Energy News

EU nationalists refuse carbon elimination by 2050

The nationalist and Eurosceptic governments of Poland, the Czech Republic, Hungary and Estonia have blocked a European Union (EU) proposal to slash the bloc’s carbon emissions to net zero by 2050. At a council summit on June 20, leaders of the EU’s 28 member states agreed instead to start working on “a transition to a climate-neutral EU.”

Though the majority of the EU nations wanted a much more robust version of the plan, where earlier proposals envisioned a strict road map of how to reach net zero emissions and a hard 2050 deadline, such deal would have impacted the lives of more than 500 million people living in the EU. The nationalist governments are wary of such a plan’s negative impact on jobs, industries, and quality of life. These central and eastern European states are particularly dependent on nuclear power and coal for energy.

A weakened version of the plan was also too strict for the group of Eastern European countries. The veto votes from Poland, the Czech Republic, Hungary, and Estonia meant the proposed 2050 emissions target became a mere footnote. Sending a message to investors and business, 24 of the EU leaders agreed to the statement: “For a large majority of member states, climate neutrality must be achieved by 2050."

EU leaders called on the European Investment Bank (EIB) to increase climate funding and acknowledged vast differences in the continent’s energy mix. Polish Prime Minister Mateusz Morawiecki pushed back to say, “We need concrete things on the table. What additional money could be allotted to Poland so that we do not end up in an offside trap?

France and Germany, who are imposing high carbon taxes on their respective countries – resulting in weekly Yellow Vest protests for the past eight months in France – had led the push for the EU to set the ambitious new climate goal for 2050, ahead of United Nations (UN) climate talks in September, which American President Donald Trump will not be attending.

Canada’s Senate passes Bill C-69 and Bill C-48

This week, Canadian Senators passed two controversial energy bills as it prepared to adjourn for the summer and the upcoming fall election. Bill C-69, the Impact Assessment Act, sets up a new authority to assess industrial projects including pipelines, mines, and inter-provincial highways, for their effects on public health, the environment and the economy. Bill C-48, the Oil Tanker Moratorium Act, formalizes a moratorium on oil tanker traffic of a certain size in waters from the northern tip of Vancouver Island to the province’s border with Alaska.

CEO of the Canadian Energy Pipeline Association (CEPA) Chris Bloomer welcomed the earlier approval of the Trans Mountain pipeline expansion but said the industry is facing broader problems and “The potential for new major pipeline development in Canada is bleak with the Senate’s passing of Bill C-69. Canada is sending mixed messages that will send critical investment capital elsewhere.”

Both bills passed on Thursday and were given Royal Assent to become law on Friday. Bill C-69 passed by a vote of 57 to 37. Bill C-48 passed by a vote of 49 to 46, with one abstaining.

On June 12, Energy Ministers from Alberta, Saskatchewan, and Ontario said many of the amendments that were struck down would have made Bill C-69 more palatable for the resource sector. They wanted the amendments taken as a complete package. Conservative Senator Richard Neufeld called C-69 “one of the most toxic, polarizing and divisive bills” he has encountered in his ten years as a Senator. Alberta Premier Jason Kenney tweeted, "This means the No More Pipelines Law will become law. A bad day for our economy, and the Canadian federation."

Prime Minister Justin Trudeau responded by saying the legislation is necessary to get energy projects built in Canada. “The conservatives still seem to think that the way to get big projects built is to ignore Indigenous peoples and ignore environmental concerns. That didn’t work for 10 years under Stephen Harper, and it’s certainly not going to work now. That’s why we had to change the process.”

At the Bloomberg Canadian Capital Markets conference in London, co-founder of Grafton Asset Management Geeta Sankappanavar said Canada risks becoming a “banana republic” for its restrictive energy policy and failure to attract new investment into the sector. She said, “We have had basically signs on our energy industry that Canada is closed for business. Today we are in danger of becoming unfortunately a little bit like a banana republic on the energy side.

Ms. Sankappanavar’s firm has raised and deployed CAD $1 billion in the Alberta oil patch and blames carbon taxes, falling oil prices, and increased regulatory scrutiny under new federal government rules for contributing to what she calls an “awful” malaise in the sector. She added, “It is a very, very dark and bleak place. We have had significant regulatory and political challenges in our industry. We are wasting our time” and at risk of becoming “violinists on the Titanic.” Additionally, Ms. Sankappanavar said, “Canada has a brand issue,” and the industry also needs to do a better job promoting the progress it’s made in reducing relative emissions and investing in renewable energy.

Canadian government approves Trans Canada pipeline expansion

On Tuesday, the Canadian government approved expansion of the 66-year-old Trans Canada crude oil pipeline that it bought last year for CAD $4.5 billion from Kinder Morgan Canada. Hoping to appease energy supporters ahead of the October federal election, the Liberals angered environmental activists despite also declaring a climate emergency this week.

The Liberal government previously approved the expansion in 2016 but that decision was overturned last year after a court ruled the government had not adequately consulted indigenous groups. Though Ottawa expects legal challenges to this latest approval, construction will resume shortly. This is expected to take two and a half years and could be in service by the second half of 2022.

The project triples Trans Mountain’s capacity to carry 890,000 barrels per day from Alberta’s oil sands to British Columbia’s Pacific coast and alleviates congestion on existing pipelines and diversify exports away from the United States. Western Canada’s oil production has expanded faster than pipeline capacity, causing a glut of crude to build up.

