blog2009: July 2009 Archives

July 29, 2009

A flurry of upbeat news from Enbridge

A trio of news items about Enbridge, reprinted in Rigzone:

Enbridge on Track for 20% Plus Growth in 2009, 10% Plus Through 2013
Enbridge Inc., Rigzone, 29-Jul-2009

Enbridge Proposes $500MM Walker Ridge Gathering System for GOM
Enbridge Inc., Rigzone, 29-Jul-2009

Enbridge to Start Multibillion-Dollar Pipeline Project in August
Brad Swenson, Bemidji Pioneer, 27-Jul-2009

Enbridge on Track for 20% Plus Growth in 2009, 10% Plus Through 2013

Enbridge Inc.
Rigzone
Wednesday, July 29, 2009

"Through the second quarter of 2009, Enbridge continued to deliver favorable operating performance across our liquids and natural gas businesses, highlighted by significant progress on our projects under construction, and the announcement of a major new oil sands project," said Patrick D. Daniel, President and Chief Executive Officer. "With adjusted earnings per share of $1.28 for the first six months of the year, we are ahead of where we had expected to be. We are now on track to achieve the upper half of our $2.18 to $2.32 per share full year adjusted earnings guidance range, for an annual growth rate greater than 20%.

"Looking further out, and affirmed through our annual review and update of our strategic plan, we expect to sustain a 10% plus average annual earnings per share growth rate from 2008 through 2013," continued Mr. Daniel.

In June 2009, Enbridge announced an agreement with Imperial Oil Resources Ventures Limited and ExxonMobil Canada Properties to provide for the transportation of blended bitumen from the Kearl project in the Athabasca Oil Sands region of northern Alberta to the Edmonton, Alberta area. The first phase of the new pipeline system is a 140-kilometre pipeline from Kearl Lake to Enbridge's Cheecham Terminal.

Enbridge Proposes $500MM Walker Ridge Gathering System for GOM
Enbridge Inc.

Enbridge Inc.
Rigzone
29-Jul-2009

Walker Ridge & Green Canyon Fields

Enbridge has entered into Letters of Intent with Chevron USA, Inc. which could result in the expansion of its central Gulf of Mexico offshore pipeline system. Under the terms of the LOI, Enbridge proposes to construct, own and operate the Walker Ridge Gathering System (WRGS) to provide natural gas gathering services to the potential Jack, St. Malo and Big Foot ultra-deepwater developments. The estimated cost of the WRGS is approximately US $500 million, subject to finalization of scope and definitive cost estimates.

"The Gulf of Mexico has long been a major producing region for North American oil and gas, and there is a significant trend towards ultra deepwater developments in the Gulf of Mexico," said Patrick D. Daniel, President and Chief Executive Officer, Enbridge Inc. "The Walker Ridge Gathering System will tie in a new supply source for Enbridge's Manta Ray and Nautilus offshore pipeline systems, enhancing Enbridge's existing offshore pipeline business and establishing a strategic base for future growth opportunities in the ultra-deep Gulf of Mexico. In addition, the development of the new gathering system represents an attractive investment opportunity itself, with risk and return characteristics comparable to Enbridge's normal business model."

Daniel continued, "This latest addition to our portfolio of commercially secured projects is indicative of a variety of growth opportunities which are currently under development, supporting our expectation that we will be able to extend our 10% plus 2008-2013 average growth rate at a similar rate well beyond 2013. Enbridge has ample financial capacity to fund the equity component of this investment from internally generated cash flow and surplus balance sheet equity."

The WRGS is expected to include approximately 190 miles of 8-inch,10-inch and/or 12-inch diameter pipeline at depths of up to 7,000 feet and will have a capacity of 100 million cubic feet per day (mmcf/d).

Enbridge offshore pipelines currently transport about 40 percent of all deepwater Gulf of Mexico natural gas production and include the UTOS, Stingray, Garden Banks, Nautilus, Manta Ray, Mississippi Canyon, Okeanos and Destin systems. Enbridge offshore assets include joint venture interests in 12 transmission and gathering pipelines in six major pipeline corridors in Louisiana, Mississippi and Alabama offshore waters of the Gulf of Mexico. The system moves on average approximately 30 percent of the Gulf of Mexico natural gas production at a rate of 2.5 billion cubic feet per day (bcf/d).

Enbridge to Start Multibillion-Dollar Pipeline Project in August

by Brad Swenson
Bemidji Pioneer, Minnesota
McClatchy-Tribune Information Services
Reprinted in Rigzone
Monday, July 27, 2009

A 1,000-mile crude oil pipeline project costing $3.4 billion begins in mid-August, say Enbridge Inc. officials.

Workers unload a 36-inch pipe from a rail car to a semi Saturday east of Bemidji in preparation to start a $3.4 billion Enbridge Inc. crude oil pipeline project in mid-August. Bemidji is one of six staging points for the 1,000-mile project, with 326 miles in the United States. (Pioneer Photo/ Brad Swenson)

"We've got pipe coming in and yards are filling up, equipment is rolling in," Lorraine Grymala, Enbridge manager of community affairs/major projects, said last week. "We're just waiting on a few remaining permits and then we'll set a firm kick-off date, but August ... we should be ready to go."

Locally, it will mean up to 500 jobs.

Enbridge is burying 36-inch pipe from northern Canada to Superior, Wis., called the Alberta Clipper. It involves 1,000 miles of new pipeline, with 326 miles in the United States.

Running parallel to that is another 20-inch pipeline, called Southern Lights, with 188 miles constructed in 2009.

"It's a significant increase in capacity," she said of the 36-inch line, which will carry an additional 450,000 barrels of crude oil daily, with a U.S. route from Neche, N.D., to Superior.

Four existing pipelines ship about 1.6 million barrels per day of crude oil and liquid natural gas, Grymala said.

"This area will actually be constructing two pipelines," she said of the Alberta Clipper crude oil line and the Southern Lights diluents pipeline which originates in Chicago and flows north.

"It carries a product called diluents which is still in the petroleum spectrum, but on the lighter end," Grymala said. "It's a product that's produced by the refining process ... It goes up north to the Alberta oil sands and is used in the crude to use it better."

Diluents are a thinning agent that allows the crude oil to flow easier through the pipeline, she said.

The line is being built in segments, with the line now completed from Chicago to Superior, she said. This year's 188-mile segment will take it to the Canadian border, where it is done to the north. In all, Southern Lights is a $2.2 billion project with a capacity of 180,000 barrels a day.

The Alberta Clipper project's 326 miles in the United States is a $1.2 billion project, Grymala said.

"Up and down the line, for the 326-mile segment, we expect to employ about 3,000 workers," she said. "We're doing the construction in six spreads and each spread has its own crew, which is 350 to 500 people per crew."

Two crews, or spreads, will operate out of Bemidji for the two pipelines, she said. "You will see a pretty significant number of people here."

The contractor for the Bemidji area is U.S. Pipeline of Houston, Texas. The contractor north of Clearbrook is Michaels of Wisconsin, and from Deer River to Superior is Precision Pipeline of Wisconsin.

"Each of those contractors brings with them a core crew of people who go all over with their respective companies and build pipelines all over the United States, so they're construction experts," Grymala said. "They are about 50 percent of the workforce. The other 50 percent is hired through the local union halls."

Pre-job meetings have been held with the unions, she said, so the unions are aware of the workforce needs and types of skills needed. "The purpose of the core crew is to train people."

Union crews will be hired locally at prevailing wage standards, she said. "The laborers will be the bulk of the workforce, and operating engineers are another significant chunk; the Teamsters and the plumbers and pipe fitters and the welders will be the rest."

There will be 23 miles of pipeline constructed in Beltrami County, or 46 miles with the two separate but parallel pipelines, said Sheila Dunn of Natural Resource Group, an Enbridge consultant.

"That will generate $1.9 million in additional tax revenue for the county, and that's above and beyond what Enbridge is already paying," Dunn said.

That additionally revenue would nearly replace the $2.1 million the county now faces losing through state aid reductions this legislative session.

The state assesses the value of the pipe once it is in the ground, and informs the county of the tax value, Dunn said. "That value will change over time, but right now it will be $1.9 million (in taxes)."

"Spending up and down the line in terms of wages paid is $276 million," Grymala said. "In terms of extra construction-related spending, there's another $110 million, for things like fuel, tires or replacement parts for equipment that breaks down.

"The workers themselves need lodging and food, groceries, those kinds of things," she added. "That's another $60 million. It's a pretty good economic shot in the arm with people spending their money and the project spending money."

Contractors are encouraged to spend locally when practical to do so, Dunn said. "A lot of the communities along the route have the potential to see a real economic boost from this project, because the workers need places to stay and restaurants to eat in and laundry facilities to wash their clothes in, and those types of things."

An area near Bemidji High School will serve as a staging area, Grymala said. Workers will arrive each morning and be taken by bus to the work site. They will typically work six days a week, 10 hours a day.

"They need that to get as much done as possible, between August and December," she said. The project is to be completed in December, and the land restored early next year. Work in wetlands will take place in January and February.

The line is scheduled to be in service by this time next year, Grymala said.

A full Environmental Impact Statement has been prepared for the project, involving the U.S. State Department as the line crosses an international border, and permits secured or in the process of being secured. Rights-of-way have been secured, although a petition filed last week on the Leech Lake Reservation seeks a tribal court decision to stop construction.

"First and foremost, we have agreements with both of the tribal councils (Leech Lake and Fond du Lac) signed and ready to go," Dunn said. "We have good relationships with the councils. Our understanding up until now is that any opposition was limited to a few band members, and mainly only Leech Lake."

More than 30 public meetings were held to gain public input, she said.

The group also sought to stop the project through the Minnesota Public Utilities Commission, Grymala said, but the PUC granted Enbridge its certificate of need for the project and a route permit.

"We're ready to go," she said.

bswenson@bemidjipioneer.com

Posted by Arthur Caldicott at 11:09 PM | Comments (0)

July 27, 2009

Hydropower boom may not be a bust for salmon

Kim Murphy
Los Angeles Times
July 27, 2009

Darrell Gouldin, managing director of the generation division of the public utility department of Chelan County in Washington state, near the large juvenile fish passage tunnel constructed to help young salmon safely pass Rocky Reach Dam on the Columbia River. (Credit: Scott Eklund / Red Box Pictures for The Times.)

With the big push for renewable energy, hydropower is getting a new lease on life. The Chelan County Public Utility District in Washington state is trying to get more power out of the Columbia River without harming endangered salmon. How will this change the dialogue about dams and fish?

Giving dam-generated electricity a big new lease on life under the mantle of clean energy has proved problematic for environmentalists, who have long seen dams as fish-killers. But more of them are coming to see the benefits of so-called incremental power, done in conservation-smart ways.

John Seebach, director of the Hydropower Reform Initiative launched by the conservation group American Rivers, said his organization has elected to support “green” credentials for incremental power generated at existing dams as long as it provides protections for fish and other wildlife values.

“Hydropower does have pretty significant and serious impacts on rivers. We know that. The industry knows that. It also provides some pretty significant benefits in terms of power production. So it’s a tricky balance to get those benefits while trying to minimize those impacts,” he said.

One organization that has tried to set standards for what can be considered “green” hydropower is the Low-Impact Hydropower Institute, based in Maine, which certifies hydropower projects, much like an organic food label. It looks at protections for such things as water quality, fish protection, recreation and cultural resources protection.

Fred Ayer, executive director, said the institute has certified about 110 dams, from Maine to Alaska, with a capacity of about 2,000 megawatts. This has been possible because of a dramatic change in the hydropower industry itself, which now has far more managers with resource protection backgrounds.

“When I entered this business 35 years ago, the people running the show were pretty much engineers and accountants — and their lawyers,” he said. “Today, if you go to a big hydropower conference, half the people in the room will be women. I mean, that was unheard of before.”

Still, some conservationists are wary of jumping on board the hydropower bandwagon without more proof. Sure, juvenile fish may be making it safely past the Rocky Reach Dam in Chelan County, says Natalie Brandon of the group Save Our Wild Salmon, but how stressed are they, and how does that affect their long-term survival?

"In the Columbia/Snake [rivers], a lot of salmon and steelhead survive passing through the dams and make it out to the ocean, but they don't make it back," Brandon said. "We think that the accumulated stress of going over eight dams stresses the immune systems of the fish, making them more vulnerable to parasites, disease and predators once they're out in the ocean."

In Chelan County, officials believe that providing more power with the same amount of water is good for the environment, and good for fish.

“We’re saying, let’s skip the new facilities, skip the regulatory issues associated with new dams and go to our existing facilities and get more value from them," said Tracy Yount, the Chelan County PUD's external affairs director.

“The regulatory landscapes are completely changing right now .We are realizing that whatever issues we’ve had to deal with in the past with the Clean Water Act and the Endangered Species Act, they’re probably going to pale in comparison to the credit market and climate change."

Boom in hydropower pits fish against climate

By Kim Murphy
Los Angeles Times
July 27, 2009

The renewable energy could ease global warming, but the dams and turbines could result in mass killings..

Reporting from Wenatchee, Wash. -- The Rocky Reach Dam has straddled the wide, slow Columbia River since the 1950s. It generates enough electricity to supply homes and industries across Washington and Oregon.

But the dam in recent years hasn't produced as much power as it might: Its massive turbines act as deadly blender blades to young salmon, and engineers often have had to let the river flow over the spillway to halt the slaughter, wasting the water's energy potential.

The ability of the nation's aging hydroelectric dams to produce energy free of the curse of greenhouse gas emissions and Middle Eastern politics has suddenly made them financially attractive -- thanks to the new economics of climate change. Armed with the possibility of powerful new cap-and-trade financial bonuses, the National Hydropower Assn. has set a goal of doubling the nation's hydropower capacity by 2025.

Expanding hydropower is fraught with controversy, much of it stemming from the industry's history of turning wild rivers into industrialized reservoirs struggling to support their remaining fish. The emerging boom in hydroelectric power pits two competing ecological perils against each other: widespread fish extinctions and a warming planet.

The issue has been particularly contentious in the Pacific Northwest, where some are calling for actually breaching dams on the Snake River in an effort to bring back the declining salmon and steelhead.

"Hydropower does have pretty significant and serious impacts on rivers. We know that. The industry knows that," said John Seebach, director of the Hydropower Reform Initiative launched by the conservation group American Rivers. "It also provides some pretty significant benefits in terms of power production. So it's a tricky balance to get those benefits while trying to minimize those impacts."

Across the country, there are about 82,600 dams, but only about 3% of them are used to generate electricity. Hydropower produces about 6% of the nation's electricity, and nearly 75% of all renewable electric power.

The increasing mandates for power utilities to expand their portfolios of renewable energy are prompting dam operators to take a second look at thousands of dams now used for flood control, irrigation, navigation, recreation and industrial water supply that might also be used to generate electricity without further harm to fish.

"Most of the bang for the buck is at existing dams and reservoirs without hydropower facilities, and hydropower facilities that need to be upgraded for additional capacity," said Norman Bishop, vice president of MWH Americas Inc., which designed the dam improvements in Chelan County, Wash., home to the Rocky Reach facility.

The U.S. Department of Energy estimated that there are up to 30,000 megawatts of potential energy at 5,677 undeveloped sites across the nation, more than half of which already have dams.

Newly added to the equation is the emerging market for so-called carbon credits. The credits are part of a strategy to place "caps" on damaging greenhouse gas emissions while allowing companies that can't meet the restriction to buy credits from ones that achieve significant savings. The cap would be gradually lowered to reduce overall emission levels.

Hydroelectric power is a prime candidate to sell credits because it is largely emission-free. The credits typically would be granted only for new or additional power.

The market for the credits is tiny now, but legislation is moving forward that would create caps and a national market that could ultimately reach $120 billion a year.

Even without a national cap-and-trade law, markets such as the Chicago Climate Exchange now allow companies to voluntarily limit their carbon emissions and lower their carbon footprint by purchasing credits, traded on the market like stock.

This added incentive has made building or upgrading hydroelectric facilities a more alluring prospect.

The small rural Chelan County Public Utility District last year became the first hydropower facility in the U.S. to begin trading carbon credits on the Chicago Climate Exchange.

The money the district has made from selling credits -- about $1.6 million so far -- is going back to Chelan County and its customers for new investments in carbon-free electricity. The district has invested heavily in making sure its new electricity results have no net harm to salmon -- a key requirement for trading on the Chicago exchange.

But the possibility of more hydroelectric construction around the world has set off alarm bells among some groups of environmentalists.

"Rivers in the U.S. have been seriously impacted by dam construction," the conservation group International Rivers said in urging California authorities to disqualify hydropower projects producing more than 10 megawatts of power from receiving carbon credits.

"Fortunately, some of this damage is now starting to be reversed by dam removals," the group said. "California climate action should not act as an incentive to increase damage to rivers and prevent efforts to restore them."

California gets about 9.6% of its power from large hydro generators. The state has said it will consider as renewable energy only those hydro projects smaller than 30 megawatts that do not require the diversion of any new water.

Climate-change activists particularly balk at the idea of offering carbon credits in the U.S. for large hydropower projects in developing countries, such as Chile, Peru, Uganda and elsewhere, where environmental protections may be lax and the overall contribution to global welfare dubious.

But here at Rocky Reach Dam, engineers say they believe there is a way to reduce emissions, increase power output and save fish at the same time -- although at a cost.

The Chelan County utility district spent $292 million overhauling Rocky Reach's 11 aging generators and installing new, more efficient turbines and an expensive mile-long safe-passage tunnel for up to 3.5 million young salmon and steelhead that navigate the dam each year. [More info here]

With the juvenile-fish passage facilities -- along with commitments to improve habitat and expand hatchery production for salmon -- the district could meet its targets for healthy fish and allow much less water to spill over the dam.

Five years ago Rocky Reach had to spill up to a quarter of its water over a 31-day period during the height of the spring salmon juvenile migration, but last spring it got permission to spill no water at all.

Yet more than 90% of the young salmon and 94% of the steelhead are surviving their trip past Rocky Reach Dam, according to district records.

The result is that the dam has been able to produce an additional 1.75 million more megawatt-hours of electricity over a recent three-year period, the equivalent of 702,204 metric tons of carbon if the electricity were generated at a natural-gas-fired power plant.

"What we have been able to do is provide more power with the same amount of water," said Tracy Yount, the Chelan County utility district's external affairs director. "We're saying, let's skip the new facilities, skip the regulatory issues associated with new dams and go to our existing facilities and get more value from them."

kim.murphy@latimes.com

Posted by Arthur Caldicott at 11:48 AM | Comments (0)

Desertec: an energy, CO2, water and food solution

The Problem: 10 billion people on Earth by 2050, and a demand for resources equivalent to three Earths.

The Solution: The DESERTEC Concept. "It simultaneously tackles efficiently all the global challenges of the upcoming decades: shortage of energy, water and food as well as excessive emissions of CO2. At the same time, this concept offers new options for the prosperity and development of regions that have so far, from an economic point of view, been scarcely developed.

"CLEAN ENERGY IS AVAILABLE IN ABUNDANCE THE EARTH‘S DESERT BELT

"North and south of the equator, deserts span the Earth. Over 90% of the world‘s population could be supplied with clean power from deserts by using technologies that are available today."

Download the Desertec Red Paper

Whew. That's no small thinking. But the world has enjoyed, or has had to suffer, many technological "visionaries" with big ideas that will solve everything, yadda, yadda, yadda.

So is Desertec any different? Is it credible? Can it be done? Should it be attempted?

What is Desertec?

The specific plan is to generate electricity in desert regions of the Middle East and North Africa (MENA) using Concentrating Solar Thermal (CSP) plants. Then wheel that power primarily to Europe, using High Voltage Direct Current (HVDC) transmission cables buried underground and submerged beneath the Mediterranean Sea.

CSP entails a number of large solar reflectors aimed at a single tube in which is a working fluid, which, when heated, is used as an energy source for a power generation station. Wikipedia has an introduction to CSP:
http://en.wikipedia.org/wiki/Concentrating_solar_power.

HVDC is an established transmission technology which has three advantages over AC transmission: no electromagnetic effects ("electro smog"), fewer transmission losses, and reduced cost over long distances. Wikipedia again:
http://en.wikipedia.org/wiki/High-voltage_direct_current

Click here for larger map

Desertec arose out of a feasibility study commissioned by the German Ministry of the Environment, and it is still very much a German project with Deutsche-Bank, RWE, E-ON, Munich-RE, Siemens all apparently on-board. The €400 billion project may provide 20 percent of European energy needs by 2050.

You can read more about it at http://www.desertec.org.

At the top we quoted the Desertec red paper saying the project will tackle shortage of energy, water, food, and CO2 emissions. The energy and CO2 factors are obvious. Desalination plants would also use the energy. Food? The red paper doesn't explain that - maybe by irrigation using the desalinated water?

