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Feds say coal-ladened land in BC will not be sold for mining

The 49,421 acres of pristine, taxpayer-owned coal lands have been slated for auction since 2013. Cabinet on Friday said it will refuse permits for all new coal mining ventures in Canada.

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Canadians own tens of thousands of acres of coal-rich land in southeast BC, but the feds say no one will be allowed to mine it, says Blacklock’s Reporter.

The 49,421 acres of pristine, taxpayer-owned coal lands have been slated for auction since 2013. Cabinet on Friday said it will refuse permits for all new coal mining ventures in Canada.

“This position will inform federal decision making on thermal coal mining projects,” cabinet said in a statement.

It did not mention the largest tract of federal lands known to have top-grade coal.

The Dominion Coal Block near Fernie, B.C. contains more than 75,000,000 tonnes of steel-quality coal, by official estimate. Parliament in 2013 passed a bill that permitted the cabinet to auction the lands owned by the federal government since 1905.

“It’s an area that is well known for high quality metallurgical coking coal,” Soren Halverson, associate assistant deputy finance minister, testified at 2013 hearings of the Senate energy committee.

“That resource is a scarce resource. It’s too early to speculate on the potential value.”

Then-Conservative MP David Wilks (Kootenay-Columbia), whose riding included the Dominion Coal Block, told the Commons at the time the wilderness area had “huge potential” for export to Asian markets.

“We know the Dominion Coal Block has a huge potential regarding metallurgical coal, which in common terms is the steel-making coal used vastly around the world for a number of things,” said Wilks.

“It is time to divest and allow natural resource extraction to continue.”

Wilks called the land auction “a great opportunity not only for the federal government, but also for the extraction industry.”

The coal lands border B.C.’s Flathead River Watershed where provincial regulators imposed a mining moratorium in 2011. The Canadian Parks and Wilderness Society has proposed the Dominion Coal Block be federally protected.

Cabinet on Friday said it would not issue any federal permits for new coal mines or expanded operations. The ban was a “position,” not a regulation or statute.

“New thermal coal mining projects or expansions are not in line with the ambition Canadians want to see on climate,” Environment Minister Jonathan Wilkinson said in a statement.

Wilkinson’s department in a policy statement said the “continued mining and use of coal for energy production anywhere in the world is not environmentally sustainable and does not align with the Government of Canada’s commitments.”

Cabinet did not comment on investments in Chinese coal companies by the Canada Pension Plan Investment Board.

The agency in its 2020 annual report disclosed it held $1 million worth of stock in Jiangsu Guoxin Corp. Ltd., a coal distributor; another $3 million in shares with China Coal Energy Co. Ltd., operator of 12 mines; and $42 million in China Shenhua Energy Co. Ltd., the largest state-owned coal mining company in the People’s Republic.

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

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2 Comments

2 Comments

  1. Claudette Leece

    July 4, 2021 at 4:20 pm

    Only have to listen to conversations between the crazy greenies, to realize it’s nothing to do with the environment. They want their cake and to eat it too

  2. Baron Not Baron

    June 16, 2021 at 8:18 am

    I suppose the Chinese can dig as much as they want there, but no to Canadian – or at least BC(!) – taxpayers.. A former employee of mine has a friend that works in BC in the coal mines – far away from the view of commercial airline traffic – that said that half of a coal mountain is taken away so far to China.. Gone!
    The feds are bringing enviro lunatics to impose on all of us tyrannical measures, but they’re selling the land from under your feet – to China.
    Is there one good thing that you can think about, of the gvt doing right , for the people?

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Energy

Deal sees Alberta becoming half owner of the Sturgeon Refinery

North West Refining will be paid $425 million to forego future tolling revenue and for its 50% equity stake. Canadian Natural Resources Ltd., which owns the other 50% of the refinery, will also be paid $400 million.

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The Alberta government now owns 50% of the troubled Sturgeon Refinery.

Energy Minister Sonya Savage said yesterday the move should free up $2 billion for provincial coffers.

“We are taking action to get a better deal for taxpayers and reducing long-term costs. This agreement provides more economic certainty which will benefit Albertans today and into the future. We look forward to our renewed arrangement with the refinery’s operator, the North West Redwater Partnership, in the years to come,” Savage said in a release.

Under the deal, the government is transferred a 50% ownership interest in the refinery previously held by North West Refining.

