Energy Articles

Skipping the Test

If you point out that an April snowstorm hardly feels like global warming you get the patronizing lecture about the difference between weather and climate. And if you ask “Then why is hot weather touted as proof?” they declare the science is “settled” and shut down the discussion. Well if it is then I want to know what’s going to happen ahead of time, not after the fact.

I know the difference between weather and climate. But I also know the difference between science and flimflam. One observes data, forms hypotheses about causal relationships, then tests them by making predictions about the future and seeing if they succeed or fail. The other distracts, distorts and blusters.

Testing theories is a complex process involving a good deal of intuition about what hypotheses to test and what constitutes confirmation or refutation. If we’re too ready to abandon theories in the face of anomalies, we just get confused. But if we’re too stubborn, we get dug in.

I can’t count the number of news stories I’ve read saying climate science is settled. Or the number rationalizing any and every weather event as somehow being consistent with the theory. But if the theory really is so settled, let’s hear what wouldn’t be consistent with it.

If some alarmists are willing to say it’s not that simple, fine, provided they’ve been busy shooshing the politician who uses one wildfire as proof that we’re on the brink of annihilation or the celebrity who says California’s droughts will never end because we’re on the brink of annihilation. Let’s hear them admit that it’s complicated when it hurts their argument as well as when it helps it.

For instance a number of us believe the sun has a strong influence on climate so if it’s now entering a significant quiet period, temperatures are liable to flatline or even drop. (And if you want to see a real climate catastrophe, try some cold on Canada’s agriculture.) If temperatures do drop over the next, say, decade, alarmists could claim it’s just a short-term cooling laid on top of a still-worrying long-term trend of human-GHG-driven warming. But how would you test that theory, if up-trends and down-trends can both be rationalized?

Blaming the sun for a short-term temperature drop in the 21st century would require also attributing some previous warming to its 20th century intensification (which the roughly contemporary warming on Mars, Jupiter, Triton and Pluto surely points to), in which case CO2 caused less of the warming than the models say and is less dangerous than the alarmists say. So they don’t want to test that theory. But at the Climate Discussion Nexus, we do.

Then there’s the oft-repeated idea that man-made global warming is causing glaciers to retreat. When a glacier advances instead, like Jakobshavn in Greenland, they tend to go oh that’s weird then resume beating the warming drum. But what about the fact that most glaciers have been retreating for centuries? Wikipedia’s article “Retreat of glaciers since 1850” cheerfully attributes the phenomenon both to the natural end of the Little Ice Age and to man-made GHGs. But as with Mr. Sun and CO2, there’s only so much warming to go around. And I’m at a loss to know how to test a theory that says the retreat was natural until 1970 and not since. But if it’s science, there must be a way.

As for the argument we heard during the brutal winter conditions of early 2019, that overall warming pushed Arctic weather systems south leading to cold weather, it’s easy to be snide about the vaguely Orwellian claim that cooling is warming. But it’s not impossible. The problem again is, how can we test a theory that can never be proved wrong by events after they’ve occurred? The answer is predictions. Don’t tell us afterwards that obviously warming caused the cooling, duh, because a theory that can explain anything after the fact but can’t predict Christmas in December isn’t science, it’s rationalization. A.k.a. flimflam. So here’s my challenge to alarmists.

Tell us beforehand what kind of summer to expect in 2019: a cool dry one, a warm wet one etc. Tell us how much extreme weather to expect, and where. And what will winter 2019-20 be like, in North America, in Europe etc? If you can’t or won’t offer such predictions, then don’t show up afterwards claiming whatever happened was consistent with your theory.

Now if you respond by demanding a prediction from me you might be disappointed because I don’t know what next winter will be like. But as my theory is that climate is too complicated to model my prediction is that nobody’s predictions are any good. And the way to prove me wrong is make ones that work.

So go ahead. Predict something. I don’t care what. A warm winter. A cold one. Glaciers retreating. Glaciers advancing. More rain or less. Forests ablaze or green and verdant. The sky turning purple. I just want some way to tell if your settled science has any validity.

What’s that? You can’t? Gosh, a minute ago you seemed so certain.


About the Author

Dr. John Robson is Executive Director of Climate Discussion Nexus. He holds a Ph.D. in American History from the University of Texas at Austin and has worked as a historian, policy analyst, journalist and documentary filmmaker for three decades. He has been examining the climate change issue for many years, including both the science and the policy debates.

Collateral Damage Caused by the Supreme Court of Canada’s Decision to Overturn the Redwater Decision

The release on January 31, 2019 of the long-awaited court decision (the “Appeal Decision”) by the Supreme Court of Canada to the appeal by the Alberta Energy Regulator (the “AER”) of the May 2016 ruling by the Court of Queen’s Bench of Alberta that provincial regulations are in conflict with the federal Bankruptcy and Insolvency Act (the “Redwater Decision”) was publicly lauded by many observers as the correct “social” decision.  The public-at-large generally accepts the “polluter pays” thinking that was behind the decision as being the correct outcome.

In this lengthy article we will not touch on the social issues resulting from the Appeal Decision.  We will focus instead on the broader implications of the Appeal Decision which we believe will inflict significant collateral damage on oil and natural gas companies, bankers, receivers, the AER and ultimately, and most importantly, the Orphan Well Association (the “OWA”), the very organization that the Appeal Decision was indirectly designed to protect.

Background

Before discussing the broader business implications of the Appeal Decision, it is worth clarifying some of the background issues.  One key point to note is that the assets of an oil and natural gas company are unlike those of a mining company, or almost any other industry which would be impacted by the Appeal Decision.  A non-oil and natural gas company typically has a very small number of assets which might lead to future environmental obligations.  An oil and natural gas company, on the other hand, might have hundreds or even thousands of such assets.  Of note is the much-discussed receivership of Lexin Resources Ltd. et al (“Lexin”), which left behind approximately 1,500 licenced wells and approximately 1,500 licenced pipelines and facilities.  Most of these licenced assets were eventually dropped into the lap of the OWA.

If an insolvent entity with a relatively small number of assets goes into receivership (“Receivership”), it is relatively straightforward for the court-appointed receiver (the “Receiver”) to deal with the very small number of assets, as compared to handling the thousands of discrete assets that result from the insolvency of an oil and natural gas company such as Lexin.

Subsequent to the Redwater Decision and prior to the Appeal Decision, the Receivers of insolvent oil and natural gas companies, generally acting on behalf of the most senior secured creditors, i.e. the creditor with the most to lose (which could be a chartered bank, a mezzanine finance lender or any other secured creditor (the “Creditor or Creditors”)), worked to monetize some of the assets from the insolvent companies which could be sold (the “Saleable Assets”) in order to recover some of the funds owing to all of the secured creditors.

Until the Appeal Decision was announced, any unsold oil and natural gas wells, pipelines, facilities and equipment (the “Residual Assets”) were disclaimed by the Receivers and ultimately delivered to the OWA, the industry-funded organization mandated to “safely decommission orphan oil and gas wells, pipelines and production facilities …”

As very publicly reported over the past several months, this resulted in a significant increase in the OWA’s orphan well count.  This has led to much public discussion, discussion which generally points the finger at the big bad Receivers acting on behalf of the socially insensitive Creditors to saddle the public with the financial burden of dealing with the resulting environmental obligations of the Residual Assets.  As a related aside, rarely does it get reported that the oil and natural gas industry, not the public, funds the OWA.

The Reality

We believe that the Appeal Decision will ultimately result in more Residual Assets being delivered to the OWA for further handling than would have been the case if the Redwater Decision was not overturned by the Supreme Court.  Further, the Appeal Decision was believed to be a method to provide much needed cash to the OWA to handle the liabilities, by directing the proceeds of any dispositions of Saleable Assets to the OWA.  We do not see how this can happen.

The sale of an insolvent entity’s assets through a Receivership can only occur if there is a party which is willing to fund the costs of the Receivership.  These costs are very real and they can quickly become significant.  Included in the costs of a Receivership are the costs of the Receiver’s time, the Receiver’s third party costs, legal expenses, court filing fees, selling agents’ fees, etc.  The Creditor will typically advance funds to the Receiver at the start of a Receivership process to cover these costs only if it is believed that the recovery from the liquidation of the Saleable Assets will exceed the costs of the Receivership and the settling of any priority claims to the estate.

Sayer has been involved in Receivership asset sales for several years, acting as sales agent for the Receivers of 36 insolvent entities.  These entities collectively held approximately 4,000 licenced wells.  We were able to sell approximately 30% of these wells, 1,200 in total.  Absent sales processes funded by Creditors through Receiverships, the 1,200 wells that were sold would likely have been delivered to the OWA along with other related Residual Assets.

As previously-mentioned, for approximately 32 months subsequent to the issuing of the Redwater Decision and prior to the issuing of the Appeal Decision, Receivers were able to act on behalf of Creditors to sell whatever wells, facilities and equipment could be sold from the estates of insolvent oil and natural gas entities.  Subsequent to the disposition of any Saleable Assets, Receivers were able to disclaim any Residual Assets and deliver them to the OWA.

With the Appeal Decision in place, any funds realized from the Saleable Assets must now be ultimately directed to the OWA, not to the Creditors, so that the OWA can use the funds to manage the abandonment and restoration of any environmental liabilities associated with the Residual Assets.  While the social aspect of this is quite clearly understood, the collateral damage that will result is significant.

Creditors will now be loath to put insolvent entities into Receivership.  Why would a Creditor fund a Receivership if there is not a realistic expectation of recovering its costs as well as a meaningful portion of the funds owing to it by way of its secured debt position?

Instead of pushing companies into Receivership some Creditors will possibly force insolvent entities to minimize overhead, following which the Creditor will then bleed off any available cash flow to help to pay down the debt position until such time as the operations are unsustainable.  After cutting the losses, it is possible that the Creditor will simply just walk away from its position once the operations are unsustainable. The likely outcome of this scenario, collateral damage caused by the Appeal Decision, is that all of the assets of insolvent oil and natural gas entities will end up as Residual Assets, bagged, tagged and delivered to the OWA.

