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The 10 Energy Stories That Defined 2017

The 10 Energy Stories That Defined 2017

Electricity

As 2017 comes to a close, it’s time to review the top energy stories of the year. There are several stories that could compete for the year’s top spot, but this year I have decided to list the stories roughly in the order they occurred during the year. Thus, the recent tax reform bill, which would be the top energy story on some lists, is near the end.

Here are the stories that shaped the year in energy.

Executive Orders on Pipelines

Just after he was sworn in last January, President Trump signed executive orders on two stalled pipeline projects. One was the Keystone XL Pipeline rejected by his predecessor. Trump asked TransCanada, the pipeline’s backer, to reapply for the permit. Shortly after, the company did just that, and the permit was approved.

The other project backed by Trump was the Dakota Access Pipeline (DAPL). The $3.8 billion project had been halted by President Barack Obama following months of protests. Trump instructed the Secretary of the Army to cut through the red tape that had stalled the project. That directive was followed, the project was restarted, and oil began to flow through the pipeline in May.

Repeal of the Clean Power Plan

In March, Donald Trump signed an executive order that instructed EPA Administrator Scott Pruitt to begin the process of dismantling the Clean Power Plan (CPP). The CPP was first proposed by the Obama administration in 2014 and would have required states to cut carbon dioxide emissions from existing coal- and gas-fired power plants, targeting an emissions reduction of 30 percent below 2005 levels by 2030.

An Exodus from the Oil Sands

Citing high costs and better opportunities in U.S. shale oil, oil majors like Statoil, Shell, and ConocoPhillips sold off $24 billion in assets in Canada’s oil sands sector. Other majors, like Total, have indicated they will follow suit.

…click on the above link to read the rest of the article…

Oil Major: 70% Of Crude Can Be Left In The Ground

Oil Major: 70% Of Crude Can Be Left In The Ground

Oil

Canada’s oil sands are too dirty to be produced, and should probably stay in the ground.

That has long been the sentiment of environmental groups, but it is also gaining acceptance even among some of the largest oil companies in the world.

“A lot of fossil fuels will have to stay in the ground, coal obviously … but you will also see oil and gas being left in the ground, that is natural,” Statoil’s CEO Eldar Saetre told Reuters in an interview. “At Statoil we are not pursuing certain types of resources, we are not exploring for heavy oil or investing in oilsands. It is really about accessing the most carbon-efficient barrels.”

Meanwhile, Statoil is under pressure at home on another front: its Arctic wells in the Barents Sea have come up dry, capping off a highly disappointing drilling season.

If heavy oil and oil sands are to be left unproduced, then a lot of oil will need to stay in the ground. According to the USGS, about 70 percent of the world’s discovered oil reserves are in the form of heavy oil and bitumen. Much of that comes from Venezuela – one of the last places in the world that an oil company wants to do business in these days – and Canada.

Last year, Statoil abandoned Canada’s oil sands, selling off its assets to Athabasca Oil Corp. But Statoil is hardly alone in the exodus. ConocoPhillips unloaded a whopping $13.3 billion of oil sands assets to Cenovus Energy earlier this year. Shell sold off $4.1 billion in oil sands assets to Canadian Natural Resources. Meanwhile, ExxonMobil wrote off 3.5 billion barrels of oil sands from its book in February, admitting that they were unviable in today’s market.

…click on the above link to read the rest of the article…

Canada’s Pipeline Industry Takes Another Hit

Canada’s Pipeline Industry Takes Another Hit

pipeline

Another oil pipeline in Canada bites the dust. TransCanada announced last week that it would scrap its plans to build a 2,800-mile major pipeline that would traverse nearly the entire country, closing off a crucial potential export route for Canada’s oil sands.

The $15 billion Energy East pipeline would have carried 1.1 million barrels of oil per day from Alberta to Canada’s eastern coast for refining and export. It faced significant opposition from communities affected along the pipeline’s route, but TransCanada had been confident that it could overcome those hurdles.

More recently, however, top Canadian regulators decided that the pipeline would need to face an assessment of the project’s impact on greenhouse gas emissions, a review that TransCanada fiercely opposed. Ultimately, it appears that the Canadian pipeline company shelved the project in light of the heightened environmental scrutiny.