The government made the switch after reviewing contracts the Sturgeon Refinery signed with former premier Ed Stelmach’s government in 2011.

The Alberta director of the Canadian Taxpayers Federation, Kevin Lacey, wasn’t happy with the deal.

“The government is just trying to dig themselves out of bad contracts they signed in the past. We expect our government to run schools, hospitals and keep our taxes low, they should not be involved in the energy business,” Lacey told the Western Standard.

“Alberta needs our government to support our energy sector, yes, but it should not be directly involved in the industry. Let the politicians run the government and business people run businesses.”

With the deal, North West Refining will be paid $425 million to forego future tolling revenue and for its 50% equity stake. Canadian Natural Resources Ltd., which owns the other 50% of the refinery, will also be paid $400 million.

“This process will not cost taxpayers any additional funds than the government would otherwise be obligated to pay as a toll payer,” said a government release.

“Through the agreement, the government is able to capture the value of processing bitumen as both a toll payer and facility owner.

“This plan improves the government’s net present value for the refinery by approximately $2 billion over the life of the project. Net present value is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.”

The government said the agreement also frees up $1 billion in cash flow over the next five years because additional cash flow is a result of the restructuring.

The agreement includes a 10-year extension of the processing agreement to 2058.

“With this optimization, the government has an equal vote in the control of the refinery to which it is the majority toll payer. Canadian Natural will provide operational leadership to North West Redwater Partnership,” said the government.

The Sturgeon Refinery is designed to process approximately 79,000 barrels per day of diluted bitumen from Alberta’s oil sands into higher-value products like low-carbon, low-sulphur diesel, vacuum gas oil, diluent and natural gas liquids.

It was set to originally cost $5.4 billion but was completed last year at a cost of close to $11 billion.

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

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WAGNER: The partnership rooted in faith that built the oil sands

“Ernest Manning’s enthusiasm for the development of the oil sands helped to attract Pew’s investment, and their shared Christian commitment cemented a partnership that proved beneficial for the entire province.”

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The two men most responsible for the commercial development of Alberta’s oil sands were Ernest Manning and J. Howard Pew. Ernest Manning, of course, was Alberta’s premier for 25 years, and Pew was a long-time president of Sun Oil (later known as Sunoco), a company co-founded by his father Joseph Newton Pew in 1886. These two men had a common spiritual bond that contributed to their successful relationship, facilitating their cooperation on the development of the oil sands.

The opening of Alberta’s oil sands is one of the events covered in Darren Dochuk’s 2019 book, Anointed with Oil: How Christianity and Crude Made Modern America. Dochuk is a history professor at the University of Notre Dame in Indiana, but he was born and raised in Edmonton. He is no stranger to Alberta and its history.

Beginning in the 1920s, attempts were made to commercially extract usable products from the oil sands, but they were mostly unsuccessful. Nevertheless, Manning saw the potential they held and continued to search for an investor. Pew was interested and saw the oil sands as a resource that could help provide North American energy security. Sun Oil Vice-President Clarence Thayer shared Pew’s perspective.

As Dochuk writes, “Impelled by Thayer and his own obsession with the oil sands, in 1962 Pew committed a quarter of a billion dollars to the creation of Great Canadian Oil Sands.” 

Dochuk adds, “Pew and Manning would manage this investment together over the coming years, as business partners and fellow believers.”

That “fellow believers” bit is important. Manning was known across much of Canada as the radio evangelist for Back to the Bible Hour, and he was also recognized in American evangelical circles. For instance, Manning spoke on behalf of evangelist Billy Graham and wrote for Graham’s periodical. Pew was also heavily involved in conservative evangelical causes, and was even known for a time as “God’s bankroller” due to his financial support of those causes. Pew was as conservative in politics as he was in religion, and prominently supported Arizona Senator Barry Goldwater’s 1964 presidential campaign, which was a watershed moment for the conservative movement to take decisive control over the Republican Party. 

Construction of the Great Canadian Oil Sands (GCOS) processing plant began in 1964. A ceremony was held on July 2 of that year to inaugurate the construction. At the climax of this event, Dochuk writes, Ernest Manning “praised the project as the finest example of free enterprise from which Alberta and the entire Dominion would profit.”