As previously-mentioned, absent funding by Creditors, this type of scenario would have resulted in roughly 1,200 additional wells being sent to the OWA from only the 36 Receiverships that Sayer has been involved in.  If you consider the numerous other recent oil and natural gas industry Receiverships, plus all of the future ones, the collateral damage from having to deal with this likely avalanche of Residual Assets will undoubtedly overwhelm the OWA.

One way for the OWA to receive funds from the sale of the Residual Assets in a scenario such as was previously-discussed would be if the AER were to act as a Creditor, forcing the sale of assets for the account of the OWA.  Without going into too much detail, Sayer recently worked with Grant Thornton Limited, Lexin’s Receiver, in managing the sale of assets from Lexin on behalf of the AER, Lexin’s Creditor by way of the funds owed to it.  We believe that after being front and centre in that process, the AER would not be interested in getting actively involved in another Receivership.  As well as creating obvious conflicts, we believe that acting as a Creditor in such scenarios is beyond the mandate of the AER as an independent regulator.

Another significant outcome of the Appeal Decision is that bankers may not continue to provide debt funding to junior oil and natural gas companies.  The implications of this collateral damage are tragic, and could spell the beginning of the end of this once robust segment of our local economy.

Background to One Possible Solution

Sayer does not believe in criticizing anything without providing an alternative solution to a problem.  To that end, approximately 18 months ago we initiated a meeting with Mr. Jim Ellis, the CEO of the AER at the time, to discuss the aforementioned possible outcomes to the Appeal Decision, which was still pending at that time.  I will quote our advice to Mr. Ellis.

Jim, regardless of how the Supreme Court rules, the AER, the Creditors and the Receivers must all learn how to play nice together in the sandbox.”

We presented a possible solution (the “Solution”) to Mr. Ellis, who did not disagree with the need for a similar outcome.  The Solution, which we stand by today, is actually quite simple.  To better understand the Solution a bit of background information is in order.

Before a Creditor pushes an insolvent entity into Receivership, the Creditor prepares an economic evaluation of the costs and benefits of the potential process.  On the benefit side, the Creditor will typically engage the services of a mergers and acquisition specialist firm like Sayer (the “M&A Advisor”) to provide an analysis of what the proceeds from the sale of any Saleable Assets might be.  An experienced M&A Advisor can generally predict which assets can be sold, what the sale proceeds will be, and which assets will become Residual Assets.  If the Creditor believes that the proceeds will exceed the expected costs of a Receivership, a Receiver is hired, and a process to market the assets is undertaken through an M&A Advisor.

At the conclusion of the Receivership, the Creditor receives the proceeds of the sales of the Saleable Assets, net of costs.  The Residual Assets are then disclaimed by the Receiver, ultimately ending up in the OWA.

One Possible Solution

Sayer’s Solution is that prior to putting a company into Receivership, the Creditor, the AER and the M&A Advisor would work together to discuss the assets.  With many details to work out, the basic workings of the Solution would involve the following steps.  The first step would be to have the Creditor advise the group as to the amount it requires to satisfy its position.  The M&A Advisor would then provide its best estimate of whether or not the estate has any Saleable Assets, and, if so, what the proceeds of a sale of those assets might be.

Once the estimate of which of the assets will become Saleable Assets is in hand, the AER would then provide its best estimate of the cost to deal with the obligations of the Residual Assets which the M&A Advisor believes will be left to deal with.

The parties now have an estimate of the results of a liquidation of the estate, factoring in the estimated cost of the Receivership, the estimated proceeds from the sale of any Saleable Assets, and the estimated cost of dealing with the Residual Assets.  With this information in hand, the disposition of assets can take place in an orderly, equitable manner.

Let’s use as an example a situation where the Creditor needs $20 million, the M&A Advisor estimates the market value of the Saleable Assets to be $12 million and the AER needs $10 million to deal with the Residual Assets.  Using an allocation determined by the proportionate shares of the required recoveries of $20 million (Creditor) and $10 million (AER), the Creditors, requiring two-thirds of the estimated recovery, would pay for two-thirds of the costs of the Receivership.  The AER, requiring one-third of the estimated recovery, would pay for one-third of the costs.  The net proceeds from the sale of the Saleable Assets would be distributed to the two parties using the same two-thirds to one-third split, in this example $8 million to the Creditor and $4 million to the AER.

Recognizing that the M&A Advisor’s estimates will be good, but not perfect, after the assets are sold and it is time to wind up the Receivership the allocation of net proceeds and expenses would be adjusted to account for the realized proceeds from the sale of the Saleable Assets and for the estimated cost of dealing with the resulting Residual Assets.

The end result of the Solution should be that the number of Residual Assets would be minimized, while providing some funds to the OWA to deal with the Residual Assets, overall a far more palatable outcome might be expected absent a Receivership process.

Potential Backlash to the Solution

While the Solution appears at first glance to be fair and equitable to all parties, before considering going down this road the AER would need to find a way to manage the public perception.  In light of the negative sentiment to the industry resulting from the recent public discussion of a few notable insolvencies, including Lexin, and in light of the Appeal Decision, the public backlash of this cooperative approach to lightening the load of the OWA would most likely be huge.

If the AER and a Creditor were to work together to share the costs and proceeds from the liquidation of assets in a Receivership, well-meaning but ill-informed third parties would look at this in horror, as the Solution conflicts with the ruling of the Supreme Court that effectively says that the OWA would be entitled to receive all of the proceeds from any asset sales in a Receivership.  This will not likely be publicly-received as the good news story that it is; it will likely be treated as a travesty of justice.  It is possible that legal challenges to any cooperative effort will follow.

The flip side is that any approach that is not collaborative is likely to result in a very significant increase in the Residual Assets heading to the OWA.  No matter how you look at it, that would not serve the best interests of any party, especially the OWA, the AER, the Creditors, the oil and natural gas industry, and even the general public.

Conclusion

While our proposed Solution has obvious positive factors rendering it worthy of consideration, the negative implications may prove to be difficult to overcome.  We are tabling it here as a starting point for discussions, as we believe that the ultimate solution will require a collaboration of industry, the financial community, government and the public.  We are sure that other solutions can be found; however, we have not yet heard of any proposals.  For the sake of our industry’s future, we all need to step up and work towards collaborative solutions to these types of issues, sooner rather than later


About the Author

Alan Tambosso, P.Eng. P.Geol., is President of Sayer Energy Advisors.

Alberta’s oil and gas industry has suffered deeply under the NDP

After protesting against the oil industry for 10, 20, 30, and even 40 years, Alberta’s NDP took the helm of the province in 2015 after a remarkable sum of events leading up to that fateful day. Since day one of their governorship, Alberta’s oil and gas industry has suffered deeply–it will likely go down as the worst 4 years in the sector’s history.

Capital fled and did not return

The day after the 2015 election, massive amounts of capital began fleeing the province. During a 2 day period when oil prices increased (May 5 & 6 2015), the TSX Energy index dropped over 4%. Small cap energy producers were hit hard, and over $20 billion was wiped from the Canadian energy markets on day one and two.

Reports from banks and analysts hit the streets, the consensus from the investment world was conclusive: the NDP’s election victory would have a negative impact on this market. Alberta became a jurisdiction looked upon unfavourably by portfolio and fund managers.

Over the next 4 years, investment fell year after year. Compared to 2015 when $75 billion was invested in Alberta, 2016, 17 and 18 saw only $60 billion in capital spending. If spending had held from 2015, Alberta would have had an additional $45 billion of capital in this province.

Alberta investment by year

Alberta investment by year

Alberta’s government fought against pipelines

Prior to forming government, you would be extremely hard pressed to find a whisper of support for a pipeline project from any member of Alberta’s NDP. Immediately upon taking office, the party began its advocacy against pipeline projects. Premier Notley stood up in the legislature during their first sitting and claimed the government’s opposition to Keystone XL. A pipeline which (if built) would have saved Alberta tens of thousands of jobs.

After the election of Justin Trudeau, Notley (and her crew) supported his cancellation of the desperately needed Northern Gateway pipeline. That particular project was in the crosshairs of the NDP as they had members who traveled to Kitimat to oppose its construction.

Lastly, the Energy East project which had the potential to be a true nation builder, was killed by the Trudeau government. The public heard not even a peep from Alberta’s NDP. Their silence was deafening.

Costs and regulations increased

Coupled with their active fight against pipeline construction, Premier Notley and the NDP began instituting a series of costs and regulations which crippled the industry’s hope of a recovery. Needless to say, the carbon tax did nothing to ease the burden on oil and gas producers. In fact, their announcement of a climate and royalty review caused several oil and gas producers to put plans and spending on hold and ultimately reduce overall activity.

The NDP also introduced higher corporate taxes, higher payroll taxes, increased labour costs, more stringent regulations via the AER, and appointed several anti-industry spokesmen to positions they have absolutely no business holding. All in the name of ‘improving Alberta’s environmental record’ — which was not an issue to begin with. They put all of this on Alberta during the worst oil market downturn in decades.

Activity levels decimated

Activity levels in Alberta have been severely depressed during the NDP’s reign. Rig counts have stayed incredibly low and have not improved. With no capital, increased costs and regulations, this was an inevitability.

And unfortunately, coupled with the decimation of activity, came massive unemployment, record numbers on employment insurance, huge office vacancy rates, higher suicide rates and all other terrible things which accompany a bad economy combined with anti-business and industry policies.

It’s been an extremely dark 4 years in the province. The only takeaway will hopefully be a reminder of how bad things can get, and the damage a government can inflict on business and its chief industry.


About the Author

Josh Groberman publishes the BOE Report.

Extinction Rebellion climate extremists shut down London public transit

In the latest evolution of the far-left’s extremism, April 15 saw the start of three days of protests that ground London to a halt, affecting more than 500,000 people. Over a thousand Extinction Rebellion (XR) campaigners threatened to bring the British capital city of London to a standstill for up to two weeks.

Extinction Rebellion is the latest in vogue protest movement for climate change activists. It has grown into an international movement backed by left-wing celebrities, academics, and writers by calling for “radical change in order to minimise the risk of human extinction and ecological collapse”. Activists in at least 80 cities in more than 33 countries will hold similar demonstrations on environmental issues, campaigners said.

