400,000 manufacturing jobs in this country have disappeared, the vast majority of them lost in Ontario.

Just prior to the deep economic recession that hit in the fall of 2008, the number of jobs in the manufacturing sector as a proportion of Canada's total employment had dropped to one-quarter, the lowest level in the postwar period.

The triggering mechanism was the Alberta oilsands. Between 2002 and 2008, the oilsands industry experienced a major economic boom, surpassing Saudi Arabia as the number 1 foreign oil supplier to the United States.

At the same time, this boom also inflated the value of the Canadian dollar to the point where manufacturing exports became much less attractive to U.S. importers.

As economist Jim Stanford has shown, international currency traders had already linked the value of the Canadian dollar to commodity prices, especially oil.

As oil prices rose on international commodity markets, so did the value of the Canadian dollar on global currency markets.

Indeed, currency traders had pegged our currency as a petrodollar. Beginning in the latter half of 2002, the value of the loonie moved steadily upward against the U.S. dollar. With the Canadian dollar gaining strength against the U.S. dollar, our manufacturing products became more and more expensive to produce, thereby gradually pricing them out of the U.S. market.

Increasingly, Ontario's manufactured exports became less competitive and took a nose dive. As a result, tens of thousands of jobs were lost in manufacturing industries that produce and sell autos, auto parts, electronic, wood, metal and other products into the U.S. market.

In promoting the virtues of the oilsands industry in Ontario, the Alberta ministers will no doubt argue that this megaproject has become the economic backbone of Canada. But a closer look reveals that the Alberta oilsands boom may be creating serious distortions in the Canadian economy.

Despite rising employment rates since the recession, Ontario's manufacturing job losses continue. Most of the recent new jobs being created have not been in the manufacturing sector but, instead, are comparatively lower paying jobs in the service sector.

It is generally recognized that, on average, the manufacturing sector has higher rates of productivity, allowing employers to pay wages that are often 25 per cent higher than those in the rest of the economy.

What's more, Canada's manufacturing trade deficit has ballooned. On average, the manufacturing sector of Canada's economy generally accounts for 75 per cent of the country's total merchandise trade. Yet, in 2007, just before the economic recession hit, this country had a manufacturing trade deficit of over $30 billion.

Nor have Canadian oil exports made up for the losses in manufacturing exports. Even at the height of the oilsands boom, petroleum exports accounted for only 12.6 per cent of Canada's total merchandise trade in 2006. Yet the value of this export trade in oil and petroleum products has been almost cancelled out by Canada's rate of oil imports.

Close to 60 per cent of Canada's total oil needs are met by imports to the eastern part of the country: Quebec, parts of Ontario and the Atlantic provinces. When these oil imports are factored into the balance of trade equation, the value of Alberta's oilsands exports in Canada's trade picture plummets.

So when Alberta's three ministers trumpet the “good news” about the oilsands industry for the Canadian economy, Ontarians should think twice.

Instead of generating economic benefits for this province's economy, the Alberta oilsands boom has triggered an inflated petrodollar that has become Ontario's number 1 killer of manufacturing jobs.

Tony Clarke, founder and director of the Polaris Institute, is author of Tar Sands Showdown: Canada and the New Politics of Oil in an Age of Climate Change.

Greenpeace report challenges Canada’s need for dirty, risky fossil fuels

jessie — Thu, 09 Sep 2010 09:14:58 -0700

Greenpeace report challenges Canada’s need for dirty, risky fossil fuels

9 September 2010 (Toronto) — Greenpeace today released a comprehensive analysis of Canada’s energy potential that challenges the need for dirty oil from the tar sands and shows that Canada can create tens of thousands of green jobs, while providing over 90 per cent of the country’s electricity and heating needs from renewable sources by 2050.

“Greenpeace worked with energy experts to show how Canada can break its addiction to dirty tar sands oil, coal and gas and save consumers $5.3 billion a year by investing in renewable energy and energy efficiency,” said Keith Stewart, Greenpeace climate and energy campaigner. “We challenge the oil industry and governments to lay out their plan for protecting Canadians from climate change and rising costs for fossil fuels. It’s past time for this debate.”

The new research is in a report, Energy [R]evolution: A Sustainable Energy Outlook for Canada, prepared by Greenpeace and the European Renewable Energy Council (EREC) in conjunction with dozens of experts around the world (1). It shows that:

· Low-impact renewable energy can supply 96 per cent of electricity and 92 per cent of our total heating needs by 2050.