Posted by Arthur Caldicott at 03:29 AM | Comments (0)

U.S. clean energy stimulus both a boon and a threat to B.C. companies

By Gordon Hamilton
The Vancouver Sun
July 25, 2009

The Obama administration's $70-billion commitment to renewable energy is creating eye-popping opportunities in the U.S. that threaten B.C. clean-energy companies as much as it opens doors.

Corporate leaders and investors say that the sheer size of the U.S. program has shifted the centre of gravity for clean energy south of the border. B.C. companies with offices or connections in the U.S. will prosper while those with little access to the cash will be challenged to raise capital or get into the market.

"Renewable energy initiatives implemented south of the border certainly have the potential to benefit those companies currently leading B.C.'s renewable energy sector," said Dean Rockwell, chief executive officers of the B.C. Innovation Council.

However, he said, "massive investment underway in the U.S., Europe and Asia, and the subsequent growth of competitors from those regions, threaten to swamp fledgling B.C. companies."

The U.S. administration has set aside nearly $70 billion US in tax and spending incentives for energy-related programs as part of its larger $787-billion economic stimulus package.

Jonathan Rhone, chief executive officer of Nexterra Energy, a company that specializes in converting biomass to synthetic gas, said the energy incentives in the U.S. "have created an absolutely uneven playing field."

"We do not have a comparable federal stimulus package in clean energy in any way shape or form," Rhone said. "I think it's a gap."

He said Canada could fall behind in innovation in clean energy.

"Why would you locate in Canada? All the money is somewhere else."

Nexterra has solid connections in the U.S. that will help it get a piece of the cash pie. It partnered with energy giant GE and energy services provider Johnson Controls long before the stimulus package was announced. It is not interested in relocating south of the border, but the lure for B.C. companies is strong, Rhone said.

"States and cities actively want green energy jobs. They want the companies located in their cities because they want the innovation to happen there. They want to attract the venture capital. They want to have the manufacturing."

Rhone, a member of an association of clean-tech chief executive officers in Vancouver, said he knows U.S. jurisdictions are approaching B.C. companies to move south.

"We've been approached, as have other companies," he said.

There's nothing new in American cities trying to attract Canadian businesses, said Jock Finlayson, executive vice-president of the Business Council of BC. State and civic subsidies and incentives are part of the American business landscape, he said. In Canada, Quebec and Ontario do the same. B.C. doesn't, instead offering incentives for research instead, such as the Innovative Clean Energy fund.

What is new in the U.S., he said, is the overlay of billions of federal dollars showering down on top of existing incentive programs.

However, the Buy American provisions in the U.S. program, as well as a focus on energy security and job creation, mean Canadian companies will be at the end of the money line, said Wal van Lierop, president of Chrysalyx Energy Venture Capital. Chrysalyx has five B.C. clean-tech companies in its investment portfolio of 25 companies.

Van Lierop said B.C. companies with a foothold in the U.S. will be able to benefit when most of the money starts flowing this fall. The big danger for Canada is that it will create significant leverage for venture capital investments in the U.S. that don't exist here, he said.

"Canadian companies will just have to work much harder to get some of that money."

Van Lierop said American legislators are as concerned about energy security and job creation as they are about clean energy technologies, creating an additional hurdle for Canadian companies.

The U.S. energy bill has already passed the House of Representatives, but van Lierop believes the jobs issue will have to be played up even more if it is to pass in the U.S. Senate.

Jack Saddler, dean of forestry at the University of B.C. and a specialist in forest-products biotechnology, said the Americans are funnelling money into shovel-ready projects that Vancouver companies like Nexterra or Westport Innovations -- which refits buses and trucks for natural gas -- can take advantage of.

He said the U.S. Department of Energy is putting huge sums of money into what he termed "Star Trek"-like searches for new sources of renewable energy that may not come on stream for 25 years.

"What the U.S. is doing in this whole area is incredibly impressive," Saddler said. "There is enough money to try to lure away some of the companies."

The incentives are so lucrative that an American law firm, Stoel Rives, used the markedly un-businesslike header "Show Me the Money!" in an e-mail to clients explaining how the dozens of programs work.

Saddler said that against such a wall of cash, Canada's best option is to form energy alliances with the U.S. He is part of a new Environment Canada-U.S. Department of Energy clean-energy dialogue, which he would like to see as the first step in establishing a formal clean-energy agreement with the U.S.

Saddler said the billions being spent in the U.S. will make that country the world leader in renewable energy and it would be in Canada's interests to have a formalized agreement, similar to trade agreements. Canada has enough bioenergy locked in our forests as well as fossil fuel reserves to make North America not only green but also energy-independent, he said.

Despite the barriers to getting a piece of the money, some B.C. companies are seeing increased sales and increased interest in their products already.

At Lignol Energy, a B.C. company producing cellulosic ethanol from wood chips, CEO Ross MacLachlan said his company is actively involved in the U.S. -- it has a subsidiary in Philadelphia -- and has plans to build a $100-million to $200-million commercial cellulosic ethanol plant.

Lignol already has a pilot plant in Burnaby and a $30-million grant from the U.S. Department of Energy to build the commercial plant. That grant could be increased thanks to the stimulus package.

MacLachlan said Canada has renewable programs of its own. However, unlike the wide-open U.S. stimulus program, much of the Canadian aid is targeted at specific sectors, such as the $1-billion federal green-energy plan announced in June for the Canadian pulp sector.

Smaller established companies like Pulse Energy, a Vancouver energy management company, and Endurance Wind Turbines are also landing U.S. contracts.

Pulse Energy's David Helliwell points to a contract at the Lawrence Berkeley National Laboratory in California for Pulse's energy-efficiency software, and energy credit programs in the U.S. are boosting sales of Endurance's Surrey-made products. Endurance turbines are distributed by U.S.-based John Deere.

"Back orders for our 50-kilowatt units are in the double digits and growing daily," said Endurance sales manager Brennan McLean.

ghamilton@vancouversun.com

SHOW ME THE MONEY!

Among the energy-related provisions in the $787-billion American Recovery and Reinvestment Act are these funding initiatives:

- $13 billion to extend tax credits for renewable energy production

- $11 billion for an electricity 'smart grid'

- $6.3 billion for state and local governments to make investments in energy efficiency

- $6 billion for renewable energy and electric transmission technologies

- $5 billion for weatherizing modest-income homes

- $4 billion for the wastewater treatment infrastructure

- $3.4 billion for carbon capture experiments

- $3.25 billion for power transmission system upgrades

- $2.5 billion for energy efficiency research

- $2 billion for advanced car battery systems

- $500 million for training of 'green collar' workers

- $400 million for electric vehicle technologies

- $400 million for the Geothermal Technologies Program

- $300 million for reducing diesel fuel emissions

Posted by Arthur Caldicott at 12:10 AM | Comments (0)

July 25, 2009

Teck resurrects plans to expand coal output

Andy Hoffman
Globe and Mail
Friday, Jul. 24, 2009

Mining company scrambling to fill dramatic increase in orders from Asian buyers

Teck Resources Ltd. (TCK.B-T26.450.451.73%) is dusting off plans to expand its coal operations and meet a sudden increase in demand, marking yet another milestone in the dramatic resurrection of Canada's largest base metals miner.

Less than six months ago, a debt-laden Teck was forced to reduce coking coal production by 20 per cent as steel makers shuttered mills in response to the global recession.

But an abrupt upswing in buying from China and other Asian customers in recent weeks now has the Vancouver company scrambling to fill orders.

“There is no question demand has picked up strongly. The issue, actually, is trying to fill that demand. We're finding it is more and more difficult to increase production,” Teck chief executive officer Don Lindsay said on a conference call to discuss the company's second-quarter profit report.

Teck's desire to augment coal production offers fresh evidence of a stunning turnaround for both the company and the commodity itself.

While it is maintaining its previous coal production guidance of between 18 million and 20 million tonnes in 2009, Mr. Lindsay has asked executives to revive once-shelved expansion plans that would boost Teck's production to 28 million tonnes by 2012 and 30 million by 2014.

The cost of increasing output at the company's coal mines in British Columbia and northern Alberta was previously pegged at between $400-million (U.S.) and $500-million.

“We don't think it is a temporary phenomenon and I have asked our coal management team to get those plans out again and refreshed,” Mr. Lindsay said.

The ill-timed $14-billion (Canadian) acquisition of Fording Canadian Coal Trust in 2008 that was consummated just weeks before the market crash last fall saddled Teck with nearly $10-billion (U.S.) in debt. It left the miner, which also produces copper, zinc and lead, heavily exposed to coal as demand for the key ingredient in steel making fell off a cliff.

While coal prices had surged to a record $300 a tonne in 2008, many analysts feared they would plunge to about $100 a tonne for the 2009 coal year contract, which is negotiated annually with customers.

Teck was forced to sell assets, issue debt securities and sell a 17-per-cent interest in its class B shares to China's sovereign wealth fund China Investment Corp. to get its balance sheet in order.

But the company has also benefited from a better-than-expected recovery in the coking coal sector.

Teck has settled the bulk of its 2009 coal sales for $128 a tonne, a far better price than most experts had been forecasting.

While coal demand in North America and Europe has remained weak as steel production has dropped by about 40 per cent, a spate of buying by China and more recently, Brazil, has left coal producers struggling to fill orders and pushed spot market prices to about $140 a tonne.

Teck's rationalization for the costly Fording deal, which gave it full control of the Elk Valley coal operations, was a belief that the consolidation of China's steel industry and a shift in production to supersized mills on the coast would boost demand for its seaborne coking coal.

The bet appears to be paying off. While China bought just 3.2 million tonnes of seaborne coking or metallurgical coal in 2008, it is on track to purchase about 20 million tonnes this year.

“We do believe the demand will be there. There is no doubt the plans for building very large steel plants on the coast of China are continuing and that will have a significant effect on long-term demand for seaborne met coal,” Mr. Lindsay said.

Posted by Arthur Caldicott at 02:30 PM | Comments (0)

Plans shelved for new Saint John refinery

Shawn McCarthy
Globe and Mail
Saturday, Jul. 25, 2009

Irving, BP decision based on forecast that gasoline consumption in North America has peaked

Irving Oil Ltd. and partner BP PLC (BP-N50.65-0.05-0.10%) have shelved plans for an $8-billion refinery in Saint John, based on a stunning 30-year forecast that North American gasoline consumption has peaked for the foreseeable future.

Many refiners in the U.S. and Canada have re-evaluated expansion plans after last year's record oil prices and the recession have driven down demand.

A number of analysts now believe gasoline consumption in North America reached a high-water mark last year, and will remain weak even when the economy recovers.

An Irving executive said the partners concluded they simply wouldn't make a reasonable return on their proposed multibillion-dollar investment.

The family-owned oil company unveiled a proposal three years ago to build a 300,000-barrel-a-day facility to serve the northeast United States.

As refinery margins continued to grow, Irving took the next step 18 months ago and brought in BP as a high-profile partner to help shoulder the enormous capital costs.

But the market soured as rising crude costs ate into refinery profits, and then motorists cut back their driving as a result of record pump prices and the recession.

“Over the past year, some of the challenges have continued to grow and we've actually seen demand for our product fall off for the first time in many years,” Kevin Scott, Irving Oil's director of refining growth, said in an interview.

“We're looking at forecasts from 2015 to 2040, and we continue to see gasoline coming under pressure.”

He said an aging population, improvements in auto efficiency and a return of high oil prices will combine to rein in consumption.

At the same time, new refineries are coming on stream in India, China, Africa and the Middle East that will export gasoline and diesel fuel to North America and further undercut the profitability of domestic refiners, he said.

The Irving-BP decision is a blow for New Brunswick's dream of becoming an “energy hub” for eastern North America.

Irving is proceeding with the permitting of the refinery, which was planned for the Saint John waterfront next to the company's new liquefied natural gas facility. But Mr. Scott said there is only an “outside chance” that petroleum product markets would rebound sufficiently to allow the company to proceed.

The U.S. industry has roughly one million barrels a day of idle refining capacity, while the amount of gasoline in storage tanks in the U.S. has risen to a 24-year high.

“I expect – and I have been suggesting for some time – that we've likely seen a peak in North American demand,” said Michael Ervin, an independent, Calgary-based petroleum analyst.

“I think we're going to see a lot of initiatives and technology that will result in a long-term decline in demand for motor fuels. And given that there is ample spare refining capacity in North America already, I think [Irving and BP] made the right decision.”

Earlier this month, Royal Dutch Shell PLC (RDS.A-N52.240.250.48%) announced it is conducting a strategic review of some of its global refining operations, including its 130,000-barrel-a-day refinery in Montreal. Options for the 75-year-old plant include continuing its operation, selling it or closing it and transforming the property into a terminal to receive imported petroleum products.

A year ago Shell abandoned plans to build a refinery near Sarnia, Ont., to handle production from Alberta's oil sands.

Shell and its partner, Saudi Refining, have also delayed by nearly two years the expansion of their jointly-owned plant in Texas. Other U.S. companies, including Valero Energy Corp., Marathon Oil Co. and ConocoPhillips Co., have also recently announced plans to delay or suspend expansion or upgrading of refineries.

The investment pullback has prompted complaints in U.S. Congress that the oil industry is deliberately restraining capacity to maintain high prices.

But Mr. Ervin said the new refinery investments don't offer a sufficient rate of return.

Until recently, refineries operated on thin margins, while oil industry profits were generated from the extraction and sale of the crude itself.

“The refining industry certainly added to corporate profitability over the past 10 to 15 years. Prior to that, refining had never been a particularly profitable business and I think we're seeing a return to that era,” the analyst said.

He expects to see some closings of smaller refineries in the United States, particularly those that have to make investments to meet environmental goals, including low-sulphur fuel mandates and greenhouse-gas emission targets.

While the current consensus is that North American gasoline demand has peaked, that could quickly change, said Spencer Knipping, a petroleum markets analyst for the Ontario government.

If the North American economy grows more strongly than expected, if governments back off environmental demands or if crude prices stay lower than forecast, consumption of gasoline and other petroleum products could outpace expectations.

Posted by Arthur Caldicott at 02:21 PM | Comments (0)

July 24, 2009

California Legislature plan falls short of closing entire deficit

COMMENT: The California budget plan was passed by the state assembly, but without two significant bills:

- the first, rejected, would have opened the coast off Santa Barbara to new offshore drilling and would have brought $100 million to the state in its first year

- the second, tabled, would have clawed back $900 million in gas-tax money from counties

This is the good news. The bad news is that an array of social programs have been sacrificed to reduce expenditures.

Earlier today, the plan in its entirety had been approved by the state senate.

Matthew Yi, Carla Marinucci, Richard Procter
San Francisco Chronicle
Friday, July 24, 2009

The Legislature passed a plan today that fell short of closing the state's gaping $26.3 billion deficit in part because lawmakers did not approve two controversial bills - one for new oil drilling off the Santa Barbara coast and the other a plan to take gas-tax funds away from counties.

Gov. Arnold Schwarzenegger indicated he would sign the deal, despite the fact that lawmakers did not include a $920 million reserve he had demanded. The governor said he intends to use his line-item veto power to reinstate the reserve.
Exhausted legislative leaders in both houses - who stayed up all night voting on the deal - pronounced the plan flawed, but also said they desperately needed to save the state from continuing to issue millions of dollars in embarrassing IOUs and from potential insolvency.

"This particular budget will be very, very difficult for a lot of people," said Senate President Pro Tem Darrell Steinberg, D-Sacramento, referring to deep spending cuts that will certainly result in larger class sizes, higher college tuitions, and loss of health and welfare benefits to the poor, the elderly and the disabled.

Earlier today, the Senate passed all 30-plus bills in the package. The Assembly, however, did not approve two the following two bills:

A bill tabled by the Assembly would have allowed the state to take about $900 million in gas-tax revenue away from counties that rely on those funds to repair local roads.

A bill rejected by the Assembly would have raised $100 million in the current fiscal year from new oil drilling off the Santa Barbara coast.

The package approved by the Legislature included $15.6 billion in spending cuts and nearly $9 billion in borrowing and accounting revisions.

Voting in both houses of the Legislature occurred during a grueling marathon session that began Thursday night and didn't end until this afternoon when the Assembly wrapped up its session.

Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), said that "we were worried there for a while, but we got through it. We made our deal."

During the oil-drilling debate, Assemblyman Chuck DeVore, R-Irvine, running for U.S. Senate against incumbent Democrat Barbara Boxer, urged passage because he said it could bring $1.4 billion to the state coffers over the next two decades as well as hundreds of jobs to the state. He was countered by a passionate Assemblyman Pedro Nava, the Democrat whose district represents Santa Barbara, who reminded legislators of devastating oil spills in the region 40 years ago, and urged opposition.

In the end, the Senate approved that proposal, but it was rejected by the Assembly on a 43-28 vote.

Members in both houses also felt the heat from big city mayors who loudly denounced the proposal to grab billions in combined gas tax revenues, redevelopment funding and Prop. 1A monies from local governments - a move they said was unfair and unconstitutional. In the end, the compromise deal allows the state to use funding - about $200 million a year - as a loan that will be repaid over 10 years starting in 2011.

As their 24-hour session wore on, the growing pressure on Assembly legislators especially became evident. With the session dragging and legislators exhausted, Bass - facing recalcitrant lawmakers holding out on some measures - became increasingly impatient. At one point, making the traditional roll call for votes - a usually staid announcement of "all those vote who desire to vote" - she added pointedly to the holdouts, "Even those who don't desire to vote - vote."

Even after approving the stack of bills, legislative leaders said there was little to celebrate at the close with a plan that guarantees pain around California with slashing cuts to education, health and welfare programs, while grabbing needed funding from local governments.

"The only good news," said Steinberg, exhausted by the close of the Senate's grueling all-nighter which began Thursday afternoon, was "may it be the last."

In February, the Legislature pulled a similar all-night session to close a $42 billion deficit. That action relied on tax hikes, cuts and borrowing.

Steinberg said that legislators on both sides of the aisle deserved congratulations "for hanging in there and finding a way, in some ways against the odds, to get this done."

"We're a bit of a beleaguered institution," Steinberg said, but said legislators could "take pride in the fact that...we have now resolved a $60 billion plus deficit - and California is still standing."

Still, he warned that while Democrats who hold the majority in both legislative houses were willing to make painful slashes in the state's social safety net, they would hold the line on future cuts - and expect Republicans to be more willing to talk about raising revenue and taxes.

But Senate Republican leader Dennis Hollingsworth of Murrieta (Riverside County), said lawmakers should be applauded for solving the entire deficit that includes government reforms such as rooting out fraud in welfare programs and consolidating state agencies without raising new taxes.

Schwarzenegger had a higher deficit estimate - of $26.3 billion - because it partly assumed on lost savings from the missed June 30 deadline to pass a deal. But the losses turned out not to be as high as expected, budget experts said this morning. In addition, Schwarzenegger initially wanted a deeper reserve - around $2 billion, a figure that was built into the estimated deficit. But in the end, the Legislature eliminated the reserve.

Still, lawmakers were keenly aware of the increasing pressures and growing criticism regarding the budget package's many complex facets.

On Thursday, the mayors, led by Los Angeles' Antonio Villaraigosa, angrily charged that the proposed deal constituted "highway robbery" that illegally raids billions of dollars in cities' share of gas taxes and redevelopment funding. "We want to be part of the solution ... but we're not going to allow this proposal to be balanced on the backs of our cities," Villaraigosa said.

As of Thursday, 188 cities across the state - including San Francisco and Oakland - had signed resolutions indicating their support for a lawsuit that is expected to be filed by the League of California Cities and the California State Association of Counties as soon as the budget is approved by the Legislature, said the league's executive director, Chris McKenzie.

"I've never seen a reaction like this. They are livid," said McKenzie of the local leaders.

With the state's bond ratings plummeting, hundreds of millions of dollars in IOUs going out and the day fast approaching when the state's coffers are completely bare, the mayors were only the start of what appeared to be growing anger and efforts to block the budget's passage.

State Insurance Commissioner Steve Poizner, a Republican running for governor, said in a radio interview that he is considering a lawsuit over the provision in the budget that would sell a portion of the State Compensation Insurance Fund for $1 billion.

Leaders representing the 95,000 state workers who belong to the Service Employees International Union protested in the state Capitol Thursday, threatening to sue the state over the furloughs of three days per month - which are to last through June 2010.

E-mail the writers at cmarinucci@sfchronicle.com and myi@sfchronicle.com.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/24/BACE18UH4P.DTL

California Coast Spared by Vote of Assembly

by David M. Greenwald, Editor
California Progress Report
July 24, 2009

By a vote of 43-28, the California Assembly defeated a proposal that would have allowed the first first new oil drilling lease in California State waters since the 1969 Santa Barbara oil spill.

“The Governor made Santa Barbara a target for new oil drilling. I am proud that we rejected this insidious proposal,” said Assemblymember Pedro Nava. “The plan would have unraveled critical environmental protections, put the coast at risk, and set a terrible precedent while the federal government is considering their 5 year drilling plan for the outer continental shelf.”

It was a proposal that every major environmental organization in the state opposed. As Assemblymember Nava put it, “This bill has only two supporters, the Governor and the oil company.”