Extinction Rebellion protestors blocked busy London roads and bridges, spray-painted government buildings, glued themselves to a DLR train at Canary Wharf, and chained and glued themselves to buildings, including the gates of Buckingham Palace. Semi-naked activists had previously glued themselves to windows in the public gallery of the House of Commons during a Brexit debate. The following day, two dozen protesters occupied the International Criminal Court in the Hague, in the Netherlands. “Only a peaceful planet-wide mobilisation of the scale of the Second World War will give us a chance to avoid the worst-case scenarios,” and “the world has “run out of the luxury of time to react incrementally” Extinction Rebellion campaigners said.

Police arrested more than 300 Extinction Rebellion protestors while London Mayor Sadiq Khan attempted to ingratiate himself with them, diverting attention from intense and ongoing criticism of his poor response to London’s knife crime epidemic. The former Labour MP and London mayor said that the “climate change emergency” was a “top priority” for City Hall and reiterated his “passion” for peaceful protest as “the cornerstone of our democracy”. West End businesses complained of a GBP 12 million loss in sales while Mayor Khan professed his “full respect” for the anarchists.

Mayor Khan attended last month’s march for a second Brexit referendum, and likened the climate protesters to suffragettes, declaring, “I was at a protest myself a few weeks ago, protesting, campaigning and lobbying on whether the public should have a final say on staying in the union and given the option of what parliament’s voted for.” The upcoming mayoral election takes place in May next year. Mayor Khan’s mayoral rival, Conservative candidate Shaun Bailey, said, “The Mayor is telling law-abiding Londoners their interests come second to those who shout loudest and disrupt the most.

Despite their claims that they are proponents of non-violent civil disobedience, on Monday, Extinction Rebellion protesters vandalised Shell’s headquarters, gluing themselves to windows and smashing glass revolving doors, causing more than GBP 6,000 of damage and enabling them to have a platform in front of a jury trial in Crown Court. Now, according to Extinct Rebellion’s legal advice, some of the protesters will soon be citing Mayor Khan’s “climate change emergency” rhetoric in their defence.

Extinction Rebellion says direct action is needed to force governments to act urgently on climate change and wildlife declines and halt a “sixth mass extinction”. Their demands include the declaration of an ecological emergency, greenhouse gases to be brought to net zero by 2025, and the creation of a citizens’ assembly to lead action on the environment. Extinction Rebellion says the systems propping up “modern consumer-focused lifestyles” will lead to mass water shortages, crop failures, sea level rises, and the displacement of millions. Extinction Rebellion says it wants “ecocide”, the deliberate destruction of the natural environment, to be listed alongside crimes against humanity, war crimes, genocide and crimes of aggression.

1,500 people showed up to Extinction Rebellion’s first protest on October 31 last year on Parliament Square in London. The group later claimed that over the next several weeks “Six thousand of us converged on London to peacefully block five major bridges across the Thames.” Extinction Rebellion claims to have chapters in dozens of countries, including the United Kingdom, the United States, the Solomon Islands, Australia, Spain, South Africa, and India.

Extinction Rebellion professes to be about climate change but in reality, is the latest rebranding and marketing campaign of Marxism. Their manifesto, published on their website, gives their game away. The tactics, slogans, and the general behaviour of the Marxist protesters exactly echoes that of the anti-globalisation protests of the early 2000s.

Beyond their climate focus, Extinction Rebellion demands the end of interest-bearing loans and to bring down the global economy with it. They want to disrupt and destroy. global capitalism and know the term ‘Marxism’ isn’t going to get the results they want, so they dress their agenda up as ‘environmentalism’ to tempt useful idiots to join their cause. In fact, Extinction Rebellion don’t admit the obvious fact that renewable energy needs capital and therefore investors who issue interest-bearing loans.

Old election advice still rings true

To train his political pugilist for the 1992 US Presidential primary and subsequent election campaigns Democratic strategist and cornerman James Carville famously told his contender from Arkansas: “It’s the economy stupid!” Apparently he wrote it on a note and ensured it was ever present in Bill Clinton’s pocket.

His fighter never forgot. Clinton with the help of a Ross Perot-gifted vote split rode the advice and that note to an unanimous decision win.

Truth is, the words on that note are not just a good political device. Their wisdom is the foundational bearing behind any effective government plan.

It is after all the economy that pays for everything. It provides the tax revenue upon which every single public service entirely depends. It provides the fiscal room for tax competitiveness, responsible budgeting; yes even balanced budgeting.

So in this Alberta election the most important question for voters, the illusive ballot question – if you will – is: ‘who has the best plan for the economy?

I admit to a bias here but the answer is Kenney and the UCP and the evidence is objectively clear and on display in their respective platforms and in the existing record of the NDP.

The NDP bought into the social license theory that some self-immolating, indulgence like a carbon tax imposed on its own people and its own economy would swing support Alberta’s way from those who have manifestly opposed the continued existence of the Canadian fossil fuel energy sector.

It was folly from the beginning. What’s more, the decision seemed to give an agreeing nod to those who attack Alberta’s energy sector that they might have been right after all. Premier Notley also supported the feds capitulation on Northern Gateway, was nowhere to be heard or seen as a few of us were fighting for KXL and whose comments on the feds killing of Energy East, C-69 and the tanker ban on Alberta oil C-48 were whispered if said at all.

While I have a great deal of respect for Premier Notley these instances were, in my opinion, fundamental failures in leadership. More seriously, the cumulative effect of policies from Ottawa and Edmonton including the NDP’s failure to defend Alberta’s economic interests have left the oil and gas economy of Alberta trailing the energy economies of Texas, North Dakota, and yes, Saskatchewan.

Here are the latest reported unemployment rates in each of those places.

Alberta: 6.9%

Saskatchewan: 4.9%

Texas: 3.8%

North Dakota: 2.4%

Granted each of these economies is different, some more diversified than others. It’s worth noting however that there is only one of them that self-imposed the largest tax hike – a carbon tax hike no less- whose leadership allied with a federal government that isn’t sure it wants Canada to have an energy sector, who gave up on pipelines and whose fiscal improbity reached near to Biblically proportioned levels.

Policies matter. Economic policies matter most.

Albertans have to wade through the muck that has been raked in this campaign and there’s been no small amount of it and ask themselves. Who does have the best plan for the economy? Who will fight for our province’s economic interests? Who will place Alberta jobs at the very top of every meeting agenda?

Voting decisions are never easy. They shouldn’t be. But James Carville’s cajun accented admonishment of his old boss can help sort things out.

It’s the economy, stupid.


About the Author

Brad Wall served as the 14th Premier of Saskatchewan from 2007 to 2018.

Get rid of gas… hey, where’s the gas?

Here come the unicorns. Or so we’d better hope. Because if they don’t hop onto the treadmill and start churning out power things are going to get kind of chilly and hungry. Not to say awkward.

Look no further than the absurd statement by B.C. Premier John Horgan that if gas prices didn’t fall soon he would do some unspecified thing to bring “some relief”. According to the Globe & Mail, “Horgan said he can’t explain a 12 cent a litre increase and perhaps the industry should invest more in refineries and the federal government should invest more in supply.”

No, neither you, nor I, nor the Globe have entirely taken leave of our senses. That really is the same John Horgan bitterly opposed to pipelines and tankers including expanding Trans Mountain to bring Alberta oil to British Columbia, a province in which various mayors and city councils have done everything possible to annoy and scare away companies that invest in energy.

So it is Horgan who has taken leave of his senses. Convinced fossil fuels are setting the sky on fire he’s been pushing hard, and sanctimoniously, to keep cheap gas away from his citizens. And now he wonders witlessly why somebody doesn’t give them cheap gas.

To some extent what we are seeing exposed here is mere hypocrisy, the politician who values saving his seat above saving the planet. Which looks pretty ugly on people who glibly accuse climate skeptics of being in it for personal advantage. But to some extent we are seeing something much more dangerous than dishonesty, namely misguided sincerity.

Advocates of harsh measures to curtail or eliminate fossil fuels tend to believe that we are this close to having abundant sources of alternative energy from wind to solar. They do not know, do not care to know, and do not check awkward facts like wind, solar and battery power supplying just 2% of world demand and 3% of that in the United States. And with rare exceptions they are viscerally opposed to nuclear partly due to fear of everything atomic because of nuclear weapons and partly from deep, inarticulate, metaphysical rejection of anything practical.

Economist Kenneth Boulding once observed that those on the left believe all utilities can be maximized simultaneously. Which is how economists talk. But Boulding was far from being some cranky right-winger; he was a Quaker peace activist and author of an essay “The Economics of the Coming Spaceship Earth” about resource depletion. Nevertheless he rightly worried that many of his fellows genuinely did not believe in tradeoffs.

Far too many on the left still don’t grasp that there is no free lunch, that you must invariably give something up to get something else. Thus we hear people seriously say we should not penalize drivers of cars and trucks with a carbon tax because it is the fossil fuel companies that are responsible for all those emissions. Or that we can transition completely away from hydrocarbons within 12 years (and after lunch, retrofit every building in America carrying materials by bicycle or some such). And when you warn about impracticality or real costs you speak a language they do not comprehend with results infuriating, comic or both familiar to tourists. Just ask John Horgan.

If it really were true that all the world’s scientists called man-made climate change an urgent crisis, which it’s not, we would be in a pickle because without fossil fuels we would see our prosperity vanish. (An amusing video along the lines of “Zinc oxide and you” recently depicted a hapless suburban millennial seeing everything made from petroleum vanish.) It would require us to think long and hard about how to adapt, and how fast, and whether adapting to whatever changes in climate do occur might not be more effective in preventing misery and death. But thinking long and hard about that topic requires a general disposition, and ability, to think long and hard about anything.

Those who believe in powering modern civilization by putting unicorns on treadmills, or spend years trying to get rid of fossil fuels then gape at expensive gasoline, seem ill-prepared for such a task. Which is a problem. And awkward.


About the Author

Dr. John Robson is Executive Director of Climate Discussion Nexus. He holds a Ph.D. in American History from the University of Texas at Austin and has worked as a historian, policy analyst, journalist and documentary filmmaker for three decades. He has been examining the climate change issue for many years, including both the science and the policy debates.

