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Crude oil producers in Alberta appear to be split on a proposed cut in production amid record-low prices, Canadian media report.

One of the large Canadian oil producers, Cenovus Energy, is calling upon the government of Alberta to mandate temporary production cuts at all drillers in a bid to ease Canadian bottlenecks that have resulted in Canada’s heavy oil prices tumbling to a record-low discount of US$50 to WTI.

The province of Alberta, the heart of Canada’s oil sands production, has the necessary legislation to have all producers agree to production cuts and it needs to use it now, Cenovus said in an emailed statement to Bloomberg yesterday.

“We’re probably producing about 200,000 or 300,000 barrels per day of oil in excess of our ability to get that oil out of the province, either by pipelines or by rail,” Cenovus’ CEO Alex Pourbaix told Global News.

However, other big players disagree that the industry needs to produce less. “Our position is that government intervention in the market would send the wrong signals to the investment community regarding doing business in Alberta and Canada. And we really do need to take a long-term view and allow the market to operate as it should,” Global News quoted a spokeswoman for Suncor as saying.

However, Suncor is in a favorable position: according to the company spokeswoman it has no exposure to the suffocating differential between Western Canadian Select and West Texas Intermediate since it processes as much as 70 percent of its crude at home.

Husky Energy is another of the large Canadian producers who oppose a government-led intervention in production rates. According to Husky, “Market intervention comes with an unacceptably high level of economic and trade risk.”

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

Canadian Oil Producer Calls For Production Cap Amid Record Low Prices

November 14, 2018

Canadian Oil Producer Calls For Production Cap Amid Record Low Prices

“This is an extraordinary situation brought on by extraordinary circumstances,” Cenovus says.

“The government needs to take this immediate temporary action — which is completely within the law — to protect the interests of Albertans,” the company’s email to Bloomberg reads.

Western Canadian Select (WCS)—the benchmark price of oil from Canada’s oil sands delivered at Hardisty, Alberta—has dropped to a record low discount of US$50 to WTI in recent weeks, due to rising oil production and not enough pipeline capacity to ship the crude out of Alberta.

Due to the record low heavy oil prices, Cenovus Energy is currently operating its Foster Creek and Christina Lake projects at reduced volumes, it said in its Q3 earnings release. On the earnings call, Cenovus Energy’s President and CEO Alex Pourbaix urged the whole Canadian industry to slow down production to ease bottlenecks.

“And I want to be clear on this, the industry right now has a production problem. We’re going to do our part but we are not going to carry the industry on our back. I think this is something that has to be dealt with on an industry wide basis,” Pourbaix said.

Alberta’s Energy Department spokesman Mike McKinnon told Bloomberg in an email, responding to Cenovus’s call for province-wide production cuts:

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

In Major Defeat For Trump, Judge Blocks Construction Of Keystone XL Pipeline

November 9, 2018

In Major Defeat For Trump, Judge Blocks Construction Of Keystone XL Pipeline

In a setback for the Trump administration, a federal judge in Montana temporarily halted construction of the Keystone XL oil pipeline late on Thursday on the grounds that the U.S. government did not complete a full analysis of the environmental impact of the TransCanada Corp project and failed to justify its decision granting a permit for the 1,200-mile long project designed to connect Canada’s tar sands crude oil with refineries on the Texas Gulf Coast. The ruling came in a lawsuit that several environmental groups filed against the U.S. government in 2017, soon after President Donald Trump announced a presidential permit for the project.

The judge, Brian Morris of the U.S. District Court in Montana, said President Trump’s State Department ignored crucial issues of climate change in order to further the president’s goal of letting the pipeline be built. In doing so, the administration ran afoul of the Administrative Procedure Act, which requires “reasoned” explanations for government decisions, particularly when they represent reversals of well-studied actions.

Morris wrote that a U.S. State Department environmental analysis “fell short of a ‘hard look’” at the cumulative effects of greenhouse gas emissions and the impact on Native American land resources. He also ruled the analysis failed to fully review the effects of the current oil price on the pipeline’s viability and did not fully model potential oil spills and offer mitigations measures.