· Renewable sources of energy would rise from 15 per cent of Canada’s primary energy demand today, to 25 per cent by 2020 and 74 per cent by 2050.

· Primary energy demand would drop by 50 per cent through aggressive energy efficiency measures and reliance on wind, sun and other cost-free fuels,

· Canadians would save about $135 per person a year or $5.3 billion on average on their energy bills over the next 40 years, as we use less energy and switch away from increasingly costly fossil fuels,

· The market for the dirty oil of the tar sands could be eliminated through a global scenario of investments in public transit, more efficient vehicles and a rapid shift to electric vehicles that would reduce the world’s demand for oil by 25 per cent by 2030 and 66 per cent by 2050,

· About 77,000 jobs would be created in Canada in the renewables sector alone by 2030, as part of a global expansion of 12 million jobs,

· Energy-related greenhouse gas emissions in Canada would drop by 21 per cent by 2020, and by 95 per cent by 2050,

· Canada would cut its greenhouse gas emissions to the levels international scientists say would protect people from the catastrophic climate change now threatening millions,

· Canada could make a fair contribution to reductions in greenhouse gas emissions in developing countries, in line with our historic responsibility for creating the problem and capacity to pay.

"Unlike other energy scenarios that promote energy futures at the cost of the climate, our energy revolution scenario shows how to save money and create good, green jobs without fuelling catastrophic climate change," said Sven Teske, Greenpeace energy expert and co-author of the report.

“Canada has vast renewable energy potential that can replace expensive and unsustainable fossil fuels and nuclear,” said Christine Lins, Secretary-General of the European Renewable Energy Council, the world’s largest industry association for renewable energy. “The renewable industry is ready and able to deliver the needed capacity to make the energy revolution a reality. There is no technical impediment, only political barriers to rebuilding the global energy sector."

At present Canada’s continued reliance on fossil fuels is part of a global problem that makes massive climate change almost certain to occur, leading to irreparable damage to the planet. This dire future can be avoided through the Energy [R]evolution with major investments in energy efficiency and renewable energy.

“There is no future for the tar sands in a world that is taking action on global warming," said Dave Martin, Greenpeace climate and energy campaigner. "The good news for Canada, with its wealth of renewable energy resources, is that there are a lot more jobs in stopping global warming than in fuelling it."

- 30 –

Notes:

1. The report was prepared by Greenpeace and the European Renewable Energy Council (EREC), in conjunction with specialists from the Institute of Technical Thermodynamics at the German Aerospace Centre (DLR), the Dutch Institute Ecofys and more than 30 scientists and engineers from universities, institutes and the renewable energy industry around the world.
2. A brief backgrounder, the executive summary of the report and the full report are available at: www.greenpeace.ca/enrevcan Download warning: the full report is more than 9 megabytes.

For more information:

Brian Blomme, Greenpeace communications coordinator, (416) 930-9055
Keith Stewart, Greenpeace climate and energy campaigner, (416) 985-5936
Sven Teske, Greenpeace International Energy [R]evolution campaign, +49 171 878 7552

Oil-sands protest greets Nancy Pelosi on Parliament Hill

jessie — Wed, 08 Sep 2010 14:23:44 -0700

Oil-sands protest greets Nancy Pelosi on Parliament Hill

Environmental groups are demanding that Alberta’s Premier apologize for misleading Canadians over his province’s environmental record on the oil sands.

Wednesday, September 8, 2010 4:29 PM

Jane Taber, Globe and Mail

Photo: Globe and Mail

The increased pressure comes as Ed Stelmach and other premiers prepare to meet with one of the most powerful officials in the Obama government, House of Representatives Speaker Nancy Pelosi, on the oil sands issue Wednesday night.

“Frankly, the level of trust of government and industry claims regarding the environmental performance of the tar sands is very low,” Rick Smith, executive director of Environmental Defence, told reporters Wednesday afternoon.

The conference call was held in advance of a meeting between Ms. Pelosi and environmental NGOs on Thursday. Her visit is attracting a lot of attention, pitting environmentalists against industry and governments over the impact on climate and habitat of oil sands production.

A strong environmentalist, Ms. Pelosi is also here to talk about energy security. Wednesday evening, she is to have dinner with Mr. Stelmach as well as Saskatchewan Premier Brad Wall and Quebec’s Jean Charest.

Mr. Smith, meanwhile, said one of the reasons for the conference call was “particularly galling” comments by Mr. Stelmach in which he said he will reason with Ms. Pelosi about the “environmental improvements” being made in the oil sands.

