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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.

Energy

Analyst says Enbridge Line 5 fight shows Trudeau, Biden playing both sides on energy issues

The Trudeau and Biden administration are playing both sides of the coin in energy issues.

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Natural Resources Minister Seamus O’Regan said the feds plan to take “whatever measures” to sustain the Enbridge Line 5 pipeline.

Alberta Premier Jason Kenney has said he wants Prime Minister Justin Trudeau to do whatever he can to save the line.

But on the other side of the 49th parallel, Michigan Governor Gretchen Whitmer cites environmental concerns as justification for cancelling the critical pipeline, which transports Alberta-based crude oil and natural gas liquids to refineries across the Midwest and Ontario. 

Jason Hayes, Director of Environmental Policy to the Mackinac Center for Public Policy, doesn’t buy that line of reasoning.

“The state of Michigan appears more concerned about following a Sierra Club scorecard than it is about the broad negative impacts the closure of Line 5 will have on the region,” said Hayes.

Secretary of Transportation Pete Buttigieg publicly called for the closure of Enbridge’s Line 5 pipeline, as did Interior Secretary nominee Deb Haaland at the 2018 Netroots Nation convention.

“It’s time to stop all new fossil fuel infrastructure in America. No more pipelines!” Haaland said.

By prioritizing the demands of progressive green pressure groups in the Democratic Party over a critical trading partner’s concerns, the President Joe Biden administration is trying to play both sides of the coin in energy issues, said Hayes.

“While other pipelines exist to transport oil to the U.S. from Canada, the threatened closure of the Line 5 pipeline sends a damaging and profoundly short-sighted, but still apparent and unmistakable, signal to one of Michigan’s largest trading partners,” said Hayes.

“Canadian officials, state legislators across the state of Michigan, the Governor of Ohio, building trade representatives in Canada and the U.S., and others, have also voiced their objections. The Consul General of Canada in Detroit, Joe Comartin, has noted that shuttering Line 5 will negatively impact refineries in Sarnia, Ont. and Quebec.” 

Democratic senators have also said Biden is going down the wrong path.

“The pipeline is essential to Sarnia-Lambton and the region at large. It is responsible for 50,000 jobs in related industries across the border — everything from refineries and downstream processors to home heating, jet fuel, and agriculture, said Marilyn Gladu, MP to Sarnia-Lambton.

She pushed back against Whitmer’s claims, as environmental studies indicate alternative means of transporting crude, including trucks and railcars, are less safe than the pipeline. She showed great concern over Canada’s limited pipeline capacity, as “there aren’t enough of them (trucks and railcars) to move the same volume as the pipeline, daily”. 

A shutdown would lead to fuel shortages and price increases across Ontario and Quebec, and further dependency on foreign supply to meet regional demands.

“My colleagues and I are doing everything we can to prevent this from happening, and secure jobs and energy for the region,” said Gladu, who called on all Canadians to sign Petition e-3081, which demands the prime minister defend Canada’s economic interests regarding Enbridge Line 5. 

She hopes the petition will pressure the prime minister to appeal to Biden to intervene and prevent Whitmer from inflicting overwhelming and catastrophic economic effects on Ontario, Quebec, Wisconsin and Ohio.

With the petition set to collect its final signatures Monday, Mike Simpson, Executive Director of Operations of the Canadian Energy Centre, or the “energy war room,” says it is too early to speculate on the actions the federal government might take. 

“We have asked our supporters to sign the petition and help grow it. What this shows is we need all Canadians to engage in this debate and support energy,” said Simpson.

However, he argues signing the petition is but one mechanism to alleviate concerns for the country’s key economic driver. 

“Canadians should talk to their neighbours and networks so that the federal government can realize supporting oil and gas is the right thing to do,” said Simpson.

“Every single person uses more carbon-based products in their daily lives than they probably even realize. If you look at the covid situation, the number of plastics needed for masks and PPE etc., are all based on fossil fuels.

“Decision-makers need to realize this is not an us vs them situation. It needs to be understood advocacy for the industry is not just government or industry responsibility. It is government, supporters, industry, workers, and everyday Canadians – once this is recognized, that path forward will be easier to follow.

“Climate change does not stop at our borders. It is a global problem, and we believe responsibly developed Canadian oil and gas is a big part of the solution.” 

