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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

Energy

AER focusing on several energy companies for shoddy work

Last month, the AER shut down the operations of foreign-owned enterprise SanLing Energy after years of not paying landowners, municipal taxes or local vendors.

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Several Alberta-based energy companies continue to face scrutiny by the Alberta Energy Regulator (AER) over repeated failures to pay fees owed and clean up regional well sites.

Last month, the AER shut down the operations of foreign-owned enterprise SanLing Energy after years of not paying landowners, municipal taxes or local vendors.

SanLing Energy also owed $67 million in security payments to the AER related to well sites and infrastructure decommissioning.

Despite their repeated failure to comply with past maintenance and cleanup orders, SanLing harvested over 3,781 BOE (Barrels of Oil Equivalent) per day from Alberta’s oil mineral reserves for years.

“If SanLing, or any company, wants to do business in Alberta, they must follow our rules. We cannot allow a company that has ignored the rules to continue to operate — that’s not in Alberta’s interest,” said Blair Reilly, AER’s director of enforcement and emergency management.

“Repeated attempts by the AER to bring SanLing into compliance have failed. As a result, the AER has little confidence in SanLing’s ability to conduct its operations safely and is taking this measure to protect the public and environment and to minimize financial risk.”

Despite the outstanding issues, AER’s compliance dashboard flagged SanLing six times previously.

In September 2020, the company failed to pay a security deposit, was unable to abandon dozens of wells as required and improperly stored waste.

They also failed to decommission 2,266 wells, 227 facilities and 2,170 pipelines and did not adhere to regulator orders to complete a detailed operation plan for their suspension tenure.

Sustaining Alberta’s Energy Network’s President Kris Kinnear, an energy advocate and landowner, has growing concerns about how long the energy producer continued to operate in Alberta despite repeated failures to the province and its partners.

“They harvested our provincial resources for years, without paying landowners, municipal taxes, or the vendors that service their oilfields. This left the Government of Alberta to deal with these liabilities,” said Kinnear.

He said the best solutions to these issues often come from the industry itself because their success and their future relies on having a sustainable industry.

“I feel that we can be innovative and by utilizing industry experts and what Alberta has to offer, a system could be created to help the companies that have liability issues so that they can become good corporate citizens in Alberta,” he said.

“They can become part of the solution instead of being the problem.”

Two weeks ago, the AER also announced it would direct the Orphan Well Association (OWA) and working interest partners of another Calgary-based Energy company Mojek Resources Inc. to take over its wells and facilities after the company failed to clean up multiple spills and comply with multiple orders.

The regulator says the escalation of enforcement was deemed necessary when the Calgary-based company failed to comply by March 5 with an order issued January 4 requiring the suspension of its wells and facilities, discontinuation of its pipelines and demonstration of proper care of all of its assets.

The AER said the OWA and Mojek’s partners are to suspend all of its oil and gas assets and ensure they are left in a safe state while addressing non-compliances at Mojek sites and confirming a working emergency response number.

It said Mojek holds AER licences for 32 wells, 35 pipelines and one facility and owes $1.76 million in security to the AER for its end-of-life obligations, along with debts to the OWA and the AER.

“We work with licensees to ensure they understand Alberta’s rules, and the majority of companies follow those rules,” said Reilly.

“When they don’t, we take action to protect public safety and the environment.”

Dhaliwal is a Western Standard reporter based in Edmonton

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Energy

Energy advocate furious no oil and gas companies at Calgary climate change conference

There were no oil and gas contributors in the 3,000 participants in the two-day Calgary climate change conference.

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An oil industry advocate is furious the City of Calgary didn’t have any industry representatives at their annual climate change conference.

Deirdra Garyk has written a letter to Mayor Naheed Nenshi and other city council members demanding an answer as to why there were no oil and gas contributors in the 3,000 participants in the two-day conference March 25-26.

“I attended the City-sponsored annual Climate Symposium last week that discussed how climate change is impacting Calgary and what innovative solutions could be implemented. These issues are top-of-mind for many, and it’s not the overall topic that I’m concerned about; it’s some of the speakers,” wrote Garyk in her EnergyNow blog.

It was titled “Is the City of Calgary giving the “middle finger” to the the oil and gas industry?”

She said the keynote speaker was Bruce Lourie – the Toronto-based Ivey Foundation president, who helped form the Task Force for a Resilient Recovery and played a role in Ontario’s Green Energy Act.

Garyk noted other speakers included Ed Whittingham – the former Executive Director of the Pembina Institute “who became famous when he encountered backlash after being appointed to the Alberta Energy Regulator’s Board by the NDP.”

Staff from the Pembina Institute also presented, with Garyk describing them as an organization “that’s actively campaigned against the fossil fuel sector.”

“What was noticeably missing from the roster were members from Calgary’s oil and gas industry that are working on innovations while providing the city and the country with reliable, affordable energy,” Garyk wrote.