The environmentalist accused the Premier of misleading the public, pointing to a recent study that “caught out” the government on its suggestion pollution in the Athabaska River is natural and not caused by oil-sands production.

Toxic levels of mercury, arsenic, lead and other pollutants have been found in the river, Mr. Smith said. Some were found at levels that exceeded Canadian and Albertan guidelines for the health of aquatic life.

“So for misleading the public, for choosing PR over effective environmental enforcement and for ignoring the best available science, we think that Premier Stelmach owes Canadians an apology.”

There is also concern with the possible approval of a new cross-border pipeline called Keystone XL. Liz Barratt-Brown, senior attorney for Natural Resources Defense Council, warned that it threatens the drinking water of over two million Americans.

There are concerns, too, with oil spills after the disaster in the Gulf of Mexico and the more recent Enbridge pipeline leak in Michigan. Ms. Barrat-Brown cautioned that U.S. dependence on “tar sands oil” will have detrimental impact for both countries for years to come.

Outside, meanwhile, protesters opted to send a message to the Conservative government and Ms. Pelosi through agit-prop. In a demonstration organized by the Rainforest Action Network and LUSH Cosmetics, a model draped in the Maple Leaf was doused in molasses as others waved placards decrying “dirty oil” and declaring Parliament Hill a “global warming crime scene.”

The Canadian Press

Protesters gather on Parliament Hill to demonstrate against the Alberta oil sands ahead of a visit by U.S. House of Representatives Speaker Nancy Pelosi on Sept. 8, 2010.

http://www.theglobeandmail.com/news/politics/ottawa-notebook/oil-sands-p...

Oilsands backlash hits Alberta

jessie — Tue, 20 Jul 2010 10:10:29 -0700

Oilsands backlash hits Alberta

By Gillian Steward, Toronto Star --

The anti-oilsands campaigns south of the border have really revved up over the past few weeks. And it doesn’t look as though they are about to stop any time soon.

In early June in Bellingham, Wash., just across the B.C. border, the city council voted 7-0 in favour of a resolution to reconsider what sort of fuel Bellingham buys for its fleet vehicles. The resolution fingers “high carbon fuels such as those derived from the Canadian Tar Sands” as the kinds of fuels that should be replaced.

The resolution is largely symbolic, since the city of 76,000 is locked into its current fuel supply contract until 2015, but it highlights the spreading political pressure on oilsands producers and the Alberta government.

Less than a month later, 50 U.S. congressmen made a case that the $12 billion Keystone XL pipeline expansion should be put on hold. The pipeline is expected to carry oilsands crude from Hardisty, Alta., to Monchy, Sask., before heading into the U.S. midwest and eventually Texas. The U.S. politicians argued it would double consumption of Alberta crude and pay no heed to the potential impact on climate change. Their concerns were echoed a few days later by Henry Waxman, chair of the U.S. Congress’s powerful energy and commerce committee.

Premier Ed Stelmach immediately offered a counter opinion to the Washington Post, which refused to publish it. So he took out a full-page ad that cost $56,000.

Stelmach’s ad opens with the comment: “A good neighbour lends you a cup of sugar. A great neighbour supplies you with 1.4 million barrels of oil per day.” He also points out that Canada is a much more reliable supplier than Saudi Arabia, Venezuela, Nigeria, Iraq, Angola and Algeria.

But the attack that outraged Albertans the most was the one launched by a coalition of environmental groups operating under the umbrella of Corporate Ethics International, a San Francisco-based NGO that promotes ethics in business by publicly embarrassing companies deemed unethical.

Called Rethink Alberta, the campaign features YouTube videos, billboards and a website which urge tourists to reconsider a trip to Alberta’s famous mountains and lakes because Alberta is also home to the world’s largest and dirtiest oil extraction projects.

The video is clever in that it effectively juxtaposes all the stunning landscapes, wilderness and wildlife that Alberta is famous for with gloomy, lifeless and earth-scarring images of oilsands production. And, of course, images of ducks drowning in the toxic glue of a tailings pond. Although there was a factual error in the Rethink Alberta video (which was corrected), it’s hard to counter those vivid images with factoids and rational arguments about what the industry has done to clean up its act.

Some commentators here have slammed the Rethink Alberta campaign as yet another example of hypocritical Americans, given that no one there is suggesting a boycott of Louisiana or Florida because of the disastrous BP deep-water blowout.