Under the proposal, the Governor would submit his oil drilling plan to an ad hoc committee where he is assured approval. The three member committee would include two appointees from the Governor (Secraties of Resources Agency and Cal EPA) along with the Attorney General.

“This is a sham. Other than the Attorney General, the Governor controls the ad hoc committee and there is little doubt that two of the three votes will quench the Governor’s thirst for more oil,” said Assemblymember Nava. “If your child’s little league team tried this kind of do-over, they would be disqualified and kicked out of the league. “

In a letter from 53 environmental organizations published Friday on the California Progress Report [see below]:

“While the precise language has not been released for legislative or public review, and may not be in time for any legitimate discussion, it is our understanding that it overrides the State Lands Commission’s legitimate denial of this project, creates an ad-hoc commission dominated by gubernatorial appointments, instructs this commission to find that the lease is in the best interest of the state, extends the duration of drilling operations, gives the public a mere five days of notice prior to a hearing, and fails to include any specifics on royalty payments that are supposed to be the rationale for approving this lease in this most unprecedented manner.”

The State Lands Commission report stated in part: ““The goals of the agreement could not be reliably enforced and the legal context for the public benefit requirements of the agreement prevented staff from devising mechanisms to improve enforceability. The Commission cannot reliably require PXP to stop and close production on federal leases.”

Speaking on the Assembly floor Assemblymember Nava, “The Governor’s proposal implies that when times are tough we ignore long established public policy, set aside our values, and if the state needs money it is acceptable to put our environment at risk.” He continued, “I strongly oppose this approach to development of environmental policy.”

Lieutenant Governor John Garamendi said earlier this week, “The Governor just put California's coastline up for sale when he had other options that don't put our natural resources at risk. He refused to approve a plan to tax oil companies that now extract oil in California to fund health care services, children's programs and education. California is the only oil producing state without an oil severance tax, and it would generate $1.2 billion dollars annually for our state,” Lieutenant Governor John Garamendi said.

“Instead, we are taking dirty money. Big Oil has offered to California $100 million dollars to seduce the state into granting the first new oil drilling lease in California since the Santa Barbara oil spill 41 years ago. The loan must be repaid by forgiving future royalty payments to California. This is an incredibly reckless fiscal policy.”

“This individual project off the Santa Barbara coast simply is not a Budget issue,” said Willie Pelote, California Political & Legislative Director, American Federation of State, County and Municipal Employees. “If the Governor really wants to generate more revenues he should charge oil companies for extraction just like they do in Texas, Alaska, and other oil producing states.”

Richard Charter, of Defenders of Wildlife, has 35 years of experience in coastal drilling issues. “The Administration has triggered the political equivalent of the Santa Barbara Blowout, rolling the State Lands Commission and the Democrats in the Legislature, while punching a big hole in the 40-year precedent that has protected California's own nearshore coastal waters from new offshore drilling.”

“The oil lobby, reaping tens of billions in taxpayer dollars from this scam, is laughing all the way to the bank, confident that any removal of rigs or facilities cannot be enforceable without congressional legislation they know is not even pending. If this deal goes forward, the driller's next stops are Malibu, Santa Monica Bay, and La Jolla,” said Charter.

“The enduring image of nearly every oil spill is a dead or dying bird lying on a blackened beach, its feathers covered with oil,” said Graham Chisholm, executive director of Audubon California. “Californians have stated many times that they don’t want to see any more of that destruction, and yet the budget crisis is prompting our leadership to risk exactly that. Our shorelines are too precious to take those kinds of chances.”

Assemblymember Nava concluded his remarks Friday, “This is a historic moment. How we deal with this issue will affect generations of Californians. Long time residents of Santa Barbara still clearly remember the 1969spill. Washington is looking to California to see how we handle this issue. If we approve this bill, we are sending the Obama Administration a strong message that we want more drilling.”

53 Environmental Groups Oppose Use of Budget Process To Approve New Offshore Oil Drilling Project

California Progress Report
July 24, 2009

On July 22 and 23, 53 leading California environmental organizations sent letters to Governor Schwarzenegger to express their united opposition to the reported budget deal that would overturn the recent decision by the independent State Lands Commission denying the Tranquillon Ridge project proposal based on legitimate substantive reasons including concerns over a lack of enforceability. This proposal, if approved, will represent the first new offshore oil lease in California waters in over 40 years, and a major reversal of the Governor’s past assurances that there would be no new oil drilling off California’s coast. Please visit: http://www.youtube.com/watch?v=HpdegV6g1WY

While the precise language has not been released for legislative or public review, and may not be in time for any legitimate discussion, it is our understanding that it overrides the State Lands Commission’s legitimate denial of this project, creates an ad-hoc commission dominated by gubernatorial appointments, instructs this commission to find that the lease is in the best interest of the state, extends the duration of drilling operations, gives the public a mere five days of notice prior to a hearing, and fails to include any specifics on royalty payments that are supposed to be the rationale for approving this lease in this most unprecedented manner.

Victoria Rome of the Natural Resources Defense Council said, "I think it should be very troubling to the public that a decision that was made through a public process in the light of day can be overturned by a few leaders behind closed doors." Approval of this project via the budget fails to take into account the consequences of reversing 40 years of long-standing state policy in opposition to new federal leasing and additional leasing in state waters. Further, the proposal is contrary to the principle of independence of California’s system of independent boards and commissions and their right to take action. It would weaken the State Lands Commission and establish the precedent that controversial decisions of this agency or any other State agency could potentially be reversed by creating case-by-case mechanisms for appeal and automatic approvals

Michael Endicott of Sierra Club California said, “We do not see how the Governor’s reversal on offshore oil drilling can really be in the best interest of the state, especially when there is a superior alternative that: 1) does not pose the risk of opening up new oil drilling off California’s coast, 2) does not send the message to the federal government that we want to encourage more offshore drilling activity at a time that it is reviewing its offshore drilling policies, and 3) would raise substantially more money for the people of California.”

Instead, we ask the Governor, and legislative leaders to withdraw this proposal and replace it with a much better alternative – the severance tax. The severance tax would generate much more revenue for the state. The PXP proposal would only generate with certainty a single $100 million payment that is really just an advance on royalties which would be credited to PXP’s benefit to reduce future royalty payments. A severance tax would raise up to 8 times more on an annual basis.

Dan Jacobson of Environment California observed, “Even Texas, Alaska and Oklahoma collect on the volume of oil extracted/severed from their territories. This alternative would indeed be in the short and long term best interest of the state because it would raise more revenue (not borrow against future revenue), use existing operations as its basis, and not set a bad precedent for federal regulatory activity which is reviewing offshore drilling policies as we speak.”

We stand united in our opposition to this attack on the independence of the State Lands Commission and the approval of new off shore oil drilling and urge the Governor to allow the established process to proceed.

American Cetacean Society Monterey Bay- Carol Maehr
Amigos de Bolsa Chica- Dave Carlberg
Audubon California-Dan Taylor
Beacon Foundation- Vickie Finan
Bolsa Chica Land Trust- Paul Arms
Buena Vista Audubon- Joan Horowitz
Cabrillo Wetlands Conservancy- Mary Jo Baretich
California Coastal Network- Steve Asceti
California Coastal Protection Network- Susan Jordan
Citizens for the Preservation of Parks & Beaches- Shari Mackin & Carolyn Kramer
Clean Water Action- Miriam Gordon
CLEAN-Marcia Hanscom
Coast Action Group- Point Arena- Alan Levine
Coastal Environmental Rights Foundation- Marco Gozales
Coastwalk California- Fran Gibson
Committee for Green Foothills- Lennie Roberts
Defenders of Wildlife- Richard Charter
Ecoslo-Morgan Rafferty
El Dorado Audubon- Mary Parsell
Endangered Habitats League- Dan Silver
Environment California- Dan Jacobson
Environmental Action Committee of W. Marin
Environmental Health Coalition- Laura Hunter
Friends of Harbors, Beaches and Parks- Jean Watt
Heal the Bay- Sonia Diaz
Humboldt Baykeeper- Pete Nichols
Inland Empire Waterkeeper- Autumn De Woody
League for Coastal Protection- Mel Nutter
League for Coastide Protection- Scott Boyd
Madrone Audubon- Diane Hichwa
Malibu Coast Land Conservancy- Steve Uhring
Natural Resources Defense Council- Victoria Rome
North Coast Environmental Center- Jennifer Kalt
Ocean Outfall Group- Jan D. Vaandersloot
Orange County Coastkeeper- Garry Brown
Pelican Network- Jack Ellwanger
Residents for Responsible Desalination- Merle Moshiri
San Diego Audubon- Jim Peugh
San Diego Coastkeeper- Bruce Reznik
San Luis Obispo Coastkeeper- Gordon Hensley
Santa Monica Baykeeper- Tom Ford
Save or Shore- Lauren Gilligan
Sea and Sage Audubon- Scot Thomas
Sierra Club California – Michael Endicott
South Laguna Civic Association-Bill Rihn
Surfer’s Environmental Alliance- Douglas Ardley
Urban Wildlands-Catherine Rich
Vote the Coast- Sara Wan
Western Alliance for Nature- Larry Wan
Wild Heritage Planners- Jack Eidt
Wildcoast- Serge Dedina

Posted by Arthur Caldicott at 05:14 PM | Comments (0)

July 23, 2009

Climate and CCS debate: Coal can’t have it both ways

by Ken Ward Jr.
Charleston Gazette
July 23, 2009

Yesterday, I wrote a story for the Gazette print edition about a new Harvard study that purports to detail the Realistic Costs of Carbon Capture from coal-fired power plants.

In a nutshell, the study puts the costs of capturing and storing greenhouse gas emissions from coal-fired power plants much higher than previous studies. Harvard researchers projected first-generation plants with CCS might double the cost of electricity. The costs might drop as the technology matures, but could still increase power production rates by as much as 50 percent.

This study also got some attention from The Wall Street Journal’s Environmental Capital blog, which called it a “reality check for clean coal.”

That’s probably right. But what kind of reality check? As I thought about this, it became clear that, in the national discussion over the American Clean Energy and Security Act, the coal industry is trying to have it both ways. Coal lobbyists want to argue that “clean coal” is here, but then also demand that the climate legislation working its way through Congress be further watered down, to give them more time to perfect and deploy carbon capture and storage technology.

First, let’s look at what coal is doing to trick the public into thinking that CCS technology is here, ready to go …

The other day, I tweeted and blogged about some comments singer/songwriter Steve Earle made in introducing his song “The Mountain” during a Mountain Stage radio show. I got a quick Twitter response from the folks at an industry front group called the American Coalition for Clean Coal Energy, who tweet under the name of their blog, AmericasPower:

@Kenwardjr Actually, the Edwardsport IGCC plant will reduce CO2 by up to 45%
http://sn.im/factuality5

That’s what these industry folks are doing. If anyone in the media dares to point out questions or problems with their scheme to capture carbon dioxide emissions and pump them underground, coal’s mouthpieces sprinkle the PR equivalent of pixie dust, to make it sound like CCS is some kinda magic potion to save us all.

Just take a look at the group’s blog, Behind the Plug, which is basically a collection of press releases aimed at showing that CCS will work, is working, and is going to be a huge part of our energy future.

Contrast that to the statements being made by coal industry officials in opposition to the current climate change bill:

– The National Mining Association, complains the bill “mandates near-term emission reductions before [CCS] technologies can be deployed.”

– CONSOL Energy vice president Steve Winberg, testifying to Congress last week, said CCS technologies “may be commercially viable by 2020, [but] they will not yet be deployed to a sufficient extent to avoid a serious impact on electricity prices and reliability.” He added:

Coal is our most abundant domestic energy resource and we need sustained investment in CCS technology and the time to develop, demonstrate and commercialize it. Emissions targets and timetables must be aligned with the pace of technology development.

– Friend of Coal skydiver Congressman Nick J. Rahall, explaining his vote in the House against the climate change bill, said the emissions reductions requirements are “still too high and too soon to incentivize rapid development and deployment of carbon capture and sequestration technologies so as to ensure coal-mining jobs in the future.”

– The United Mine Workers union, admitting that “the future of coal is intact” because of billions of dollars in CCS subsidies, still refusing to support the legislation and seeking more changes to benefit the industry.

– And don’t even get me started on my buddy, West Virginia Coal Association President Bill Raney, who fooled the Bluefield paper into writing this in an editorial:

According to Raney, the Obama administration is attempting to penalize the public — and coal producing regions such as southern West Virginia — based on a science that no one has a consensus on. Raney argues there are still differences of opinion regarding climate change and global warming.

Coal operators and coal-fired utilities (not to mention the mine workers union) want us to believe that CCS will work — and in fact is working — so that the public won’t demand a tougher climate bill, or tougher restrictions (or abolition) of mountaintop removal coal mining, toxic coal-ash impoundments, etc. That’s why they lure the media into writing glowing reports about CCS projects, without ever making it clear that they are very small, experimental efforts.

But, they also want us to believe that any really tough climate bill with a strong near-term emissions reductions requirement is just too much, too soon.

That doesn’t make for an honest debate.

The truth is, even experts don’t know if — let alone when — CCS is going to be ready to be installed on hundreds of coal-fired power plants across the country (and indeed, across the planet).

As I’ve pointed out before on Coal Tattoo, quoting Andrew Revkin’s New York Times’ Dot Earth blog:

Vaclav Smil, an energy expert at the University of Manitoba, has estimated that capturing and burying just 10 percent of the carbon dioxide emitted over a year from coal-fire plants at current rates would require moving volumes of compressed carbon dioxide greater than the total annual flow of oil worldwide — a massive undertaking requiring decades and trillions of dollars. “Beware of the scale,” he stressed.

You can read the paper in which Smil makes this argument here.

The new Harvard study I wrote about this week is yet another indication of the huge challenge that faces coalfield communities if coal is going to remain a viable energy source in a carbon-constrained world. Other previous major studies by MIT and the Union of Concerned Scientists drew similar conclusions and spelled out similar concerns.

There have been a lot of cheesy comparisons made between efforts to rework out energy system and the Apollo space program that put men on the Moon. But one area that seems worth thinking about is the plain talk President Kennedy gave the country about how going to the Moon was going to be hard, and that was part of why it was worth doing:

We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.

Cleaning up coal — if it can be done — might be an even bigger challenge. Can’t we at least be clear about that?

Blogs @ The Charleston Gazette

Posted by Arthur Caldicott at 01:37 PM | Comments (0)

Realistic Costs of Carbon Capture

COMMENT: The Belfer Center at Harvard has just published a study of carbon capture and storage (CCS). It has determined that the early technology ("first-of-a-kind" or FOAK) implementations will cost in the range of $120-$180 per tonne of CO2 "avoided". On first take, it suggests that a CCS requirement will put the coal business out of business.

Expect plenty of media attention to this discussion paper in coming days. We will add some of them to this post.

CCS, like corn ethanol, and the hydrogen highway, looks like another of those business-as-usual panaceas that government so seems to love - that costs a fortune and doesn't do what it's supposed to do or certainly can't do it in any useful timeframe.

Discussion Paper
July 2009

Authors: Mohammed Al-Juaied, Former Visiting Scholar, Energy Technology Innovation Policy research group, 2008-2009, Adam Whitmore

Belfer Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University

ABSTRACT

There is a growing interest in carbon capture and storage (CCS) as a means of reducing carbon dioxide (CO2) emissions. However there are substantial uncertainties about the costs of CCS. Costs for pre-combustion capture with compression (i.e. excluding costs of transport and storage and any revenue from EOR associated with storage) are examined in this discussion paper for First-of-a-Kind (FOAK) plant and for more mature technologies, or Nth-of-a-Kind plant (NOAK).

For FOAK plant using solid fuels the levelised cost of electricity on a 2008 basis is approximately 10¢/kWh higher with capture than for conventional plants (with a range of 8-12 ¢/kWh). Costs of abatement are found typically to be approximately $150/tCO2 avoided (with a range of $120-180/tCO2 avoided). For NOAK plants the additional cost of electricity with capture is approximately 2-5¢/kWh, with costs of the range of $35-70/tCO2 avoided. Costs of abatement with carbon capture for other fuels and technologies are also estimated for NOAK plants. The costs of abatement are calculated with reference to conventional SCPC plant for both emissions and costs of electricity.

Estimates for both FOAK and NOAK are mainly based on cost data from 2008, which was at the end of a period of sustained escalation in the costs of power generation plant and other large capital projects. There are now indications of costs falling from these levels. This may reduce the costs of abatement and costs presented here may be "peak of the market" estimates.

If general cost levels return, for example, to those prevailing in 2005 to 2006 (by which time significant cost escalation had already occurred from previous levels), then costs of capture and compression for FOAK plants are expected to be $110/tCO2 avoided (with a range of $90-135/tCO2 avoided). For NOAK plants costs are expected to be $25-50/tCO2.

Based on these considerations a likely representative range of costs of abatement from CCS excluding transport and storage costs appears to be $100-150/tCO2 for first-of-a-kind plants and perhaps $30-50/tCO2 for nth-of-a-kind plants.

The estimates for FOAK and NOAK costs appear to be broadly consistent in the light of estimates of the potential for cost reductions with increased experience. Cost reductions are expected from increasing scale, learning on individual components, and technological innovation including improved plant integration. Innovation and integration can both lower costs and increase net output with a given cost base. These factors are expected to reduce abatement costs by approximately 65% by 2030.

The range of estimated costs for NOAK plants is within the range of plausible future carbon prices, implying that mature technology would be competitive with conventional fossil fuel plants at prevailing carbon prices.

2009_AlJuaied_Whitmore_Realistic_Costs_of_Carbon_Capture_web.pdf (454K PDF)

For more information about this publication please contact the ETIP Coordinator at 617-495-7961.

For Academic Citation:
Al-Juaied, Mohammed and Adam Whitmore. "Realistic Costs of Carbon Capture." Discussion Paper 2009-08, Energy Technology Innovation Research Group, Belfer Center for Science and International Affairs, Harvard Kennedy School, July 2009

http://belfercenter.ksg.harvard.edu/publication/19185/realistic_costs_of_carbon_capture.html

July 21, 2009

Carbon capture for coal costly, study finds

By Ken Ward Jr.
Charleston Gazette
July 21, 2009

To read the study, click here:

Clean Coal: Competitive Someday, Just Not Today

Keith Johnson
Wall Street Journal
July 20, 2009

The cavalry’s coming–maybe

As if Big Coal’s protests weren’t enough, here’s another reality check for “clean coal.” Harvard’s Belfer Center just released an analysis of the costs of carbon capture and storage for coal-fired plants.

The good news? Clean coal could become an economically viable alternative source of energy down the road. The bad news? It’s a long road—and the short term isn’t pretty.

“The Realistic Costs of Carbon Capture,” which examined the economics of trapping carbon emissions from coal-fired plants now and in the future, concludes that making coal plants “clean” will be an expensive undertaking until the technology is mature. Actually storing the stuff underground might cost more money, or might be a source of revenue, depending whether it’s used to juice tired oil fields or just stuck in caves.

How much will clean coal cost? The first generation of plants will be able to capture 90% of their carbon emissions at a cost of between $100 and $150 a ton. In layman’s terms, that would add between 8 and 12 cents per kilowatt hour to the cost of coal plants (the national average electricity price is about 9 cents per kilowatt hour).

Once the technology is mature and more efficient plants are up and running, the economics look better: It will cost between $30 and $50 per ton of carbon, or an extra 2 to 5 cents per kilowatt hour. To quote the report: “The range of estimated costs for [future] plants is within the range of plausible future carbon prices, implying that mature technology would be competitive with conventional fossil fuel plants at prevailing carbon prices.”

The problem is determining just when clean coal leaves behind its gawky adolescence and enters adulthood. It’s not a question of getting a couple of demonstration plants up and running; rather the world needs to make a huge, concerted push to enjoy economies of scale and the like. Harvard figures that “maturity” means between 50 and 100 gigawatts of clean coal plants in operation. Right now, there are four demonstration plants in the world, not including FutureGen.

One interesting tidbit: Less is not more. That is, “clean coal” doesn’t get any cheaper by capturing fewer of the plant’s emissions (as the reborn FutureGen seeks to do). To wit: “Indeed for the benchmark of a conventional coal plant…costs decrease markedly with increasing capture rates… There do not seem to be any grounds based on unit cost of abatement to prefer lower capture rates” for advanced coal plants.

Posted by Arthur Caldicott at 12:30 PM | Comments (0)

July 22, 2009

Dig the coal, bury the carbon

COMMENT: This article reads like it was written by coal industry PR flacks trying really hard to achieve a "balanced" report on coal, carbon emissions, and how industry and government are fixing the problem without harming the patient.

But later it reveals what we really know about carbon capture and sequestration (CCS) - it isn't a proven technology, Canadian and US governments are sinking billions into it, and it's letting the coal industry carry on as usual.

What the article does not get across, is the urgency with which we need to rein in emissions from carbon combustion, and how pointless CCS is. It's like designing a new kind of detection system after the Titanic has run into its iceberg. Worth exploring one day, but we have a more immediate crisis, glub, glub, glub.