Prime Minister Justin Trudeau has been under intense pressure from both western Canadian Premiers and energy supporters who accuse him of doing too little for the oil industry, and from environmental groups who wrongly see the oilsands as a highly polluting source of crude production.

Trans Mountain still requires various permits and route approvals in British Columbia, where that province’s far-left New Democratic Party government opposes the project. BC Premier John Horgan said his government was “disappointed” with the federal government’s decision but would not unduly withhold construction permits. However, the BC government plans to appeal a recent BC Appeal Court ruling that the provincial government cannot restrict the flow of oil on pipelines that cross provincial boundaries.

The Canadian Energy Pipeline Association said in a statement that the decision will help create billions in economic benefits across Canada as it allows Canadian oil to reach higher-paying international markets. Alberta Premier Jason Kenney, a frequent critic of PM Trudeau, said, “This is now a test for Canada to demonstrate to the rest of the world we are a safe place in which to invest. We will measure success not by today’s decision but by the beginning of actual construction and more importantly by the completion of the pipeline.

The pipeline is a vital conduit to help Canadian oil reach higher-priced international markets. According to a National Energy Board filing, eighty percent of the expanded pipeline’s total capacity has been contracted to companies including Suncor Energy, Canadian Natural Resources, and Exxon-owned Imperial Oil. Numerous indigenous groups have said they are interested in investing in it.

Trans Mountain has stockpiled about 30 percent of the pipe it needs and would resume construction where it left off a year ago, at the Westridge Marine Terminal in Burnaby, BC, and between Edmonton and Jasper, Alberta.

Governments rapidly return to coal

With global coal production up 4.3 percent and consumption up 1.4 percent, the fastest rate of increase in five years, a major report by energy giant BP said the world was returning to coal following three years of falling consumption. “This strength was concentrated in Asia, with India and China together accounting for the vast majority of the gains in both consumption and production. As a result, the peak in global coal consumption which many had thought had occurred in 2013 now looks less certain. Another couple of years of increases close to that seen last year would take global consumption (of coal) comfortably above 2013 levels,” the BP report said.

BP’s highly respected annual report, which examines trends in energy demand and use, including from renewables, said last year’s global energy demand and carbon emissions from energy use had grown at its fastest rate since 2010-11. The report notes that massive investments in renewable energy were needed but would not be enough to satisfy ­increasing demands for power, most notably in China and India. Global greenhouse gas emissions overall were up 2 percent last year as a result. Most of the increase in demand for power came from China, India, and the United States – where most notably, unusually hot and cold weather led to a spike in demand for heating and cooling.

Even if renewables are growing at truly exceptional rates, the pace of growth of power demand, particularly in developing Asia, limits the pace at which the power sector can decarbonise,” the report said, and that building more renewable sources of energy could not keep pace with rising demand.

In Australia, Queensland's environment department has signed off on a plan to manage groundwater on and around Adani’s controversial mega coal mine of Galilee Basin, which the Queensland government has issued final approval for construction to begin. "You could be thinking from today, in two years' time, people should be expecting we have exported our first piece of coal," Adani Chief Executive Lucas Dow told reporters in Brisbane.

In the face of eco-activist opposition, Queenland’s State Environment Minister Leeanne Enoch said the decision was made solely by her department and that Cabinet members had nothing to do with it; “It has been made by the regulator and is backed by expert advice," she said.

State Oppostion leader Deb Frecklington labelled the decision a win for Queenslanders who need a job, but says it's just the beginning as she wants the Galilee Basin to be opened up to more projects, though won't soften the state's environmental laws to make the approvals process easier if elected next year. "You can't just come into Queensland and start digging up coal, it is an extremely rigorous and difficult process as it should be," she said.

Regional leaders were glad a decision had been finally made and were now waiting for Adani to follow through with jobs. LNP mines spokesman Dale Last says 19,000 people have applied for the 1500 direct jobs Adani says the project will create during construction.

Alberta invests in First Nations energy projects

This fall, Alberta’s new United Conservative government will bring in legislation to create a Crown corporation, called the Indigenous Opportunities Corporation, supported by CAD $1 billion to help First Nations invest in major energy projects such as pipelines.

Indigenous Relations Minister Rick Wilson will consult First Nations groups over the summer to better inform the legislation when it comes forward and the board of the Crown corporation will have First Nations representation.

During the election campaign, Premier Jason Kenney had promised that, should he win, his government would fund the corporation with CAD $24 million over the first four years to give legal, technical, and financial advice to First Nations looking to initiate or participate in energy projects, as well as CAD $1 billion to provide financial backstops and loan guarantees.

At his announcement, Premier Kenney said the corporation addresses a historic imbalance, adding that for too long some First Nations did not have the financial means to get commercial rates of credit. "(Some) have not had the same advantages. They don't have the balance sheets quite frankly to be partners in projects like TMX (Trans Mountain pipeline expansion). The idea of the Indigenous Opportunities Corporation is to help them get that financial capacity," he said.

Grand Chief of the Treaty 6 Nations Wilton Littlechild said the discussion was about growing the economy, but not development for its own sake. "We also heard concerns, of course, about is it possible to have sustainable development and promote respect for Mother Earth at the same time. From our experience the answer is yes. It's not no to any development or yes to all development. We need to seek a balance, and that's been the approach of those successful First Nations that have been able to capitalize on that opportunity," he said.