However, the decision does not permanently block a pipeline permit. It requires the administration to conduct a more thorough review of potential adverse impacts related to climate change, cultural resources and endangered species. The court essentially ordered a do-over.

Morris, a former clerk to the late Chief Justice William Rehnquist, was appointed to the bench by President Obama.

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

Petro Politics and Trudeau’s Sordid Pipeline Deal

September 8, 2018

Petro Politics and Trudeau’s Sordid Pipeline Deal

Behind the spin, the reality is clear — taxpayers and the environment lose in the pipeline debacle.

Alberta Premier Rachel Notley and Prime Minister Justin Trudeau are ignoring the law, economics and the environment in backing the Trans Mountain pipeline. Photo from trumpvstrudeau, Creative Commons licensed.

“Petroleum is unique among the world’s resources; it is more likely to be associated with conflict than any other commodity.” — Terry Lynn Karl

The debate about the Federal Court of Appeal decision that killed the approval for the Trans Mountain $7.4-billion pipeline expansion speaks volumes about the oily state of Canadian politics.

The leaders of Canada’s die-hard petro republics, Alberta’s Rachel Notley and Saskatchewan’s Scott Moe, predictably chaffed and frothed.

They complained that they had been let down, billions of dollars are being lost and Parliament must address “this crisis.”

Business types lamented that the courts had dealt another blow to Canada’s mining republic reputation by slowing down another noble megaproject promising jobs and prosperity — for China no less.

The power of oil to construct narratives that bear little or no relation to the truth is a global phenomenon and, in Canada, a new boreal specialty. You can’t find a more entitled political player than a petroleum exporter.

All in all, the media and Canadian politicians reduced the court decision to a dubious concession to pesky First Nations and environmentalists and another damned hurdle for “the national interest” and the pursuit of jobs.

But that’s not the truth or the reality.

Here are some of the important issues that concerned citizens should now be contemplating in the wake of the historic decision.

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

Carbon price wars–BC, Ontario or Quebec?

September 5, 2018

Carbon price wars–BC, Ontario or Quebec?

The question of how the Canadian provinces should deal with the issue of greenhouse gas emissions continues to be contentious and occasionally acrimonious.

The new provincial government of Ontario has declared its intention to cancel that province’s cap-and-trade system—referring to it as “a punishing, regressive tax that forces low-and middle-income families to pay more.” A week ago the province of Alberta threatened to pull out of the Federal government’s carbon pricing scheme after progress on building the Trans Mountain Expansion pipeline ground to a halt. Progressive Conservative leader Andrew Scheer has vowed to shut down carbon pricing asserting: “Conservatives know that carbon tax isn’t just bad for big business; it’s bad for everyone. And that’s why, come 2019, my first act as prime minister will be to get rid of it once and for all.”[1]

So is it? Bad for everyone?

There is no question that pricing carbon works. Over 51 countries and subnational jurisdictions are now operating carbon pricing systems, or planning to do so.[2] A report last year by two of the world’s top economists was clear: “A well-designed carbon price is an indispensable part of a strategy for reducing emissions in a efficient way.”[3]

Earlier this year, Environment and Climate Change Canada published the results of a modeling exercise which showed that a carbon pricing system applied across Canada would reduce greenhouse gas pollution by between 80 and 90 million tonnes by 2022–making a significant contribution to meeting Canada’s Paris Agreement target of a 30% reduction over the period 2005 to 2030. [4]

But some forms of carbon pricing systems seem to work a lot better than others. Can we learn a few lessons and draw some conclusions by looking at the performance of the four Canadian provinces where carbon prices have been introduced: Quebec, Ontario, Alberta and British Columbia? Of the four, British Columbia’s revenue-neutral carbon pricing system is widely regarded as a major success.[5] But the latest data on Canada’s greenhouse gas emissions paint a rather different picture.

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

Disaster Hits Canada’s Oil Sands

April 10, 2018

Disaster Hits Canada’s Oil Sands

Kinder Morgan said it would halt nearly all work on a pipeline project that is crucial to the entire Canadian oil sands industry, representing a huge blow to Alberta’s efforts to move oil to market.