One Question Remains As The US Moves Closer To Drilling In ANWR: How Much Oil Is There?

The Arctic National Wildlife Refuge’s (ANWR) coastal plain, or 1002 area, could hold billions of barrels of oil and natural gas, but the results of the only test well drilled in the refuge has been kept secret for decades.

The New York Times recently tried to pierce the veil of secrecy of the 1986 test well, called KIC-1, by looking through court documents filed in Ohio and talking with the attorneys involved in the case.

“The discovery well was worthless,” said now-retired attorney Sidney Silverman, who represented Standard Oil of Ohio shareholders in a 1987 lawsuit against BP, one of the oil companies that drilled the KIC well.

After deposing a BP executive, Silverman told The Times he remembered being convinced “either there was no oil and gas there, or the oil couldn’t be produced at an economic value.” That sentiment was echoed by a BP executive and a lawyer The Times spoke to.

The Times’s April 2 piece will no doubt be seized upon by opponents of ANWR drilling, but the question remains: How much can one really know about ANWR’s oil and gas potential from one test well?

Oxford-educated geologist Roger Herrera was first sent by BP to look for oil and gas in the Alaskan Arctic in the 1960s, including ANWR’s coastal plain. He said it was “absolute nonsense” to judge ANWR based on one confidential test well.

“Either the writer or the people he was writing about didn’t have the slightest clue what they were trying to understand,” Herrera, now retired, said in an interview with The Daily Caller News Foundation. “The point is, it doesn’t matter.”

Herrera was not privy to the KIC well results but has experience with looking for oil and natural gas across the North Slope and Arctic. He said test wells often turn up no hydrocarbons but provide valuable geological data.

“The evidence you get from that well is the data and position that gives you an advantage,” Herrera said. “It allows you to assess the geology of the area because you’ve got real data down to 10,000 feet or so that you can tie to the seismic data.”

Anyone else looking for oil and gas in ANWR would be guessing, Herrera said. “That assessment might downgrade the whole area or it might do the exact opposite,” he said.

“It allows them to make those estimates whereas everybody else is completely guessing,” Herrera said.

Herrera, for decades, advocated for drilling in ANWR, but the refuge remained off-limits to energy exploration for decades as environmentalists held enough sway in Congress to keep drillers out.

ANWR’s 1.5 million-acre coastal plain was finally opened to energy exploration when President Donald Trump signed 2017 tax cuts into law. That provision was put in the tax legislation by Alaska GOP Sen. Lisa Murkowski, one of the biggest proponents of opening ANWR.

Opening ANWR comes more than three decades after BP, Chevron and two Alaska native corporations teamed up to drill the KIC well in the eastern part of the 19.2 million-acre refuge. The Arctic Slope Regional Corporation (ASRC), one of the native corporation partners, has continued to aggressively push for opening ANWR.

ASRC declined to comment, but Richard Glenn, a geologist with the group, told Congress in 2017 that ANWR holds “significant potential for onshore oil and gas development.”

ASRC and Kaktovik Inupiat Corporation (KIC) own 92,000 acres of surface and subsurface in ANWR. For decades, the federal government kept those lands off-limits to exploration, despite the potential economic benefit to local tribal members.

“I know for a fact it’s an oily area,” Herrera said. “The clue is really contained in the rocks that occur above the surface in the tundra. Those exposures will more or less tell you what’s going on in general.”

The big question is whether or not ANWR’s oil and natural is trapped in large or small reservoirs by the region’s underground geology. However, even good seismic data doesn’t give the full picture and test wells are needed to truly understand the geology.

“There’s a very good expectation under the 1002 area that there are going to be reservoir and source rocks for oil or gas, no one is quite sure which,” Herrera said, adding he believes there are probably “trapping mechanisms” under ANWR. “I’m very confident I’m right.”

The last resource assessment of ANWR conducted by the U.S. Geological Survey (USGS) in 1998 estimated technically recoverable oil reserves at 10.4 billion barrels. That was a two-dimensional seismic survey using 1980s computing power, and the technology has drastically improved since.

Three-dimensional seismic surveys can give geologists a more accurate picture of what lay underneath ANWR, but environmental activists fought hard to keep further tests from being carried out.

Seismic testing in ANWR was scheduled to take place over the winter but had to be delayed because the company contracted to carry out tests did not get a special permit from the U.S. Fish and Wildlife Service in time.

The prolonged government shutdown may be partly to blame for that, and the company, SAExploration, plans on carrying out seismic testing in December 2019. That could complicate things for drillers looking to bid on leases in late 2019.

ANWR still lacks updated seismic data, however, signficant oil and gas finds have been made to the west.

“One of the largest fields in Alaska is in development within a stone’s throw from ANWR,” said Jon Katchen, former senior counsel to Alaska Department of Natural Resources Commissioner Dan Sullivan.

Sullivan, now a GOP U.S. senator, supports oil and gas exploration in ANWR. He’s not alone — Alaska’s entire congressional delegation, and most other elected officials in the state, support drilling in the refuge.

Katchen is referring to the Point Thomson field, which is 60 miles west of the village Kaktovik, which lies on ANWR’s coastal plain. Exxon brought the reservoir online in 2016 and aims to eventually produce 10,000 barrels of natural gas condensate per day.

To the west of Point Thomson sits Prudhoe Bay, Alaska’s most iconic oil field. The 1968 oil discovery there completely reshaped Alaska’s economy and drastically raised standards of living for Alaskan residents and tribes.

However, it almost never happened. BP and Sinclair Oil drilled six wells in the early 1960s that all turned up dry. More wells were drilled by other companies, but by 1967 the oil and gas industry had basically given up on the North Slope.

“It’s not uncommon for wells to be drilled with disappointing results, then another well to be drilled and ‘whoa,’” Katchen told TheDCNF.

That “whoa” moment came just before Christmas 1967 when ARCO and Humble Oil, with the last drilling rig left on the North Slope, hit paydirt, NPR reported. Months later, a second test well confirmed the oil discovery was massive — about 10 billion barrels.

“That’s the sort of process that happens when you’re looking for oil,” Herrera said. Test wells are about the geological information, not just striking oil and gas.

The Times did note, however, that one of the few people outside of BP or Chevron to see the results of the KIC well was geologist Mark Myers. Myers was allowed to examine the geological data from the well in 1988, but not allowed to take notes. All he reported were “the findings were significant,” The Times reported.


About the Author

Mike Bastasch writes about energy and the environment at the Daily Caller News Foundation.

Carbon tax is a hit to business competitiveness

Contrary to Justin Trudeau’s claim of just a few years ago, budgets don’t actually balance themselves: revenues have to equal expenditures for that to happen.  Given that, it is not surprising that after running up an enormous deficit in less than four years the Trudeau Government is looking to put its hands in our pockets with the Carbon Tax. Though presented as revenue neutral, the reality will be handouts to some and hidden risen costs for all.

Of particular note will be the hit to business competitiveness. Or at least the competitiveness of some businesses: one wonders how many large corporations have exemptions of one kind or another.  Why do we say that? Well why else would a group like the Business Council of Canada – made up of some of Canada’s largest corporations – repeatedly make clear their support for carbon taxes? And why do various trade associations feel compelled to do the same thing?

How many people realize that there are industry groups out there declaring their support for carbon taxes, and then working out special exceptions because they are “energy-intensive industries” who compete in international markets with players who don’t pay carbon taxes.  So in other words, they say “we’re for carbon taxes but we don’t want to pay them”.

Any hypocrisy there?

So who will pay them? Well this is the ongoing trick with the carbon tax – it is hard to tell. But let me tell you that we know small to medium sized businesses will be hit hard. This tax is going to be devastating to the competitiveness of these companies – and that is really, really bad for Canada. If I belonged to any association that supported a carbon tax I would resign my membership immediately, full stop.

Large companies need to remember that while they are negotiating exemptions they are throwing small to medium businesses under the bus: they are decimating their supply chains, killing the entrepreneurialism that ultimately provides talent to them, and hurting the innovation that flourishes in small enterprises – innovation from which they eventually benefit.

Carbon taxes are not revenue neutral – the BC case shows that. They do not change behavior –European case studies show that. They do not have an impact on emissions – all kinds of cases prove that. What they do is drive up costs, subsidize ineffective alternatives, and give government another pool of money to pay for their pet projects.

The time has come for Canadian business to come together, to realize government is trying to divide and conquer us to advance their interests, and to realize our trade associations do us no favours by bowing before government to get access instead of calling them out when their actions are against our interests.


About the Author

Jocelyn Bamford is the president and founder of the Coalition of Concerned Manufacturers and Businesses of Canada.

Rethinking energy, rethinking industry – who’d have thought pucks would take centre stage?

It is very easy to get bogged down in energy wars. Conversations, even macro-type ones, often degenerate into debates about trees and not the forest – is this/that pipeline needed, is there a market for bitumen, etc. Energy talk devolves into these bite size pieces, and fixates on them, because that’s how Canada’s energy industry is attacked, so we must deal with the disinformation.  There is a whole internet that needs convincing. But when that happens, it gets harder to think outside the box.

Sometimes something wonderful happens that, virtually speaking, slaps us right off our barstool (thanks for the visual Eminem – for whom the metaphor may be part of his daily routine). Lately, I’ve been fortunate to interact with people who are working outside the spotlight in ways that cause a complete mental reset.

One instance occurred recently in a conversation with Jeff Paquin, CEO of Wapahki Energy Ltd. Wapahki is a 100-percent-owned First Nation company, and has an attitude that is desperately welcome – they want to create jobs, build an industry, and solve problems in a way that is, unsurprisingly, beneficial to the environment. Wapahki is developing CanaPux, a new method of transporting bitumen by blending and encasing it in plastic. (Side note: this is a bit of a fanboy exercise, but not intended as some sort of weird product promotion (I am not a paid shill for anything, and will not receive a single bitumen puck as compensation). Also, I unfortunately can’t discuss all the other brilliant ideas going on to help solve energy problems (because there are too many of them), but I will get to them as I can. There is a point to the story beyond starry-eyed adulation (though there is an element of that for sure).