Dhaliwal is the Western Standard’s Edmonton reporter.

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U.S. environmental groups poured $2.4 billion in 2019 to further climate change ideology

Ludwig warned had the finances from these groups also been included, the final numbers might be double or even three times current figures.

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New research from the Capital Research Center, an American-based think tank, reveals environmental groups poured a record $2.4 billion in 2019 to further left-wing climate change ideology.

“This stunning figure contrasts with the environmentalist movement’s self-image as David vs. Goliath: impoverished, idealistic eco-activists outgunned by powerful interests in the “fossil fuel” industry,” said its Senior Investigative Researcher, Hayden Ludwig.

He said Liberals have long claimed the Right outguns environmentalists despite holding the country’s best-funded special interests.

However, a 2018 misleading study measuring the income of broadly right-leaning groups focused on a host of issues, including welfare, telecom regulation, agricultural policy, etc., to produce the claim conservatives spend $1 billion per year to stop action on climate change, amounting to a 10 to 1 disparity with environmental groups.

CRC examined the finances of 166 left-leaning policy, activist, litigation, and research organizations along with any associated political action committees (PACs) that primarily focus on climate change or environmental regulation. 

The think-tank captured their revenues, expenditures, and the amounts of grants they paid out in 2019 using publicly available Form 990 findings.

Their inquiry found these organizations raked in $2.67 billion from donors, nearly all of whom remain undisclosed. These organizations, including special interests, spent a whopping $2.43 billion paying staffers, attorneys, activists, professional fundraisers, and researchers and lobbying for environmental regulations. 

“In the case of 501(c)(4) groups and PACs, they also helped elect Democrats and oppose Republicans in the 2019-2020 election cycle,” said Ludwig, as mostly left-leaning nonprofits received $435 million in grants.

“These figures don’t include lobbying by private firms for renewables subsidies, left-wing groups with a broader focus than climate change or the environment or eco-Right groups, self-identified “conservative” organizations that support carbon taxes and other global warming policies.” 

He warned had the finances from these groups also been included, the final numbers might be double or even three times current figures.

“The tax status of these organizations sheds light on the distribution of funds within the environmental movement,” said Ludwig. 

With 111 of 166 groups IRS-designated 501(c)(3) public charities, donations provided to them are tax-deductible. The 501(c)(3) nonprofits account for the overwhelming majority of finances CRC traced.

CRC traced 83.95 per cent or $2.24 billion of the $2.7 billion in total revenues uncovered, 83.1% of $2.02 billion of the $2.4 billion in total expenditures found, and 78.5% or $342 million of the $435 million in grants paid.

Of the 166 groups, 46 are 501(c)(4) advocacy nonprofits, which are permitted to spend significantly more on lobbying than their 501(c)(3) counterparts. 

The top 20 biggest spenders also number among the loudest voices pushing environmental regulations:

  1. World Wildlife Fund: $236 million
  2. Environmental Defense Fund: $188.6 million
  3. Natural Resources Defense Council (NRDC): $173 million
  4. Sierra Club: $150 million
  5. World Resources Institute: $120.8 million
  6. National Audubon Society: $118 million
  7. American Association for the Advancement of Science (AAAS): $109.9 million
  8. Sierra Club Foundation: $93.9 million
  9. National Wildlife Federation: $89.7 million
  10. EarthJustice: $78 million
  11. League of Conservation Voters: $66.5 million
  12. NextGen Climate Action Committee: $56.8 million
  13. NextGen Climate Action: $54 million
  14. People for the Ethical Treatment of Animals (PETA): $53.5 million
  15. Rocky Mountain Institute: $45 million
  16. Resources Legacy Fund: $42.3 million
  17. Union of Concerned Scientists: $40.7 million
  18. Greenpeace: $37.7 million
  19. Oceana: $36 million
  20. League of Conservation Voters Education Fund: $34.8 million

“These are the titans of “Green” Activism Inc. They spend hundreds of millions of dollars to pass the socialist Green New Deal and promote radical global warming legislation that promises to jack up household electricity prices and enable the Left’s war on science,” said Ludwig.

Dhaliwal is the Western Standard’s reporter based in Edmonton.

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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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