But the coalition behind this campaign features Canadian environmental groups, not just U.S ones. They include the Polaris Institute, and Forest Ethics, which just happens to have an office in Bellingham, as well as San Francisco, Vancouver and Toronto.

There’s no question that Stelmach and the energy industry are much faster on their feet then they used to be when it comes to defending the oilsands. But if the pressure keeps up, they may soon have to dance even faster.

Canadian Centre for Sustainable Living Opens in Windsor, ON

jessie — Mon, 21 Jun 2010 13:17:52 -0700

Canadian Centre for Sustainable Living Opens in Windsor, ON

Media Release

For release June 16, 2010

Canadian Centre for Sustainable Living Opens in Windsor, ON

Windsor, ON – Effective July 1, 2010, the Canadian Centre for Sustainable Living (CCSL) will be opening its doors in Windsor, ON. The initial focus for the Centre is to deliver high quality education and community awareness programs focused on renewable energy technologies. Some of the programs available were previously offered through the Renewable Energy Technology Center. Robin Easterbrook, founder of CCSL, said “I felt that it was important to remove education programs from an association with a commercial enterprise in order to ensure a balanced approach to the technologies available. Further, it is important that Windsor have access to education focused on more than just solar technology. For example, CCSL will soon have program offerings for small wind, and geothermal technologies as well.”
The first program offering through CCSL will be a class for trades people or those with some “hands-on” skills who are looking to gain design and installation experience in solar photovoltaic (solar PV) systems. The first offering of this class will take place July 5 – July 9. The class totals 40 hours of classroom time and is fully compliant with the standards of the North American Board of Certified Energy Practitioners (NABCEP) and the Canadian Electrical Code. Graduates of the exam will be ready to challenge the NABCEP solar PV basics exam which will be offered in Windsor for the first time following the conclusion of this class. Cost of the class is $2,495.00 plus applicable taxes and includes the examination fee. This is the first time such a class will have been offered in Southwestern Ontario to general members of the public or the solar PV industry.
“Given the growth in the number of solar PV installations happening in Ontario at the moment, it is almost criminal that people with no qualifications or only marginal experience are being allowed to work with these systems” said Easterbrook. “Anyone considering a residential or commercial installation of a solar PV system should demand that their installer have this type of education. Better system design leads to optimal system performance and better installation processes lead to a safely installed system with long life.”
This first class is limited to 20 participants and is expected to fill up quickly. Registration is through the Center’s website www.cdncsl.com after June 21. Alternately, people can reserve space by calling CCSL at 519-791-4096.

The Canadian Centre for Sustainable Living is located at 1680 Kildare Road in Windsor, ON.

For more information about CCSL, contact:
Robin Easterbrook
Telephone: 519-791-4096
Fax: 519-254-5442
e-mail: reasterbrook@hotmail.com

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Oil spill to upset crude's price balance

jessie — Mon, 03 May 2010 10:26:01 -0700

Oil spill to upset crude's price balance

Peter Tertzakian, Calgary Herald, May 3, 2010--Maybe I was the only one on the flight from Florida to Texas last week feeling the irony of the situation. Hugging the Gulf of Mexico coastline for most of my otherwise routine business trip, I thought of the contradiction below: The jet fuel that was being consumed to coincidentally fly me over the disastrous BP oil spill probably originated from an offshore oil well in the nearby region.

To be sure, such events remind us, implicitly, that we live in a conflicted society that goes to the ‘ends of the earth’ to drill for the oil that promotes the way we “live, work and play,” under a long shadow of environmental, geopolitical and economic consequence. No doubt, the widening BP oil slick, reportedly spewing uncontrollably at a rate of 5,000 barrels per day from the ocean floor, will heighten our sense of this inner societal conflict. The markets will feel the conflict too, likely pushing oil prices higher over the near term, and triggering bigger changes longer term.

Oil prices in the $75/B to $85/B range over the past nine months have led to a quiet, multi-party balance. Consumers within this price range are not quite screaming at the pumps, governments have been tending to other matters, and oil producers have been content that their financial hurdles are being met at the cost margins, even at the ends of the earth. The worsening ecological disaster in the Gulf of Mexico upsets this balance.