Kinder Morgan’s Trans Mountain Expansion is the largest, and one of the very few, pipeline projects that has a chance of reaching completion. Alberta’s oil sands producers have been desperate for new outlets to take their oil out of the country, and the decade-plus Keystone XL saga is the perfect illustration of the industry’s woes.

Keystone XL is still facing an uncertain future, and with several other major oil pipeline projects already shelved, there has been extra emphasis on the successful outcome of the Trans Mountain Expansion. That is exactly why Canada’s federal government, including Prime Minister Justin Trudeau, has gone to bat for the project.

But, despite federal approval, Trans Mountain still faces a variety of obstacles that have bedeviled the project for some time. It appears that opposition from First Nations, environmental groups, local communities affected by the route, and the provincial government in British Columbia have forced Kinder Morgan to throw in the towel, at least for now.

Kinder Morgan said on Sunday that it suspended most work on the $5.8 billion Trans Mountain Expansion.

Environmental groups hailed the announcement. “The writing is on the wall, and even Kinder Morgan can read it. Investors should note that the opposition to this project is strong, deep and gets bigger by the day,” said Mike Hudema, climate campaigner with Greenpeace Canada, according to Reuters.

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

Alberta’s Aggressive Renewable Energy Push

March 29, 2018

Alberta’s Aggressive Renewable Energy Push

One Canadian province has set its sights on generating almost a third of its electricity from renewable sources by 2030. This will take some US$7.77 billion (C$10 billion) in investments by that year to add 5 GW of renewable capacity, creating more than 7,000 jobs.

The province is Alberta—the center of Canada’s oil industry.

Alberta has been aggressively pursuing renewable energy, switching power plants from coal to gas, and last December, organizing its first renewable power bidding round, which ended with commitments from three energy companies to develop four wind power projects that will add a combined 600 MW to the province’s renewable capacity.

Now, the government is preparing another two bidding rounds, to take place later this year, and it is raising the local carbon tax to fight emissions.

As of January 1 this year, Alberta’s carbon tax has jumped to US$23.30 (C$30) per metric ton. That’s a 50-percent increase although it’s still lower than the carbon tax that will enter into force in neighbor British Columbia from April 1, at US$27 (C$35) per ton.

An urge to go green is not the only reason for the steep tax increase, however. It is expected to help the government’s efforts to balance its books.

In the current fiscal year, Alberta’s Finance Ministry has projected a deficit of US$6.8 billion (C$8.8 billion). This is a decline on last year’s figure and the deficit should continue to decline over the next four years until the province returns to a surplus, albeit moderate, in fiscal 2023-24. The carbon tax will contribute to the deficit shrinkage but it won’t be even close to enough for Alberta to swing into the black.

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

North America’s Next Big Shale Play

February 2, 2018

North America’s Next Big Shale Play

The oil price crash of 2014 not only weighed on Canada’s oil sands industry, but it also directed more company investment into shorter-cycle shale projects in the U.S. at the expense of more capital- and energy-intensive oil sands production in Canada.

While the oil sands will continue to be a growth story thanks to investments made before the downturn, Canadian energy officials and many oil companies — both Canada-based and supermajors — are increasingly looking to explore and drill in the two largest shale formations, Duvernay and Montney, estimated to hold billions of barrels of light tight oil and trillions of cubic feet of gas.

Currently, Canada’s shale oil production is around 335,000 bpd, according to estimates by energy consultancy Wood Mackenzie, quoted by Reuters. This is some 8 percent of total Canadian production, which the National Energy Board (NEB) says was nearly 4.2 million bpd in 2017. Wood Mackenzie expects shale oil production to rise to 420,000 bpd in a decade.

Some two-thirds of Canada’s oil production comes from oil sands. In 2017, Canadian oil sands production is expected to have exceeded 2.6 million bpd, according to IHS Markit. Production is expected to continue to grow, thanks to investments made prior to the oil price crash, while future investment is “to remain lower than historical levels”, the data and analysis provider said in a report earlier this week.

