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Former Shell head says Biden’s Keystone move ‘makes no sense’

John Hofmeister said Biden’s move will create huge uncertainty in the energy industry.

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The former president of Shell Oil says President Joe Biden’s cancellation of the Keystone XL pipeline project “makes no sense for the future good of the American people,” warning “we will pay a price for that.”

John Hofmeister made the comments on FOX Monday morning.

“Oil is not going away. Anyone that thinks it is, certainly doesn’t understand how the economy works and how science works and so it’s just going to be a struggle,” he said.

“We’re in for a number of years of struggle while we also work on the next set of alternatives.”

In addition to halting Keystone, Biden renewed the U.S. commitment to the Paris climate accord last Wednesday, the first day he was in power.

Hofmeister said Biden’s move will create huge uncertainty in the energy industry.

“It creates a great deal of uncertainty, which is very difficult to manage in a business that requires billions of dollars and years of planning,” Hofmeister, who retired as head of Shell in 2008, told Fox.

“We’re not going to get rid of fossil fuels in a four-year term or an eight-year term of an administration. It’s just not going to happen. What will happen is that the price of oil will go up and the production of U.S. oil will go down.”

Alberta has billions of dollars tied up in the cancelled project, with $1.5 billion of taxpayers’ money handed to operator TC Energy already, along with $6 billion in loan guarantees.

In a letter to Trudeau Friday, Alberta Premier Jason Kenney claims when Biden cancelled the Keystone XL pipeline expansion project on Wednesday, he broke several free trade regulations.

“At the very least, I call upon the government of Canada to press the US Administration to compensate TC Energy, and the Alberta government, for billions of dollars of cost incurred in the construction of Keystone XL to date,” Kenney’s letter said.

During the Democratic primaries and campaign, Biden vowed to kill the pipeline, large portions of which have already been built in Alberta. He made the vow before Alberta invested it’s money.

Biden and Vice President Kamala Harris, have also said in the past they would put an end to fracking, a promise they did not repeat during the campaign.

The Keystone pipeline runs from Alberta to refineries in Illinois and Texas.

The new pipeline would have run from Hardisty, Alberta to Steele City, Nebraska.

Dave Naylor is the News Editor of the Western Standard
dnaylor@westernstandardonline.com
TWITTER: Twitter.com/nobby7694

Dave Naylor is the News Editor of the Western Standard and the Vice-President: News Division of Western Standard New Media Corp. He has served as the City Editor of the Calgary Sun and has covered Alberta news for nearly 40 years. dnaylor@westernstandardonline.com

Energy

OUELLETTE: To save Canada’s energy industry, we need to end dependence on the US market

“The construction of new Canadian pipelines would maximize the volume of fuels transported by the safest, greenest means, and allow us to seize a golden opportunity to diversify the markets for our oil.”

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Guest column from Miguel Ouellette, Economist and Director of Operations at the Montreal Economic Institute www.iedm.org

Oil: Let’s put an end to our dependence on the United States

By Miguel Ouellette, Economist and Director of Operations at the Montreal Economic Institute www.iedm.org

Imagine for a moment that you are the head of a popcorn company. You know that the demand for popcorn is strong, and that contrary to what anti-fast food lobby groups say, demand will continue to increase in the coming years. But you have a problem: 98 per cent of your popcorn is purchased by one single cinema, because you didn’t diversify your client base. This cinema, however, has just named a new CEO who, to please some nutritionist friends, wants to keep your popcorn out. What do you do? Would it maybe be a good idea to try to sell your popcorn in other cinemas in order to save your company, and all its associated jobs?

Canadian oil is in a similar situation. His very first day in office, new US President Joe Biden revoked Keystone XL’s permit, and this project will likely not be his last victim. As in our hypothetical example, 98 per cent of Canada’s oil exports go to our southern neighbour. What should Canada and its industry do, then, to sell its product? The answer: Build new pipelines in order to reduce the risk associated with this one-client strategy and maximize oil export revenues.

According to the latest estimates, global oil demand will grow by 9 per cent by 2045, and by more than 40 per cent in a number of Asian countries. New pipelines would allow Canada to transport its oil to a larger number of refineries and terminals that could then export it to these new markets.

We therefore need more pipeline infrastructure to diversify our exports, and the Canadian government should do everything in its power to allow these projects to be completed. Putting all of our eggs in the same basket is a risky strategy. The Keystone XL cancellation alone represents over $50 million a day in potential exports for Canada that have fallen through.

Over the past five years, the federal government collected an average of $14 billion a year from the oil and gas industry. This tax revenue totals more than half of the sum of all provincial deficits during the pandemic. And the energy sector directly or indirectly employs over 830,000 workers, and accounts for around 10 per cent of our GDP. It’s therefore not just “Big Oil” that would benefit from such a strategy, but all Canadians.