Chief Aaron Young of the Stoney Nakoda-Tsuu T'ina Tribal Council said the talks were promising, "We are now at the table where we can come together and solve our own problems and move forward.”

Oil tanker ships attacked near Iran

On Thursday, two oil tankers near the strategic Strait of Hormuz were attacked, prompting the United States Navy to rush to the aid of the vessels in the Gulf of Oman off the coast of Iran, including one that was set ablaze.

The United States blamed Iran and denounced what it called a campaign of “escalating tensions” in a region crucial to global energy supplies. American Secretary of State Mike Pompeo said his country’s assessment of Iran’s involvement was based in part on intelligence as well as the expertise needed for the operation. It was also based on recent incidents in the region that the US also blamed on Iran, including the use of limpet mines, which are designed to be attached magnetically to a ship’s hull, to attack four oil tankers off the nearby Emirati port of Fujairah and the bombing of an oil pipeline in Saudi Arabia by Iranian-backed fighters in May.

Taken as a whole these unprovoked attacks present a clear threat to international peace and security, a blatant assault on the freedom of navigation and an unacceptable campaign of escalating tension by Iran,” Secretary Pompeo said.

Iran has previously used mines against oil tankers, in 1987 and 1988 in the ‘Tanker War where the US Navy escorted ships through the region. The fact that both vessels remained afloat suggested mines may have damaged them. Seniors American officials said the US had photographed an unexploded mine on the side of one of the tankers and that the US will re-evaluate its presence in the region as it considers a plan to provide military escorts for merchant ships.

The ships’ operators offered no immediate explanation on who or what caused the damage against the Norwegian-owned MT Front Altair and the Japanese-owned Kokuka Courageous. Each was loaded with petroleum products. The Japanese-owned tanker, abandoned by its crew, was towed to a port in the United Arab Emirates on Friday, after a Dutch firm said it had been appointed to salvage the ships. The Front Altair burned for hours at sea and its operator Frontline said an explosion was the cause of the fire and its crew of 23 from Russia, the Philippines, and Georgia was safely evacuated to the nearby Hyundai Dubai vessel.

Iran denied being involved in the attacks last month and its Foreign Minister called the timing of the attacks suspicious since Japanese Prime Minister Shinzo Abe was meeting Supreme Leader Ayatollah Ali Khamenei in Tehran.

Following talks between the two leaders on Wednesday, PM Abe said any “accidental conflict” that could be sparked amid heightened between Washington and Tehran must be avoided. A statement published by Ayatollah Khamenei’s website after the meeting suggested a tense exchange between the two. The Ayatollah had reportedly told PM Abe that, “We have no doubt about your good will and seriousness, but … I don’t regard Trump as deserving any exchange of messages,” and that while Iran remains opposed to building atomic weapons, “You should know that if we planned to produce nuclear weapons, America could not do anything.” PM Abe later told journalists that he stressed with Ayatollah Khamenei that President Donald Trump wanted to de-escalate the tensions, and “I frankly told that to Supreme Leader Khamenei as my opinion.”

CEO of the Dubai-based Institute for Near East and Gulf Military Analysis Riad Kahwaji said either the international community could push Washington to ease up on Iran or continued attacks could encourage global pressure against the Islamic Republic. The burden, he said, would fall on Western powers, particularly the United States but including France and Britain, to protect regional waters. “If there was going to be a war ... it will be the international community against Iran. No one wants to slide into a lone war against Iran. I would not be surprised to see the Chinese and Japanese sending ships to escort at least tankers and ships flying their colors,” he said, given their dependence on Gulf oil.

Alberta Premier creates an energy ‘war room’

Alberta’s Premier Jason Kenney has announced the creation of an energy ‘war room’ intended to quickly take on industry opponents and paid activists without government bureaucracy holding them back. During the provincial election campaign, Premier Kenney pledged to combat misinformation in the media about the energy sector and fight back against what he said are foreign-funded interests attacking the industry.

Government communications are by nature a little bureaucratic and tend to be a bit slow moving and risk averse. The energy war room will have a mandate to operate much more nimbly and much more quickly with a higher risk tolerance, quite frankly, than is normally the case for government communications,” he said in his announcement.

The office will be based in Calgary, the province’s energy headquarters, with a CAD $30 million budget funded by the United Conservatives’ large emitters levy and overseen by Energy Minister Sonya Savage. Premier Kenney said he would announce who will be leading the initiative “in the near future.”

Premier Kenney said he hopes to have it up and running by the end of the summer and that it will be staffed by government employees and potentially contractors. The war room’s attention will extend all over the world and the Premier said if the government sees misinformation being spread in “paid, earned and social media” the war room would respond on the information battlefield “in real time.

On Friday, Premier Kenney and Energy Minister Sonya Savage held a round table with several industry leaders and advocacy groups, including the Calgary Chamber of Commerce, Canada Action, The Canadian Association of Petroleum Producers and Energy Citizens for advice on how the war room should work.

The Premier said the creation of the energy war room is necessary since the 24-hour news cycle is a thing of the past and the initiative will be able to work freely beyond government communication limitations, where he says taking hours or days to approve a message won’t cut it. “The news cycle is now basically instantaneous with social media,” he said.

Premier Kenney disagreed that the initiative will only serve to galvanize the environmental groups that it’s meant to target, saying a defensive posture in the past hasn’t worked. He says it will be tough to gauge the war room’s success, but one measure will be whether there is a shift in public opinion about Alberta’s energy industry.