When I first heard of CanaPux in the news, my battle-weary brain simply interpreted it as a new way to transport bitumen, and I mentally filed it as a new subsection in the “crude-by-rail” category.

As it turns out, my initial reaction was sort of symptomatic of the problems with the whole energy dialogue. I lazily framed the new technology in a limited way – that lack of transportation is our biggest problem, because that’s what we’ve become fixated on.

CanaPux, as it turns out, is the tip of an iceberg, a multidimensional development that goes far beyond the issue of “moving oil.” I don’t know if that developed by design or accident, and it doesn’t matter; what does matter are the possibilities that unfold.

What’s so special here? Well, from one end to the other, fresh thinking is obvious. First, the project is primarily a development between a First Nation entity and a railway company, who in conjunction set out to create a better future for the community, in a greener way, by building a business that isn’t designed or defined singularly as “moving product.” Moving bitumen is one aspect of the business, but there are others, and each is a value-added component in one way or another.

The entire process doesn’t just get something to market, it in a way creates new markets. For starters, rather than focusing on getting bitumen to refineries, this system will take product to Asia – China and India as a considerable start – where huge demand exists for bitumen in the textile, roadbuilding/asphalt, and petrochemical industries. Both these massive countries require bitumen in locations not served by pipeline, so plasticized block transport is perfect.

Next, recycled plastic can be used to create the pucks, and, as you can imagine, the opportunities for plastic recycling are staggering. The world is begging for a productive use for waste plastic. At the other end of the chain, the plastic is separated from the bitumen and can be reused.

Further along the value chain, biomass material that would otherwise go to landfills can be sourced in Alberta or even backhauled on empty trains. This last part has value not to be underestimated; empty trains coming back from either coast could create a sub-industry whereby other First Nations (or anyone, for that matter) along the way can sign on to provide waste organic wood material that is of no value, or has negative value as forest fire fuel, but is valuable as biomass feedstock.

The benefits of this project are all over the place. First Nations ownership is a great thing from any perspective, and the project will create hundreds of local jobs. The bitumen pucks serve non-combustion markets in Asia that are not served by pipelines, and are huge – millions of barrels per day. The project has not just railway support, but participation. Greenhouse gases are reduced. The danger of transport spills is eliminated, since a spill would be cleaned up like Lego is cleaned up in the living room. The bitumen will command a higher value than as simple refinery feedstock. The plastic used the process can be reused in manufacturing. Sourcing plastic itself is an exciting aspect (as exciting as plastic recycling gets anyway), because, well, just look around. Waste plastic is, to put it mildly, plentiful. Who wouldn’t like to see all that crap find a home? The list of positives is so large it sounds crazy, but they are all real. What is worth remembering though as an overarching comment is that this is a First Nations initiative from people that are fed up with substandard living and want to do something constructive about it. That line of thinking is as noble as it gets.

If this whole idea had been initially screened by someone who was thinking like myself, as simply another way to move bitumen to refineries, maybe it would never have gone anywhere. There are always a million reasons why something won’t work, if one chooses to see things that way. Luckily, some people do not.

Wherever these people come from that dream up these new visions, we need more of them. Maybe there’s plenty of them under our noses, grinding away and muttering to themselves that no one will listen to fresh thinking. Rise up and be heard, you nerds. Not every long shot idea works, but some will, and the payoff can be revolutionary and huge.

Here’s another way to look at it, from the flip side. A few years ago, plus a bit, I had a summer university job at a small-town “dehy plant” as they were known in Saskatchewan. Dehy plants were an agricultural sub-industry in Saskatchewan whereby freshly-cut alfalfa was process into pellets by harvesting and quick-drying the alfalfa with natural gas heat, rather than baling it when bone-dry. Most of the pellets were shipped to Japan, which never ceased to amaze us, that alfalfa could be dried, processed, and shipped around the world to fetch many times the value that it would have in conventional hay bales. The industry was, however, largely wiped out when natural gas prices skyrocketed in the 1990s. So…we are now in a prolonged period of low natural gas prices. If the alfalfa processing business can’t/doesn’t make a comeback, what else is there that could be a proxy? Nothing? I find that hard to believe. The world as we know it was built on cheap energy, and you don’t get cheaper than near-free natural gas.

From one aspect, western Canada has a problem, the lack of access to energy markets. From another perspective, western Canada has profound opportunity – product that the world wants, needs, and has increasing demand for; a phenomenal workforce that is used to change and adaptive to technology; and square miles of untapped opportunity. We may not have supportive politicians, we may have to battle energy ignorance at every turn, and we may be the target of unfair attacks. But that doesn’t mean it is game over.


About the Author

Terry Etam is an independent senior consultant for small and midsize oil and gas companies. His website Public Energy Number One is dedicated to energy education and he is the author of The End of Fossil Fuel Insanity.

Iran and Iraq will work together to develop two oilfields

According to a report on Iran’s oil ministry website, Oil Minister Bijan Zanganeh Iran and Iraq have come to an understanding regarding development of the Naft Shahr and Khorramshahr oilfields, though without details of the plan.

Iranian President Hassan Rouhani called for Iran and Iraq to expand their gas, electricity, and oil dealings and boost bilateral trade to USD $20 billion despite difficulties caused by U.S. sanctions against Tehran. Iranian media reports have put the current level of trade at about $12 billion. In remarks carried by state television, President Rouhani said, “We hope that our plans to expand trade volume to $20 billion will be realized within the next few months or years,” after a meeting with visiting Iraqi Prime Minister Adel Abdul Mahdi.

In November, American President Donald Trump re-imposed sanctions on Iran’s energy exports citing its nuclear program and meddling in the Middle East, but he granted waivers to several buyers to meet consumer energy needs. In March, the United States granted Iraq a 90-day waiver exempting it from sanctions on buying energy from Iran.

According to comments published by the oil ministry’s news site SHANA in February, Minister Zanganeh criticized Iraq for not agreeing to develop shared oilfields because of sanctions fears. The energy industries in the two countries have close ties, and Iraq relies heavily on Iranian gas to feed its power stations. Iraq imports roughly 1.5 billion standard cubic feet of gas per day from Iran via pipelines in the south and east of the country. Zanganeh noted Iraq owes Iran approximately $1 billion for gas supplied in the past.

After a trip to Iraq last month by President Rouhani and Minister Zanganeh, Iran had agreed to help Iraq with technical and engineering services in the oil sector. “Given the lack of development in the petrochemicals and gas industries in Iraq, there is a bright perspective for cooperation between the two countries,” Minister Zanganeh said, also without further detail.

According to SHANA, Iran’s deputy oil minister for trade and international affairs Amir Hossein Zamaninia said Iran also agreed to help with the development of mutual fields, rebuilding old refineries, and helping build a network for gas delivery.

Trudeau imposes his carbon tax on four provinces challenging the decision in court

Last week, Liberal Prime Minister Justin Trudeau followed through on his ultimatum and imposed a landmark carbon tax on four provinces that have defied implementing their own. Ontario, Manitoba, Saskatchewan and New Brunswick say the decision is unconstitutional and are challenging it in court. PM Trudeau cited Canada’s international commitments to fight global warming when he announced he would force a carbon tax on all provinces that did not come up with their own plans by April 1, 2019.

The federal “backstop” program applies to Ontario, Manitoba, New Brunswick and Saskatchewan, which make up nearly half of Canada’s population. With an upcoming federal election in October, polls show the Conservative party, which has pledged to scrap the tax, stands a decent chance of winning.

Federal projections show the average household cost of the carbon tax will range from CAD $202 to CAD $403 annually starting in 2019, depending on the province, while the average household rebate will range from CAD $248 to CAD $598. The rebates will rise in tandem with the increasing carbon price.

The carbon tax will add 4.4 Canadian cents per liter of gas, or 12 U.S. cents per gallon and this rise in coming years if the Liberals are re-elected. The government is pairing the new tax with “Climate Action Incentive” payments sent overwhelmingly to households, meaning the burden will fall disproportionately on small businesses.

It will raise about CAD $2.3 billion in revenue this year, rising to CAD $5.6 billion by 2022-2023, with the majority sent back to households. The economic impact of the measures is expected to be minimal and rebates will mean the net impact on gross domestic product will be small in the short term.

The carbon tax comes on the heels of a tax on industrial emitters that began in January, details of which are still being finalized. The new tax is the equivalent of a CAD $20 per tonne carbon price. That will rise by CAD $10 each year to CAD $50 by 2022.

Canada has little chance of meeting its climate change goals of reducing emissions by 30 percent from 2005 levels by 2030 and critics say carbon taxes are simply a cash grab from taxpayers that have no real impact on climate change.

PM Trudeau’s other efforts to combat climate change are also proving a challenge. Last year, the government unveiled legislation to overhaul environmental assessments of energy projects, paying more attention to greenhouse gas emissions. Critics say this will deter future investment at a time when existing projects are already in trouble.

Trump issues a new permit for the Keystone XL pipeline

More than a decade after the project was first proposed, American President Donald Trump issued a new presidential permit for the Keystone XL pipeline, two years after he first approved it. The permit issued replaces one granted in March 2017 and the order is intended speed up development of the pipeline, which would ship crude oil from the oilsands in western Canada to the U.S. Gulf Coast.

In November, federal District Judge Brian Morris blocked the project, claiming the Trump administration had not fully considered potential oil spills and other impacts and ordered a new environmental review.

An appeal filed by the project’s developer, Calgary-based TransCanada, is pending. Russ Girling, TransCanada’s President and CEO said President Trump “has been clear that he wants to create jobs and advance U.S. energy security, and the Keystone XL pipeline does both of those things.” The company said in a statement that Trump’s order “clarifies the national importance of Keystone XL and aims to bring more than 10 years of environmental review to closure” and Keystone XL will create thousands of jobs and deliver crude oil to U.S. refineries “in the safest, most efficient and environmentally sound way.

The Keystone XL was first proposed in 2008 under former President George W. Bush. The pipeline would begin in Alberta and go to Nebraska, where it would join with an existing pipeline to shuttle more than 800,000 barrels a day of crude to terminals on the Gulf Coast. After years of delay, former President Barack Obama rejected the project in 2015.  President Trump reversed that decision soon after taking office in 2017, saying the USD $8 billion project would boost American energy and create jobs. A presidential permit is needed because the project crosses a U.S. border.