Investment in new oil sands production capacity has dropped by two-thirds since the oil price crash — from more than $30 billion to just over $10 billion estimated for 2017 — and may fall further this year before starting to recover, IHS Markit says.

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

Alberta Approves Suncor Tailings Plan Despite Reliance on ‘Unproven Technology’

October 27, 2017

Alberta Approves Suncor Tailings Plan Despite Reliance on ‘Unproven Technology’

The Alberta Energy Regulator (AER) has approved a tailings management plan from oilsands giant Suncor, despite the plan relying on “newly patented, unproven technology” that will require decades of monitoring.

Wednesday’s decision came only six months after the AER rejected Suncor’s proposed plan for the same project because it relied on unproven technology and a 70-year timeline for reclamation. The regulator only later agreed to re-review the plan.

So what changed? Uh, nothing.

“Suncor really hasn’t budged an inch in terms of actually changing anything,” said Jodi McNeill, policy analyst at the Pembina Institute, in an interview with DeSmog Canada.

Critics are also concerned that the approval will set the tone for the remaining seven tailings management plans: all of which depend on unproven technologies in some capacity.

“Suncor has been operating for 50 years: they shouldn’t be given another 15 years to monitor and confirm tailings treatments that may or may not work,” said Tzeporah Berman, former co-chair of the Alberta Oil Sands Advisory Group, in an interview with DeSmog Canada.

“It is not a matter of the AER asking for more details. It’s that oilsands companies should not continue to operate if they once again have shown they don’t know how to clean up the mess they make. They have other technologies they can use. They just don’t want to pay for them.”

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Alberta Approves Suncor #Tailings Plan Despite Reliance on ‘Unproven Technology’ https://www.desmog.ca/2017/10/27/alberta-approves-suncor-tailings-plan-despite-reliance-unproven-technology …#oilsands @james_m_wilt

12:42 PM – Oct 27, 2017

Industry Has ‘Taken Advantage of Flexibility’ of Regulator

It’s been a long and windy road to get to this point.

Directive 085 was introduced by the AER in mid-2016 to replace the failed Directive 074, which was implemented in 2009 and saw every way company overshoot its respective tailing target without any consequence.

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

The Real GHG trend: Oilsands among the most carbon intensive crudes in North AmericaOilsands at 50 Series – The Real Cost of Development, Part 1

October 17, 2017

The Real GHG trend: Oilsands among the most carbon intensive crudes in North America Oilsands at 50 Series – The Real Cost of Development, Part 1

The Oil-Climate Index suggests that the oilsands generate 2.2 times as many emissions per barrel than the average crude extracted in North America. Photo: Jennifer Grant

Over the past 50 years, the development of the oilsands has changed the face of Alberta, driving innovation and technology to make oilsands a reality. The oilsands are the third largest oil reserve on earth, and despite a cycle of boom and busts, contribute to the prosperity of the province. Industry, however, has not addressed many of the largest environmental impacts generated by the oilsands, and much work is still left to be done. This blog is part of a series where we look back at the last 50 years of the oilsands industry and shed light on a number of the remaining challenges. See Part 2 here and Part 3 here.

After 50 years of production, the oilsands remain among the world’s most carbon intensive large-scale crude oil operations. Studies continue to back this up. The Carnegie Endowment’s Oil-Climate Index suggests most oilsands crude is associated with 31 per cent more emissions than the average North-American crude from the point of extraction through its lifecycle to the point of end use (See Figure 1).

Figure 1. Emissions associated with the full lifecycle of a crude (from extraction to combustion) for a selection of crudes produced in North America

When looking at the carbon pollution associated with the extraction and processing, the Oil-Climate Index suggests that the oilsands generate 2.2 times as many emissions per barrel than the average crude extracted in North America (See Figure 2).

Figure 2. Emissions associated with the extraction and processing for a selection of crudes produced in North America

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

How Oil Hijacked Alberta’s Politics: Behind the Curtain With Former Liberal Leader Kevin Taft

October 11, 2017

How Oil Hijacked Alberta’s Politics: Behind the Curtain With Former Liberal Leader Kevin Taft

Oil's Deep State Kevin Taft Alberta DeSmog Canada

In his new book, Taft, who served as a Liberal MLA between 2001 and 2012, and as leader of the Alberta Liberal Party — the province’s official opposition — between 2004 and 2008, maintains his course.