By Mark Clayton
The Christian Science Monitor
July 21, 2009

New coal-fired power plants will capture CO2 and inject it into the earth.

Coal miner Nathan Genisio bolts the roof of the Gateway coal mine near Coulterville, Ill. (Seth Perlman/AP/FILE)

EDWARDSPORT, IND., and DECATUR, ILL.

On the back roads near Edwardsport, Ind., jutting from a hillside carpeted with corn, a steel tower conveyer belt lifts from a mine below a black stream that spills out to become a growing mountain of coal.

Corn used for ethanol may be renewable, but coal is still king of energy crops in the boot tip of the Hoosier State. Yet if coal is to keep its crown, the phrase “clean coal” will need to be more than a slogan.

(Rich Clabaugh/Staff/The Christian Science Monitor)

Power utilities, coal producers, and coal-rich states are racing to preserve coal’s viability as a fuel, as Washington pushes to cap carbon emissions. This region is also working to establish itself as a hub for storing greenhouse gases deep underground permanently. To do that, however, will require technology that can capture carbon dioxide (CO2) emissions from coal power plants at moderate cost.

While many environmentalists decry any further deployment of coal-based power technologies, some people say that because coal is cheap, it will continue to be used for power generation worldwide and therefore carbon capture and sequestration (CCS) technology is critical to curbing global warming.

“We have to show ourselves and others how to do this – how to slow these emissions – or it’s going to be game over,” says John Thompson, director of the Coal Transition Project of the Clean Air Task Force, a national environmental group.

At least one-quarter of the 30 billion tons or so of new human-caused CO2 emitted each year comes from burning coal to generate power, according to Emerging Energy Research, an energy market-research firm in Boston.

Although solar and wind power and other renewable technologies are expected to generate more power in the future, coal is expected to remain a dominant fuel for decades. With numerous new coal-fired power plants being built in China and India, the US must take the lead in quickly developing new ways to slash CO2 emissions from them, Mr. Thompson says. Otherwise, he notes, the world could end up experiencing what climate scientists call the “more dangerous effects” of climate change.

“If coal is to maintain its share in the global power generation mix over the next two decades, its carbon emissions must be mitigated through the capture of CO2,” says Alex Klein, research director for Emerging Energy Research.

Underground storage of carbon dioxide has been demonstrated on a small scale, but large-scale commercial viability is still uncertain, analysts say. Nearly 120 CCS projects are under way worldwide in hopes of proving its effectiveness.

Nowhere in the United States is the bid to develop CCS moving faster than here in southern Indiana, Illinois, and Kentucky – whose coal fortunes intersect where the Ohio River meets the Wabash River.

“The Midwest has got the three things you want most – deep saline aquifers to store CO2, coal for gasification, and big-city power demand,” says Kevin Book, managing director at ClearView Energy Partners, an energy market-research firm in Washington, D.C.

Also important: climate-change legislation under consideration in Congress that could, Mr. Book says, pump some $75 billion into CCS development over the next 25 years.

But Midwestern states are not waiting on Washington. In Kentucky, plans are moving ahead for a coal-gasification power plant. In Illinois, a consortium of businesses is racing to develop the high-profile FutureGen coal-power project, which could capture from 60 to 90 percent of its emissions and pump them underground.

In January, Illinois adopted a “clean coal portfolio” law that requires state utilities by 2015 to get 5 percent of their electricity from power plants that capture CO2 emissions and store them permanently underground. It also sets a goal of 25 percent “clean coal” by 2025.

But first, researchers such as Sallie Greenberg, an environmental geologist with the Illinois State Geological Survey, need to prove that the geology can hold CO2 under pressure in perpetuity.

She’s standing here in what was a Decatur, Ill., farm field, on a mud-and-gravel platform where a massive steel cap sits atop what could be the nation’s first commercial-scale CO2 injection well.

In April, researchers will begin pumping 1,000 tons of CO2 a day more than 6,000 feet into a porous sandstone layer far below aquifers that provide drinking water. That layer, known as the Mount Simon, should hold the CO2 for eons beneath a 300-foot shale cap, she says.

“We will monitor this site for at least three years and know in some detail whether or not CO2 is escaping,” she says. “But we think the geology shows a high likelihood the CO2 will stay down.”

Similar tests have been conducted elsewhere. But only pumping much larger amounts of CO2 will prove whether it will stay put. Initially that CO2 will come from a nearby Archer Daniels Midland ethanol plant. By sequestering about 1 million tons of CO2 from ethanol over three years, the project will show if the same could be done for power projects – or any CO2-intensive industry, says Rob Finley, director of the Illinois State Geological Survey Center for Energy and Earth Resources.

Success here could mean a boon for CO2 sequestration from ethanol, cement, and manufacturing plants. It could also support an expansion in mining Illinois’s high-sulfur coal – if carbon dioxide and other pollutants, like sulfur, can be removed inexpensively, says Warren Ribley, director of the Illinois Department of Commerce and Economic Opportunity.

There are other options for using the captured CO2: Plans are afoot to run a pipeline from Illinois to Mississippi, where CO2 could be pumped underground to extract oil remaining in depleted fields.

All of this hinges on capture technology, which accounts for three-quarters of the cost of CCS today. The leading technology is integrated gasification and combined cycle (IGCC), which adds 20 percent to the cost of building a new power plant but lowers the cost of removing carbon dioxide from the plant’s exhaust.

Here in Edwardsport, in a quarter-mile-wide bowl of mud, cranes, and concrete, workers are bolting together the world’s first large-scale commercial IGCC power plant. On track to begin generating by 2012, the new $2.3 billion plant – being built by Duke Energy with $460 million in local, state, and federal tax incentives – is being watched closely by lawmakers, environmentalists, and the energy industry.

When it opens, the plant should be the cleanest coal power plant in the nation, company officials say. More important, if it receives state approval as expected, the plant will, as early as 2013, also begin capturing up to 1 million tons of its own CO2 annually and pumping it underground.

“Whether we’re producing steel or generating electricity, it’s all heavily carbon intensive,” says David Pippen, policy director for energy, environment, and natural resources for the governor of Indiana. “We feel that for some time to come, our nation is going to produce CO2. So, to the extent we in Indiana can sequester it, we want to be part of the solution.”

But not everyone is persuaded that CCS is necessary or safe. In a study last year, the environmental advocacy group Greenpeace declared CCS “unproven, risky, and expensive.” Leakage of just 1 percent of CO2 from storage would undermine greenhouse-gas reduction programs. Renewable-energy development might suffer, and CCS could raise concerns about human health, ecosystem damage, and groundwater contamination.

The Natural Resources Defense Council applauded the House of Representatives’ passage of a climate-energy bill that contained billions for CCS, but others say that the spending was a sop to win coal-state votes – and poor environmental policy.

Energy efficiency; wind, solar, and geothermal power; and a more efficient power grid can meet US and global energy needs, according to Friends of the Earth in Washington. Opposed to the climate-energy bill and to CCS, the group favors a moratorium on new coal-fuel power plants.

“Instead of developing CCS capability, we should move away from coal altogether,” says Nick Berning, a Friends of the Earth spokesman. “Even if [cost and liability] concerns were overcome, you would still have the problem that coal mining and mountaintop removal is an inherently dirty process. We don’t need it.”

Needed: a retrofit breakthrough for coal power plants

Building new coal power plants that capture and sequester their own greenhouse gases would not by itself capture enough CO2 to cool the planet, a new report says.

Still to be invented is a cost-effective carbon-dioxide-capture technology that can be retrofitted to existing conventional coal power plants, a Massachusetts Institute of Technology study says.

There is no credible pathway toward prudent greenhouse gas stabilization targets without CO2 emissions reduction from existing coal power plants,” said Ernest Moniz, director of MIT’s Energy Initiative program in a statement. “These coal plants are going to continue to operate for decades….”

Fewer than half of existing coal-fired plants are large enough or new enough to justify such a retrofit using current CO2 capture technologies. Even if retrofits are affordable, applying them creates a dilemma: The technology gobbles up much of the power plant’s capacity, so extra power is needed from – where? Another coal-fired plant? Renewable energy?

Nationwide, about 320 coal-fired generating units could use such retrofits, according to Ventyx and E3 Consulting, two power industry consulting firms. That would cut 55 gigawatts of generating capacity – a one-sixth drop in the nation’s 310 gigawatts of capacity from coal.

Kevin Book, managing director for Clearview Energy Partners, puts it this way: “The breakthrough we don’t have yet is an affordable retrofit technology. We had better invent something soon.”

Posted by Arthur Caldicott at 11:55 PM | Comments (0)

July 21, 2009

At what price 'white man's money'?

Shawn McCarthy
Globe and Mail
Jul. 21, 2009

The candidates vying to succeed Grand Chief Phil Fontaine pretty much agree that economic development is the key to prosperity for Canada's native people. Many others, however, fear the cost

Each spring, Art Sterritt and his family gather at his wife's ancestral home among B.C.'s Gitga'at people to harvest seaweed, clams and cockles on the shores of Hartley Bay near Kitimat.

The event is more than vacation; it connects the 60-year-old grandfather and his growing family to a way of life that has existed for a millennium.

But the Gitga'at and other aboriginal people on the isolated coast worry about a new and dire threat to that natural abundance that forms the basis of their cultural identity.

Calgary-based Enbridge Inc. plans to build a 1,170-kilometre pipeline to carry oil-sands crude from Edmonton. Double-hulled tankers would navigate 80 kilometres up Hartley Bay to Kitimat to take it the rest of the way to Asia and the U.S. West Coast.

First nations in the region adamantly oppose the tanker traffic, fearful that spills and even heavy wakes from the massive vessels would disrupt the tidal environment that nourishes them.

"The dangers of it are monumental," says Mr. Sterritt, who is executive director of Coastal First Nations, an umbrella group that pursues sustainable economic development for 10 member communities.

"The minute there is tanker traffic, there is damage to a way of life."

But native people also badly need the jobs that would come from building and maintaining the pipeline as well as operating the marine terminal in Kitimat. In fact, the whole town is suffering so badly from the loss of industrial jobs and population that the local hospital may have to close.

Enbridge is offering aboriginal communities not only training and jobs, but the opportunity to own 10 per cent of the $4.5-billion project.

Long excluded from the development of Canada's natural resources, many native leaders now insist their people must take part, and warn that failure to include them could derail projects.

The five candidates in next week's vote to choose a successor to Phil Fontaine as Grand Chief of the Assembly of First Nations have all promised to pursue resource development as a way of alleviating the appalling poverty and social conditions on reserves.

"This represents an enormous opportunity for us," Mr. Fontaine says.

NO CONSULTATION, NO DEVELOPMENT

From the Enbridge project (known as the Northern Gateway) and the proposed Mackenzie Gas Pipeline in the Northwest Territories to the Lower Churchill River hydro development in Labrador and the development of wind power and transmission lines in Southwestern Ontario, energy companies are facing people who are newly empowered as well as assertive. After a series of Supreme Court of Canada decisions, governments now have a duty to "consult and accommodate" first nations before the approval of any development that has an impact on their traditional lands.

"We expect that, if we do this right, there is a real good opportunity to turn the corner in terms of first nations poverty," Mr. Fontaine explains in an interview.

"But it will only occur if our people are trained and we develop a highly skilled, highly mobile work force, and if this legal requirement - this duty to consult and accommodate aboriginal interests - is reflected in policy at all levels of government."

In many cases, the native groups want to become full partners in the developments, and some are pursuing their own projects, most notably renewable energy in Ontario. At the very least, they expect to be fully consulted and to share in the financial benefits that flow from the resource projects on their traditional lands. Although they don't have veto power, they can harass developers with court action unless properly accommodated.

But the push for development has sparked debate within aboriginal communities, pitting those who see development as an answer to the poverty that plagues native peoples against those who fear that, even with aboriginal input, the environmental and cultural impact on their way of life will be too great.

Communities on the B.C. coast, for example, prefer low-impact development opportunities, including eco-tourism, fish farming and sustainable forestry, to the polluting, scarring resource extraction that typically provides jobs in remote areas.

And they make common cause with environmental groups and native protesters who oppose the proposed expansions of oil-sands extraction as a poisonous blight on the land.

However, other first nations remain eager for the income and employment that resource development can offer. They insist that they can work with corporations and government to minimize the impact, even in the oil sands.

This week, the Birch Narrows Dene Nation in northwest Saskatchewan signed an agreement with Calgary-based Oilsands Quest Inc., which hopes to introduce oil-sand extraction to the wheat-field province.

According to Chief Robert Sylvester, the pact offers "new business and employment opportunities for our local residents, and also recognizes that social, economic and environmental impacts need to be addressed."

On the Northern Gateway pipeline, Enbridge is already in talks with 30 of the 50 first nations whose traditional lands would be traversed. The aim is to secure their consent, or at least satisfy the need to "consult and accommodate" before governments can approve the project.

As well, the company has signed agreements with aboriginal communities in Saskatchewan and Manitoba, where its main pipeline carries oil-sands bitumen from Alberta to the United States.

However, one candidate for the AFN leadership, Manitoba Chief Terrance Nelson, has slammed the pipeline companies and the National Energy Board for proceeding with projects over the objections of his Roseau River First Nation. He is urging the AFN to take a militant approach, promoting the use of civil disobedience and U.S. courts to block developments unless aboriginal rights to the land and resources are fully respected.

A long shot to succeed Mr. Fontaine, he says he doesn't want "white man's money," but his rivals are promoting co-operation with companies eager to operate in native territory.

THE EAST ALSO HAS AN ENERGY CASH COW

In the West, the oil industry offers the greatest potential benefits, but the big prize in Manitoba and Eastern Canada is electric-power development.

In Newfoundland and Labrador, Innu leaders are close to a deal for a benefits package from the Lower Churchill development - one that is expected to include a small ownership stake in the project.

In Ontario, the provincial government last fall withdrew its long-term energy plan and told its Ontario Power Authority to conduct more consultations with first nations to ensure their concerns are met. The province's Clean Energy Act will allow native communities to develop their own power projects and sell the electricity to the grid at attractive rates.

The co-operation of aboriginal groups is critical to Ontario's plan to develop renewable sources - the most attractive sites tend to be far from population centres and will require new transmission lines across native land.

Hydro One, the provincially owned transmission company, has had to halt construction of a high-voltage line from Niagara to Hamilton after protesters from Six Nations reserves set up barricades over land claims near Caledonia.

The agency also has negotiated co-operation agreements with Indian and Métis communities along a planned transmission line to Milton that would deliver power from a retooled Bruce Nuclear plant as well as any new wind projects on Lake Huron and Georgian Bay.

First nations are looking to launch their own energy projects as well as benefit from corporate-driven developments. But native leaders warn that governments and companies will have to help them so they can properly consult in planning and maximize their benefits.

The developers will need to be patient, says Angus Toulouse, Ontario regional chief for the AFN, while communities come to grips with the often-overwhelming requirements for expert decision-making.

"There is obviously a desire of industry to move quickly, because time is money," Mr. Toulouse concedes. "But without a reasonable level of resources made available, many first nations simply have no capacity to engage."

They also have little access to capital, so governments will have to find innovative ways to help them take part in projects. But the native communities themselves will need to be patient.

The 4,200-member Walpole Island First Nation has been pursuing a wind-energy project for five years, spending about $800,000 on wind monitoring and other preparations.

Located on the shores of Lake St. Clair in Southwestern Ontario, the band had hoped to construct a 50-megawatt wind farm under the province's former Standing Offer program, but found it impossible to navigate the conflicts between the project's regulations and the federal Indian Act, which governs their community.

The province revamped its renewable energy policy under the Clean Energy Act, and Walpole Island now expects to proceed with a 10-megawatt, five-turbine site on nearby St. Anne's Island at a cost of $35-million.

The Walpole band is negotiating with a joint-venture partner, which will provide half the financing and the expertise in managing a wind project.

As well, they will benefit from a provincial loan-guarantee program for first nations' renewable projects and a "price adder" that will bump up the already-generous tariff being offered by the province.

The band hopes to use the income from the project to assume control of the island's power-distribution company and, economic development officer Lee White says, to subsidize electricity costs for its members.

He warns, however, that the provincial government's well-intentioned plans for native-backed renewable energy will be difficult to achieve, given bureaucratic inertia and the first nation's lack of trained people.

"Maybe we should all be given some Viagra," Mr. White says. "You have to be very patient and stay the course, because there are a lot of things that have to happen before first nations can participate."

YOUNG PEOPLE ARE KEEN - AND IMPATIENT

In many communities, the promise of participation in resource development is being greeted with considerable skepticism, given false starts and broken promises seen in the past.

Younger leaders are embracing the idea that resource development - in partnership with non-native corporations - will help to ease the Third World conditions found on so many reserves, says Mr. Toulouse, the AFN chief for Ontario, who hails from Sagamok Anishnawbek, a community north of Lake Huron.

But they need to see results: "The frustration will grow quickly if youth doesn't see the kind of development that elders tell them is available,"
he says.

And from frustration arises further conflict.

Shawn McCarthy is The Globe and Mail's energy reporter, based in Ottawa.

Posted by Arthur Caldicott at 09:36 AM | Comments (0)

July 20, 2009

TransAlta offers $654 million in cash to acquire Canadian Hydro Developers

COMMENT: Renewable energy is good business, especially when utility buyers like BC Hydro and Hydro Quebec guarantee a long-term, risk-free revenue stream to the development companies. In its portfolio of about 700 MW of generation projects, Canadian Hydro Developers has about 100 MW in BC, and other streams lined up.

(Though TransAlta's energy interests are historically and primarily in coal-fired generation, and it has no intention of relinquishing that business base, the company has also expanded significantly to hydro, geothermal and wind. It has no projects in BC today, that I can think of. In 1998 it jointly built a gas-fired generation plant in Fort Nelson, and in 2001, sold it to BC Hydro. Also in 2001, Larry Bell, then a TransAlta director, was appointed as chair of BC Hydro. Dawn Farrell, formerly an executive VP at BC Hydro, is now Chief Operating Officer at TransAlta.)

This is another example of the big capital that is chasing power generation opportunities in BC. Canadian Hydro's stock shot from $1.19 a share to $4.84 with this takeover bid by TransAlta.

Canadian Press
Oilweek
July 20, 2009

CALGARY - After a failed attempt at a friendly deal with renewable power producer Canadian Hydro Developers (TSX:KHD), TransAlta Corp. (TSX:TA) says it is taking its $654 million all-cash hostile takeover offer directly to the target company´s shareholders.

With 143.7 million shares outstanding, the $4.55 per share bid, announced Monday, values Canadian Hydro at $654 million. However, TransAlta said including debt and other financial measures, the enterprise value of the bid is $1.5 billion.

TransAlta, a Calgary-based utility, said it approached Canadian Hydro´s board in December with a written offer, but was told the hydro, wind and biomass company preferred to remain independent.

"They made no reference to price. We made a full offer to their board and received back a note saying they do not want to pursue it. It´s simple as that," TransAlta chief utive Steve Snyder on a conference call with analysts and investors.

On the call, Snyder said proposed transaction is in the best interest of Canadian Hydro shareholders.

"Absent this offer, we believe they face significant uncertainty in today´s environment," he said.

"Our industry is highly capital intensive and financing can be challenging as a small, standalone company."

TransAlta said the offer is a premium of about 30 per cent to the average trading price of Canadian Hydro Developers common shares on the Toronto Stock Exchange for the last 10 trading days.

A takeover circular will be made available to Canadian Hydro shareholders on Wednesday.

"We have great respect for the company and its employees, and believe our respective shareholders and other stakeholders would be very well-served by the combination of these two great Alberta-based businesses," said Snyder.

TransAlta, which mainly operates mainly coal- and natural gas-fired power plants, wants to expand into renewable energy sources as environmental regulations become more stringent.

"We believe the combination of Canadian Hydro Developers´ portfolio and our operational and development capabilities and strong balance sheet, s a company well-positioned to succeed in a world in which both capital and carbon are constrained," Snyder said.

Canadian Hydro Developers operates 694 megawatts of wind, hydro and biomass power plants in Alberta, Ontario, Quebec and British Columbia. It also has 252 megawatts of advanced development projects in western and eastern Canada.

Combined, TransAlta and Canadian Hydro Developers would have net generation capacity of 8,657 megawatts in operation. The renewables portfolio would include 1,900 megawatts, or 22 per cent of the combined portfolio.

Going into trading Monday, Canadian Hydro had a stock market value of about $524 million, compared with an enterprise value of $1.5 billion.

Enterprise value is a measure of a company´s value, often used as an alternative to traditional stock market capitalization. The measure is calculated as market cap plus debt, minority interest and preferred shares minus total cash and cash equivalents.

TransAlta said the transaction will be funded initially with new credit from the Royal Bank of Canada and later with issues of corporate debt and between $200 million and $300 million of new equity.

The power producer said its bid will not have an impact on the company´s current dividend policy.