TransCanada disputes claims by environmental groups who say the administration had not fully considered potential oil spills and other impacts and that further reviews were needed. In fact, Keystone XL has been studied more than any other pipeline in history. “The environmental reviews are clear: the project can be built and operated in an environmentally sustainable and responsible way,” Mr. Girling said.

Saudi Aramco shows USD $111 billion net profit last year

Ahead of Saudi Aramco issuing its first bonds in international markets, an assessment published by Moody’s Investors Services gave a rare first look into Aramco’s revenue and earnings. The state-owned oil firm’s finances show net profits reached USD $111 billion last year. Revenue hit USD $355.9 billion last year and it produced 10.3 million barrels per day of crude oil in 2018.

In another assessment issued Monday, Fitch Ratings said Aramco posted profits of $224 billion before interest, tax, depreciation, and amortization. The standing places Aramco among the world’s most profitable companies, compared to Apple at USD $60 billion, Royal Dutch Shell at USD $23 billion, and Exxon Mobil at USD $21 billion. The company began as a U.S. venture with a concession for oil rights in Saudi Arabia and was fully acquired by the Saudi government in 1980.

Moody’s said Aramco paid USD $58.2 billion in dividends in 2018 and USD $50.4 billion in 2017. It remains unclear exactly how these dividends are distributed within the Saudi monarchy and its ruling family. Fitch said Aramco accounted for around 70 percent of the Saudi government’s budget revenue between 2015-2017, but it wasn’t immediately clear if that figure included the dividends mentioned by Moody’s.

In anticipation of a partial listing of Aramco on an international exchange, the Saudi government reduced Aramco’s tax rate from 85 percent to 50 percent in 2017. Saudi Arabia is attempting to create new income streams and lessen the government’s dependence on oil for revenue.

Ellen Wald, President of Transversal Consulting and the author of “Saudi Inc,” a book about Aramco’s corporate history, said “I would say that this tells us that Aramco is worth at least one trillion dollars.” King Salman and his son, Crown Prince Mohammed bin Salman, have taken a much more active role in controlling various power centres in the kingdom, including Aramco.

Aramco said it will start to meet with investors about selling its bonds which, if issued, would be priced in dollars and traded on the London Stock Exchange. The bonds are expected to help pay for Aramco’s USD $69 billion acquisition of majority shares in Saudi petrochemical firm SABIC from the kingdom’s sovereign wealth fund.

Fitch said its conservative forecasts show Saudi Aramco’s net debt rising to around $35 billion by 2021, after incorporating the SABIC transaction. The USD $69 billion deal with SABIC pumps capital into the Public Investment Fund, which is overseen by the crown prince. Prince Mohammed has transformed the fund in order to back major development projects throughout the kingdom amid delays to an initial public offering of Aramco, which he’d touted as a way to raise capital for the PIF’s projects.

The deal was struck after the crown prince’s early efforts at attracting Western investors for his social and economic transformation plans suffered a setback following the killing of Washington Post columnist Jamal Khashoggi by Saudi agents inside the country’s consulate in Istanbul last year.

What is the west so upset about? Well, there’s this…

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Instead of raining blows upon people’s heads with yet another diatribe about how Canada’s petroleum sector is being disadvantaged, it’s time for something a little different, to explain to mystified Canadians just why feeling are running a little high out west. Yes, we see the news, we hear that Canada is warming faster than ever. Yes, we know the world is gravely concerned about climate change. We hear that, and the calls to do better. But the world continues to consume more and more petroleum products, for better or worse, and to pretend otherwise is unhelpful. Almost all of you, and us, are in that boat, with the size of our lifestyle footprints. What is irksome then, among other things, is the level to which things are taken for granted. So it’s quiz time!

How’s the oxygen today? 
How’s the food supply today? Going to be able to find enough to eat and/or feed the family?
How’s the fuel supply today? Is there enough heat for your building? Enough jet fuel for your flight?

These are all things taken for granted by everyone. No matter what anyone says, we require all three for the modern life we lead. But we don’t really think about any of them.

Some of you of the more pugnacious variety might ask: How dare I compare life-giving food with planet-killing fossil fuels? Well, depending on where you sit in the reality-awareness spectrum, a better question might be: how dare you not?

Odd as it seems, those questions strike at the heart of the tense mood in the west. Some will think Canada’s petroleum sector is in a bad state because it fears for its existence, and people are just worried about jobs. For some that probably true, as with any industry in a downward spiral. Some think the west is a spoiled brat, used to having it all, upset that it doesn’t anymore.

But it is far more than that. There is an overarching feeling that a vital industry, one we can’t live without, is being declared obsolete by people who spend zero time thinking about it.

Sometimes it is useful to listen to people that know what they are talking about, and hear their frustrations. When I go to my doctor, I can hear the frustration in her voice when talking about people who refuse to stretch or exercise. She’s not upset for business reasons; she is frustrated because she can see how people throw away their lives in a downward spiral of inactivity. She knows that because that is her business.

When you hear an oil or gas professional say something like we really need to be able to get products to end users, there is a reason for that. Again, if you are so inclined you can say it is all self-interest, but that attitude is the cross you must bear each day. No industry person I know wants to see people freeze to death in winter, as they would without natural gas. Many voice the opinion that shutting in pipelines is the only way to get people’s attention, and there is likely some truth to that. But no one wants to do it out of apathy or just to make more money; it seems like a very Russian thing to do (Russia did exactly that, to Europe, a few years ago in the dead of winter).

You, the people that don’t care to understand how your buildings are heated or how food gets in your mouth or how every single object within reach is brought to you by petroleum, you who believe that fossil fuels don’t matter because renewables are here, you have been duped by localized enthusiasts that think minor success stories are scalable to global energy reinvention. You are blasted with fear messages, like how Canada is warming at 3x the global average, by people who have no comment on what comparably large slice of the world must be warming at only 1/3 the global average (because that’s how averages work).

Look around you. Look at the endless infrastructure that enables the way we live. Open your eyes to boring heat sources, to transportation systems, to how it all works. Try to grasp that scale, and then think of consequences. Want to get rid of fossil fuels in a decade? Then think of, as but one small example, what the resulting destruction of the tourist industry would bring to…everywhere. Think of every resort that relies on people flying in, every Caribbean destination, every Parisian tourist trap, every ski resort, every one of them around the globe that would have their business decimated. Think of the upheaval in that industry alone.

Oh, that’s alarmist you say? Well what do you think would happen? What would replace that necessary air travel in a dozen years? How long does it take to certify a new jet engine that runs on conventional jet fuel, never mind one that would run on something that doesn’t even exist yet in commercial quantities? It would take probably a decade to develop that technology, let alone make it dominant. There is no substitute for fuels and lubricants and all the other million uses of petroleum. 

People in the energy business are aware of all this stuff because it is part of their business. When we go on a holiday and see the plane filling up, many of us know that jet fuel is a cousin to diesel, we know where it comes from, and we know what it takes to get the fuel there safely and consistently. Do you think about that stuff, all you people wondering what all the fuss is about in Canada’s oil patch? 

Do you think about what a violently large infusion of power from a hundred solar installations does to the stability of an electrical system not designed for that? Do you think of what it would take for that electrical system to be reconfigured to accept not a hundred but a thousand such installations, at the same time that activists demand the demolition of a century’s worth of petroleum infrastructure? 

Do you think that when you read one of the countless articles about how “solar power is now price competitive with natural gas” or that battery storage costs have fallen by 35 percent or whatever, do you think about what that actually means? Do you think it means the functionality now exists to rewire the energy world simply because one component out of a hundred is now cheaper? Do you realize that, regardless of the direness of warnings, certain “renewable pathways” cannot be rushed through, they just can’t, particularly with global fossil fuel consumption continuing to rise? Do you think that maybe any talk about changing the world’s energy systems should start with those who currently make it work, rather than ridiculing and sidelining them because of what Big Oil did 50 years ago? Do you think starving the existing and necessary business of capital reduces consumption?

Do you think that building anything is easy? Do you know how hard it can be to build new power lines or wind farms or solar installations on a large scale, never mind anything to do with petroleum? Do you have any idea what that scale would be to replace fossil fuels? Do you have any idea what the impact would be on wildlife or species at risk or protected habitats or the foulest beast of all, the NIMBYist, to do that?

Canada’s energy industry thinks of all those things because providing energy is what it does, as petroleum sources are exhausted and new ones developed. That is the job and all those factors need to be understood. To acknowledge reality is not necessarily to resist change. When building infrastructure, a “can do” attitude doesn’t mean you can “do anything.”

And there is a flip side to that coin also. When people vilify the petroleum industry, maybe they should consider that it largely does not consist of a back-room dealing, transnational, Big Oil industrial-complex machine. It is made up of a great many people from all over, who are well aware that times are changing.

Do you know that we know that mistakes have been made in the oil patch in the past? Do you know that we know that there is an environmental footprint to finding, developing, producing, transporting and, especially, consuming fossil fuels, that needs to be minimized? Do you know that we know that in a perfect world, cheap reliable energy would come from purely green sources? Do you know that, because our lives are centered on energy, we are well aware of just how far away that world is? Do you think that we don’t know the world is changing, but that we also know that you don’t build a skyscraper with a pile of bamboo and boundless enthusiasm? Do we not need a much bigger plan that deals with energy first, and leaves social justice to the dank pits of politics?

Wow, sorry, that’s a lot of questions. I tried answering them all myself and only got 68%. Good luck with the quiz, and may you come out just a little bit less of a petroleum basher.


About the Author

Terry Etam is an independent senior consultant for small and midsize oil and gas companies. His website Public Energy Number One is dedicated to energy education and he is the author of The End of Fossil Fuel Insanity.