Oil’s Deep State: How the Petroleum Industry Undermines Democracy and Stops Action on Global Warming — in Alberta, and in Ottawa is a controversial read.

Notably the book implicates the Alberta NDP, which was elected in 2015 with promises to challenge the sector’s dominance over political processes. To help explain why that didn’t happen, Taft deploys concepts of institutional capture and deep state — a term used when institutional capture occurs with several different entities and is maintained for a long time.

It’s a challenging and insightful read, one that will likely spark many debates about how we talk and think about the oil and gas sector.

DeSmog Canada chatted with Taft about the book.

What inspired you to write Oil’s Deep State?

When you’re in the middle of action in politics, you don’t necessarily see the bigger picture. You’re fighting the local battles.

After I left politics in Alberta, I was invited to go to Australia to talk about the effect of the fossil fuel industry on democracy, because they have some real concerns there. That prompted me to begin reflecting on my own experience.

Essentially, the book is an account of the collision between the oil industry and global warming, and how democracy is caught in the middle of that.

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

Canada’s Largest Shale Play Is Gaining Momentum

October 1, 2017

Canada’s Largest Shale Play Is Gaining Momentum

The National Energy Board of Canada released a resource assessment today, examining the Duvernay Shale of Alberta.

Deposited during the Devonian Period, the Duvernay Shale is located throughout central Alberta, running from Grande Prairie almost to Calgary. Located near, and in some locations directly below the Montney, the Duvernay is part of the larger Western Canadian petroleum system.

(Click to enlarge)

Source: National Energy Board

The NEB estimates that the Duvernay’s marketable resources are 76.6 Tcf of gas, 6.3 billion barrels of NGLs and 3.4 billion barrels of crude oil. “Marketable resources” represent the total amount of petroleum that can be recovered from the formation, not the actual reserves nor the original hydrocarbon in place.

(Click to enlarge)

Source: National Energy Board

According to Reuters, this makes the Duvernay the largest resource of unconventional crude oil and condensate in Canada. However, the Duvernay’s natural gas reserves are exceeded by two other basins in Canada. The Montney wears the crown with the largest natural gas resource, 449 Tcf recoverable. Following the Montney is the Liard Basin with 216 Tcf, located in British Columbia, the Yukon and the Northwest Territories.

(Click to enlarge)

Source: National Energy Board

Best rock lies in western Duvernay, around Whitecourt, Alberta

In its assessment, the NEB split the Duvernay into two plays, the East Shale Basin and the West Shale Basin. The West Shale Basin is the larger of the two by a significant margin, and holds a much larger area of sufficient quality that it was assessed. Other locations were not assessed because “they were considered unlikely to be developed; such as where the Duvernay Shale is less than 10 m thick, is under pressured, where its mapped in-place gas contents are less than 50 m3 of volume per m2 of area, and where oil contents were more than 2000 barrels per million cubic feet of gas (i.e., there is too little gas in the reservoir to help drive the oil out).”

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

‘Get lined up’: Alberta gas producer’s demise leaves long list of creditors and costly messes

April 25, 2017

‘Get lined up’: Alberta gas producer’s demise leaves long list of creditors and costly messes

Who will have to pay to clean up after Lexin Resources?

Maureen and Wendell Strong have two former Lexin Resources natural gas wells on their land near Nanton, Alta. The province’s energy regulator shut down the struggling company back in February. (Tracy Johnson/CBC)

Maureen and Wendell Strong started hearing the rumours early in 2016: Alberta landowners with Lexin Resources natural gas wells on their property weren’t getting paid.

The Strongs, who had two Lexin wells on their land south of High River, and decades of experience dealing with the energy industry, waited anxiously to see if they’d receive their money.

In Alberta, most landowners don’t own the mineral rights below their land and are required to allow access to energy companies that want to drill wells. Landowners like the Strongs are paid an annual lease rate that typically totals a few thousand dollars.