BC Chief said Trans Mountain stake should go to Indigenous owners on route

The Canadian federal government is to make a final decision by June 18 on whether the delayed expansion of the Trans Mountain pipeline can proceed. Finance Minister Bill Morneau previously said the federal government will not negotiate the sale of the pipeline it bought for CAD $4.5 billion last summer until after construction of its proposed expansion is “de-risked,” without explaining what that means.

British Columbia Director Shane Gottfriedson of Project Reconciliation, a First Nations consortium planning to buy a majority stake in the Trans Mountain pipeline, says Ottawa should favour communities along the route when deciding who can make an ownership bid. Mr. Gottfriedson, a former Chief of the Tk’Emlups te Secwepemc First Nation and a former BC regional Chief for the Assembly of First Nations, says the emergence of a rival Alberta Indigenous bidder raises concerns about weakening his group’s all-inclusive bid and that Project Reconciliation’s business model is more “inclusive” because it wants to enlist Indigenous groups from BC, Alberta, and Saskatchewan in its CAD $6.8-billion bid for a 51 percent stake in the pipeline project.

Iron Coalition, an Alberta-based organization co-chaired by Chief Tony Alexis of Alexis Nakota Sioux Nation, just announced details of its intended bid. Iron Coalition says it is the only Alberta group mandated by the Assembly of Treaty Chiefs to pursue the stake and is inviting all First Nations and Metis communities in the province to join in.

On Wednesday. Iron Coalition announced it is inviting First Nations and Metis groups from across Alberta to join its bid team, promising all resulting profits will be split equally among members. Project Reconciliation, on the other hand, is asking for support from Indigenous communities throughout BC, Alberta, and Saskatchewan, and plans to place 80 percent of the cash flow from the pipeline stake into a “sovereign wealth fund” to invest in environmentally friendly projects.

Whispering Pines Indian Band Chief Michael LeBourdais says it makes more sense for his organization, the Western Indigenous Pipeline Group, and Iron Coalition to be owners of the pipeline because Trans Mountain brings oil and refined products from Edmonton to Burnaby, BC and it doesn’t pass through Saskatchewan.

Chief LeBourdais said communities in BC and Alberta are the “title and rights holders” when it comes to the pipeline. “Here’s the difference between us and Project Reconciliation,” he said, “We’re the ones bearing all the risk because the pipe goes through my reserve, goes through my traditional territory. These are my rivers, my salmon. We’re bearing all the risk. So we should have more say.”

Canadian Senate approves Bill C-69

The Canadian Senate has approved legislation intended to change how major projects such as oil pipelines are assessed, though with more than 180 amendments. Bill C-69 will now go back to the House of Commons where Prime Minister Justin Trudeau's Liberal government must decide which amendments it will accept.

Amendments include removing the power of the federal Environment Minister to veto a project and altering how the effect of climate change is considered in the regulatory process. Many of the amendments were recommended by the oil and gas industry, and environmental groups have previously railed against unelected senators having such an impact on the bill.

In 2015, the Liberal government introduced Bill C-69 to fulfil its election promise to streamline and restore trust in the environmental approval process for major projects. The legislation in its original form was fiercely opposed by the oil industry and the Alberta government. Critics said it would deter investment in the sector by creating uncertainty and giving too much power to federal ministers to veto projects.

Alberta Premier Jason Kenney welcomed the Senate's decision to pass the bill with the unusually high number of amendments, saying, “While we believe the Senate's revised version of Bill C-69 is still problematic, we believe that it is a very significant improvement, and therefore urge the Government of Canada to allow the bill to proceed to royal assent as amended."

In a statement, Minister of Environment and Climate Change Catherine McKenna said, "We are carefully considering the Senate's proposed amendments and thank them for their work. Our government is open to amendments that will strengthen and improve the Bill.

Canadian Senate rejects BC tanker ban bill report

Canada’s Senate has voted to not to accept a report from its transportation and communications committee critical of Bill C-48, which is legislation to formalize a moratorium on oil tanker traffic off northern British Columbia’s coast. The bill will now proceed to third reading at the Senate’s next sitting.

Last month, the transportation and communications committee passed a motion recommending that the Senate not go ahead with that bill, leading to the report. The report, which was written by Conservative senators, argued that Bill C-48 should be defeated because it would lead to divisions across Canada and trigger resentment among Indigenous communities.

Conservatives and a few Independent Senators voted in its favour, while most Independents and Liberal senators voted against it. Independent Senators who are opposed to Bill C-48 had urged fellow members to reject the report. Had they voted to accept the report, they would have killed Bill C-48 right then and there. Opponents of Bill C-48 have said the legislation would make it difficult to approve energy megaprojects. Bill C-48 will now move to third reading, where Senators can talk about amending the legislation.

If passed, Bill C-48 would enact the Oil Tanker Moratorium Act, which would keep oil tankers that can carry over 12,500 metric tonnes of crude oil or persistent oil from “stopping or unloading crude oil or persistent oil, at ports or marine installations located along British Columbia’s north coast from the northern tip of Vancouver Island to the Alaska border.

According to the bill’s text, “The Act prohibits loading if it would result in the oil tanker carrying more than 12,500 metric tons of those oils as cargo.” The bill would also establish an “administration and enforcement regime that includes requirements to provide information and to follow directions and that provides for penalties of up to a maximum of $5 million.