UCP poll shows half of Albertans support independence from Canada over energy assaults

Two weeks into Alberta’s provincial election, the United Conservative Party has released the results of a poll that found “a shocking 50 per cent of Albertans surveyed said they support secession from Canada.” In the news release, UCP leader Jason Kenney said many people in the province support secession from Canada, based on what he calls “a real tension that runs through the hearts of many Albertans.” He said Albertans are proud Canadians, but they will no longer tolerate the rest the country benefiting from the province’s resources while trying to hold back its economy.

The poll results follow the British Columbia government’s effort to pass legislation that would impact the expansion of the Trans Mountain pipeline, which runs from Edmonton to Vancouver.

In light of the federal government’s Bill C-69, which would change how projects such as oil and gas pipelines are reviewed, Mr. Kenney said Alberta is “under assault from other governments in Canada” and “We are by far the biggest contributor to the federation. We have always played by the rules, paid our taxes, and produced wealth for other Canadians. And it’s why we need to stand up and fight for a fair deal, a new deal, for Alberta in the Canadian federation.”

He had earlier pledged to hold a referendum on federal equalization payments if his party wins the provincial election on April 16. Last week, Mr. Kenney said a UCP government would hold a referendum on equalization on Oct. 18, 2021 — the same date as the next municipal elections in Alberta — if there is still no progress on pipelines.

Mr. Kenney further said that if he becomes Premier, he will call for Ottawa to cut federal income tax for Albertans equal to the amount of the Canada Health Transfer and Canada Social Transfer, as this would allow Alberta to raise its tax rates to give Albertans more control over their own money.

Further, he pledged a UCP government would seek to form federal and provincial agreement on resource corridors to create pre-approved, guaranteed land corridors for Canadian products.

Who's funding you?

Raise any sort of question about climate science or policy and that’s the first question you’ll be asked, in a snarky tone. (Or possibly the second after “Don’t you idiots know every scientist not bought by oil companies says manmade global warming is an urgent crisis?”) But in the Daily Telegraph, Jillian Ambrose asks who’s funding Tempus Energy, the little energy-conservation software startup with amazingly deep pockets for climate litigation. The answer: You don’t need to see where our money comes from, and you can’t. It seems money only taints one side here.

Tempus Energy’s big coup was to challenge the European Union over its approval of subsidies to fossil fuel companies during the transition to windmills and solar. And they won big in the European Court of Justice, throwing British energy policy into chaos and arguably underlining the desirability of Brexit to restore the ability to make key policy decisions in the Mother of Parliaments at Westminster not the Mother of Bureaucracy in Brussels.

The British government actually said it would carry on regardless. So Tempus promptly charged into the UK High Court with a major Greenpeace-connected law firm in tow. And, says Ambrose, “The industry has largely looked on in quiet bafflement; how can a struggling start-up wield this kind of power over a cornerstone policy?”

It turns out “this plucky underdog is backed by a cast of secretive shareholders and anonymous donors guarded by confidentiality agreements. Under EU rules, pressure groups and campaigners cannot challenge state-aid laws but there is nothing to stop companies from doing so while using their funds.”

It’s exactly the sort of arrangement progressives would denounce if it were used to fund, say, a conservative political party or political action committee. But when it comes to greens, there’s nothing to see here folks, move along. Exactly as was the case over the massively foreign-funded campaign to “landlock” Alberta’s oil sands until independent researcher Vivian Krause started asking questions about who was funding it and why. (For instance why these big American foundations aren’t trying to landlock American oil, just ours.)

Tempus is run by its founder Sara Bell, a successful software engineer who has said “The list of what I am not prepared to do to solve climate change is minuscule. Never underestimate how much ruthless determination makes up for a lack of cash”. But evidently she doesn’t lack cash. We just don’t know whose.

Tempus, the Telegraph notes, is required by British law “to publish a public register of its shareholders on Companies House. Unusually though, many of its 280 investors are listed by their surname only. John Coomber, the former chief executive of insurance giant Swiss Re, is understood to be an investor but is listed only as ‘Coomber’, for example.” Oh well. At least his name isn’t “Smith”.

Or “Outis”, like the shadowy environmental groups behind the litigation. “Unusually for climate campaigners, they have also requested anonymity, according to Bell. ‘These supporters are not Tempus shareholders and they wish, and have the right, to remain anonymous. We signed a confidentiality agreement with them and I would be in breach of that agreement if I disclosed their names,’ she says.”

Let’s hope it’s not, say, Kremlin money looking to undermine Western Europe’s independence by making them beholden to Russian natural gas. But no. Perish the thought.

It’s only skeptics who take money for dirty motives. No matter how much gravy the government train delivers to researchers who support alarmism, or climate foundations funnel to opponents of pipelines, there isn’t the slightest mercenary taint. But let the Climate Discussion Nexus pass the hat for $20 and the jeering starts.

Despite which, please visit our contribution page and make a pledge. We have a lot of work to do, and our adversaries have deep dark pockets.


About the Author

The Climate Discussion Nexus was formed in 2018 by a group of citizens concerned about expensive, ill-planned energy policies intended to reduce carbon dioxide emissions. It offers a forum for more open debate on all aspects of climate change, especially better use of scientific information in public discussion and policy formation.

97 percent wrong

If you dare raise questions about climate change, as we’re doing at the Climate Discussion Nexus, somebody will immediately try to clobber you with the claim that 97% of world scientists agree that it’s an urgent manmade crisis, unlike you idiots. But the thing is, they don’t. It’s a made-up number… and if someone is that smugly and aggressively wrong about something that important you wonder what else they don’t know.

Many people assume the 97% figure is solid enough to be used as a club. After all, Barack Obama tweeted it: “Ninety-seven percent of scientists agree: #climate change is real, manmade and dangerous.” And if you can’t trust politicians, who can you trust? Hey, wait a minute.

It’s especially odd that journalists keep repeating it without ever looking at it sideways. When I joined the profession, way back when newspapers made money, there was a newsroom maxim “If your mother says she loves you, check it out.” So before ringing endless changes on “experts agree” you’d think they’d make a few phone calls, or Google, to figure out where it came from.

Especially because this number doesn’t just look funny, it smells funny. There are millions of scientists in the world, most of whom don’t work on climate change. Who supposedly surveyed them? When? How? And what did they say?

Astoundingly, the 97% number comes from a handful of methodologically feeble studies beginning with historian of science Naomi Oreskes in 2004 claiming she’d looked at 928 articles about climate change in scientific journals and 75 percent of them endorsed the “consensus view” that “Earth’s climate is being affected by human activities” while none directly disputed it. Which you’ll notice says nothing about it being dangerous or manmade. Nor did it claim 97% agreement. (And even her 75% didn’t withstand subsequent scrutiny.)

Five years later, two University of Illinois researchers sent an online survey to over 10,000 Earth scientists asking two simple questions: Did they agreed that global temperatures had risen in the last couple of centuries and did they think human activity was a significant contributing factor. They got 3,146 responses, so at best about 30% even of that sample. Of those 90 percent said yes to the first question and 82 percent yes to the second. Again no manmade, no dangerous, and where’s the 97%?

Well, the researchers discarded all but 77 responses from people who self-described as climate experts, of whom 75 said yes to the second question. And 75 out of 77 is 97%. But there’s still no mention of danger and even this very skewed sample only said our influence was significant. Not overwhelming. Not even dominant.
Another survey by Australian researchers in 2013 claimed to have looked at 12,000 scientific papers on climate change and found 97% agreement… that greenhouse gases had some impact on global warming. Again not dangerous and not manmade. Also, it turned out, not true. Nearly two-thirds of the papers said nothing on the consensus. Of the 34% that did, 33% endorsed it. Which again is 97% but only that we’ve had some impact. Which could mean as little as accepting the “urban heat island” effect. A far better question would be how many of the studies said we caused most of it.

Amazingly, we know. Buried deep in the paper is the figure: 64. Not 64%. 64 papers. Out of nearly 12,000. Half a percent, rather short of 97%. And it gets worse. Climatologist David Legates actually read those 64 papers and found that 23 didn’t say what the Australian team claimed. The only danger here is to scientific integrity.
There’s more where that came from. But not much. Just a handful of papers that show considerable agreement on the uncontroversial claims that the Earth has warmed since Queen Victoria reigned and that humans had some impact. No manmade, and no crisis… except people yelling insults about “settled science” on the basis of frankly rather obvious statistical trickery.

If politicians and journalist are that carelessly and sanctimoniously wrong about a central claim in the dispute, it’s fair to ask what else they’ve got wrong. And that’s exactly what we’re doing at the Climate Discussion Nexus.


About the Author

Dr. John Robson is Executive Director of Climate Discussion Nexus. He holds a Ph.D. in American History from the University of Texas at Austin and has worked as a historian, policy analyst, journalist and documentary filmmaker for three decades. He has been examining the climate change issue for many years, including both the science and the policy debates.

Environmental crotch-kicking is the latest thing, and it will not end where we think it will

“There’s no more complex, messy, community-wide argument…political discourse is now a formulaic matter of preaching to one’s own choir and demonizing the opposition. Since the truth is way, way more gray and complicated than any one ideology can capture, the whole thing seems to me not just stupid but stupefying…how can any of this possibly help me, the average citizen, how even to conceive for myself what the policy’s outlines should be? …it’s childish, and totally unconducive to hard thought, give and take, compromise, and the ability of grown-ups to function in any kind of community.”

- The unfortunately dead David Foster Wallace

The above commentary was penned after Wallace accompanied a US presidential candidate on tour during a campaign. Sadly, it is irrelevant to identify which party the candidate represented, because as Wallace notes, it doesn’t matter.

In attempting to pursue some sort of energy dialogue I wrote a book, and publicizing the book requires, well, interfacing with the public. Some forms of this have been fantastic and gratifying, such as a book launch event (thanks attendees), while others have left me feeling like I’ve been projectile-vomited on.