Finally, it bears repeating: Pipelines are the safest and “greenest” method of transporting oil. New pipeline projects compromise neither our safety nor the protection of our natural environment. On average, over 99.99 per cent of the oil transported by federally regulated pipeline arrives without incident every year. Not to mention that transporting fuel by pipeline emits from 61 per cent to 77 per cent fewer GHGs than transport by rail.

In short, the construction of new Canadian pipelines would maximize the volume of fuels transported by the safest, greenest means, and allow us to seize a golden opportunity to diversify the markets for our oil.

So I ask you again: If you were the boss, what would you do?

Guest column from Miguel Ouellette, Economist and Director of Operations at the Montreal Economic Institute www.iedm.org

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Energy

As WTI crude rises, pipeline bottleneck remains in full effect

Alberta’s oil producers remain starved for pipelines, with investors continuing to flee the province.

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Western Texas Intermediate (WTI) crude continues to rise following a year of severe depreciation of Canada’s crude oil supply.

On April 20, 2020, WTI Crude reached historic lows and dropped by almost 300 per cent, trading at negative $37 per barrel.

The economic shock of COVID-19 worsened conditions for the energy sector when a price war erupted between oil giants Saudi Arabia and Russia in early March after OPEC’s failures to agree on deeper supply cuts.

Experts found oil demand bottomed out 30 per cent in April – conditions the market has not seen over the last 40 years since world oil markets developed.

As supply remained steady while demand struck record-breaking lows, the industry quickly began running out of storage space to put their oil.

However, oil prices steadily recovered in May to $35 per barrel – jumping 88.38 per cent to register the best month on record for WTI, despite the petroleum industry still reeling from the effects of the coronavirus pandemic.

A once shining epicentre for the industry, Alberta’s oil producers remain starved for pipelines, with investors continuing to flee the province.

In December 2020, two rival oil and gas companies in Husky and Cenovus merged in a $3.8-billion all-share takeover bid. The companies combined 8,600 person workforce downsized in early-2021, cutting nearly 2,000 employees.

On President-elect Joe Biden’s first day in office, he signed an Executive Order to revoke Trump’s Keystone XL permits, costing Albertan taxpayers at least $1.2 billion after Premier Jason Kenney’s investment boondoggle.

Kenney called the revocation a gut punch and an insult and threatened to sue, while Prime Minister Justin Trudeau expressed some disappointment.

And now, Enbridge Line 5 – the major infrastructure connecting western Canadian crude to Eastern Canadian markets – is at risk of being shutdown by Michigan’s Governor citing environmental concerns.

Not to mention Royal Dutch Shell reducing its presence in Alberta with a $900 million sale of assets to Calgary-based company Crescent Point Energy Corporation. This comes after it publicly stated it passed peak oil production last week, and sought carbon offsets as a new venture.

However, it was not all bad news for the ailing sector.

In January, the Alberta Energy Regulator reported record-high oil sands production in December 2020, hinting neither demand nor supply was the issue longterm. It remains the transportation bottleneck.

Oil-by-rail exports surged by 87 percent in November 2020 – the same month, Alberta’s oil production hit an all-time high.

Transporting crude oil by rail is costlier to industry and riskier on conservation efforts than pipelines.

Despite WTI Crude rising significantly to $61 per barrel, there are no pipeline projects underway, and it’s unlikely that there will be new ones anytime soon.

Dhaliwal is the Western Standard’s Edmonton reporter.

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Energy

Bloc vows to defeat budget if it helps oil and gas sectors

The minority Liberals need the support of at least one Opposition party to survive or the country will be thrown into a pandemic-time election.

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The Bloc Québécois says they will not support any Liberal budget that brings in help for the beleaguered oil and gas industry.

The minority Liberals need the support of at least one Opposition party to survive or the country will be thrown into a pandemic-time election.

Instead of help for the energy industry, Bloc leader Yves-François Blanchet wants greater health transfers to provinces and more support for seniors.

He also wants Prime Minister Justin Trudeau to provide unconditional funding transfers for health care and child care, and “intensive” support for health-care workers and nursing-home residents.

The Canadian Press reported Blanchet wants the budget to jump-start battered sectors such as tourism and aviation, and also that relief funds should not go to the oil or nuclear industries, if the Liberals want their support.

Western’s Canada’s energy industry has been rocked by a double whammy of record low oil prices and the COVID-19 pandemic.

There has been little or no help from the federal Liberals.

Dave Naylor is the News Editor of the Western Standard
dnaylor@westernstandardonline.com
Twitter.com/nobby7694

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