“We were on the alert, watching,” Maureen said, “and when the time went past, that’s when we got the name of the guy at Lexin and phoned him. Nice guy but he said, ‘Just get lined up, we’ve had 700 calls on this.'”

In March, Lexin Resources was forced into bankruptcy by the Alberta Energy Regulator (AER) — an order the company is fighting in court. Documents from the case show landowners like the Strongs have plenty of company on the list of creditors seeking payment from Lexin.

They range from a small scaffolding company to Baker Hughes, one of the largest oil services companies in the world. The Alberta government is also looking for unpaid royalties, rural municipalities are claiming unpaid taxes, and there are former workers who are looking for vacation pay and severance and are concerned about their pension plan.

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

Rising oil production will push Alberta economy to fastest growth in country in 2017: Conference Board

February 23, 2017

Rising oil production will push Alberta economy to fastest growth in country in 2017: Conference Board

Solid increases in oil production, Fort McMurray rebuild will be the difference in Alberta this year

The Conference Board of Canada forecasts Alberta will see a 2.8 per cent growth in real GDP in 2017.

The Conference Board of Canada forecasts Alberta will see a 2.8 per cent growth in real GDP in 2017. (Larry MacDougal/Canadian Press)

After two difficult years, Alberta’s economy is climbing out of recession thanks in part to oil prices, but the Conference Board of Canada warns the road to a full recovery will be long.

In its winter quarterly report released Thursday, the board projects Alberta will lead the country in terms of real GDP growth in 2017, which is forecast at 2.8 per cent.

“The recent stability in oil prices has encouraged optimism that the worst is over, laying the foundation for a modest gradual recovery in capital spending in the energy sector,” the report said.

Oil prices are expected to remain low, which will hinder economic recovery and pull overall real GDP growth down to 1.9 per cent in 2018, the report says.

The OPEC factor

However, an agreement made between Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries in late 2016 to cut crude oil production by 1.8 million barrels per day supports a stronger price outlook for Alberta’s energy sector, the report says.

While OPEC restrains itself, Alberta’s output is forecast to increase, as new oilsands projects come online.

The price of crude oil is also expected to rise to almost $60 US by the end of 2018.

That energy sector recovery is good for the Canadian economy as a whole, according to Marie-Christine Bernard with the Conference Board.

“There was very weak growth for Canada as a whole in the last two years,” she said.

“The difficulties in the resource sector and in particular in the energy sector really hurt investment. That really pulled economic growth down in Canada to one and one-and-a-half per cent on average over the last two years.”

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

Global Recession? The Canadian Economy Shrinks At The Fastest Pace Since The Last Financial Crisis

September 2, 2016

Global Recession? The Canadian Economy Shrinks At The Fastest Pace Since The Last Financial Crisis

Things have not been this bad for the Canadian economy since the last global recession. During the second quarter of 2016, Canada’s GDP contracted at a 1.6 percent annualized rate. That was the worst number in seven years, and it was even worse than most analysts were projecting. This comes at a time when bad news is pouring in from all corners of the global economy. While things in the United States are still relatively stable for the moment, the same cannot be said for much of the rest of the planet. Canada in particular has been hit very hard by the collapse in oil prices, and the massive wildfire in northern Alberta back in May certainly did not help things. The following comes from the BBC…

The recent drop in GDP was larger than analysts had projected, but not far off the predicted 1.5% loss.

“[The figure] could have been worse, given the hit from the wildfire, and clearly confirms the disappointing downward trend in exports over the last few months,” said Sal Guatieri, senior economist at BMO Capital Markets.

In May, wildfires devastated the parts of northern Alberta where much of Canada’s oil and natural gas is produced.

For many years, high oil prices and booming exports enabled the Canadian economy to significantly outperform the U.S. economy. But now conditions have changed dramatically, and all of the economic bubbles up in Canada are starting to burst. This includes the housing bubble, as we have seen home sales in the hottest markets such as Vancouver drop through the floor late in the summer. In fact, it is being reported that home sales during the first two weeks of August in British Columbia were down a whopping 51 percent on a year over year basis.

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

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