Twitter would be a prime example of the latter. Holy hell. That platform is some sort of inverted-quality pyramid; in many arenas, the ablest become spokespeople, but on Twitter, the nastiest and foulest seem to rise to the top. “Scientists” shout insults at challengers, their smugly-wielded academic pedigrees utterly devoid of any of the genuine humility that true scientists exude, and “my-peer-review-is-better-than-your-peer-review” child-like condescension abounds. Thoughtful questions or comments that even hint at opposition to special interest groups invites an instant onslaught of juvenile and horrifyingly brainless counterattacks. Originally possibly sensible raisons d’ etre are abandoned in mudslinging contests; for example, “Greenpeace” is neither green nor peaceful, nor are any of their anarchic and irresponsible and once-principled counterparts. But of course, in response to their calculated disinformation, many take the bait and rise up to slag any green developments, mocking and amplifying any shortcoming of wind turbines or solar panels, or blocking EV charging spots with big sooty trucks. The whole thing is obscene. And we’re all guilty by degrees; I’ve found my fingers flying across the keyboard in response to something so profoundly stupid that it can’t be left alone, and then I’m just another pitchfork in the crowd.

But that’s where we are. Those are the arenas where the war is played out by thugs who use modern communication platforms as weapons, as bludgeoning instruments. In politics, a weary resignation defines the general public. Only a demented few occupy the fringes of either spectrum, and most people have a variety of positions on a variety of topics that defy classification on purely ideological lines. Sometimes policies appear to be bastards, with leftish-leaning programs coming from right-wing administrations, and vice-versa. And of course Donald Trump transcends all classification.

That’s all well and good for the endless back and forth of politics, where nothing is ever resolved. But that cerebral black hole has now engulfed energy, and that’s not funny. Energy is life or death. Cheap energy has allowed 7 billion people to coexist at the same time, definitely with a heavy environmental footprint, but that is the price we pay as we rush around the world saving lives in any way we can. And now the tidal wave of social commentary has lasered in on up-ending the existing energy system, right now.

We are playing with fire like we can’t imagine in trying to rush through an energy transition without understanding the consequences. And even uttering that simple sentence in social media circles earns one the title of “fossil fuel apologist”, and a corresponding avalanche of derision from an army of well-rehearsed troglodytes.

Said army can’t hear anything with their fingers in their ears, but it’s worth saying anyway. Here’s what’s going to happen with the current attempts to demolish the petroleum industry in a short time frame: The global initiative to starve the hydrocarbon industry of capital is working, but consumption refuses to go down (in fact it continues to increase). The lack of capital will lead to a shortage of supply (the US shale basins are having their day in the sun, but won’t forever and are still a fraction of the global market). A shortage of supply will lead to price spikes and a rush of production, from the very places that any environmentalist should not want it to come from – those that are immune to public environmental pressure.

But before petroleum production can rise enough to meet demand, those higher oil prices will have a devastating impact on world economies, because high oil prices are like a tax on virtually everything.

So what, you might think, the world has survived such before. One crucial difference this time around though: the world is now in debt to the tune of $240 trillion. Yes, trillion. Central banks have been trying for a decade to kickstart economic growth with extremely low interest rates, which has sort of worked, but has also generated this mountain of ever growing debt, and with it a startlingly fragile global economy.

A new breed of economist has brought forward the concept of MMT, Modern Monetary Theory, which postulates that debt levels really don’t matter as long as countries can keep printing more money. This tactic rescued the world from the financial meltdown of 2008, and, as shell-shocked economists realized that it actually seems to have worked, some now think we can do it forever. Are they right? I have no idea, but I do know that it is one hell of a gamble to think that governments can perpetuate ever-higher borrowing and simply print their way out. 

As an energy industry then, we have to weather this onslaught of negativity, and think like grownups about the day when fossil fuels no longer dominate. The forces of madness in the world are huge and accelerating, and appear overwhelming, but maybe they’re not. If they succeed in hamstringing the global petroleum business, the second and third order consequences may make western Canadian petroleum an asset like we can scarcely believe. A world dying for reliable, safe petroleum supplies might at some point see the value in what Canada offers.

Ah, that’s it! That’s how I’ll split those unsplittable skulls on Twitter. Scuse me, while I kiss the sky…


About the Author

Terry Etam is an independent senior consultant for small and midsize oil and gas companies. His website Public Energy Number One is dedicated to energy education and he is the author of The End of Fossil Fuel Insanity.

Why Ministerial Discretion Does Not Belong in Bill C-69

On March 22, 2019, my Board Chairman and I represented the Petroleum Services Association of Canada (PSAC) before the Standing Senate Committee on Energy, the Environment and Natural Resources.  We were testifying on behalf of PSAC Member companies, offering their views and perspectives on Bill C-69, which would enact the Impact Assessment Act and the Canadian Energy Regulator Act, as well as amend the Navigation Protection Act and a number of other acts. In short, Bill C-69 is the federal government’s attempt to impose new “environmental assessment” measures on Canada’s resource sector.  It has been widely criticized as likely to further delay and discourage investment in Canadian pipelines, mines and other resource infrastructure. Its “green agenda” threatens to trump economic considerations while adding new layers of bureaucracy, higher costs, longer delays and more uncertainty on Canada’s resource sector.

In preparing to appear before the Committee, we struggled with what we could present that hadn’t already been said many times before by other parties as deeply distressed as we are with the disastrous consequences this bill portends.  Nevertheless, we felt it necessary to reiterate the issues of deep concern that had also come to the fore in our own assessment of the bill’s likely impact.

We pointed out that what began in 2014 as a downturn due to low commodity prices, a situation outside of the control of a federal or provincial government, has escalated into a dramatic flight of capital from Canada in response to factors that are within the control of governments.  These include competitiveness, regulatory uncertainty, the tanker moratorium, the clean fuel standard, methane emissions reduction regulations, carbon taxes and, finally, Bill C-69.  At a time when investors are looking for regulatory certainty and firm timelines, Bill C-69 in its current form threatens the opposite. Canada will continue to sacrifice billions of dollars of economic prosperity and growth even as jobs continue their flight to other countries.

One of the biggest problems with Bill C-69 is that it would give the federal Environment Minister added discretionary power on deciding whether a project goes ahead or not. This politicization of the process has been roundly criticized by numerous thoughtful commentators, including the four Atlantic Premiers (including three Liberals) who told the Prime Minister that Bill C-69 in its current form “will not meet the dual objectives of environmental protection and economic growth”.  They went on to say that a particular concern is that the bill “places final decision-making power in the hands of the Minister or Governor in Council and provides the opportunity to veto the results of thorough scientific assessment and review of evidence”.

Telling the Committee that PSAC shares this concern added nothing new to the debate.  What is new is a key lesson coming out of the ongoing SNC-Lavalin saga.

In that regard, we reminded the Committee that one of the purposes of administrative law is to take political decisions out of the hands of politicians and place it in the hands of subject experts. That’s what we seek: subject experts able to move the process forward in an objective manner.

Legislators have the key responsibility of establishing the parameters within which such quasi-judicial administrative bodies exercise their authority. They then need to stand out of the way and let their handiwork prove itself.  The problem with politicizing the process by adding a ministerial override is that you will invariably have other ministers, MPs, and others with agendas lobbying the minister in question to exercise his or her discretion in a certain way. The clear danger is that issues of national interest may be forced to take a back seat to those of political interest.

Our advice to the Committee?  If you don’t want the PMO, or ministers, or others exercising undue pressure upon an individual minister, then take away that possibility.  The process must not be politicized.

Let’s take to heart what the PM himself said about the SNC-Lavalin affair: “We will stand up and defend and create jobs, and we will always defend our institutions and rule of law.”  By all means, create new and better institutions and laws as they deal with resource development, but then stand out of the way and let them work with certainty, objectivity and timeliness to restore investor confidence and bring back those jobs for Canadians.


About the Author

Gary G. Mar, Q.C is President and CEO of the Petroleum Services Association of Canada (PSAC). He is a former Alberta Cabinet Minister and the province’s Representative in Washington, D.C. and Asia.

Japan’s exit from nuclear exports leaves the field open to Russia and China

The possible withdrawal of Japanese conglomerates from nuclear export projects in Britain and Turkey would leave the nuclear newbuild industry open to Russian and Chinese state-owned companies as Western private firms struggle to compete.

Mitsubishi Heavy Industries (MHI) has effectively abandoned their Sinop nuclear project in Turkey as cost estimates had nearly doubled to around USD $44 billion. The Sinop deal was signed in 2013 between Turkish leader Tayyip Erdogan and Japan’s Shinzo Abe and had been too ambitious. The project, earmarked for a country with no nuclear tradition, would have been the first to use the untested Atmea reactor developed by MHI and France’s Areva. Chief Executive Shunichi Miyanaga said this month it was up to the Turkish and Japanese governments to decide on the project, adding that Turkey was examining a feasibility study MHI had submitted.

Hitachi is also considering whether to scrap its Horizon nuclear project in Britain as cost estimates had risen, while Toshiba liquidated its UK project this year. Horizon said it had been in talks with the UK government since June, when business minister Greg Clark said Britain may invest directly in the project, and nuclear cooperation will be on the agenda of Prime Minister Abe’s visit to Britain next month. Hitachi hopes a group of Japanese investors and Britain each will take a third of the equity portion of the project. A company source said the project would be financed one third by equity, two thirds by debt. The company said it will make a final decision next year.

With Japan’s export prospects severely curtailed, the global nuclear market is now essentially in the hands of Russia’s Rosatom and two Chinese reactor builders. Russia and China are already facing off in Latin America, where a Chinese deal to build a reactor in Argentina seems to be unravelling and Russia is muscling in. An industry source familiar with the situation said China-Argentina talks had stalled and that “Something fell apart. It is not an accident that the Russians are there now.” A Beijing-based nuclear industry consultant said it was significant that Chinese President Xi Jinping did not mention nuclear in a recent speech about China-Argentina cooperation.

Meanwhile, Reuters reported that the U.S. Department of Energy’s nuclear security office is developing a project to help other countries handle nuclear waste, an effort to keep the United States competitive against global rivals in disposal technology.

The National Nuclear Security Administration is considering helping other countries by using technologies that could involve techniques such as crushing, heating, and sending a current through the waste to reduce its volume. The machinery would be encased in a “black box” the size of a shipping container and sent to other countries with nuclear energy programs, but be owned and operated by the U.S.

The U.S. has struggled to find a solution for its own mounting nuclear waste inventories amid political opposition to a permanent dump site in Nevada, proposed decades ago, and concerns about the cost and security of recycling the waste back into fuel.