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Pipeline Bottlenecks Cost Canadian Producers $20 Billion

May 5, 2019

Pipeline Bottlenecks Cost Canadian Producers $20 Billion

Costing Money

Canada has plenty of oil, and demand is high, but the Canadian oil industry has nevertheless taken a major hit this year thanks to its persisting pipeline bottleneck. The Albertan oil industry has long been plagued by insufficient pipeline volumes but has not been able to fix the issue with any semblance of efficiency thanks to major bureaucratic and litigation-based delays on building new infrastructure like the long-delayed Trans Mountain pipeline expansion project.

With pipeline capacity maxed out, Canadian oil producers have run out of storage space, leading to a major glut in oil reserves with nowhere to go. This has forced Canada to sell their oil at a major discount. In fact, a new study released this week by conservative think tank the Fraser Institute calculates that Canadian oil producers missed out on a whopping $20.62 billion more than they earned this year thanks to their severely depressed prices. Compared to the West Texas Intermediate benchmark, in the last year Canadian heavy crude traded, on average, at a discount of $26.50 U.S. a barrel. This is a huge dive from the five-year preceding, when Canadian heavy crude traded at an average of just $11.90 U.S. a barrel less than West Texas Intermediate.

The pipeline capacity deficit has negatively impacted the Canadian economy in a number of ways. “Canada’s lack of adequate pipeline capacity has imposed a number of costly constraints on the country’s energy sector including overdependence on the US market and reliance on more costly modes of energy transportation,” states the Fraser Research Bulletin. “In 2018, these factors, coupled with the maintenance downtime at refineries in the US Midwest, resulted in significant depressed prices for Canadian heavy crude (Western Canada Select) relative to US crude (West Texas Intermediate) and other international benchmarks.”

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

Recent Arrests Under New Anti-Protest Law Spotlight Risks That Off-Duty Cops Pose to Pipeline Opponents

August 23, 2018

OVER THE WEEKEND, four opponents of the Bayou Bridge pipeline and an independent journalist covering their activities were arrested and charged under Louisiana House Bill 727, which makes trespassing on “critical infrastructure” facilities — a category that explicitly includes oil pipelines — a felony punishable by up to five years in prison, a fine of $1,000, or both. A total of eight people have now been charged under the law since it took effect on August 1.

HB 727 is one of numerous anti-protest laws that states have considered or enacted in the wake of the mass mobilization against the Dakota Access pipeline, which drew tens of thousands of people to gather near the Standing Rock Sioux reservation in 2016 and 2017. The arrests also expose the blurred line between private security and public law enforcement that has become typical in the policing of anti-pipeline struggles.

On August 9, the first three arrests under the law were carried out by probation and parole officers with Louisiana’s Department of Public Safety and Corrections moonlighting as security guards for Bayou Bridge pipeline parent company Energy Transfer Partners. Ken Pastorick, communications director for the Louisiana Department of Public Safety and Corrections, told The Intercept that the department’s director authorized the officers to work on behalf of the Bayou Bridge pipeline as a form of “extra-duty employment.” “They have the ability to enforce the law in Louisiana even when off-duty and working extra-duty security details,” he said.

Given the complex land ownership and public access rules that govern the bayou, handing discretionary arrest powers to a private company is particularly controversial. The off-duties’ involvement deepened concerns by pipeline opponents that law enforcement favored the interests of the pipeline company over the first amendment rights of concerned citizens to protest, and the rights of landowners who never granted permission to the company to build at all.