Canada’s pipeline industry cried foul, blaming the government for regulatory uncertainty. “The common thread here is that Canada generally has displayed an unwelcoming policy environment and an uncertain approval process,” Explorers and Producers Association of Canada president Gary Leach, told the Financial Post, citing other billion-dollar projects that have been cancelled in the past year. “For Canada, I think this is a blow. We are deluding ourselves if we think Canada is a place with a stable, predictable investment climate.”

The lack of pipeline capacity is why so much onus has been put on Keystone XL, a pipeline that has been in limbo for the better part of a decade.

But the problem for TransCanada is that Energy East was always going to be a heavier lift than other projects. While some blame regulators for the death of Energy East, others see changing market conditions behind TransCanada’s decision to pull the plug. The project ran into trouble when oil prices cratered in 2014. Also, even with Keystone XL blocked, there are other projects that are more attractive than Energy East.

…click on the above link to read the rest of the article…

Blowout Week 123

Blowout Week 123

A few careless campers who forgot to extinguish their campfire, or maybe a few kids playing with matches, or a cigarette, or an arsonist, a piece of glass, whatever, have in the last few days done more to bring the global oil market back into balance than OPEC and the rest of the world’s producers put together:

The raging wildfire burning through vast areas in and around Fort McMurray has forced more nearby oilsands companies to shut down their operations and forced staff and output reductions at more far-flung facilities in northern Alberta.

Analyst estimates on Thursday put the total amount of oil shut in from the fires at one million bpd, or roughly 40 per cent of total oilsands production. But the amount of production affected is now expected to exceed those numbers as the fire grew significantly into Friday and as additional companies have reduced production. “When we’re talking about a potential shutdown of up to a million barrels per day, that’s very serious business for the global oil market if it persists,” BMO Capital Markets chief economist Douglas Porter said Friday.

We continue with the usual story mix, including how AGW contributed to the wildfires, industry responses to David Mackay’s comments, Exxon’s novel CCS technology, EU CO2 emissions rise, Indonesia likes thorium, UK short 87,600 nuclear technicians, Belgium hands out iodine pills, EU’s percent renewable numbers not reliable, problems with perovskite PV panels, Saudi Arabia fires Oil Minister al-Naimi, moving day for Halley Base and the world’s first certified climate refugees – from Louisiana.

El Niño and ongoing climate change have both contributed to the devastating Alberta wildfires according to experts. The weather phenomenon has caused much drier conditions than normal, leading to a massive increase in the number of fires in the province.

…click on the above link to read the rest of the article…

Energy Wars of Attrition: The Irony of Oil Abundance

Energy Wars of Attrition: The Irony of Oil Abundance 

Three and a half years ago, the International Energy Agency (IEA) triggered headlines around the world by predicting that the United States would overtake Saudi Arabia to become the world’s leading oil producer by 2020 and, together with Canada, would become a net exporter of oil around 2030. Overnight, a new strain of American energy triumphalism appeared and experts began speaking of “Saudi America,” a reinvigorated U.S.A. animated by copious streams of oil and natural gas, much of it obtained through the then-pioneering technique of hydro-fracking. “This is a real energy revolution,” the Wall Street Journal crowed in an editorial heralding the IEA pronouncement.

The most immediate effect of this “revolution,” its boosters proclaimed, would be to banish any likelihood of a “peak” in world oil production and subsequent petroleum scarcity.  The peak oil theorists, who flourished in the early years of the twenty-first century, warned that global output was likely to reach its maximum attainable level in the near future, possibly as early as 2012, and then commence an irreversible decline as the major reserves of energy were tapped dry. The proponents of this outlook did not, however, foresee the coming of hydro-fracking and the exploitation of previously inaccessible reserves of oil and natural gas in underground shale formations.

Understandably enough, the stunning increase in North American oil production in the past few years simply wasn’t on their radar. According to the Energy Information Administration (EIA) of the Department of Energy, U.S. crude output rose from 5.5 million barrels per day in 2010 to 9.2 million barrels as 2016 began, an increase of 3.7 million barrels per day in what can only be considered the relative blink of an eye. Similarly unexpected was the success of Canadian producers in extracting oil (in the form of bitumen, a semi-solid petroleum substance) from the tar sands of Alberta.