TransAlta said the offer will expire Aug. 27 and is subject to an acceptance of two thirds of common shares tendered. It would also need approval from the federal Competition Bureau and from provincial power regulators.

In Monday trading on the Toronto Stock Exchange, TransAlta shares fell 13 cents to $20.88.

Meanwhile, Canadian Hydro stock jumped $1.19 to $4.84, a gain of 32.6 per cent in trading of 14.5 million shares.

The stock price jump above the TransAlta bid price suggests investors believe Canadian Hydro deserves a higher offer, either from TransAlta or from another bidder.

http://www.oilweek.com/news.asp?ID=23597

TransAlta signals green intentions with Canadian Hydro bid

Shawn McCarthy
Globe and Mail
Tuesday, Jul. 21, 2009

$653-million offer would give the heavily coal-based company one of the largest wind and renewable portfolios in the country

TransAlta Corp. (TA-T21.070.271.30%) is sending a clear signal that it is counting on renewable power to fuel its growth for at least the next decade, unveiling a hostile offer for Canada's largest independent alternative energy producer.

TransAlta, whose traditional coal-fired power business faces years of government-imposed stagnation as a result of pending climate change regulations, Monday launched a $653-million bid for Canadian Hydro Developers Inc., (KHD-T5.000.102.04%) which has a stable of operating and planned wind, hydro and biomass projects.

Analysts said they expect TransAlta, one of Canada's largest electricity producers, will have to boost its $4.55-a-share offer after Canadian Hydro rebuffed TransAlta's earlier, seven-month courtship aimed at securing a friendly deal.

Faced with burdensome climate change regulations, the company doesn't expect to build any new coal plants once it completes its Keephills 3 plant, scheduled to open in 2011.

TransAlta chief executive officer Steve Snyder said the industry has to find commercially viable means to significantly reduce greenhouse gas emissions for new coal- and natural-gas-fired plants.

“Thermal energy, and coal in particular, are going to have to develop cost-competitive technologies to fundamentally reduce their carbon footprint in order to be a viable part of the electricity mix,” Mr. Snyder said in a telephone interview.

“Do I think it is going to happen? Yes. Do I think it is going to happen in the next 10 years? No. But it will happen.”

In the meantime, power producers like TransAlta will have to turn to renewable sources – including wind, hydro and biomass – to meet electricity demand that is expected to grow again once the recession ends.

TransAlta now relies on renewables for 15 per cent of its power output. That share would climb to 22 per cent with the acquisition of Canadian Hydro Developers.

TransAlta would also reduce its emissions of greenhouse gas on a per-megawatt basis. It could use new projects planned by Canadian Hydro – as well as those TransAlta is currently developing – to offset emissions from its coal- and natural-gas-fired plants in order to meet federal climate change regulations that are expected to be announced later this year. However, until the federal government unveils its regulatory framework for the power sector, the value of the credits generated by renewable power sources remains uncertain.

Mr. Snyder began courting Canadian Hydro in December, but received no indication that the company would entertain a takeover offer.

John Keating, who founded Canadian Hydro with his brother Ross in 1989, recently retired as CEO, and some analysts believe TransAlta waited for the transition before making the hostile bid directly to shareholders.

Canadian Hydro's board, which includes the founders, was meeting late yesterday to discuss the bid, but did not issue any response prior to deadline. Under a shareholders' rights plan adopted by Canadian Hydro, TransAlta would have to win the support of two-thirds of equity holders in order to succeed.

TransAlta argues that the smaller independent faces a tough future given the depressed market for electricity in Canada, and the difficulties in credit markets. The cash offer of $4.55 a share represents a 25-per-cent premium over Friday's closing price. Including the assumption of Canadian Hydro's debt, the deal would be worth $1.5-billion.

Investors clearly expect TransAlta to sweeten its bid, as Canadian Hydro jumped $1.25 – or 34 per cent – to $4.90 on the Toronto Stock Exchange Monday.

TransAlta's offer provides a decent valuation of Canadian Hydro's assets compared with some recent deals in the power sector, but could be enriched, said analyst Ben Isaacson of Scotia Capital Inc.

Mr. Isaacson said Canadian Hydro has been able to secure financing for its projects in the past and, with credit markets easing, will be able do so again. “I don't think the offer price is fairly valuing Canadian Hydro's potential value to TransAlta, and I think there is quite a bit more upside to go,” Mr. Isaacson said.

Mr. Snyder said the market typically overinflates share prices in companies that are targets of acquisition, and insisted he is prepared to walk away before exceeding TransAlta's expected rate of return on the investment.

“This offer provides Canadian Hydro Developers shareholders with significant, immediate and certain value for the company's existing assets, as well as its future growth potential,” he said in a morning conference call.

“For TransAlta, this transaction accelerates our current strategy and extends our leadership position to become the largest publicly traded provider of renewable energy in Canada,” he said.

Canadian Hydro operates 694 megawatts of wind, hydro and biomass facilities in Alberta, Ontario, Quebec and British Columbia, including the recently commissioned Wolfe Island wind farm near Kingston. It also has 252 megawatts in advanced stage of development elsewhere in Canada.

TransAlta, which operates in Canada, the United States and Australia, has been expanding its own renewable portfolio in recently years, primarily through wind projects in southern Alberta.

Posted by Arthur Caldicott at 04:17 PM | Comments (0)

Operators See No Immediate Need For Pipelines To Kitimat

By Richard Macedo
Oil Sands Review
July 9, 2009

Opening up Asian markets for growing oilsands production is a top strategic goal for producers, although pipelines that could further support this, such as like proposals to Kitimat, British Columbia, are still a ways off, major pipeline operators said Wednesday.

Ian Anderson, president of Kinder Morgan Canada, told a TD Newcrest unconventional oil conference that the Kitimat option is on the company's radar screen.

"It's a great northern port option," he said. "(Enbridge Inc.) has done a lot more work than we have in accessing Kitimat.

"We stand with them in recognition of the viability of Kitimat and the attractiveness of Kitimat."

He said, though, that incremental expansion south to the Port of Vancouver and increasing ship sizes over time is more in line with where the supply/demand economics will be, at least for the next decade.

"Kitimat remains an option for us," he noted. "We've got the capabilities to go into Kitimat, we've done enough preliminary work to understand what some of the basic engineering is to get into Kitimat.

"The key question when you think about Asia is when will producers develop the markets for Canadian crude in an adequate volume that would support and underpin a major pipeline expansion for the West Coast?"

The company has shipped Canadian crude through the Trans Mountain pipeline to tidewater for over 50 years. While the majority of volumes shipped by tanker go to California, some bbls have gone to the United States Gulf Coast and Asia, Norm Rinne, senior director of business development with KMC, later told the Bulletin.

When examining its marine exports on a monthly basis, he said that in March, 134,000 bbls per day was shipped across the dock in the Lower Mainland, a record. This, he said, illustrates more clearly the capacity of the existing pipeline system and the ability for Canadian crude to access tidewater in response to changing market conditions.

Deliveries across the dock are typically heavy crude.

Trans Mountain was recently expanded with the support of shippers in 2008 from 225,000 bbls per day to 300,000 bbls.

"Part of this pipeline expansion was to support growing marine exports," he noted. "This year we expect about 70,000 bbls per day on average will be loaded onto tankers.

"In addition, changing rules that govern tanker movements through the Port of Vancouver will see savings for our customers in excess of 50 cents per bbl for Aframax tankers to Asia making these movements more attractive for buyers and sellers."

KMC has two incremental expansions available to the south coast supporting deliveries to the pipeline connected Washington State refineries and marine exports through Vancouver to California, the U.S. Gulf Coast and Asia.

Rinne said that these are the lowest cost expansions (25% of the second pipe is already in the ground) and when combined with low pipeline tolls and competitive tanker costs, "should serve these markets well for many years."

"We do not at this time have commercial agreements in place with customers to underpin these expansions and have therefore not made the necessary regulatory applications to move forward," he added. "We can do so relatively quickly once commercial agreements are in place. We expect this will occur in lock step with longer-term crude supply deals being made between Canadian producers and customers.

"Because Kinder Morgan already has an operating pipeline that provides tanker access we believe Kitimat makes sense when we have reached the maximum capacity of those facilities (or) our customers require VLCC (very large crude carrier) tanker access to Asian markets. We have done the necessary technical work to confirm that Kitimat is a viable location."

Rinne said that the expansion to Kitimat will happen later rather than sooner and it will occur in smaller incremental phases as production and markets grow.

"The recent slowdown of production growth and approximately one million bbls per day of new pipeline capacity to PADD II and more planned into PADD III reinforce our view on this," he noted.

In the event that market conditions change and the company is asked to build to Kitimat, Rinne said KMC can lever off its existing Trans Mountain base and extend a 750 kilometre long line from Valemount, B.C. to Kitimat, the northern leg.

"Our expansion plans have been designed to be modular so we can go north to Kitimat before or after expansion to the south coast," he said. "It is impossible to put a time on when this expansion might happen as that timing is in the hands of our customers."

Al Monaco, executive vice-president, major projects for Enbridge Inc. said the current supply profile doesn't dictate an immediate need for a project like its proposed Northern Gateway. This would transport crude from Edmonton to Kitimat where it would be loaded into VLCCs for shipment to Asian or West Coast refineries. A second smaller pipeline would transport 193,000 bbls per day of imported condensate from Kitimat to Edmonton.

"That is certainly a forward-looking project, it's a long-term project based on getting to the markets over time," he said, adding development for projects like this take several years.

"We're talking probably a three-year construction timeframe, we're also looking at about a year or two in terms of the regulatory process," he added. "The point is we need to initiate those projects early on.

"The supply profile dictates probably beyond 2015 for that pipeline to be required."

Russ Girling, president of pipelines for TransCanada Corporation, added that having alternative markets for producers is positive but the issue is complicated.

"Oil is a very strategic resource in North America," he said. "That tension between what Canada wants to do from a producing perspective and what North America wants to do from a strategic perspective will be the tensions that we need to deal with over time."

Posted by Arthur Caldicott at 03:28 PM | Comments (0)

Chinese buying spree bypasses Canada

By Deborah Yedlin
Calgary Herald
July 15, 2009

If anyone doubts China's growing need for energy and its continued quest to shore up supply, having a look at the activity of its national energy companies on the international stage will put those thoughts aside.

What's curious, however, is that none of those deals has taken place in Canada.

The only possible exception could be the $1.5-billion US investment by the China Investment Corp. in mining giant Teck, which amounts to a 17.2 per cent interest in the company.

What's relevant here is that Teck also holds a 20 per cent interest in the Fort Hills oilsands project owned by Petro-Canada.

Since February--as oil touched $33-per-barrel lows--China has gone on a bit of a buying spree to shore up its oil supply. It made "loans for oil" deals in Brazil and Russia and has been an active buyer through its various oil companies.

Last month, Sinopec said it was going to buy Toronto-listed Addax Petroleum for $8.8 billion.

Meanwhile, the China National Petroleum Corp. is still waiting to hear whether its $430-million deal to buy Calgary-based Verenex, with its Libyan assets, will proceed or end up in Libyan hands.

Of the biggest 10 deals done in the second quarter, Chinese companies were associated with three of them.

And it doesn't end with interest in the upstream side of the business. The downstream is turning out to be just as important.

There are reports Chinese companies are looking at investing in Iran's oil refining sector, PetroChina recently bought a 45.1 per cent interest in Singapore Petroleum Co. to gain access to its refining arm and just received approval to invest in Japan's key refiner, Nippon Oil.

But the reality is that since 2005, when Sinopec bought into the Synenco Northern Lights Project --now owned by Total-- and the Chinese National Overseas Oil Co. bought the 16.69 per cent interest in MEG Energy-- the Chinese have been conspicuously absent from Alberta's oilpatch.

And according to Wenran Jiang, associate professor of political science and the Mactaggart research chair of the China Institute at the University of Alberta, there are a number of reasons for this apparent lack of activity.

"There's been more thunder but little rain," said Jiang.

"Are they interested? Yes, but there are four or five factors that make Canada less desirable relative to other jurisdictions."

One of those factors is the lack of pipeline infrastructure to the west coast that could see the export of oilsands production to China and other countries in the Far East. Jiang makes reference to the memorandum of understanding signed with Enbridge back in 2005 in connection with the Gateway Pipeline, but it's been almost four years since that time and the pipeline has yet to be built.

"Having that pipeline from Edmonton to the west coast would be good for Canada and Alberta because it represents diversification in terms of who buys the oil," said Jiang.

Another is the fact that the oilsands remain the marginal barrel on the world's oil stage.

"The Chinese want to know what happens to the economics of the oilsands if the price falls to $40 per barrel," he says.

This relates to another strike against Alberta's oilsands--the cost of labour and other inputs that push up the price of getting oil out of the bitumen.

One of the ways the Chinese have suggested mitigating the cost side of the equation would be by bringing in contract labourers from China. A lower cost structure through cheaper labour, notes Jiang, would be one way to insulate the oilsands from being so vulnerable to the world oil price.

Then there's the political environment. Alberta might be keen to attract investment, but this enthusiasm doesn't necessarily translate at the federal level. While other countries are interested in luring the dragon to their doorstep, says Jiang, Canada is ignoring it.

This despite the fact it is becoming increasingly apparent that, in addition to the U. S. recovering from the recession, from a Canadian perspective, it's just as critical that China gets its economy rolling, too.

The reason is simple.

"As China recovers, so do the prices for metals and other natural resources. And that's important for the Canadian economy. Canada needs the Chinese more than the Chinese need Canada," said Jiang.

The irony in all this is that Chinese companies have been eager buyers of assets being sold by Canadian companies outside the country. Since 2005, Chinese companies have been buyers of assets sold by EnCana and Petro-Canada, have bought Addax Petroleum, bid for Verenex and also swallowed PetroKazakhstan.

"The Chinese are buying assets in Africa, the Middle East, Southeast Asia and Latin America," said Jiang.

But not here.

And despite more attractive valuation metrics, it's clear there is much more to this story than simply commodity prices.

The combination of regulatory challenges, a tepid political climate at the federal level, the higher relative cost of an oilsands barrel and the inability to get it out of the country all suggest that until there are some positive shifts in these areas, the Chinese companies are going to keep buying assets of Canadian energy companies with assets overseas. The question that needs to be asked is if this is in the best interest of the Canadian economy.

Posted by Arthur Caldicott at 08:33 AM | Comments (0)

July 18, 2009

Oil sands catches break from recession

Shawn McCarthy
Globe and Mail
Friday, Jul. 17, 2009

The current slowdown could prove a boon for Canadian oil sands producers, driving down construction and operating costs and giving time for the development of infrastructure needed for the industry's growth.

Signs of a thaw are already appearing, half a year after several companies shelved their most ambitious expansion plans amid diving crude prices and a breakdown of financial markets.

Smaller oil sands companies, including Canadian Oil Sands Trust (COS.UN-T27.230.220.81%) and Petrobank Energy and Resources Ltd. (PBG-T35.020.471.36%), have been able to raise debt and equity financing to finance their operations.

And larger companies are taking advantage of the hiatus to re-engineer their projects in order to drive down costs and incorporate the latest environmental technologies.

The latest vote of confidence in the industry comes from U.S.-based rating giant Moody's Investor Services, which six months ago cited large increases in debt and declining oil sands economics in downgrading Nexen Inc. (NXY-T21.85-0.60-2.67%) and Suncor Energy Inc. (SU-N31.71-0.04-0.13%).

In a report yesterday, Moody's said the oil sands sector will prosper but at scaled-back and more sustainable levels. Moody's also expects smaller, financially weaker companies to be acquisition targets, as the industry is set for further consolidation.

"The way development was going on there, at such a breakneck pace, was not sustainable," Moody's vice-president Terry Marshall said in an interview yesterday.

"So we've had this big pullback and a lot of projects deferred or cancelled; but I think that enables the industry to step back, take a harder look at what they're doing and move forward on a much more measured basis. So we'll have a more steady growth over a longer period of time."

Oil sands producers faced increasing bottlenecks in accessing pipelines and a lack of refining capacity at the height of the boom last year. A moderate development schedule will allow time for pipeline companies to complete their expansions, and refiners to reconfigure their plants to handle the Alberta bitumen.

Suncor expects its capital costs to decline by as much as 20 per cent from the peak of 2008 when it resumes oil sands expansion after its merger with Petro-Canada, which is expected to close this fall.

"Material costs are down - steel for sure," Suncor spokesman Brad Bellows said. "And labour costs are easing. If there is a continued slower pace in the industry, then that takes some of the overtime out of the equation, and productivity will also increase."

Despite uncertain economics and the prospect of burdensome environmental regulations, investors will continue to value oil sands companies because they offer massive, long-life reserves in a stable political climate with close proximity to the largest market in the world.

Moody's expects further consolidation in the industry.

"Low oil prices, steep declines in stock valuations and limited capital for oil sands development have created a ripe environment for mergers and acquisitions [M&A]," its analysts said in the report.

However, companies will approach M&A opportunities cautiously, given the volatile nature of the commodity and financial markets.

Greg Stringham, vice-president at the Canadian Association of Petroleum Producers, said Moody's outlook is consistent with CAPP's own cautiously optimistic view of oil sands development.

At the height of the boom, CAPP said oil sands production would grow to 3.5 million barrels a day by 2015. It has since revised that forecast to between 1.9 million and 2.2 million barrels a day.

Posted by Arthur Caldicott at 09:53 AM | Comments (0)

July 17, 2009

US: offshore drilling in the news

COMMENT: Offshore drilling in the US is in the headlines these days. It is in part a consequence of initiatives taken in the final months of the Bush administration, and much of it is what's happening today in US energy politics, with the Obama administration and the new makeup of Congress and the Senate. Much of it has to do with complex US politicking whereby deals on all sorts of fronts get wrapped up in major bills. It's too much for my wee brain.

But, what we're seeing right now are offshore drilling debates on all of America's coasts - Alaska, California, the Gulf of Mexico, North Carolina. Here's a sampler of news items.

The headline of the California article tells all - Gov. Schwarzenegger has been a stalwart opponent of offshore drilling, but this article says he may be ready to relent on that opposition to get the necessary political support to help resolve the state's financial crisis.

It may be worth noting now, that Schwarzenegger's term as governor ends at the end of 2010. Potential candidates are emerging now. The last article copied in this email is "A Guide to the Governor’s Race, One Year Before the Primary". The columnist suggests that the conventional wisdom says it'll be are former Governor Jerry Brown, now 71, for the Democrats, and Meg Whitman, described as "the billionaire ex-CEO of eBay," as the Republican candidate. The column ends with the note that conventional wisdom is always wrong.

Schwarzenegger's progressive and persuasive leadership on many environmental issues will be missed, although if he caves on offshore drilling now, that leadership will be missed long before he leaves the office.

California Budget Deal May Mean New Offshore Oil Drilling
Interior Plans Offshore Drilling Despite Questions (Gulf)
Offshore drilling debate resurfaces (North Carolina)
A Guide to the Governor’s Race, One Year Before the Primary

California Budget Deal May Mean New Offshore Oil Drilling

Written by Timothy B. Hurst
Red Green and Blue
Published on July 16th, 2009

Proposed deal would allow first new offshore oil leases in 40 years

The same state budget crisis that could shutter 220 of California's state parks and beaches, may also open the door for the first new offshore oil leases in state waters in forty years. That is, if a proposal floated in the closed-door state budget negotiations on Thursday wins approval from Governor Arnold Schwarzenegger.

If approved, the deal would pave the way for the first offshore oil leases in California state waters since the 1969 Santa Barbara oil spill and the California Sanctuary Act. In so doing, it would effectively bypass the current regulatory process for formalizing the leases.

"It would be a complete corruption of the safeguards that Californians have demanded in order to protect the coastlines from oil development," said State Assemblymember Pedro Nava, via telephone on Thursday afternoon.

Nava, who represents California's 35 District (Santa Barbara), said the proposal was floated today during the budget negotiations currently underway in Sacramento between Gov. Schwarzenegger and the top two leaders in each party, otherwise known as "The Big Five".

Nava said he was not sure if it was Democrats or Republicans brought the proposal to the table, but that the governor has the power and the authority to out of hand reject the proposal. "The governor can say no," he said.

Assemblymember Nava said that the Governor has established his environmental credentials, but "if he allows the first new lease in state waters, that will be the only thing he will be remembered forŠ that will be his legacy."

In January, California regulators rejected a compromise that would have closed four offshore oil platforms and allowed new drilling in state waters for the first time in forty years.

The California State Lands has the power to approve any new leases in the state. When the proposal was evaluated it was found to be unenforceable and rejected in a 2-1 vote.

http://redgreenandblue.org/2009/07/16/california-budget-deal-may-mean-new-offshore-oil-drilling/

Interior Plans Offshore Drilling Despite Questions

By Ben Evans
The Associated Press
July 17, 2009

WASHINGTON -- The Obama administration is moving ahead with an oil lease sale in the Gulf of Mexico next month despite legal questions about whether the proposal and other offshore drilling plans initially drawn up under President George W. Bush went through a full environmental review.