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

Five Spills, Six Months in Operation: Dakota Access Track Record Highlights Unavoidable Reality–Pipelines Leak

January 11, 2018

Sections of pipe sit at an Energy Transfer Partners LP construction site for the Sunoco Inc. Mariner East 2 natural gas liquids pipeline project near Morgantown, Pennsylvania, U.S. on Aug. 4, 2017. The Pennsylvania Department of Environmental Protection has issued four notices of violation after "inadvertent" spills of drilling fluids associated with horizontal directional drilling for the project. Photographer: Charles Mostoller/Bloomberg via Getty Images
Photo: Charles Mostoller/Bloomberg News/Getty Images

FIVE SPILLS, SIX MONTHS IN OPERATION: DAKOTA ACCESS TRACK RECORD HIGHLIGHTS UNAVOIDABLE REALITY — PIPELINES LEAK

REPRESENTATIVES FROM Energy Transfer Partners, the company behind the controversial Dakota Access pipeline, traveled to Cambridge, Iowa, in October to present a series of $20,000 checks to emergency management departments in six counties. The money was, in part, an acknowledgement of the months of anti-pipeline protests that had taxed local agencies during construction, but it was also a nod to the possibility of environmental contamination. One of the counties had pledged to use its check to purchase “HazMat operations and decontamination training/supplies.” Less than a month later, in Cambridge, the Iowa section of the Dakota Access pipeline would experience its first spill.

According to the standards of most state environmental agencies, it was a small spill that wouldn’t require much attention from emergency managers. On November 14, “excessive vibration” caused 21 gallons of crude to leak out of a crack in a weld connection at one of the pump stations, which are situated along pipelines to keep the product moving and monitor its flow. Since the leak was contained at the site, it went unreported to the Iowa Department of Natural Resources, although it did make it into a federal pipeline monitoring database.

The Dakota Access pipeline leaked at least five times in 2017. The biggest was a 168-gallon leak near DAPL’s endpoint in Patoka, Illinois, on April 23. According to federal regulators, no wildlife was impacted, although soil was contaminated, requiring remediation. DAPL went into operation on June 1, along with its under-the-radar sister project, the Energy Transfer Crude Oil pipeline, a natural gas pipeline converted to carry crude. Together, the two make up the Bakken pipeline system. ETCO leaked at least three times in 2017.

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

The 10 Energy Stories That Defined 2017

January 3, 2018

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…

Pipeline Memo Guiding Trudeau Gov’t ‘Riddled with Mistakes’

October 16, 2016

Pipeline Memo Guiding Trudeau Gov’t ‘Riddled with Mistakes’

Economist Allan tells Natural Resources it was ‘dangerously misled’ four ways.

960px version of Minister of Natural Resources Jim Carr
Misinformed: Minister of Natural Resources Jim Carr is working from a pro-pipeline memo useless due to errors, concludes an economist who studied it closely.

A Natural Resources memo extolling the economic benefits of more bitumen pipelines for Canada is “riddled with factual and analytical mistakes” that could “dangerously mislead” elected officials and the public, says an economist who has pored over its claims.

In a detailed 10-page letter, B.C. economist Robyn Allan has warned Jim Carr, minister of Natural Resources, that the memo’s conclusions are “unreliable and yet, based on recent public statements, you have adopted them to conclude new pipelines, such as Trans Mountain’s expansion, are necessary.”

Trans Mountain is one of four proposed pipeline projects, controversial for safety and climate change concerns, currently under consideration.

Allan’s letter documents a series of major errors in the February memo titled “Economic Benefits of Pipelines.” The memo wasn’t released until July due to a Freedom of Information Request. Allan, who served as president and CEO of the Insurance Corporation of British Columbia and as senior economist for B.C. Central Credit Union, analyzed the document in September.

The memo to the minister contends that Canada’s oil pipelines are currently operating at “over potential”; that they need one million barrels of new capacity by 2020; that lack of tidewater access has cost the economy billions and that Asian markets are “fast growing.”

Yet the facts support none of these claims says Allan, who has long questioned the economic argument for expanding bitumen production in an era of low and volatile oil prices.

Allan asserts these errors:

1. Not true that pipelines are operating beyond potential.

The memo states that Canada’s pipelines were operating at fullest potential in 2014. But it omits the ongoing problem of leaking and faulty pipelines and its dramatic impact on pipeline capacity.

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

Canadian Oil Slammed By Low Prices, Pipeline Woes

March 2, 2016

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…

Exploding Trains, No New Regulations, Record Industry Profits: The Oil-by-Rail Story

February 19, 2015

Exploding Trains, No New Regulations, Record Industry Profits: The Oil-by-Rail Story

A month ago there was a close call for the oil-by-rail industry. As part of the Cromnibus bill that President Obama signed in December, new oil-by-rail regulations were supposed to be finalized and implemented by regulators by January 15th.