…click on the above link to read the rest of the article…

Canadian Oil Slammed By Low Prices, Pipeline Woes

Canadian Oil Slammed By Low Prices, Pipeline Woes

Canada has been particularly hit hard during the downturn in oil prices. A major oil-producing country, Canada rode the commodity wave upwards over the past decade, but has suffered from the downturn.

The economy briefly dipped into a recession in 2015. Even after growth resumed, Canada’s GDP slowed the most out of all G7 nations. The unemployment has rate ticked up, especially in Alberta where most of its oil and gas production is concentrated. And the Canadian dollar has plunged in value to its lowest level in over a decade.

The problems for Canada’s oil industry are compounded by several factors. First, Canada’s oil is more costly to produce than other regions, particularly when compared to oil produced in United States where Canada competes for pipeline capacity and market share. Similarly, Canada’s oil sector is also struggling to build enough pipelines to get their oil to market. With elevated levels of production in the U.S., Canadian producers have very few options to move their product. Pipeline routes to the east and west coasts for export abroad are limited, vexing Alberta producers.

That has led to a third problem that puts Canadian producers at a disadvantage to some of their peers: Canadian crude oil sells at a steep discount to more widely recognized benchmarks like WTI. In mid-January, for example, when WTI dropped to $30 per barrel, heavy tar sands in Canada traded at just $8 per barrel temporarily. Canada’s oil, at a lower quality and produced at a higher cost, needs to be discounted in order to entice buyers.

Job losses have proliferated across the oil patch. Earlier this week, Nexen Energy, a Calgary-based subsidiary of China’s Cnooc, announced that it would lay off another 120 workers because of low oil prices.

…click on the above link to read the rest of the article…

Canada’s Indigenous Bands Rise Up Against a Tar Sands Pipeline

Canada’s Indigenous Bands Rise Up Against a Tar Sands Pipeline

TransCanada, the company behind the now-defunct Keystone XL, is proposing another pipeline that would ship Alberta tar sands oil to Canada’s Atlantic coast. But fierce opposition from First Nation communities could derail this controversial project.


Sitting in his office on the outskirts of Montreal, Serge Otis Simon, council chief of the Kanastake — a band of Mohawks — is clear about what might happen if the proposed Energy East Pipeline is routed through the band’s land, in spite of their opposition. “The Warrior Society are men whose duty is given by creation to protect the land, people, and community,” he told me, describing a group of Mohawks who go by that name. “I can’t think of a more honorable way to be killed than standing in the way of that pipeline.”

The rhetoric may be extreme, but it reflects the passions surrounding the debate over oil and gas pipelines in Canada. And it may well not be hyperbole. The Kanastake, after all, are the First Nations band that rose in armed revolt against Quebec and the federal government in 1980 over a developer’s efforts to build a golf course and condominium complex on a burial site in a sacred pine grove next to their reserve. The two-and-a-half month standoff ended when the Kanastake surrendered to police.

350.org
Cree activist Clayton Thomas-Muller, shown at a Keystone XL protest last January, is organizing First Nations opposition to the Energy East Pipeline.

Now that President Obama has shot down the contentious Keystone XL Pipeline — which would have transported oil from the tar sands of northern Alberta to refineries on the U.S. Gulf Coast — the spotlight is turning to Energy East. Proposed by TransCanada, the same company behind Keystone XL, the Energy East Pipeline is the next most likely conduit for what is known as unconventional crude. It would run from Alberta nearly 3,000 miles east to ports in Atlantic Canada, snaking across territory claimed by some 150 First Nations groups.

…click on the above link to read the rest of the article…

River Supplying Water To Alberta Oil Sands Operations At Risk From Drought

A new study casts doubt on the long-term ability of the Athabasca River to supply the water Alberta’s oil sands industry relies on.

Water is allocated to oil sands operations based on river flow data collected since the 1950s, but that doesn’t necessarily represent an accurate assessment of the Athabasca River’s flow variability over the longer term, according to a report published this week in the Proceedings of the National Academy of Sciences.

Development of Alberta’s oil sands, the world’s third-largest crude oil reserve at an estimated 168 billion barrels, uses a lot of fresh water — more than 3 barrels of water for every barrel of oil produced. Currently, the oil sands industry is allocated 4.4% of the mean annual flow of the Athabasca River to meet that demand. In 2010, the oil and gas industry accounted for 74.5 percent of total surface water allocations in the Athabasca River Basin, the report says.