The decision comes three months after the U.S. Court of Appeals in Washington blocked lease sales in Alaska, saying the Bush administration didn't properly study the environmental consequences. The Alaska drilling was part of a five-year plan to expand drilling around the country, including in the Gulf. The court didn't say whether its ruling also applied to Gulf drilling, but many experts watching the case said they believed the decision could cover the entire program, not just the Alaska portion.

Interior Department spokeswoman Kendra Barkoff said the agency has sought clarification from the courts. But after not getting further guidance, Secretary Ken Salazar decided to move ahead, Barkoff said.

"We're planning as if it doesn't affect the Gulf, but if the court provides direction otherwise, we will follow it," she said.

The sale would pave the way for drilling in some 18 million acres in the western Gulf near Texas. The area comes as close as nine miles from shore in some parts and stretches as far as 250 miles out in places.

The department's Minerals Management Service, which conducts lease sales, estimates the area could yield up to 423 million barrels of oil and up to 2.64 trillion cubic feet of natural gas.

The U.S. uses about 7.5 billion barrels of oil per year, so the estimated oil production is the equivalent of a roughly three-week supply. The nation uses about 23 trillion cubic feet of natural gas per year, so the estimated gas production amounts to nearly six weeks of consumption.

Salazar's decision to proceed comes amid Republican criticism that the Obama administration isn't moving fast enough to open up new areas to drilling.

"Secretary Salazar believes that it is important to move forward with President Obama's comprehensive energy agenda for the country," Barkoff said.

The lease sale is planned for Aug. 19 at a hotel in downtown New Orleans.

http://www.salon.com/wires/ap/us/2009/07/17/D99GANO80_us_offshore_drilling/

Offshore drilling debate resurfaces

by Marimar McNaughton
Lumina News
Wrightsville, North Carolina
Thursday, July 16, 2009

Offshore drilling for oil and natural gas has returned to mainstream debate in North Carolina. The likeliest target is a federal lease area 30-40 miles off the Cape Hatteras coast. Forty miles out, the Gulf Stream meets the Labrador Current at the edge of the Sargasso Sea which is home to loggerhead sea turtles and fertile ground for untold numbers of micro-organisms, other marine life and fish.

Many of the pros and cons of the issue will be vetted by the Offshore Energy Exploration Subcommittee during a daylong public hearing at the University of North Carolina Wilmington (UNCW) on July 28.

Kure Beach mayor, Mac Montgomery is the only elected official on the panel, which was assembled earlier this year, comprised of university professors, conservationists and economists co-chaired by former UNCW chancellor, Dr. James Leutze, and chief ocean scientist of the Environmental Defense Fund, Dr. Doug Rader.

"Ecologically it's one of the richest areas on the Atlantic coast," Montgomery said, known for its fish habitat prized by recreational fishermen and commercial fishermen.

"A lot of studies have been presented to us by UNCW and by Duke on deep sea coral found in this area."

Though the proposed drill sites are literally out of sight, whatever petroleum or natural gas resources are mined offshore need to be brought onshore to be refined or distributed via pipeline, tankers and trucks.

"When you start getting into the effects on inland waters, not so much from drilling, but from the infrastructure that's going to go on, the question then becomes, we're not only talking about what's going on the well site but then everything that goes with it. That's the conservation point of view," Montgomery said. His committee peers seem to be leaning toward that side of the debate.

From an economic standpoint, the state has little to gain from revenue leases beyond a 12-mile point that are controlled by the federal government.

"If North Carolina hoped to reap any benefit from this financially then what you'd have to do is change the federal law as far as the distribution of leases," he said.

Numbers being tossed around include the annual $15 billion dollar industry represented by the coastal counties versus a projected $24 billion that Mineral Management Services estimates that the state might earn from shared revenues over a 30-40 year period. From the point of exploration, it's expected to take approximately seven to 10 years to bring the product to market.

As a beach mayor, one of Montgomery's concerns is the effect of offshore drilling on the coast, not only from a tourism point of view, but recreational and commercial fishing.

"If you built a port, if you brought in pipeline, how's it going to affect the communities it's brought into. Is Wilmington ready to accept pipeline, or are we in a position to accept more tankers, or is Morehead City? Or like the coast of Louisiana, are we ready to have pipeline laid across a coastal area to get to an interior refinery? Those are a lot of issues that really need to be explored before we say, 'Yes, we're in favor of it.'"

If there were oil down here, Montgomery wonders where it would be brought in Š across Holden Beach, Kure Beach, Wrightsville Beach? He said, "What're the implications for the communities when this happens? Is there a financial benefit for us? Does it outweigh the cost? Here Š it affects one of the richest, most unspoiled coasts left in the United States that due to a lot of regulations, we have not let it become polluted."

In addition to studying petroleum and natural gas exploration and development, the committee will also examine the potential impacts of alternative offshore energy projects on the nation's energy supply, including energy generated from wind, waves, ocean currents, the sun and hydrogen production.

The Offshore Energy Exploration Subcommittee will meet at UNCW on Tuesday, July 28 from 10 a.m. to 4 p.m. in the Computer Information Systems Building, Classroom 1008. A series of experts will discuss alternative energy options from 10 a.m. to 3 p.m. after which a public comments session will be held.

http://www.luminanews.com/article.asp?aid=4615&iid=175&sud=30

A Guide to the Governor’s Race, One Year Before the Primary

Jerry Roberts
Santa Barbara Independent
July 2, 2009

And They're Off!

One glance at the madness in Sacramento, where Arnold Schwarzenegger is leading a political parade to plunge California into the abyss, is enough to make every sane person wonder why anyone would want to be governor.

A year out from the 2010 primary elections, however, a quintet of eager applicants for the job already is merrily on task, raising millions, decrying the mess, and explaining why everything will be better on his or her watch. As the contestants moved into the first turn with the first deadline for fundraising reports this week, here’s a handicappers’ guide to the race.

The Never-Minds: Most of the political window shoppers whose intentions were unknown earlier have packed it in.

For Democrats, much uncertainty lifted when L.A. Mayor Antonio Villaraigosa withdrew last week; once seen as a strong player, hizzoner failed his own political gut check after a string of stumbles, including an underwhelming reelection, a massive city deficit, and a couple of what-was-he-thinking affairs with TV reporters.

His withdrawal followed a recent statement of disinterest in running by Dianne Feinstein, acknowledging what everyone else already knew: It makes no sense to leave the comfort of an influential U.S. Senate seat for an impossible job amid the, um, delights of Sacramento life.

A few loyal fans are still puffing on well-cooled embers of speculation on behalf of Santa Barbara favorite Jack O’Connell, but he hasn’t exactly provided a world-class exhibition of fire-in-the-belly.

On the Republican side, Ventura County Supervisor Peter Foy still is playing Hamlet. Unknown statewide, Foy’s pro-life stance and right-wing positions on other social issues contrast with what he calls the “squishy” views of the rest of the GOP field, giving him entrée to the party’s sizeable cultural-conservative bloc.

The Democratic Duo: A generational mano-a-mano matchup pits Attorney General and former everything Jerry Brown, 71, against Gavin Newsom, the 41-year-old San Francisco mayor and gay-marriage guru. A new statewide survey, taken by Sacramento pollster Jim Moore after Villaraigosa’s withdrawal, gives Brown a 46-26 percent lead; he runs ahead of Newsom everywhere but the Bay Area.

Newsom’s high-powered handlers spin the race as a reprise of the 2008 Democratic presidential primary, casting their guy as the Obama-like avatar of new politics with Brown in the role of Hillary, the remaindered establishment Democrat. The problem with trying to portray Jerry Brown as the status quo is that he’s, well, Jerry Brown — unpredictable, impossible to categorize, and the smartest guy in the class.

Brown does his best to avoid saying anything substantive about the state’s fiscal mess. Instead he’s positioning himself as an “apostle of common sense” (always with the religious metaphors), a world-weary political warrior who can cut through the bushwa to slash the Gordian knot of state government and its structural double binds.

Newsom is more specific in articulating proposed progressive solutions on a host of issues. He was an early endorser of a plan for a constitutional convention, backs a move to dump the two-thirds budget vote requirement, and cautiously hints at the need to amend Proposition 13.

At this point, though, it’s Brown’s race to lose, at least until Newsom can expand his limited core of support among younger voters.

Mega-Bucks Republicans: Meg Whitman, the billionaire ex-CEO of eBay, is seeking to dominate the GOP Money Primary with a multimillion-dollar contribution report. As a practical matter, she doesn’t need the money; as a political matter, attracting statewide donations helps her strategically, by showing she’s a viable candidate and not just another dilettante business executive. Whitman swiftly became the favorite of the Washington Republican establishment, earning high-profile endorsements from the likes of John McCain and House wunderkind Representative Eric Cantor, as well as an influential if gushy cover profile from the conservative Weekly Standard.

Her effort to court conservatives is being fiercely challenged by Insurance Commissioner Steve Poizner, whose own Silicon Valley fortune gives him the table stakes to compete against her, and whose aggressive campaign team relentlessly attacks Whitman’s business acumen and lack of political experience.

Running to the left of the duo is former Silicon Valley Congressmember Tom Campbell, the only candidate on either side to offer a thoughtful and comprehensive plan for the intractable problems of the budget and economy. The candidate of free media, Campbell will hustle to every editorial board and talk radio gig he can find because he won’t have the bucks to match his well-heeled rivals.

Today’s 2010 conventional wisdom: Brown vs. Whitman.

Politics 101: Conventional wisdom is always wrong.

http://www.independent.com/news/2009/jul/02/guide-governors-race-one-year-primary/

Posted by Arthur Caldicott at 12:42 PM | Comments (0)

July 14, 2009

Five 'threat groups' identified for Alberta, B.C. oil industry

By Kelly Cryderman
Calgary Herald
July 14, 2009

Report sees no organized energy threat

CALGARY - Violent acts or blockades against northern Alberta's oil and gas industry will likely continue in the years ahead, but the disruptions are unlikely to be organized or widespread unless disparate groups come together, says a new report.

The Canadian Defence and Foreign Affairs Institute report -- sponsored by Nexen Inc. -- was completed before the two most recent explosions at EnCana facilities in northeastern B. C.

However, author and political scientist Tom Flanagan says his conclusions still hold true. "I don't see any evidence of an organized group doing it," Flanagan said of the Dawson Creek blasts.

The report, part of a series of institute studies directed by the global energy company, identifies five "threat groups" --individual saboteurs, ecoterrorists, mainstream environmentalists, First Nations and the Metis people.

"All except the Metis have at various times used some combination of litigation, blockades, occupations, boycotts, sabotage, and violence against economic development projects which they saw as a threat to environmental values or aboriginal rights," Flanagan's report said.

"However, extra-legal obstruction is unlikely to become large-scale and widespread unless these various groups make common cause and cooperate with each other. Such co-operation has not happened in the past and seems unlikely in the future because the groups have different social characteristics and conflicting political interests."

When speaking of First Nations in northern Alberta, Flanagan wrote that there exists the potential for "warrior societies"--where aboriginal groups brandish firearms or set up blockades.

"There is no history of warrior societies operating in northern Alberta, but that does not mean it could not happen," the report said.

"A nightmare scenario," he wrote, "would be a linkage between warrior societies and eco-terrorists."

He said his report was written from the point of view of threats specific to the oil and gas industry.

"It's what keeps the ship floating in Alberta. Without it, we'd have a province of one million people rather than three million, and I wouldn't have a job," Flanagan said in an interview.

"I'm sympathetic to the continued prosperity of the industry, so I point out the difficulties they face."

However, environmental writer Andrew Nikiforuk said Flanagan's report focuses on the wrong security issues.

"Energy developments are generally secure when you make sure that surface owners--whether they are farmers or aboriginals--are treated with respect . . . and where regulators don't allow development to undermine groundwater, air quality and health of the local community," Nikiforuk said.

"Most terrorism experts would say Alberta has made itself terribly insecure again by rapidly expanding oil and gas pipelines, and by becoming the number 1 supplier of oil to the United States. We've become a target for global terrorists, who might have an interest in disrupting U. S. oil supplies," he said.

At the Canadian Association of Petroleum Producers, spokesman Travis Davies said in a statement that the oil and gas industry has worked with all levels of government to ensure energy security.

"The safety of our neighbours and employees is a top priority. In terms of nonviolent campaigns against Canadian energy sources, industry consults with stakeholders in order to understand their issues, and focuses on communicating our demonstrated safety and environmental performance, as well as the stringent regulatory requirements in place for all oil and gas projects," Davies wrote.

The Canadian Defence and Foreign Affairs Institute describes itself as an independent research body that focuses on Canadian foreign policy, defence policy and international aid.

kcryderman@theherald.canwest.com

Resource Industries and Security Issues in Northern Alberta

by Tom Flanagan
Prepared for the Canadian Defence & Foreign Affairs Institute
June 2009

The rapid expansion of natural-resource industries in Northern Alberta has come under intense scrutiny and has faced both violent and non-violent opposition. In this paper Tom Flanagan examines the potential sources of opposition, past security threats, and the likelihood that these threats will continue or even increase in the future.

Complete report here

Posted by Arthur Caldicott at 09:09 AM | Comments (0)

July 11, 2009

Thawing Arctic relations

COMMENT: Regular readers will know that we are champions of a high Arctic that is off-limits for oil and gas and other mineral and resource exploitation and is instead an international protected area. None of the nations which lay claim to a chunk of the Arctic supports a global protected initiative, though this article suggests that a number of nations are interested in carving off at least some of the area in a protected zone.

It's a token, and better than a complete free-for-all feeding frenzy. But outside of these relatively small protected areas? Feeding frenzy, of course.

Our hopes for the Arctic? A dead horse, a nay vote, so to speak.

If this article is to be believed, Russian ambitions in the region humble Canadian and American efforts to claim the place, but it is also Russia making the first steps to protecting at least some of the Arctic.

Leah Zimmerman
San Francisco Chronicle
Friday, July 10, 2009

Thawing Arctic relations - melting ice in Greenland is drawing attention to the Arctic. (Doug Struck / Washington Post)

On Aug. 2, 2007, the world watched as Russia brashly planted a titanium flag under the North Pole, laying proverbial claim to the top of the world. In the months since, Russia has moved to assert control over many of the Arctic's rich resources, eyeing oil and gas fields, building floating nuclear power plants and shoring up its fleet of ice breakers - at least 14, compared with the United States' three.

President Obama met this week with Russian President Dmitry Medvedev to reset U.S.-Russian relations through discussions about nuclear arms reductions. But by focusing their first face-to-face meeting on arms reductions, they missed a key opportunity to forge a peaceful partnership and effective governance in the Arctic.

There are new signs of Russia's openness in the Arctic. At a news conference in Canada June 30, Russia called for cooperation with Canada in managing the Arctic. Three weeks ago, Prime Minister Vladimir Putin set aside some 3.5 million acres in the Russian Arctic as a national park.

The United States, too, is poised to step up its leadership in the Arctic. The Obama administration has signaled its interest in Arctic governance by sending a high-level State Department official to the Arctic Council's April Ministerial meeting in Norway. The United States and Russia can - and should - lead the way to a peaceful and sustainable Arctic. Here's how:

Both nations should prioritize environmental protection in the Arctic. Specifically, the United States should initiate an Arctic-wide conservation process, involving scientists, governments, indigenous leaders and conservationists. Russia's decision to create the Russian Arctic National Park was a surprising - yet welcomed - move toward protecting the fragile Arctic ecosystem. In contrast, the United States opened more than 73 million acres offshore in Alaska's Arctic to oil and gas extraction under the Bush administration. How ironic that oil companies have moved to access fossil fuels in the Arctic that will speed up the effects of climate change in the very place most affected by melting polar ice and warming waters.

Second, the United States and Russia must step up leadership on climate change. Scientists worldwide have concluded that a melting Arctic has severe global repercussions. To date, the United States and Russia have lagged behind the rest of the world in committing to reducing greenhouse gas. As Arctic nations, we need to step forward at the Copenhagen global climate treaty conference in December to set a clear vision for protecting the Arctic's ecosystems and communities by putting conservation first.

Third, as climate change opens additional shipping lanes in the Arctic, local communities will face myriad safety issues. Obama and Medvedev should together take steps to implement recommendations to ensure shipping safety, situate search-and-rescue resources and protect sensitive coastlines and marine mammals.

Finally, Obama and Medvedev should recognize the plight of Arctic communities and pledge necessary resources to help them adapt to a changing climate.

The United States and Russia have a historic opportunity to ensure a peaceful and protected Arctic, as well as to launch efforts in the Arctic to mitigate climate change.

Leah Zimmerman is Russia program director at Pacific Environment, a San Francisco nonprofit.

Posted by Arthur Caldicott at 11:56 PM | Comments (0)

Barge hauling 1 million gallons of gas runs aground in Columbia Gorge

COMMENT: In a coast awash with fuel moving from Vancouver and Puget Sound/Cherry Point to everywhere on the coast by tug and barge, this incident is proof that in time, accidents will occur.

A gas barge on a sandy bar in the Columbia is one thing. An oil tanker grounding in Douglas Channel or entering Hecate Strait is quite another.

This is a good time for you to run again some of Living Oceans' oil spill animations.

by Matthew Preusch
The Oregonian
Thursday July 09, 2009

A barge carrying 1 million gallons of gasoline ran aground in the Columbia River near Hood River early Thursday. (Benjamin Brink/The Oregonian)

HOOD RIVER -- This city awoke today, as it did Thursday, to an unwelcome guest at its front door: a barge laden with 1 million gallons of gasoline run aground in the Columbia River.

As evening approached Thursday, the river was rising a whole foot -- an effort by dam managers up and down the river to float the barge free. But it failed. And a backup plan to offload some of the gasoline to another barge was shoved off till this morning.

So it goes on the river that carries the region's commerce but also is home to renowned runs of federally protected salmon as well as recreationalists. Kiteboarders zipped around the marooned barge all day Thursday.

The stakes remain high.

A gasoline leak -- and none was detected after inspections early Thursday by the U.S. Coast Guard -- could be environmentally catastrophic. But the double-hulled vessel New Dawn, owned by Tidewater Barge Lines of Vancouver, was described by a Tidewater official midday Thursday as merely stuck in the mud and soon to float away.

Where and why the barge ran aground at all remained an open dispute.

Tidewater, which transports grain, fertilizer, and petroleum and wood products the full commercially navigable length of the Columbia and Snake rivers, insisted the New Dawn ran aground within the Columbia's shipping lane.

Officials for the company said the tugboat captain pushing the New Dawn kept it between the imaginary lines that mark the river's channel -- where there is sufficient depth for passage.

Coast Guard officials agreed, relying on GPS coordinates they had taken placing the vessel inside but on the southern edge of the channel. At Hood River, it is about 300 feet wide and historically about 40 feet deep.

"The chart that we have been looking at all day does have the position of the vessel in the channel, albeit on the southern tip," said Coast Guard Lt. j.g. Ryan Harry in Portland.

The U.S. Army Corps of Engineers maintains the Columbia's navigation channel, marking it with red and green buoys and allowing gasoline to be carried upstream to Pasco, Wash., as the New Dawn was doing early Thursday.

And the corps said the New Dawn was 1,000 feet outside the approved channel -- due south of it -- when it ran aground.

"Based on the coordinates the Coast Guard gave us, the barge and tug are way outside the channel," said corps spokesman Matt Rabe in Portland.

The mishap occurred at roughly 3:15 a.m. Thursday, when the New Dawn was part of a four-barge tow being pushed by the tugboat The Chief. Only the New Dawn ran aground. Its adjoining barges were untethered midday Thursday and towed off, leaving the gasoline-laden New Dawn stuck.

But complicating the picture is the unseen riverbed itself.

Riverbeds are dynamic, and the barge ran aground where the Hood River enters the Columbia, depositing a big fan of silt and rock well into the larger river. Two years ago, a flood in the Hood carrying rock, dirt and debris expanded the reach of the sandbar at that river's mouth into the Columbia by 26 acres.

On Thursday, the U.S. Coast Guard said the buildup of additional material may have contributed to the grounding.

"We've had mariners report it, and it appears to be excessive," said Capt. Fred Myer. "At this time, this appears to be one of the contributing factors."

Tidewater on Thursday described the New Dawn's grounding as hitting an "uncharted sand bar."

Rabe said the corps hadn't heard any complaints about a new shallow sandbar near the mouth of the Hood River.

"Our best source of information is from the river pilots themselves finding shallow areas of the river, and this is not an area they have mentioned," Rabe said.

The Coast Guard said it was continuing the investigation into the grounding, and neither the Coast Guard nor Tidewater would release the name of the tug captain.

At the Coast Guard's request midday, the corps cut the outflow from Bonneville Dam, downstream from the New Dawn, while maintaining the flow at The Dalles Dam, upriver from the scene.

The result was a net gain of water behind Bonneville Dam and at Hood River, but the river level would remain within normal operating parameters, according to Rabe. Irrigation, shipping, power production, recreation and fish management were unaffected.