Two days before that deadline, the Pipeline and Hazardous Materials Safety Administration (PHMSA), the agency responsible for new regulations, posted new documents on their website related to recent meetings between PHMSA and various oil and rail industry lobbyists.

They did not issue a press release about these meetings, unlike the meetings a year ago when the industry volunteered to try improving its safety record and there was plenty of publicity.

And then it was announced that new regulations would once again be delayed, this time until May 2015.

Since that delay an ethanol train has derailed resulting in burning rail cars and ethanol spilling into the Mississippi River. An oil train derailed and caught fire in Gogama, Canada. And another oil train of Bakken crude oil derailed, exploded, andleaked oil into the Kanawha River near Mount Carbon, West Virginia.

Also, since the announced delay of regulations there have been two congressional hearings on this issue. In one, Sen. John Thune (R-SD) was adamant that the proposed new regulations were “unattainable” and in the next Rep. Jeff Denham (R-CA) lectured the hearing attendees on how it was necessary for everyone to be“singing the same tune” so the American public didn’t get the “misperception” that the oil-by-rail industry isn’t safe.

 

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

How $40 oil would impact Canada’s provinces

January 7, 2015

How $40 oil would impact Canada’s provinces

What does Canada’s economy look like with oil prices at $40 a barrel? Certainly it won’t be the energy superpower envisioned by Prime Minister Stephen Harper.

If $40 a barrel still seems a ways off, consider that the benchmark price for oil sands crude is already trading in that price range. What’s more, if production from high cost sources isn’t withdrawn from an oversupplied market, oil prices may soon be trading even lower.

The first thing Canadians should recognize about the new world order for oil prices is that—contrary to what we’re being told by our federal government—the economy is no longer in dire need of any new pipelines. For that matter, it can live without the new rail terminals being built to move oil as well. Yesterday’s transportation bottlenecks aren’t relevant in today’s marketplace.

At current prices there won’t be any massive expansion of oil sands production because those projects, which would produce some of the world’s most expensive crude, no longer make economic sense.

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

 

Joe Oliver concerned about a Canada divided over energy – Business – CBC News

December 31, 2014

Joe Oliver concerned about a Canada divided over energy – Business – CBC News.

Finance Minister Joe Oliver says he is concerned that divisions within Canada over the energy sector will eventually hold back the country’s growth.

In a year-end interview for The Exchange with Amanda Lang, Oliver cited opposition to fracking and to pipelines in some provinces as potential points of conflict.

“It’s important to communicate with Canadians that we’re not just missing out on a new opportunity. We’re potentially also looking at a decline which would adversely affect the Canadian economy and degrade the standard of living of Canadians across the country,” Oliver said.

New Brunswick recently announced it would impose a moratorium on fracking and Quebec and Ontario have set conditions for the development of the Energy East pipeline within their borders.

Pipelines critical to economy

Oliver terms the need to get Canadian oil to tidewater so it can be shipped overseas a “critical strategic imperative” for the country.

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

Energy East Pipeline is Unsafe and Unwanted | Stéphane Brousseau

December 18, 2014

Energy East Pipeline is Unsafe and Unwanted | Stéphane Brousseau.

TransCanada’s strategy to hoister its Energy East pipeline on the Quebec public has been unmasked, and Quebecers don’t buy the company’s sales pitch.

Quebec citizens, not to mention citizens worldwide, have done their homework and based on the science, the facts and the statistics are keenly aware that the risks inherent in this proposed pipeline, a project endorsed by the federal government, are simply too great, and the required social acceptability for this project is not there, and never will be.

We know that to determine the risk level and viability of a project you can calculate the probability of an accident and the cost of decontamination. This can mean hundreds of billions of dollars in decontamination costs and costs in relation to persistent pollution impacts.

A good indicator in this case is TransCanada’s dismal track record for pipeline oil spills in terms of frequency, quantity and response time.

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

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