That allocation takes into account seasonal fluctuation, but not long-term climatic variability and change, the authors of the report write — even though the region has a history of droughts and future droughts are likely, suggesting the industry’s water use might be unsustainable.

Syncrude_mildred_lake_plant
Syncrude’s Mildred Lake oil sands operation in Alberta, Canada. Photo via Wikimedia Commons.

Researchers from the University of Regina and the University of Western Ontario, both in Canada, analyzed the measured river flow record for the Athabasca River Basin while accounting for the effects of climate oscillations that can confound attempts to spot long-term trends, like the Pacific Decadal Oscillation, the Pacific North American mode and El Niño.

Their analysis revealed declining flows throughout the river basin, which is consistent with the record of regional warming and the resulting loss of glacier ice and snowpack at high elevations in the Rocky Mountains, the origin of much of the Athabasca’s water.

…click on the above link to read the rest of the article…

Newfoundland’s oil ripple effect: As prices fall, commuting workers stay home

Newfoundland’s oil ripple effect: As prices fall, commuting workers stay home

The big paycheques from Alberta are drying up, and with them the economic good times

It was a tell-tale sign when East Coast Catering of St. John’s laid off 44 workers in September. The company supplies meals and housekeeping services to Newfoundland’s offshore oil rigs, two of which departed this year at the end of their contracts.


 

‘I am certainly not pushing the panic button, but I think we should have our hand hovering over it.’​– Radio host Paddy Daley


“The majority of our business is not directly impacted by the recent drop in oil prices,” East Coast Catering said, but the subtle signs of a downturn are there.

“I am not worried yet. And I am certainly not pushing the panic button, but I think we should have our hand hovering over it,” said Paddy Daley a well known call-in radio host for VOCM in St. John’s.

Newfoundland’s offshore oil industry has been somewhat insulated from the shock of plunging oil prices over the last 16 months, but the long tail of job losses and cancelled contracts so clearly evident in Alberta is beginning to show, especially as the province’s “turnaround workers” come home for good.

Darryl Day

Darryl Day worked in Alberta’s hydraulic fracturing industry. He was laid off in June, one of many Newfoundlanders who’ll no longer make the commute to the Alberta oil patch.

For years, thousands of Newfoundlanders commuted back and forth to Alberta’s oil patch, working three or four weeks at a time and bringing home plump paycheques. Many of them aren’t going back this fall.

Darryl Day used to fly from Gander to Alberta and back — 22 days out, 13 days back home. He was recruited at a job fair in Newfoundland six years ago to drive heavy machinery for a hydraulic fracturing company. Those were the “good times.”

“Different companies would run three or four job fairs in Newfoundland a week and they would leave with however many employees,” Day said. “Then if they ran short, they would come back again.”

…click on the above link to read the rest of the article…

Will declines in U.S. and Canadian oil production lead to a global decline?

Will declines in U.S. and Canadian oil production lead to a global decline?

 At the beginning of this year I noted that all of the growth in world oil production* since 2005 has come from two countries: the United States and Canada. And, I suggested that since the growth in production in those two countries came from high-cost deposits–tight oil in the United States and tar sands in Canada–that the precipitous drop in oil prices would lead to declines in production in both countries.

I concluded that unless another area of the world suddenly started growing its oil production significantly that those declines would probably result in a worldwide decline in oil production.

Well, declines in the both the United States and Canada have arrived. It will be several months before we can know with any certainty whether those declines will translate into a persistent global decline. But this much we do know:

The International Energy Agency, a consortium of 29 countries tasked with tracking worldwide energy trends, said in its latest report that global oil production fell 600,000 barrels per day in July–and here’s the important part–“mainly on lower non-OPEC output.” That’s a reference to falling U.S. and Canadian production. One month does not make a trend. But the report notes that non-OPEC supply is expected to contract in 2016.

The report said that further declines in U.S. production are expected. Weekly estimates from the U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, bear this out. The EIA put U.S. production at 9.1 million barrels per day (mbpd) for the week ending September 18; that’s down from 9.6 mbpd in early June.