So, too, was the positioning of the New Dawn.

This is the second time in two years a boat owned by Tidewater has been involved in an accident on the Columbia.

Last February, a Tidewater tug pushing two empty grain barges and a barge filled with 1.7 million gallons of diesel fuel ran into the upstream gate at the John Day Dam's navigation lock on the Columbia River. No injuries or fuel leakage were reported during that event by the corps.

Though there was not fuel spilled in either incident, environmental groups continue to worry about the possible impact of millions of gallons of petroleum products being dumped into the region's great waterway.

"The potential barge spills are a huge concern to us," said Brett VandenHeuvel, executive director of the Hood River-based conservation group Columbia Riverkeeper. He spent the day monitoring the barge from his boat and with binoculars from his office.

"Just because it hasn't happened in the last several years doesn't mean we can become complacent," he said.

Matthew Preusch; mattpreusch@news.oregonian.com

Posted by Arthur Caldicott at 08:48 AM | Comments (0)

July 10, 2009

Who's doing the math here?

by Ricardo Acuña
Vue Weekly (Edmonton)
July 02, 2009

Province announces $3 billion royalty break, needs to trim $2 billion from budget

Last week, a friend of mine posted some Edmonton Journal news stories on her Facebook page, and followed them up with the question, "Who's doing the math in this stupid province?" It's a question that really is hard to fathom, especially given the various announcements and policy initiatives undertaken by the provincial government over the last couple of weeks.

An announcement at the end of June provided an especially glaring indication that it would seem as though the Conservative caucus had lost all of its calculators, and that its collective mental capacity was not up to the mathematical challenge of understanding that two minus three equals negative one.

Unlike the provincial government, gas companies can generally do math.

On that day, Alberta Treasury Minister Lloyd Snelgrove called together leaders from Alberta's labour movement, Alberta's professional associations and various other community groups. In total, close to 100 people were summoned to hear Minister Snelgrove tell them that the province was in serious financial trouble and would soon need to identify $2 billion in savings if they were to meet next year's budget goals.

The government claimed the meeting was intended to let key stakeholders in on the fiscal challenges facing the province over the next year, and invite them to be active participants in finding solutions to those challenges. A more cynical view, however, would suggest that the meeting was intended to issue a warning to these groups that once again they are about to bear the brunt of the government's financial mismanagement and that they should keep their funding requests, salary expectations and programming requirements way, way down.

We saw something similar in the Klein years, when the former premier brow-beat provincial unions and organizations into voluntarily taking wage rollbacks, on the understanding that if they did so they would be saving the jobs of their colleagues and securing service levels for their constituencies. Of course, after all the unions agreed to cooperate and take the rollbacks, their colleagues still got fired and their operating budgets still got decimated.

Alberta's labour leaders, in particular, would do well to keep that history in mind as they ponder what they were told at that Thursday meeting.

At pretty much the exact same time that Minister Snelgrove was asking the assembled leaders to help him find $2 billion in cuts, Alberta's Energy Minister Mel Knight was also talking about Alberta's economy. He had assembled the press to announce to them that effective immediately the province would be providing Alberta's natural gas industry with a brand new $1.5 billion royalty break. He also announced the extension of two royalty breaks initially announced last March.

In total, the cost to provincial coffers of these breaks would be in the neighbourhood of $3 billion over the next two years.

The theory behind the natural gas royalty breaks is that they will encourage gas companies to begin drilling again, despite the depressed North American gas market. What this policy fails to take into account is that gas prices are down as a result of a significant amount of new gas coming online in the United States. Bringing more Alberta gas online will only succeed in bringing prices down further.

The government also ignores the reality that gas companies are leaving the Alberta market because our gas deposits are old and our reserves dwindling, as opposed to those in Saskatchewan and BC, which have barely been tapped and have a long future ahead of them.

Unlike the provincial government, gas companies can generally do math. They seen no sense in putting holes in the ground when the resource is $3.25 per thousand cubic feet, regardless of what the royalty rate might be.

Likewise, the activity of oil companies in Alberta's oil patch is not determined first and foremost by royalty rates, but rather by the price of the resource. The spring royalty break failed to stimulate drilling because the price of oil remained at under $50 per barrel for the better part of the winter and spring.

Now that the price of oil is pushing $70 per barrel again, activity in the oil patch will slowly begin to pick up. Here again, oil companies are not stupid — they know better than to take $50 oil out of the ground when they can wait and take that same oil out of the ground at $75 or better.

The bottom line is that the $3 billion in royalty breaks will accomplish neither increased drilling or economic stimulus.

Add to that the reality, established in the government's own job and economic multiplier numbers, that energy extraction actually results in the lowest job creation and GDP creation per dollar invested of almost all sectors of the economy, and you wonder what exactly the government is trying to do. Is it really just a matter of padding the pockets of their friends in the oil and gas sectors?

In short, the only thing these new royalty breaks will accomplish is a $3 billion hole in the government's coffers over the next two years. Apparently, the way they have decided to pay for this $3 billion shortfall is by taking it directly out of the pockets of public servants and out of the public services and programs that Albertans rely on.

It really is simple math. If you need to come up with $2 billion in reduced expenses, your first step should not be to give up $3 billion worth of revenue. Not introducing the royalty breaks would not only eliminate the need to cut the $2 billion from the budget, it would leave an extra billion kicking around for spending on things like health care (which is also about to have its budget decimated), infrastructure, schools and education, arts and culture and social services.

All of the areas cut, by the way, generate more job creation and GDP growth per dollar invested than does the oil and gas sector.

The question my friend asked on Facebook is really the question all Albertans should be asking. Who is doing the math in this province, and who benefits from their inability to add and subtract? The sooner Albertans figure that out, the sooner we can get on with the business of electing a government that manages our dollars in our interests rather than mismanaging them in the interest of the oil and gas sector. Isn't it time the numbers started getting crunched in our favour?

Ricardo Acuña is Executive Director of the Parkland Institute, a non-partisan public policy research institute housed at the University of Alberta.

Posted by Arthur Caldicott at 06:39 PM | Comments (0)

July 07, 2009

New US Natural Gas Pipeline Displacing Canadian Gas

Posted by Keith Schaefer
Oil and Gas Investments Bulletin
July 7, 2009

Impacting Prices for Producers

A new natural gas pipeline in the United States is allowing cheap gas from the Rockies to displace more than 10% of Canada’s gas exports to the Midwest US, forcing more Canadian gas into storage and lowering natural gas prices for Canadian producers.

The 1,679 mile, $4.4 billion Rockies Express pipeline, or REX, is providing about 1.5 billion cubic feet per day (bcf/d) of cheap gas from the Rockies through the Midwest to Ohio. The latest section of REX just opened June 29. (www.rexpipeline.com)

The new pipeline is displacing about 600 million cubic feet per day (mmcf/d) of Canadian production, says Jack Weixel, director of Energy Analysis for Bentek Energy. Bentek provides specialized energy pipeline information to clients in the oil and gas sector in North America. Weixel estimates the mid-continent corridor of pipelines send just over 5 bcf/d of gas, net, to the US from Canada (some western Canadian gas goes back into Southern Ontario via Michigan).

“It has pushed off about 600 million cubic feet per day off the Northern Border Pipeline, which runs into Midwest pipelines at Ventura, Iowa,” Weixel told me over the phone from his Colorado office.

“REX is flowing at 1.5 bcf/d, which has forced some (Canadian) gas up the northern natural gas pipeline.

“And Rockies gas is cheaper than Canadian gas. REX is more efficient versus the Northern Border (Pipeline), an older pipe that serves Ventura.”

Weixel said the price for Rockies gas has always been low, with a lack of pipelines out of the area. Now that cheaper gas is being pushed farther east with REX, and pushed back Canadian gas.

“(REX) has helped increase Canadian gas storage quite significantly,” Weixel says. Previously, the natural decline of gas production in Canada helped keep natural gas prices high at the Edmonton AECO hub. But then came horizontal drilling, shale gas, and the REX pipeline.

“Even in face of declining production you (Canada) are now increasing storage, which is a pretty big shift,” Weixel says. He estimates Canadian production is down 1 bcf/d since January 2008.

It’s relatively cheap to move natural gas around the US, whereas transportation costs (read: pipeline) down from Canada is making Canadian gas less competitive. Pipelines on both sides of the border are regulated, says Weixel, and get a fixed return, but there is more competition in the US so costs are lower. And a new pipeline simply has lower operating costs than an older one - as REX vs. the Northern Border Pipeline shows.

Normally Canadian gas would flow through to the big consuming area of the US Northeast, but that market is having a lot less demand this year. Weixel says he sees slightly less Canadian gas being pushed off the grid in the fall, but adds that Canada needs to go find new markets for its gas.

“The US has solved its own problem, and we are less reliant on Canadian gas. It’s still an important part, especially in the Northeast, but not so much for Midwest or California.” A new pipeline, called RUBY, is already being planned to take Rockies gas to California - another big market for Alberta gas, Weixel says.

The Liquid Natural Gas export terminal from Kitimat, on the west coast of British Columbia, is a great idea for the Canadian industry he says. Alberta needs to do more to develop export markets for its natural gas.

Before ending our call, I asked him for his outlook on natural gas prices in North America.

“We could see US$2 gas (per mcf). It’s definitely possible. We haven’t seen the production declines down here yet. Rigs are dropping but they are more efficient now. And the success rate is much higher in drilling wells into these new shale formations. (The production decline) is coming, but not as foretold as everybody thought it would be.”

This is why I am keeping my portfolio in oil weighted energy stocks for now.

Posted by Arthur Caldicott at 11:22 PM | Comments (0)

Swimming in natural gas

By Jonathan Ratner
Financial Post
July 4, 2009

At a recent presentation to money managers in Canada's oil and gas heartland, the chief executive of a major Calgary-based energy trust used an interesting choice of words to describe natural gas. He referred to the commodity as a "wasted byproduct."

The suggestion that natural gas is worthless may be extreme, but it is an indication of the challenge the industry faces. Market experts continue to expect weak prices for natural gas as a surge in unconventional gas discoveries, such as shale plays, pour on to an already-flooded market. Add in unpredictable weather and a slower-than-forecast economic recovery, and the outlook doesn't get much brighter.

Canadian companies such as EnCana Corp., North America's largest natural gas producer, are trying to hedge production but investors might take a look at Australian players that are capitalizing on Chinese demand, or global majors such as Exxon Mobil Corp. and Royal Dutch Shell PLC, that are likely to come out ahead in the race to develop low-cost shale projects.

"We're going into one of those periods where this commodity has everything going against it," said Norman MacDonald, who manages the Trimark Canadian Resource Fund. "When you couple low-cost gas from the Middle East about to hit the shores of North America with some of these shale plays that have been emerging, it's kind of a worst-case scenario for the overall supply outlook and supply cost for natural gas."

While the stabilization of many global economies has sent oil prices higher, demand for natural gas has fallen off a cliff. The recession that closed factories and power plants has driven gas prices to roughly US$4 per MBTU, slightly above a six-year low of US$3.15 reached in April.

NYMEX natural gas futures spiked above US$15 at the end of 2005 after a busy storm season marked by Hurricane Katrina, but prices fell back sharply less than a year later. They rose again to nearly US$14 by the summer of 2008 as oil prices surged above US$140 per barrel, but have declined more than 70% since then.

Meanwhile, cargoes of excess liquefied natural gas (LNG) from offshore projects in Australia, Saudi Arabia and Qatar are heading for North America because it has storage capacity the other regions don't have. The Canaport LNG terminal in New Brunswick received its first cargo last week. It has the capacity to import one billion cubic feet per day of LNG.

"Storage is basically the buffer zone between demand and supply," said Martin King, vice-president of institutional research at First-Energy Capital Corp. in Calgary. "The storage levels in Western Canada and the U. S. are the highest ever for this time of year."

To top it off, Coloradobased Potential Gas Committee recently boosted its total potential U. S. gas supply estimate by 35% to 2,074 trillion cubic feet, the highest level in the gas supply authority's 44-year history, primarily due to the proliferation of unconventional shale gas plays. Shale gas, which is found locked in tightly layered rock formations, now accounts for 33% of recoverable U. S. natural gas.

The Haynesville, in the southern United States, and Marcellus, in the northeast United States, shales are considered the most economically viable resource plays in the United States, even at today's depressed prices. New horizontal drilling technology has also unlocked shale plays in Canada, in places like Horn River and the Montney in northeast British Columbia. While development and drilling of many of these deposits has slowed because of the price downturn, their cost structures, reserve sizes and amount of production continues to lure both companies and investors.

Some market observers say that natural gas has dropped so far it has nowhere to go but up. The reasoning is that the traditional pricing ratio between oil and gas appears to have completely broken down. The theoretical energy equivalent between the two commodities is a six to one ratio (six MMBTU of natural gas equates to one barrel of crude oil), but oil has appreciated so much that the ratio has surged to a 20-year high of almost 20 to one.

"As tempting as this straightforward conclusion would seem, we are unconvinced that natural gas will reconnect with oil anytime soon, given the relative lack of 'switchability' between the fuels and the insular nature of the U. S. gas market," said Shannon Nome, an analyst at Deutsche Bank.

While companies in Canada's natural gas sector move to diversify toward unconventional forms of production, many are opting to hedge their exposure to protect against weak prices. EnCana has entered into fixed price hedge contracts on about 35% of its anticipated production for the 2010 gas year, at an average price of US$6.21.

Most companies are hedging what they can with what appears to be a floor near US$5 or US$6, according to Subash Chandra, analyst at Jefferies & Co. But hedging is no panacea.

"All said, the industry can only hedge a small fraction of their ... enterprise value," he said in a note. "Also, the industry remains leveraged. So spending plans must be balanced against the need to reduce bank debt."

Birchcliff Energy Ltd., Vero Energy Inc. and Iteration Energy Ltd. are among the names that have recently tapped the market for equity financings. However, an industry watcher, who asked not to be identified, said the proceeds are not going into spending but rather paying down bank lines.

Meanwhile, U. S. shale assets will find their way into majors hands, predicted Mr. MacDonald of Invesco Trimark. "One thing they're good at is controlling the pace of development, which controls the supply of natural gas."

Recent acreage deals involving British Gas, Royal Dutch Shell and Exxon Mobil suggest the appetite for corporate acquisitions isn't far behind, Mr. MacDonald said. He also suggested they might not even have to pay very much given the debt situation faced by names such as Chesapeake Energy Corp., Petrohawk Energy Corp, and some companies in Western Canada.

"All you need is an unseasonably warm winter and these majors will be able to come in and name their prices," Mr. MacDonald said. "They're not going to be talking to the companies, they're going to be talking to the banks."

He also considers Australia an interesting opportunity, not so much because of the quality of deposits, but the pricing dynamic. "The northeast portion of the offshore Australian gas market is becoming as hot as Fort McMurray."

Australian gas had traded at a massive discount relative to global markets for a long time but has picked up dramatically because of the proximity to Asia for LNG export facilities. Mr. MacDonald considers Apache Corp. the best way to get some value out of the Australian gas market, while suggesting Calgary-based Enerflex Systems Income Fund as a way to take advantage of a secondary play on the market.

Not everyone is a pessimist on the outlook for the market.

Mr. King of FirstEnergy Capital expects supply to tighten in the United States because of the downturn in drilling that has been going on for almost a year now. Gas rigs now hover around the 690-level, marking a 57% peak-to-trough tumble in U. S. drilling activity since last fall.

He expects to see some stabilization of demand into 2010. So, if supply continues to come off, non-weather related demand improves and winter is cold, the big storage overhang may start to be unwound.

Those, however, are a lot of ducks to get in a row.

jratner@nationalpost.com

Posted by Arthur Caldicott at 09:09 AM | Comments (0)

July 05, 2009

The Graph: A Picture of the Present and Future

by Ray Grigg
Shades of Green
July 5, 2009

Click for larger graph

The multi-coloured graph sprawls across two facing pages of the New Scientist magazine (Oct. 18/08). The horizontal axis marks the years from 1750 to 2000, while the vertical axis marks increments of change in 12 crucial categories linking global economic activity with environmental conditions on the planet. All the lines begin to rise steeply after 1950, and by 2000 they have converged in a nearly vertical ascent. Taken together, they are a picture of the present and a prospect for the future - a future that seems to hint at some uncertain but inevitable climax. The following is a more detailed description of the graph's lines.

Northern hemisphere average surface temperature (orange). It rises from 1750 to 1775 then drops gradually until about 1830, levels out until about 1912, rises again until 1950, drops until 1975, then angles sharply upwards thereafter. This irregular course is probably the result of the warming effect of increasing atmospheric carbon dioxide levels in conflict with the cooling effect of industrial air pollution and volcanos.

Population (red). It rises gradually from 1750, then ascends sharply after 1950, indicating a doubling since 1950 and a nearly eight-fold increase since 1750.

Carbon dioxide concentration (dark blue). It follows the population curve but then crosses it on an even steeper trajectory after 1975. Atmospheric concentrations have risen from 280 parts per million to 388, with actual increases during the last decade.

Gross domestic product (dark red). It marks a slow curve, then is nearly vertical after 1960. All human history was required for the economy to reach its present level; barring any changes, it will double in two decades.

Loss of tropical rainforest and woodland (dark green). This line follows the gross domestic product curve. About half of the world's tree cover has now been converted to other uses.

Water use (blue). Not tracked until 1900, it begins by increasing gradually but it has risen to a nearly vertical trend by 1970.

Paper consumption (yellow). First tracked about 1908, it follows a jagged but nearly vertical ascent after 1950.

Species extinction (light green). Tracking starts about 1890, showing a sweeping curve that is rising nearly vertically by 2000.

Motor vehicles (black). From the time they were invented just before 1900, they show little increase until about 1930. After 1945, their trajectory is nearly vertical. Almost one billion vehicles now populate the planet. World traffic fatalities are now about 1.2 million per year, with vehicle accidents injuring 20 to 50 million people annually.

Fisheries exploited (light blue). Tracking starts in 1950 and shows a steepening curve that is nearly vertical by 1980. Large fish have now been depleted by 90%.

Foreign investment (brown). Tracking begins about 1952 and shows a zig-zag line rising nearly vertically after 1980.

Ozone depletion (beige). Tracking begins in 1950 and shows the same dramatic rise.

Considered in their totality, these coloured graph lines form the famous "hockey stick" figure, a relatively long horizontal handle that turns into a sharply rising curve as it reaches the present. Mathematically, these upward-moving lines resemble an asymptote, a condition in which the ever-steepening curve approaches a theoretical vertical. In this situation, any small advance in time on the horizontal axis measures a nearly infinite change on the vertical.

Since numbers seem to be infinite, the asymptote is an interesting mathematical curiosity. In the real world, however, infinity is not an option. Practical limits are soon reached for the number of people we can accommodate on our planet, for the amount of carbon dioxide the atmosphere can hold without poisoning the biosphere, for the forest cover we can remove without radically altering global ecologies. Limited space is available for parking and driving vehicles. Oceans can only provide a finite supply of fish. Species cannot be removed indefinitely from Earth's web of life without eventually shredding the fabric that binds together its biological integrity.

Scientist who examine the "hockey stick" graph are acutely aware of the stark difference between the mathematical possibility of the infinite and the finite limitation of the real. This is why they are getting nervous. When time is plotted against change in an asymptote, just a few moments has an enormous impact on consequence. The nearly vertical trajectory of so many crucial categories in our civilization's graph suggests that a collision with the reality of limits is a "when" rather than an "if".

No one knows when this will happen. But in an asymptote, every moment becomes increasingly important - critical becomes literal. This probably explains the rising level of anxiety in nearly everyone who closely follows the world's unfolding events. The present economic system, built on the assumption of continual growth, does not seem to be sustainable.

Most traditional economists, of course, do not reckon a limit to growth. They see it as a cure to all that ails humanity. And optimists believe the dire concerns illustrated by the "hockey stick" graph can be addressed by the promises of new technologies, recycling, increased efficiencies and human resourcefulness. The future of our civilization seems suspended in the balance between optimistic hopefulness and a catastrophic collision with limits.

In 1848, one of the founders of modern economics, John Stuart Mill, published a landmark book called Principles of Political Economy (Ibid.). He envisioned a time when we would complete our task of "economic growth" and, having satisfied our material needs, could then graduate to a "stationary" economy in which our efforts would be spent on bettering ourselves with "all kinds of mental culture, and moral and social progress... for improving the art of living...". Our present circumstances suggest that we should each take his vision very, very seriously.

How our economy is killing the Earth

Special Report
New Scientist #2678
October 16, 2008

THE graphs climbing across these pages (see graph in detail, or explore the data) are a stark reminder of the crisis facing our planet. Consumption of resources is rising rapidly, biodiversity is plummeting and just about every measure shows humans affecting Earth on a vast scale. Most of us accept the need for a more sustainable way to live, by reducing carbon emissions, developing renewable technology and increasing energy efficiency.