Alberta’s Premier Jason Kenney criticised the vote, arguing that Bill C-48 unfairly targets exports of oil sands bitumen from Alberta, and said if the bill is passed into law the province will launch a constitutional challenge.

AltaGas opens Canada’s first propane export terminal

AltaGas is celebrating the grand opening of its Ridley Island Propane Export Terminal (RIPET), located in Prince Rupert, British Columbia, as the first marine export facility for propane in Canada. The facility, which is expected to ship approximately 1.2 million tonnes of propane annually to customers in Asia, departed its first shipment there on May 23.

Asia is the world’s largest importer of liquified petroleum gas (LPG), with as many as 24 million households using propane for heating and cooking in Japan alone. Propane is also an important feedstock for the petrochemical industry and fuels nearly 25 million vehicles worldwide.

In 2017, AltaGas entered a multi-year agreement with Astomos Energy Corporation, a Japanese propane importer and distributor, to purchase at least 50 percent of the propane shipped from RIPET annually. RIPET provides producers and customers with a significant locational advantage given comparatively short shipping distances to markets in Asia, notably a 10-day shipping time from Canada’s West Coast compared to 25 days from the United States’ Gulf Coast.

RIPET is owned by a joint venture between AltaGas, as to a 70 percent interest, and a Canadian subsidiary of Royal Vopak, as to a 30 percent interest. Royal Vopak is one of the world’s leading independent tank storage companies, with significant experience in marine terminals worldwide; AltaGas has the right to 100 percent of the capacity of RIPET.

AltaGas’ President and Chief Executive Officer Randy Crawford said, “The completion of this game-changing project and the shipment of our first cargo are historic milestones for AltaGas, as well as for our project partners, customers, local Indigenous Peoples, surrounding communities, and western Canada’s upstream energy sector. With RIPET now operational, we can offer producers a uniquely complete solution for their propane, providing premium netbacks and market optionality, while also positioning AltaGas to profitably grow our Midstream footprint – a true win-win for AltaGas and our customers.

Throughout the design and construction of RIPET, AltaGas worked closely with local Indigenous Peoples, communities, and all levels of government to develop opportunities for economic and social development, skills training, and emergency response preparedness. The project provided more than 200 jobs during the construction phase and will provide up to 40 additional permanent jobs for the local economy now that the facility is operational.

Mayor of Lax Kw’alaams John Helin said, “Good partnerships can only form when both parties get to know each other. AltaGas is a good community partner. They included us from the beginning, respected us, trusted us, and worked with us to understand what our community needs. Together, we developed a training program so our people could get good jobs and enjoy the benefits they provide.”

Chief Councillor of Metlakatla First Nation Harold Leighton said, “AltaGas approached the development of their Ridley Island project respectfully, by engaging us early and providing regular updates. They worked with us to accommodate our interests and to find mutually beneficial solutions for their project and our community.

BC is the first province to implement orphan well requirements

British Columbia’s Oil and Gas Commission says the province is the first in Western Canada to impose legal timelines for the restoration of oil and gas wells and the regulation is part of a new liability management plan that ensures all the costs of reclaiming oil and gas sites continues to be paid by industry.

In March, BC Auditor General Carol Bellringer warned that the number of inactive oil and gas wells that have not been properly decommissioned was rising, despite legislation that gave the Commission more powers to speed the process. AG Bellringer’s report said there were almost 7,500 inactive oil and gas wells in BC that had not been property decommissioned and contamination from oil and gas activity can affect human health, ecosystems, and water and air quality.

Energy Minister Michelle Mungall says the regulation enhances the Commission’s checks of a company’s financial health and history to ease pressure on a fund that supports the reclamation of orphaned wells. It will return inactive wells more quickly to their previous state, set a clean-up timeline, and impose requirements for decommissioning wells.

One percent of approximately 25,000 oil and gas wells in BC are orphans that are restored through the industry-funded levy. In a news release, the Commission said that a new liability levy to fund site restorations will be phased in over three years to ensure the Commission has adequate funds to restore all orphan sites.

Devon Energy leaves Canada for $3.8 Billion

Canadian Natural Resources has signed a deal to buy the Canadian operations of Devon Energy for CAD $3.8 billion with asset portfolio that includes thermal in situ oilsands production and conventional primary heavy crude oil operations located adjacent to existing Canadian Natural assets.

The production acquired under the deal totals 128,300 barrels per day, including 108,200 from the thermal in situ operations and 20,100 from the conventional operations. It includes 607,000 hectares of land, of which 405,000 hectares are undeveloped, providing significant upside value and opportunities.

Devon’s heavy oil assets are principally located in the province of Alberta, with net production averaging 113,000 oil-equivalent barrels in the first quarter of 2019. At year-end 2018, proved reserves associated with these properties amounted to approximately 409 million barrels of oil. Field-level cash flow accompanying these assets, which excludes overhead costs, totaled $236 million in 2018.

Proceeds from the sale, which is expected to close on June 27, will be used for debt reduction. President and CEO Dave Hager said, “The sale of Canada is an important step in executing Devon’s transformation to a U.S. oil growth business. This transaction creates value for our shareholders by achieving a clean and timely exit from Canada, while accelerating efforts to focus exclusively on our high-return U.S. oil portfolio.”

Devon put its Canadian assets up for sale February. It is the latest foreign company to reduce its ownership in the oilsands over the past few years, including Norway’s Statoil, France’s Total SA, Arkansas-based Murphy Oil, and Houston-based ConocoPhillips.