…click on the above link to read the rest of the article…

 

 

Canadian Oil Trapped Without More Pipeline Capacity

Canadian Oil Trapped Without More Pipeline Capacity

Adding insult to injury for Canada’s oil industry, Democratic Presidential candidate Hillary Clinton came out against the Keystone XL Pipeline on September 22, ending several years of silence and waffling on the controversial issue.

That comes as a blow to TransCanada, the project’s backer, who wanted to connect Canada’s oil sands to refineries on the U.S. Gulf Coast. The 1,179-milepipeline would allow 830,000 barrels of oil per day to be exported from Canada. Clinton’s opposition will add some pressure on the U.S. President to reject the pipeline, which looks increasingly likely.

But if the pipeline is rejected, it won’t just be bad news for TransCanada, but also for Canada’s larger oil industry. Canadian crude trades at a discount to WTI, in part because of a lack of pipeline capacity. That discount has fluctuated over the years – ranging from $40 at a high point to around $15 today – but the bigger the discount, the more revenue is lost by Canada’s oil producers.

Related: Peak Oil Has More To Do With Oil Prices Than You May Think

Now with oil prices less than half of what they were from a year ago, the discount that Canada’s oil sector must sell their oil for is even more painful. “At $100 a barrel it was a big concern. At $45 a barrel, that is a far larger percentage (of revenue) and is likely the difference between profitable and unprofitable on many of the assets,” Tim McMillan, president of the Canadian Association of Petroleum Producers (CAPP), told Reuters in an interview in early September.

…click on the above link to read the rest of the article…

 

Oil sands pipelines now back on the election agenda

Oil sands pipelines now back on the election agenda

Mulcair may have the most explaining to do in tonight’s French-language leaders’ debate

So now we know. The woman who wants to be the next Democrat to occupy the White House has made a decision that the president she hopes to succeed hasn’t, or won’t.

Hillary Clinton came out against the Keystone XL this week, the Canadian-backed pipeline that would carry Alberta bitumen — and some North Dakota crude — through the heartland of America to the giant refineries on the U.S. Gulf Coast.

“I think it is imperative that we look at the Keystone pipeline for what I believe it is — a distraction from the important work we have to do on climate change,” Clinton said at a meeting in Iowa, which just happens to be a key battleground state for Democrats in the lead-up to the presidential nomination race next year.

She used stronger language in a later tweet, saying “it’s time to invest in a clean energy future not build a pipeline to carry our continent’s dirtiest oil across the U.S.”

American progressives and environmentalists — key Democratic constituencies — immediately cheered her decision. Barack Obama likely did, too, from the privacy of the Oval Office.

After delaying his own decision, again and again, Clinton’s statement may well relieve him of having to make one at all.

Clinton, too, had delayed stating where she stood. And for good reason. She was Obama’s secretary of state when her department concluded Keystone XL would have no significant impact on oil sands development, support 42,000 jobs and generate billions in tax revenues in the U.S.

But these days, Clinton is more interested in burnishing whatever climate-friendly agenda she intends to roll out, especially now that she’s facing a real threat for the Democratic nomination from Vermont Senator Bernie Sanders.

…click on the above link to read the rest of the article…

 

 

Nexen’s Brand New, Double-Layered Pipeline Just Ruptured, Causing One of the Biggest Oil Spills Ever in Alberta

A pipeline at Nexen Energy’s Long Lake oilsands facility southeast of Fort McMurray, Alberta, spilled about five million liters (32,000 barrels or some 1.32 million gallons) of emulsion, a mixture of bitumen, sand and water, Wednesday afternoon — marking one of the largest spills in Alberta history.

According to reports, the spill covered as much as 16,000 square meters (almost 4 acres). The emulsion leaked from a “feeder” pipe that connects a wellhead to a processing plant.

At a press conference Thursday, Ron Bailey, Nexen vice president of Canadian operations, said the company “sincerely apologize[d] for the impact this has caused.” He confirmed the double-layered pipeline is a part of Nexen’s new system and that the line’s emergency detection system failed to alert officials to the breach, which was discovered during a visual inspection.

At this time, the company claims to have the leak under control, according to CBC News.