“In fairness, there were two staff from ATCO discussing the topic ‘Innovation and Decarbonization in Natural Gas Distribution’, which was a fascinating presentation on the technology their company is working on in the fields of hydrogen and renewable natural gas; it’s important research and something all Calgarians should be proud of.”

“However, that is not the only innovative work being done by Calgary-based energy companies. Why wasn’t there a presentation from such organizations such the Clean Resource Innovation Network (CRIN) or Canada’s Oil Sands Innovation Alliance (COSIA)? Were they given an opportunity to present but chose not to? If so, did they feel welcomed to the symposium?”

“The City needs to engage with the oil and gas sector to help with the economic recovery and the energy transition. Yes, the City has to be innovative, but not at the expense of the industry and the people that made Calgary what it is today. The climate strategy needs to include and work closely with the oil and gas sector.”

Garyk warned members of the oil and gas industry might take their frustrations out on council in voting against them in the upcoming October elections.

“If Council doesn’t support oil and gas workers, maybe oil and gas workers shouldn’t support Council, especially those members who are running for re-election in October.  Calgarians should be asking their current council member and anyone running in the October municipal election some hard questions about their support for the oil and gas sector, especially in light of the of invited speakers to this symposium and lack of representation from the oil and gas industry.”

Late Tuesday, the city replied to the Western Standard for comment.

“The City of Calgary hosted the annual Calgary Climate Symposium to increase awareness of local climate risks and causes as well as knowledge of practical climate mitigation and adaptation actions for citizens; increase opportunities for sharing of best practices and innovative solutions to climate resilience for the Calgary business community; and explore how Calgary can leverage economic recovery from the COVID-19 pandemic to unlock new business opportunities and strengthen climate change resilience,” said a statement

“The City sought out experts who could deliver content for the two-day virtual event based on the goals of this year’s Symposium, which focused on practical actions for citizens and solutions to climate resilience for the Calgary business community-at-large, to help reduce emissions and risk to climate impacts within Calgary. The City of Calgary collaborated with a broad spectrum of organizations with diverse perspectives to support and deliver this year’s Calgary Climate Symposium including the Alberta Council for Environmental Education, Alberta Ecotrust, ATCO, BILD Calgary, BOMA Calgary, Canadian Business for Social Responsibility, Calgary Airport Authority, ENMAX, the Pembina Institute, the University of Calgary and more.”

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

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Energy

UPDATED: Chevron stops funding Kitimat LNG project feasibility work

Calgary-Centre Conservative MP Greg McLean laid the blame for the funding halt squarely on the feet of the federal Liberal party.

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In another blow to Canada’s energy industry, Chevron says it will halt its feasibility funding on the massive, Kitimat LNG project on B.C.’s north coast.

Chevron, which is active in 180 countries, holds a 50 per cent stake in the project with Australia’s Woodside Petroleum Ltd.

Project operator Chevron put its interest up for sale in December 2019, but has failed to find a buyer.

The Canadian Press reported when the company put its stake up for sale, it said it would continue to work with Woodside on agreed project activities that brought value or were required for regulatory and operational compliance.

“But in a statement on its website this week, Chevron says that it now plans to stop Chevron-funded further feasibility work,” The Canadian Press reported.

“The project includes upstream resource assets in the Liard and Horn River Basins in northeast B.C., the proposed 471-km Pacific Trail Pipeline and plans for a natural gas liquefaction facility at Bish Cove near Kitimat, B.C. 

Calgary-Centre Conservative MP Greg McLean laid the blame for the funding halt squarely on the feet of the federal Liberal party.
 
“After 15 months of looking for an interested party, Chevron Canada has come to the conclusion that no one is prepared to buy their 50 per cent stake in the Kitimat LNG project, thanks to the Liberal policies and practices that continue to drive investments and jobs out of Canada,” said McLean, Conservative Shadow Minister for Natural Resources.
 
“Liquified natural gas (LNG) from this project would be some of the cleanest in the world, and would displace dirtier and more costly energy resources like coal, and LNG from the Gulf Coast.
 
“Losing this project would be a major blow for local First Nations that support the project and would see investments and good-paying jobs leave their communities. Failing to get this project built is not only a lost opportunity to reduce global emissions, it is also a lost economic opportunity for local First Nations communities and the rest of Canada.
 
“Canada has become an unreliable jurisdiction to invest in because the Liberal government makes up rules and regulations as they go. The uncertainty this creates is driving away investments, jobs, and opportunities.
 
“This project, representing a $24-billion investment and 4,500 construction jobs plus ongoing employment, reflects everything the Liberal government says it wants in an energy project, including rigorous indigenous consultation and environmental considerations. It is concerning that even a project like this has trouble being built in Canada.
 
“There is no time to waste as the world waits for the solutions that Canada is best positioned to provide. Conservatives will work to secure a future where responsible, world-class energy projects can get built. It’s time we did better.”

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

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