French solar power generation increased in Q1

As the French government pushes the development of green energies in the country, the Energy Ministry noted in its quarterly report that solar power generation rose to 2.3 terawatt hours (TWh) in the period. This is up 57 percent year-on-year, the surge due to a period of prolonged sunshine in February and March and new capacity installations.

The government’s goal is to cut the share of atomic power in the electricity mix to 50 percent by 2035, from around 75 percent at present. According to the grid operator RTE, around a fifth of French power needs in the first quarter were met by renewables, including solar, wind, and hydro power.

France added 164 megawatts of solar capacity in the quarter, taking total installed solar generation capacity to over 9 gigawatts (GW) at the end of March. The energy ministry report showed electricity production from wind turbines in France reached 9.8 TWh during the quarter, up from 9.2 TWh a year earlier. Around 200 MW of new onshore wind capacity was connected to the power grid, taking installed generation capacity to 15.3 GW. Power from wind turbines covered around 7 percent of French electricity consumption in the quarter. The ministry said 11.8 GW of wind power projects were in the pipeline as of the end of the period.

At the end of March, France had 663 facilities producing electricity from biogas with a total installed capacity of 460 MW, of which 7 MW was added in the first quarter, the data showed. Electricity output from biogas generation was at 0.5 TWh during the quarter.

Saskatchewan fights the carbon tax in Supreme Court of Canada

Earlier this month, Saskatchewan’s Court of Appeal ruled in a split decision that the implementation of the federal carbon tax on the province is constitutional and that establishing minimum national standards for a price on greenhouse gas emissions falls under federal jurisdiction.

Saskatchewan Premier Scott Moe, who has said the tax hurts his province economically, promised there would be an appeal. Now, the Saskatchewan government has filed notice that it is taking its challenge of the tax to the Supreme Court of Canada. The province’s Justice Minister Don Morgan says the high court will be asked to rule on whether the tax is constitutional and whether Ottawa has the jurisdiction to impose it. Minister Morgan said the province has two months to file a factum to the Supreme Court and “Our government will continue to stand up for Saskatchewan people against what we believe is an unconstitutional tax on their families, communities, and businesses.

Minister Morgan also noted that if the Liberals lose the federal election in October, there may be no federal tax left to fight since the Conservatives have promised to scrap the tax, saying, “The Supreme Court could say it’s moot, it’s not worth hearing because the government has changed the law. Or they could say, ‘No, this is a matter of import. We want to create a precedent.'

The federal tax has been imposed on provinces that have not implemented their own carbon levies, including Saskatchewan, Ontario, New Brunswick, and Manitoba. Ontario and Manitoba are also fighting the carbon tax in court and Alberta Premier Jason Kenney’s government officially killed the province’s carbon tax on May 30, resulting in an average 8 cent per litre drop in prices at the pump. Federal Environment Minister Catherine McKenna said Ottawa’s tax would be imposed on the province as soon as possible and Premier Kenney said he has not yet received a formal notice from the federal government on its tax, adding, “If and when we receive that, I will instruct our lawyers to proceed with filing a judicial reference to the Alberta Court of Appeal.

President Trump lifts ethanol restrictions

The Trump administration has lifted restrictions on the sale of higher ethanol blends of gasoline as part of its campaign promise to farmers who have been suffering from the trade war with China. Ending a summertime ban that former President Barack Obama’s Environmental Protection Agency (EPA) imposed in 2011 to reduce smog pollution, gasoline stations are now allowed to sell blends containing up to 15 percent corn-based ethanol, called E15, year-round.

The United States farm lobby has argued the restrictions on E15 hurt growers by limiting demand for corn-based fuel, without providing tangible air quality benefits. Recent research found little difference in smog risk between E15 and E10, a 10 percent ethanol blend that is already available year-round. Chief Executive of biofuel trade group Growth Energy Emily Skor said, “We estimate this one change will generate over a billion new gallons of ethanol demand in the next five years,” adding it could also boost the market for American grain by some 2 billion bushels over time.

The decision is considered a setback for the oil industry, which views biofuels as competition for its petroleum-based fuels and has threatened to sue the Trump administration. The American Petroleum Institute, which represents the American oil industry, has repeatedly said the administration lacks the authority to unilaterally lift the ban on E15 and that such a move should require an act of Congress. President and CEO of the American Fuel and Petrochemical Manufacturers trade group Chet Thompson said, “EPA has left us no choice but to pursue legal action to get this unlawful rule overturned.

President Donald Trump has struggled to please both the oil and gas and agriculture industries, two critical constituencies in his re-election effort that have frequently clashed over biofuels. In October, he ordered the EPA to lift the summer E15 ban, cheering corn country ahead of the mid-term elections and putting the EPA on a tight deadline to complete its rulemaking ahead of the summer of 2019. As a concession to the oil industry, he also ordered the EPA to overhaul the biofuels credit market it oversees under the Renewable Fuel Standard, which requires refiners either to blend biofuels into their fuel or purchase credits.

The EPA has issued new rules to improve transparency in the market for biofuels credits that refiners must acquire under the nation’s biofuel law, but stops short of what many refiners were seeking. The EPA’s plan for credit market reform was called a “win-win” solution for the oil and corn industries, omitted several elements that the oil industry had been seeking. The plan focuses solely on improving market transparency, while dropping previous proposals like a requirement that buyers sell off excess credits, and limits on what types of traders can enter the market.