A stronger oil price over the next 12 to 24 months was already looking probable, but now the time fame is likely going to come forward as markets perceive costlier and scarcer supply sources. Yet rising price will also reinforce the ultimate consequence of this disaster, which will be a redoubled effort by fully industrialized economies like the United States to try to “get off oil” over the longer term. Potentially significant advances toward that effort – whether it’s the adoption of direct petroleum substitutes, efficiency gains or the mitigation of demand – now have greater chance to accelerate as early as mid-decade. Such a ‘break point’ in the oil complex was already percolating; gauging the magnitude of this environmental disaster over the next few weeks will dictate how much faster the agenda of long-term change accelerates.

Aside from oil sands, offshore drilling is where most of the world’s incremental oil barrels now come from, and it’s those higher-cost marginal barrels that set price. Indeed, a large fraction of the world’s growing oil needs since the early 1990s has come from the discovery of new, deep offshore reservoirs. The trend, which is global, is best illustrated with data from the US Gulf of Mexico. Figure 1 shows the components of US monthly oil production between January 1981, and the end of 2009.

Top line oil volumes peaked in the mid-1980s and then started a long declining trend. The United States has been producing commercial quantities of crude oil for over 150 years, so it’s no surprise that onshore oil fields, the top wedge in Figure 1, would ultimately succumb to maturity. Onshore scarcity, geopolitics and new technology facilitated migration to deep offshore resources in the early 1990s, with production volumes from the Gulf of Mexico rising in the latter part of the decade (the bottom wedge in Figure 1). The sharp dips you can see in recent years are hurricane disruptions. But note how offshore US production really began to ramp up in the last couple of years, leading to the first overall rise in domestic America oil supply since the 1980s. Unbeknownst to most, the US has been a significant contributor to new oil supply over the past 18 months or so.

It’s no wonder the Obama administration, and other constituents who are determined to “get off foreign oil,” were eager to open up hitherto protected areas of offshore exploration. The volume increases from environmentally sensitive regions like Alaska and Florida are potentially significant contributors to the nation’s oil supply, if not the world.

Of course now there is a halt to offshore oil exploration in restricted areas. Drilling in areas already open for business will continue, but with heightened attention to safety, greater aversion to risk, more regulatory scrutiny, and more opposition from those affected – for example, fishermen. All of these factors translate into greater exploration and development costs and longer lead times to production. Of course this tragedy in the Gulf of Mexico won’t stop oil drilling in the deep waters off the shores of Brazil, Africa, India, China and even the North Sea to name a few of the extreme regions that the industry explores. But these places are not cheap to drill for each of their own circumstances, whether for technical, environmental or political reasons.

A seemingly insignificant 5,000 barrels per day of rogue oil, on 86 million barrels per day of global consumption, is going to cause a lot of change sooner than expected. We shouldn’t be surprised, because history shows that the way our society consumes its energy, and the way that our society is supplied its energy, always changes due to factors we least expect.

Shell puts oil sands expansion plans on hold

jessie — Thu, 29 Apr 2010 06:24:00 -0700

Shell puts oil sands expansion plans on hold

Nathan VanderKlippe and David Ebner, Globe and Mail, April 29, 2010--Costs to build in the oil sands have grown so high that one of the world’s largest energy companies plans to wait at least five years – perhaps much longer – to expand its presence there.

The oil sands have become one of the most costly places on earth to pursue oil projects, said Marvin Odum, the Americas head for Shell (RDS.A-N62.591.522.49%).

As a result, the company will delay any decisions on expanding its Athabasca Oil Sands Project (AOSP) until at least the second half of this decade, and will focus instead on wringing more production out of its existing facilities.

That process could increase its production, which will hit 255,000 barrels a day later this year, by a further 30,000 to 80,000 barrels per day, Mr. Odum said.

“We certainly have seen the cost environment in Alberta go up considerably,” he said in an interview with The Globe and Mail editorial board on Wednesday. “We see the ability for lower investment levels to bring more production online over the next four, five, six years.”

It is Shell’s most definitive declaration that it is retreating from one of the grandest growth schemes in the business. In 2007, as its current 100,000-barrel-a-day expansion began, Shell talked about eventually mining almost 800,000 barrels of bitumen a day. Now, the oil sands are very much a next-decade resource, as Shell instead chases offshore oil in Alaska, the Gulf of Mexico and Brazil.

The first 155,000-barrel stage of AOSP was hugely profitable for Shell, spinning out a per-barrel profit 66-per-cent higher than its other producing assets and paying back its capital costs in just five years at oil prices in the mid-$50s (U.S.).

But the company’s expansion, which will enter production this year, has been far more costly. Shell was one of the few companies to continue oil sands construction – both through the height of the boom and the subsequent crash – and saw expansion costs climb from $9.4- to $12-billion in 2006 to $14.3-billion earlier this year.