Nexen’s “failsafe” system didn’t detect massive pipeline spill: http://wp.me/p2Y4rw-8SFH 

The spill comes at a particularly bad time for Canada’s premiers, who are poised to sign an agreement three years in the making to fast-track the approval process for new oil sands pipelines while weakening commitments to fight climate change, according to Mike Hudema, a climate and energy campaigner for Greenpeace.

“As provincial premiers talk about ways to streamline the approval process for new tar sands pipelines, we have a stark reminder of how dangerous they can be,” Hudema said in a statement. “This leak is also a good reminder that Alberta has a long way to go to address its pipeline problems and that communities have good reasons to fear having more built.”

…click on the above link to read the rest of the article…

 

 

 

Greenwash: Shell May Remove “Oil” From Name as it Moves to Tap Arctic, Gulf of Mexico

Shell Oil has announced it may take a page out of the BP “Beyond Petroleum” greenwashing book, rebranding itself as something other than an oil company for its United States-based unit.

Marvin Odum, director of Shell Oil’s upstream subsidiary companies in the Americas, told Bloomberg the name Shell Oil “is a little old-fashioned, I’d say, and at one point we’ll probably do something about that” during a luncheon interview with Bloomberg News co-founder Matt Winkler (beginning at 8:22) at the recently-completed Shell-sponsored Toronto Global Forum.

“Oil,” said Odum, could at some point in the near future be removed from the name.

Odum’s comments come as Shell has moved aggressively to drill for offshore oil in the Arctic and deep offshore in the Gulf of Mexico, while also maintaining a heavy footprint in Alberta’s tar sands oil patch.

Shell Oil Greenwashing
Image Credit: Bloomberg News Screenshot

Shell also recently acquired BG (British Gas) Group, a company that owns numerous assets in the global liquefied natural gas (LNG) industry, transforming the company into what Forbes hailed as a “world LNG giant.”

Winkler quipped in Toronto that due to this major asset purchase, it might be more accurate to call Shell Oil, “Shell Gas.”

In October 2011, BG Group signed a major contract with the U.S.-based LNG giant Cheniere to ship its gas product obtained via hydraulic fracturing (“fracking”) to the global market. That LNG will begin to flow by the end of the year.

Just a week before Odum told Winkler that Shell may take “oil” out its company name, he appeared on Bloomberg News on the sidelines of the Aspen Ideas Festival to boast about his company’s big plans — plans to drill for oil in the deep offshore Gulf of Mexico Appomattox field. At Aspen, Odum called Appomattox a “world class oil and gas project.”

 

…click on the above link to read the rest of the article…

Zero Carbon Emissions: The New Language Of Climate Change

This is a guest post by David Suzuki.

If nothing else, the G7 countries’ recent agreement to end fossil fuel use for energy by 2100 signals a shift in the way we talk and think about global warming. Previous agreements were about reducing carbon emissions from burning coal, oil and gas. This takes matters a step further by envisioning a fossil fuel–free future.

There are reasons for cynicism: the long time frame means none of the politicians involved in the commitment will even be alive, let alone held accountable, for meeting the target in 2100; Canada and Japan watered down Germany’s proposal to end fossil fuel energy by 2050; and many governments, including Canada’s, haven’t met even their current weak commitments. But in calling for deep emissions cuts by 2050 and an end to fossil fuel energy by 2100 — “decarbonization” — the non-binding pledge at least shows governments recognize the need to confront climate change.

Canada could show it takes the commitment seriously by heeding the advice of 100 scientists (including 12 Royal Society of Canada fellows, 22 U.S. National Academy of Sciences members, five Order of Canada recipients and a Nobel Prize winner, from a range of disciplines) who released a statement with 10 reasons why “No new oil sands or related infrastructure projects should proceed unless consistent with an implemented plan to rapidly reduce carbon pollution, safeguard biodiversity, protect human health, and respect treaty rights.”

According to Simon Fraser University energy economist and statement co-author Mark Jaccard, “Leading independent researchers show that significant expansion of the oil sands and similar unconventional oil sources is inconsistent with efforts to avoid potentially dangerous climate change.”

Another author, Northern Arizona University ecologist Tom Sisk, said it’s not just about climate: “Oil sands development is industrializing and degrading some of the wildest regions of the planet, contaminating its rivers, and transforming a landscape that stores huge amounts of carbon into one that releases it.”

 

…click on the above link to read the rest of the article…

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