United States EPA scales down biofuel credit reform

Under instruction from American President Donald Trump, the Environmental Protection Agency (EPA) has been developing a plan to reform the multi-billion-dollar biofuel market to help the oil refining industry, which had long complained that speculation was driving up costs for the credits they must acquire to comply with the nation’s biofuel law. President Trump had requested the EPA’s reform to be finalized prior to June 1, to coincide with expanded sales of gasoline blended with higher levels of corn-based ethanol, intended to help farmers by expanding the market for corn.

Regulators concluded many of the agency’s initial ideas required more time to study, therefore the EPA will release a more limited version of its proposed biofuel credit market reform before the end of this month; it is unclear whether this will limit the intended benefits to refiners. After the EPA finalizes the abridged version of the plan, to coincide with E15 in time for the summer driving season, it will then “continue to consider the existing comments on the other (reform proposals)” according to an EPA source. The less ambitious version of the plan will also focus on increasing market transparency and limiting hoarding of purchase credit (RINs).

The US Renewable Fuel Standard requires refineries to blend biofuels into their gasoline and diesel each year or purchase credits, called RINs, from those who do. The policy has created a 15 billion gallon-a-year market for corn-based ethanol to help farmers but refiners have increasingly complained that compliance costs them a fortune, particularly when RIN prices are high and volatile. Drafted in March, the EPA’s initial plan to reform the RIN market would have barred trading by non-industry players, publicized large positions, improved price transparency, imposed limits on credit “hoarding,” and provided the EPA with increased market-monitoring powers.

Regarding a less ambitious version would be unveiled that focuses on increasing market transparency and limiting hoarding of RINs, EPA spokesman Michael Abboud would not comment but said the agency was adhering to President Trump’s request that it address problems in the RIN market. “The premise of this story is inaccurate. EPA’s final action, which will be signed by the summer driving season, is consistent with the President’s direction last year and will help increase transparency and prevent price manipulation in the RIN market,” Mr. Abboud said.

Report shows lack of pipelines costs Canadians billions

A new calculation by the Canadian Taxpayers Federation shows the country is losing billions of dollars because provincial and federal governments are obstructing pipeline development with policy. It compares how the lack of pipelines reduces the Canadian price of oil compared to the US price, based on data released by the Office of the Parliamentary Budget Officer. Canadian taxpayers lost CAD $6.2 billion in revenue between 2013 and 2018 and can expect to lose another CAD $3.6 million every day until the end of 2023 if governments continue to get in the way of pipelines.

The CTF estimates that with enough pipeline capacity, the revenue collected by the Canadian government would pay for at least one additional hospital for every province and territory, fully fund nearly 25,000 new teachers for 10 years or exempt all three Maritime provinces from federal taxes for a year.

Prime Minister Justin Trudeau’s government blocking the Northern Gateway pipeline and proposed a discriminatory tanker ban off the coast of British Columbia are among the policies and positions that are denying Canadian oil and gas access to international markets and new customers, while oil deliveries from Saudi Arabia and other foreign oil producers to refineries in New Brunswick and Quebec are still allowed.

The federal government also changed the regulatory goal posts on TransCanada’s CAD $16-billion Energy East pipeline by requiring the project go through an upstream and downstream emissions review. In response to British Columbia’s government opposing the Trans Mountain pipeline expansion, University of Calgary economist Jack Mintz says, “Trudeau rewarded the B.C. government’s attempts to block Trans Mountain by showering B.C. with infrastructure money.

Bill C-69, commonly referred to as the ‘No More Pipelines Act’, which is currently before the Senate, is considered to the be the most destructive government policy toward Canada’s energy industry. If it becomes law, this bill will make it even more difficult for pipelines to be approved by imposing additional considerations into an already onerous regulatory process. CEO of the Canadian Energy Pipeline Association Chris Bloomer said, “It is difficult to imagine that a new major pipeline could be built in Canada under the Impact Assessment Act [Bill C-69].”

CTF says oil production is projected to grow in Canada by over 50 percent over the next two decades and taxpayers will lose billions more if Canadian politicians continue to get in the way of pipeline development. Taxpayers will either have to pay more to cover the federal government’s multi-billion-dollar budget hole or will receive less services.

BC Court of Appeal rules no province can obstruct pipelines

British Columbia’s Court of Appeal unanimously determined that the province does not have the authority to interfere with inter-provincial projects, upholding its decision that the constitutional principle that projects in the national interest remain federally legislated. Therefore, the BC government must respect the federal government’s jurisdiction over national projects and stop interfering with the Trans Mountain expansion pipeline (TMEP) to the detriment of all of Canada, including its own province.

The five-judge panel agreed that January 2018 amendments to BC’s Environmental Management Act were not constitutional because they would interfere with the federal government’s exclusive jurisdiction over interprovincial pipelines. Justice Mary Newbury wrote on behalf of the panel that the substance of the proposed amendments were to place conditions on and, if necessary, prohibit the movement of heavy oil through a federal undertaking. Therefore, the legislation is not just an environmental law of “general application,” but is targeted at one substance, heavy oil, in one interprovincial pipeline: the Trans Mountain expansion project. She wrote, “Immediately upon coming into force, it would prohibit the operation of the expanded Trans Mountain pipeline in the province until such time as a provincially appointed official decided otherwise. This alone threatens to usurp the role of the (National Energy Board), which has made many rulings and imposed many conditions to be complied with by Trans Mountain for the protection of the environment.”