Even as construction got underway, negotiations over the project continued between the Alberta government and Sun Oil. They didn’t always see eye-to-eye. Manning, of course, wanted to ensure Albertans would receive maximum benefit for the development of their resources. Pew, on the other hand, wanted to maximize the profitability for Sun Oil.

Dochuk writes, “While Manning and Pew had become good friends by this point, conflicting interests still required ironing out. Enter Billy Graham. With their mutual ally serving as mediator, Pew and Manning began exchanging letters at a fairer clip. Soon the correspondence assumed a comity strengthened by talk about the Bible.”

Manning and Pew’s relationship deepened further, and their wives became good friends as well. The GCOS plant officially opened in 1967, with both Manning and Pew presiding over the ceremony.

The following year Manning retired as premier and was replaced by Harry Strom, a devoted evangelical just like his two Social Credit predecessors. As Dochuk notes, “One of Strom’s first trips after becoming premier was to Washington, DC, to hear Manning keynote Richard Nixon’s Presidential Prayer Breakfast, an event assisted by Billy Graham and J. Howard Pew.”

Since the discovery of oil at Leduc in 1947, Americans have played a key role in in the development of Alberta’s oil resources. It was J. Howard Pew – and not a Canadian investor – who decided to risk millions on opening up the oil sands. All Albertans have benefited from his risky venture through the economic prosperity that resulted, as well as the royalties paid to the provincial government. Those royalties pay for health care, education and other services. 

Ernest Manning’s enthusiasm for the development of the oil sands helped to attract Pew’s investment, and their shared Christian commitment cemented a partnership that proved beneficial for the entire province.

Michael Wagner is a Senior Columnist for the Western Standard

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Energy

WITTEVRONGEL: Changes to royalties could super-charge upgrading in Alberta

“Updating the royalty system to one based on market pricing for bitumen also invites capital investment and the accompanying development of other oil sands products such as carbon fibre.”

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With news of the official termination of the Keystone XL project, the Alberta government is out approximately $1.3 billion. What’s more, the province is left with unrefined bitumen that it doesn’t have the capacity to upgrade to higher-value products like gasoline and diesel. Why, then, does the province not look to develop its own capacity to refine bitumen and upgrade its oil sands resources internally?

While the answer is complex, one factor is the government’s royalty system, which disincentivizes processing bitumen into higher-value products. Due to the Bitumen Valuation Methodology (BVM), the government collects higher royalties per barrel for oil sands producers that upgrade bitumen compared with those selling raw bitumen directly to refineries. Charging a much lower royalty payment per barrel encourages the sale of raw bitumen out of province. 

Currently about 35% of the bitumen produced in Alberta is upgraded in the province, with the remaining 65% sold directly to out-of-province refineries. Prior to the implementation of the BVM in 2009, roughly 60% was upgraded in Alberta. In addition to the more than $18 billion that oil sands investors have spent on American refineries and upgraders since the BVM was instituted, many jobs that could have gone to Albertans have also been created and maintained in the United States. 

It just makes sense. Why would a producer pay more to upgrade bitumen in the province when it costs considerably less to have an out-of-province refinery do it?

In 2019, oil sands extraction and refineries alone contributed over $68 billion to the Alberta economy and sustained more than 131,000 jobs. This translates to over 18% of provincial GDP and more than 5% of the province’s workforce. It is estimated aligning the BVM with market prices would allow the volume of bitumen upgraded in the province to increase to 50% over the next 12 years. This would result in the creation of over 41,000 jobs in the province and generate an average of more than $700 million in annual revenue, despite a short-term reduction in revenues. 

Updating the royalty system to one based on market pricing for bitumen also invites capital investment and the accompanying development of other oil sands products, such as carbon fibre. Alberta Innovates, a Crown corporation mandated to promote innovation, sees significant potential in carbon fibre, which could represent a multibillion-dollar opportunity. Replacing steel with carbon fibre can reduce the weight of a typical vehicle by two-thirds, and a lighter vehicle reduces fuel consumption.

The government of Alberta’s 2020 Recovery Plan pledges to create tens of thousands of jobs, make Alberta more competitive, and ensure a strong future for the province’s innovative energy industry. Given these commitments, fixing the BVM seems like low-hanging fruit. 

By Krystle Wittevrongel, Public Policy Analyst at the Montreal Economic Institute

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We the undersigned call on the Canadian government to immediately cease all payouts to media companies.

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