The expansion will now require an oil price of $70 to $75 to turn a profit, making it “some of the most expensive production that we have,” Mr. Odum said.

Shell internally forecasts future oil prices between $50 and $90 – a range that potentially excludes the oil sands, and makes other global projects more attractive unless the company can find a way to beat back costs.

Shell will only commit “to watch the market and see when is the next time to commit to the next major expansion of the oil sands,” Mr. Odum said.

In the meantime, it is looking for ways to beat back costs, both through project design and through securing longer-term contracts with suppliers and construction firms.

Chevron Corp. and Marathon Oil Corp. each own 20 per cent of AOSP – one of several major oil sands operations that have come under assault for their environmental record, which includes scarring the landscape and using large quantities of water and energy.

Mr. Odum defended the industry’s record on greenhouse gas emissions, which he called “not ridiculously high,” but said companies have done a poor job of making that point.

“Industry needs to do a lot more in terms of getting out and being more transparent and very clear about what is truly involved in these operations,” he said.

In the meantime, Shell supports the idea of building a West Coast pipeline that would open access to Asian markets, a project proposed by both Enbridge Inc. and Kinder Morgan Canada.

“Typically the more options you have for distribution of your product, the better,” Mr. Odum said.

And the company has research teams across the continent looking at ways to refine extraction techniques, he said, even holding out the possibility that bitumen could become a relatively green source of energy.

Mr. Odum said he has challenged his research teams to make oil sands crude less greenhouse gas-intensive than conventional oil, making it “a preferred [resource] from a CO2 and water standpoint.”

Oilsands flowing south

jessie — Wed, 03 Feb 2010 17:09:16 -0800

Oilsands flowing south

Dina O'Meara, Calgary Herald, Feb. 3, 2010--Oilsands will continue to be needed to meet growing energy demands, with thermal recovery schemes taking over from mining operations, industry officials said at a conference in Calgary.
At the same time, heavy oil and bitumen volumes will travel south to existing refineries, boosting demand for diluent, an agent used to enable the sticky resource to flow on pipelines.

In the past 18 months, the price differential between heavy and light oil has narrowed to around $10 per barrel from $25, squeezing refinery margins and pushing back upgrading projects. The list of oilsands projects has been increased in the past month unaccompanied by a similar number of upgraders, analyst Stephen Fekete, with Purvin and Gertz, said Tuesday. Fekete noted that while production from the oilsands will be growing, upgrading and refinery capacity in Alberta is not.

"The list of projected upgraders is as long, but with the exception of a couple, most remain deferred or cancelled," he told an audience at the Insight conference. The situation already is leading to a diluent supply gap between what will be required to thin heavy oil for shipping and what is available, he said.

The light-heavy-differential squeeze raises interesting issues around pipeline capacity as production in the oilsands ramps up, added Steve Reynish, president of Marathon Oil Canada Corp.

"We do have mining and upgrading in our existing facilities and our expansion has mining and upgrading as well," he said. "Beyond that, we would consider looking at mining only and maybe taking the drillbit south of the border to any upgrading refining that already exists. The economics, at this point in time: the brownfield expansion of existing refineries looks like the cheaper option than the greenfield upgrader."

On Monday, Marathon announced it was cutting its oilsands capital budget by 32 per cent to $668 million, partly due to partner Royal Dutch Shell's holding back on investing in a second expansion phase of the 155,000-barrel-per-day Athabasca Oil Sands Project.

Thermal operations, where the bitumen is heated to a consistency where it can flow rather than be mined, are the future of Alberta's oilsands, said industry representative Pat Nelson.

Nelson, a former provincial energy and finance minister, is now the vice-chairwoman of the In situ Oilsands Alliance, a six-member group of oilsands developers using emerging technologies to squeeze bitumen from the Alberta sands.

"The future, in my view, is in situ," she said. "Only two per cent of our oilsands resources can be mined; the balance has to be developed through in situ processes."

Industry association spokesman Greg Stringham agreed that promoting a positive vision of Canada's oilsands needs to be addressed, but added the resource will continue to have a market.

Canadian oil will be needed by the United States to fill the gap of reduced volumes coming from Mexico and Venezuela, even in a flat demand scenario, said Stringham, spokesman for the Canadian Association of Petroleum Producers.

Production growth from the oilsands is seen as flattening for the next few years until major project expansions kick in fully and smaller projects come on board, he told the audience.