The future of TMEP now rests with the Government of Canada to ensure construction begins immediately following the completion of consultations on June 18, 2019. Prime Minister Justin Trudeau’s government purchased the TMEP for CAD $4.5 billion and construction was paused last August after the Federal Court of Appeal overturned the federal permits. The project would triple the Trans Mountain pipeline’s capacity to carry diluted bitumen from the Edmonton area to Metro Vancouver and increase the number of tankers in Burrard Inlet seven-fold.

President and CEO of the Canadian Association of Petroleum Producers (CAPP) Tim McMillan said, “Today the B.C. Court of Appeal ruled in favour of Canada and its Constitution. No one province should have the ability to hold the rest of the country hostage … It is the role of the federal regulator to review all major projects and determine what is in the best interests of Canadians. At the end of the day, the National Energy Board determined Trans Mountain to be in the best interest of Canada, as a whole … Environmental stewardship and the protection of Canada’s waters have always been a priority. With world-class marine systems such as the West Coast Marine Response Corporation, Eastern Marine Response Corporation, and the federal Oceans Protection Plan, we can protect Canada from coast-to-coast-to-coast.”

Due to a lack of access and detrimental government policy, capital investment in Canada’s oil and natural gas sector is forecasted to drop to an estimated CAD $37 billion in 2019 compared to CAD $81 billion in 2014. Market access remains of paramount importance to Canada’s energy industry. In 2017, Eastern Canada imported about 586,000 barrels per day of foreign-sourced oil. According to the International Energy Agency’s, World Energy Outlook 2018 (New Policies Scenario), total global energy demand is projected to increase 27 percent over 2017 levels by 2040. Together, oil and natural gas will account for 53 percent of the world’s total energy demand by 2040.

 

Turkey drills for oil in offshore Cyprus, raising sovereignty concerns

Turkey has advanced its plans for offshore drilling operations within Cyprus’ Exclusive Economic Zone, eliciting deep concern from the European Union and United States, escalating tensions between President Erdogan and Turkey’s supposed Western allies. The Cyprus foreign ministry said it “strongly condemns” Turkey’s drilling operations and “This provocative action by Turkey constitutes a flagrant violation of the sovereign rights of the Republic of Cyprus.

The island of Cyprus was divided in 1974 after a Turkish invasion triggered by a brief Greek-inspired coup. Numerous peacemaking efforts have failed and offshore resources have increasingly complicated peace negotiations. North Cyprus, which is supported by Turkey, says that any offshore wealth also belongs to them, as partners in the establishment of the Republic of Cyprus in 1960.

Last week, Turkish Foreign Minister Mevlut Cavusoglu announced “we are starting drilling” in the region where Turkey and the internationally recognized Greek Cypriot government have overlapping claims of jurisdiction for offshore oil and gas research in the eastern Mediterranean, a region thought to be rich in natural gas. Speaking from Northern Cyprus, Minister Cavusoglu said a Turkish seismic research vessel was continuing work in the region and “We will conduct drilling in areas of Turkey’s continental shelf and we are starting our drilling work at points identified by Barbaros Hayrettin Pasa.”

In February, Minister Cavusoglu said Turkey would soon begin drilling for oil and gas near Cyprus. The country launched its first drill ship off the coast of Turkey’s southern Antalya province in October, which Refinitiv Eikon shipping data showed was located 70 kilometers off the west coast of Cyprus on Monday.

Speaking at NATO’s North Atlantic Council Mediterranean Dialogue meeting in Ankara on Monday, President Tayyip Erdogan said he expected NATO to support Turkey’s rights in the Mediterranean: “The legitimate rights of Turkey and the Northern Cypriot Turks over energy resources in the eastern Mediterranean are not open for argument. Our country is determined to defend its rights and those of Cypriot Turks. We expect NATO to respect Turkey’s rights in this process and support us in preventing tensions.”

EU foreign policy head Federica Mogherini expressed “grave concern” about Turkey’s intentions and said, “We urgently call on Turkey to show restraint, respect the sovereign rights of Cyprus in its exclusive economic zone and refrain from any such illegal action to which the European Union will respond appropriately and in full solidarity with Cyprus.” Following these comments, United States State Department spokesperson Morgan Ortagus said, “The United States is deeply concerned by Turkey’s announced intentions to begin offshore drilling operations in an area claimed by the Republic of Cyprus as its Exclusive Economic Zone,” and “This step is highly provocative and risks raising tensions in the region. We urge Turkish authorities to halt these operations and encourage all parties to act with restraint.”

Turkey stopped purchasing Iranian oil as US waivers granted last November to eight buyers expired on May 1. The country’s largest oil refiner Tupras urged Washington to grant them an extension of the import waiver, which was not granted. A senior Turkish official said Ankara did not agree with US sanctions policy on Iran: “We don’t believe in sanctions, but as a strategic ally we respect the U.S. decision.”

Analysts say Turkey is replacing Iranian oil with supplies from Iraq, Russia, and Kazakhstan, as Refinitiv tracking data reports no tankers loaded in Iran arrived at Turkish ports since May 1. In November, the United States reimposed sanctions on Iran after pulling out of an Obama-era 2015 nuclear accord between Tehran and six world powers. Aiming to cut Iran’s sales to zero, Washington this month ended sanctions waivers for importers of Iranian oil, ending a six-month reprieve for Turkey and seven other big importers including China and India.