But are these efforts to save the planet doomed? A growing band of experts are looking at figures like these and arguing that personal carbon virtue and collective environmentalism are futile as long as our economic system is built on the assumption of growth. The science tells us that if we are serious about saving Earth, we must reshape our economy.

This, of course, is economic heresy. Growth to most economists is as essential as the air we breathe: it is, they claim, the only force capable of lifting the poor out of poverty, feeding the world’s growing population, meeting the costs of rising public spending and stimulating technological development - not to mention funding increasingly expensive lifestyles. They see no limits to that growth, ever.

In recent weeks it has become clear just how terrified governments are of anything that threatens growth, as they pour billions of public money into a failing financial system. Amid the confusion, any challenge to the growth dogma needs to be looked at very carefully. This one is built on a long-standing question: how do we square Earth’s finite resources with the fact that as the economy grows, the amount of natural resources needed to sustain that activity must grow too? It has taken all of human history for the economy to reach its current size. On current form it will take just two decades to double.

In this special issue, New Scientist brings together key thinkers from politics, economics and philosophy who profoundly disagree with the growth dogma but agree with the scientists monitoring our fragile biosphere. The father of ecological economics, Herman Daly, explains why our economy is blind to the environmental costs of growth (”The World Bank’s blind spot”), while Tim Jackson, adviser to the UK government on sustainable development, crunches numbers to show that technological fixes won’t compensate for the hair-raising speed at which the economy is expanding (”Why politicians dare not limit economic growth”).

Gus Speth, one-time environment adviser to President Jimmy Carter, explains why after four decades working at the highest levels of US policy-making he believes green values have no chance against today’s capitalism (”Champion for green growth”), followed by Susan George, a leading thinker of the political left, who argues that only a global government-led effort can shift the destructive course we are on (”We must think big to fight environmental disaster”).

For Andrew Simms, policy director of the London-based New Economics Foundation, it is crucial to demolish one of the main justifications for unbridled growth: that it can pull the poor out of poverty (”The poverty myth”). And the broadcaster and activist David Suzuki explains how he inspires business leaders and politicians to change their thinking (”Interview with an environmental activist”).

Just what a truly sustainable economy would look like is explored in "Life in a land without growth", when New Scientist uses Daly's blueprint to imagine life in a society that doesn't use up resources faster than the world can replace them. Expect tough decisions on wealth, tax, jobs and birth rates. But as Daly says, shifting from growth to development doesn't have to mean freezing in the dark under communist tyranny. Technological innovation would give us more and more from the resources we have, and as philosopher Kate Soper argues in "Nothing to fear from curbing growth", curbing our addiction to work and profits would in many ways improve our lives.

It is a vision John Stuart Mill, one of the founders of classical economics, would have approved of. In his Principles of Political Economy, published in 1848, he predicted that once the work of economic growth was done, a "stationary" economy would emerge in which we could focus on human improvement: "There would be as much scope as ever for all kinds of mental culture, and moral and social progress... for improving the art of living and much more likelihood of it being improved, when minds cease to be engrossed by the art of getting on."

Today's economists dismiss such ideas as naive and utopian, but with financial markets crashing, food prices spiralling, the world warming and peak oil approaching (or passed), they are becoming harder than ever to ignore.

Complete articles and sources at the New Scientist, here.

The facts of overconsumption

Special Report
New Scientist #2678
October 15, 2008

The two sets of graphs, below, illustrate 1. how human activity has changed since the beginning of the Industrial Revolution, and 2. the impacts that our societies have had on the Earth as a whole.

1. Human activity since the beginning of the Industrial Revolution

The increasing rates of change in human activity since the beginning of the Industrial Revolution. Significant increases in rates of change occur around the 1950s in each case, and illustrate how the past 50 years have been a period of dramatic and unprecedented change in human history

2. The impacts that our societies have had on the Earth

Global-scale changes in the Earth system, as a result of the dramatic increase in human activity:
(a) atmospheric CO2 concentration (Etheridge et al, 1996);
(b) atmospheric N2O concentration (Machida et al, 1995);
(c) atmospheric CH4 concentration (Blunier et al, 1993);
(d) percentage total column ozone loss over Antarctica, using the average annual total column ozone, 330, as a base (Image: J D Shanklin, British Antarctic Survey);
(e) northern hemisphere average surface temperature anomalies (Mann et al, 1999);
(f) natural disasters after 1900 resulting in more than ten people killed or more than 100 people affected (OFDA/CRED, 2002);
(g) percentage of global fisheries either fully exploited, overfished or collapsed (FAOSTAT, 2002);
(h) annual shrimp production as a proxy for coastal zone alteration (WRI, 2003; FAOSTAT, 2002);
(i) model-calculated partitioning of the human-induced nitrogen perturbation fluxes in the global coastal margin for the period since 1850 (Mackenzie et al, 2002);
(j) loss of tropical rainforest and woodland, as estimated for tropical Africa, Latin America and South and Southeast Asia (Richards, 1990; WRI, 1990);
(k) amount of land converted to pasture and cropland (Klein Goldewijk and Battjes, 1997); and
(l) mathematically calculated rate of extinction (based on Wilson, 1992)

Complete article and sources at the New Scientist, here.

Posted by Arthur Caldicott at 11:24 AM | Comments (0)

Grit leader flatters Alberta, criticizes Tories

COMMENT: Ignatieff's stand on the tar sands ensures that climate change won't be the locus of debate in the next election. It'll be only the Greens, Bloc, and NDP making an issue of it, futilely.

By Renata D'Aliesio
Calgary Herald
July 5, 2009

CALGARY - Liberal Leader Michael Ignatieff touted Saturday the economic virtues and national reach of Alberta's oilsands, urging Canadians to take pride in the mammoth industrial development, which has touched off international environmental opposition.

Speaking at a party fundraiser Stampede breakfast in Calgary, Ignatieff said financial ripples from the oilsands can be felt throughout the country - from East Coast workers flying to Alberta for jobs to a northern Ontario factory making pipes for the oilpatch in Alberta and Saskatchewan.

He also said Canada's "centre of economic gravity" will shift west to Calgary within his lifetime.

"The one instinct I've had from the beginning about the industry at the heart of this economy is this is a national industry - a national industry in which all Canadians should take pride," Ignatieff told about 600 Grit supporters at the Calgary Zoo.

"The Liberal Party of Canada must never, ever, ever run against that industry or against Alberta."

Ignatieff acknowledged several environmental and social challenges may be thwarting a national embrace of the oilsands.

The massive development is a significant producer of greenhouse gases and toxic waste ponds.

Mount Royal College political scientist Duane Bratt noted Ignatieff's continuing overtures to Alberta and the oilpatch are a "clear repudiation" of the policy plank former leader Stephane Dion put forward for the October 2008 federal election: the Green Shift carbon tax plan.

"The bigger question that I would have for Ignatieff is that's fine, saying that in Calgary. Let's see you say it in Montreal. Let's see you say it in Toronto," Bratt said.

While Ignatieff's oilsands stance has earned a smattering of praise from the Stelmach Conservatives, winning even a single seat in Alberta will be a difficult challenge for the Liberals - but not impossible, Bratt suggested.

The party was shut out in the last campaign, as the Stephen Harper Conservatives won all but one of the province's 28 federal ridings. The last time a Grit was elected in Calgary was in 1968.

Though Ignatieff urged supporters to prepare for the next election, shared his vision of Canada on its 150th birthday in 2017 and accused the prime minister of taking Alberta voters for granted, he wouldn't speculate on when the next election may come.

In taking aim at the Conservatives' climate change record, Ignatieff said delays and a lack of clarity have created uncertainty for investors and producers. He said the Liberals favour carbon trading and hard caps on greenhouse gas emissions, but didn't offer more detail.

Environment Minister Jim Prentice rejected Ignatieff's assertion that the Conservative government is faltering on climate change.

Canada is in talks with the United States about developing cleaner energy from coal-fired power plants and the oilsands. Prentice said he plans to unveil all of Canada's climate change plans before the United Nations next climate change conference in December in Copenhagen, Denmark.

Detailed regulations will follow in 2010, he added.

"We're not waiting for the Americans just to be perfectly clear," Prentice said at his Stampede breakfast Saturday. "The Canadian policies will be policies that reflect Canada's national interest."

Prentice also dismissed claims that the Conservatives take Albertans' support for granted.

"We don't take any vote in this province for granted. Not one single vote. We work hard and that's why we're so strong on the ground."

Calgary Herald

Posted by Arthur Caldicott at 07:59 AM | Comments (0)

July 02, 2009

On Canada, trade and climate change

COMMENT: This was written by Brent Patterson of the Council of Canadians. It brings together five recent events or publications:

- a WTO/UNEP report on Trade and Climate Change

- the Waxman-Markey bill on energy and climate change

- a Globe and Mail editorial which views Waxman-Markey as thinly disguised trade protectionism

- a letter from Natural Resources Minister Lisa Raitt to California Gov. Schwarzegger attacking the Low Carbon Fuel Standard as an “unfair trade barrier” if it discriminates against the tar sands

- a speech by Environment Minister Jim Prentice to the Council of Americas (a US business group which lobbies for free trade) in which he criticized carbon adjustment fees as "trade protectionism"

Only a week ago Trade Minister Stockwell Day joined the Raitt-Prentice chorus when he proposed a draft procurement agreement which would become an adjunct to NAFTA. He wants to tie the provinces and municipalites to the same rules as the federal government with respect to provincial purchasing and contracting - a direct response to recent US "Buy America" conditions in proposed legislation.

What the heck is so wrong with trade protection policies anyway? We do what we can to protect our environment, our health, our community and society, and indeed we do what we can to protect our economies. Signing away all rights to do that, by trade and investment freedom agreements, is inimical to wise domestic economic stewardship. Governments need to be able to utilize all the available policy and regulatory tools.

Brent Patterson
Council of Canadians
June 2, 2009

A joint media release from the World Trade Organization (WTO) and the United Nations Environment Program (UNEP) states that, "The WTO/UNEP report on 'Trade and Climate Change' published today examines the intersections between trade and climate change from four perspectives: the science of climate change; economics; multilateral efforts to tackle climate change; and national climate change policies and their effect on trade."

"National policies, from traditional regulatory instruments to economic incentives and financial measures, have been used in a number of countries to reduce greenhouse gas emissions and to increase energy efficiency. ...The report also reviews extensively two particular types of pricing mechanisms that have been used to reduce greenhouse gas emissions: taxes and emissions trading systems."

The Globe and Mail editorial board writes today that, "(The report says) 'border adjustment measures' – in other words, new trade barriers with real or ostensible environmental purposes – that are elements of cap-and-trade or carbon-tax schemes ...may well be justifiable under international trade law."

"Most notably for the economic interests of Canadians, the Waxman-Markey bill ...is not only an attempt to put a price on carbon emissions in the United States, but also tries to price the emissions that have gone into the making of goods elsewhere that are imported in the U.S – if that has not already been accomplished in the country of origin..."

"Likewise, emissions-reducing measures are apt to include subsidies to energy production that results in a lesser amount of greenhouse gases. These subsidies ...may similarly turn out to be quite defensible in WTO or NAFTA litigation."

The Council of Canadians has highlighted that Natural Resources Minister Lisa Raitt wrote California Governor Arnold Schwarzenegger in April about the now-passed Low Carbon Fuel Standard calling it an “unfair trade barrier” if Alberta’s tar sands is "discriminated" against as a high carbon intensity crude oil.

And Environment Minister Jim Prentice recently told U.S. lawmakers “carbon-border adjustment” fees designed to prevent carbon pollution outside of the U.S. from undermining American measures to reduce emissions were “trade protectionism” in the name of environmental protection and a prescription for disaster for the global economy and the environment.

Council of Canadians energy campaigner Andrea Harden-Donahue has written, "These comments and others made by Canadian officials exhibit a disconcerting pattern to use trade-based threats to dissuade U.S. policy measures that would benefit the environment by reducing oil exports from Alberta’s environmentally destructive tar sands to U.S. markets."

Today's Globe and Mail editorial

The WTO/UNEP media release and report are at http://www.wto.org/english/news_e/pres09_e/pr559_e.htm.

Our 'ACTION ALERT: Tell the Harper government to stop the trade-based threats and start getting serious about the tar sands' is at http://www.canadians.org/action/2009/12-June-09.html.

Brent Patterson
The Council of Canadians
www.canadians.org/campaignblog

Posted by Arthur Caldicott at 12:08 PM | Comments (0)

Preparing for Oil Spills in the Future Arctic

National Ocean Service
29-May-2009

The thawing of Arctic Ocean ice during summer months will lead to increased maritime transportation, tourism, and oil exploration activity.

Within the next two decades, scientists estimate that the Arctic Ocean will be free of multi-year ice in the summer.

The thawing of Arctic Ocean ice during summer months will lead to increased maritime transportation and tourism. It will also lead to increased oil and gas exploration as access to Arctic sea floors grows easier—the U.S. Geological Survey estimates that the Arctic may hold as much as 90,000 billion barrels of oil, 669 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids, with 84 percent in offshore locations.

While many people around the world are thinking about the economic opportunities that may open up as the ice thaws, experts from the NOS Office of Response and Restoration are now working out strategies to deal with the increased likelihood of oil spills in this remote region.

The Problem

In 2004, the M/V Selendang Ayu spilled more than 350,000 gallons of oil into the Bering Sea during a storm. Attempts to recover oil during spills in Alaska have often failed and, in many cases, weather and other adverse conditions prevent any response at all. Oil spills in Alaska have killed birds, tainted shellfish, fouled shorelines, and contributed to declines of fish populations.

"The U.S. is not adequately prepared to respond to a large spill in broken ice conditions in the Arctic and sub-Arctic region," said Dr. Amy Merten, co-director of the Office of Response and Restoration's Coastal Response Research Center.

"The challenges of geography, weather, and a sensitive and changing ecosystem compel us to improve our preparedness and response capabilities. The increasing likelihood of a major spill in the Arctic means that we must prepare now," she said.

Since the Arctic is remote and undeveloped, vessels transiting the region will have little or no emergency response infrastructure or support. Spills that might be cleaned up relatively quickly and efficiently along the coastal U.S. will be much harder to deal with in the far reaches of the Arctic. Added to this, there are no nearby search and rescue teams in the area. Ships that collide with floating ice or other vessels will likely have to wait much longer for help to arrive.

The extreme remoteness of the Arctic also means that there are no nearby logistical support services for salvage and emergency response, so even a minor breakdown could lead to a large spill. And while technological improvements have reduced the potential for oil spills from oil production platforms, spills resulting from the associated vessel traffic, pipelines, shore side facilities and other infrastructure are common.

In addition, shoreline erosion and the melting of permafrost are dramatically affecting the stability and safety of communities in the Arctic region. Oil pipelines and other infrastructure located in permafrost will become less stable, also increasing the risk of spills.

Melting ice will also present hazards to navigation, to include unpredictable ice conditions, moving ice floes, unsettled weather, and erratic wave patterns.

Finding Solutions

With the loss of 11 million gallons of oil, the 1989 Exxon Valdez spill in Alaska's Prince William Sound remains the largest marine spill ever to occur in U.S. coastal waters. Although the spill occurred in calm seas and ice-free conditions with response equipment and shore-based infrastructure available nearby, the clean-up was still daunting. Active response efforts took over three years. Today, 20 years later, the environment and communities are still recovering.

NOAA is now working with Norway, the University of Alaska, the Prince William Sound Oil Spill Recovery Institute, and the University of Rhode Island to address these concerns. The goal of ongoing research is to better understand and prepare for conditions and increased traffic in the Arctic in the not-too-distant future.

This work is part of a larger joint industry program to improve response capabilities and contingency plans for responding to Arctic spills.

NOAA also recently co-led an international workshop on accident threats to the Arctic. The key recommendations from this workshop are forming OR&R’s Arctic Preparedness and Response Strategy:

Enhance and add capacity for spill preparedness and response capabilities for the Arctic/Sub-Arctic regions. Currently, response assets would come from Anchorage and the lower 48 states, taking days to weeks to arrive on scene.

Develop response strategies for using alternative countermeasures (e.g., dispersants, in-situ burning).

Update environmental sensitivity maps, improve baseline data for biological resources at risk and other planning tools for emergency responders.

Conduct critical research on Arctic response and restoration efforts including better understanding of behavior and effects of oil in cold water/ice conditions and the technologies for spill response in difficult environments.

Develop pollutant fate and effects models (models that help predict what will happen to pollutants and what effects they may have on the environment) for ice conditions.

Develop natural resource damage assessment and restoration guidelines/protocols for the Arctic.

Source: http://oceanservice.noaa.gov/news/features/jun09/arctic.html

Posted by Arthur Caldicott at 09:27 AM | Comments (0)

Opponents try late rally against Enbridge pipeline

John Myers
Duluth News Tribune
June 30, 2009

Marty Cobenais, with the Indigenous Environmental Network out of Bemidji, describes the pollution and environmental destruction caused by mining tar sands in Alberta at a press conference today in Duluth. The photo at right is of a tailings pond in Alberta. (Bob King / king@duluthnews.com)

Opponents of the Enbridge Alberta Clipper pipeline rallied today in Duluth to announce they are trying legal and political efforts to stop the oil pipeline.

A rural Superior landowner says the Enbridge Energy pipeline slated to cross his land will damage wetlands. A Thief River Falls farmer says the pipeline will cause flooding of his crops. And a Leech Lake tribal member says she’s on a spiritual mission to stop the pipeline and the flow of Canadian tar sands oil into the U.S.

Opponents of the Enbridge Alberta Clipper pipeline rallied today in Duluth to announce they are trying legal and political efforts to stop the oil pipeline.

“We are a vote of unity for our brothers and sisters’’ in Canada, said Marty Cobenais of the Bemidji-based Indigenous Environmental Network.

But it’s not clear if opponents can succeed before construction begins in coming weeks. The company already is stockpiling pipe along the route and the U.S. State Department is expected to issue a permit allowing the pipeline to advance.

Enbridge already has approval from the Minnesota Public Utilities Commission to cross the state. The company also has signed agreements with the Fond du Lac and Leech Lake band governments to cross those reservations.

And a federal environmental impact statement concluded the pipeline, which will parallel an existing oil pipeline, will not create serious environmental harm.

Tony Podgorak, who owns Douglas County land that the pipeline will cross on the way into Superior, said the route includes several water and wetland crossings that will be irrevocably harmed. And he said there’s a human health risk if the chemicals proposed to be pumped north into Canada along the line ever spill.

“What they want to push back to Canada along the line is very toxic,’’ he said.

Elizabeth Sherman, Leech Lake band member, criticized Fond du Lac and Leech Lake governments for approving the pipeline while Cree people in Alberta are affected. Sherman and Cobenais said opponents will file a request for an injunction against the pipeline next week in Leech Lake tribal court.

“I’m on a spiritual mission,’’ Sherman said. “We are rising up and saying no.”

But Karen Diver, chairwoman of the Fond du Lac band, said she has not heard any opposition of her band’s agreement to allow Enbridge to cross the reservation. The amount the company paid the Fond du Lac Band for the right-of-way has not been disclosed. Leech Lake received $10 million from Enbridge.

“We’ve heard absolutely no opposition. No one has come forward,’’ Diver said. “The reason we struck an agreement with (Enbridge) is that the least environmentally damaging route was along the existing pipelines. Going around the reservation would have been worse. … As for the tar sands oil, it’s up to Canada to permit that.’’

Opponents are encouraging others to write Secretary of State Hillary Clinton to oppose the pipeline. Clinton is expected to make a decision as early as next week.

The Minnesota Center for Environmental Advocacy has filed several lawsuits against the pipeline. But, pending any court injunction, Denise Hamsher, Enbridge spokeswoman, said Friday that the company is ready to begin work when the State Department permit is issued. The project is expected to create some 3,000 construction jobs in the region.

Opponents of the pipeline say the oil is among the dirtiest in the world and that mining it from tar sands is damaging the environment for native tribes in Canada. It’s blamed for leaving scarred landscapes and polluted waters in northern Alberta. Tar sand oil also is high in carbon dioxide, a greenhouse gas, and requires more energy to process, opponents say.

The pipeline would carry about 450,000 barrels of oil, or 19 million gallons, per day. That would be in addition to the 1.6 million barrels per day the company already moves through an existing pipeline along the same route.

The $1.2 billion U.S. segment of the pipeline is part of an $8 billion system expansion that will bring oil from Alberta into the U.S., 285 miles across Minnesota and into Wisconsin. From Superior, the oil could either be refined at the Murphy Oil facility or piped another 450 miles to Illinois.

Posted by Arthur Caldicott at 09:04 AM | Comments (0)

blog2009

July 29, 2009

A flurry of upbeat news from Enbridge

Enbridge on Track for 20% Plus Growth in 2009, 10% Plus Through 2013

Enbridge Proposes $500MM Walker Ridge Gathering System for GOM Enbridge Inc.

Enbridge to Start Multibillion-Dollar Pipeline Project in August

July 27, 2009

Hydropower boom may not be a bust for salmon

Boom in hydropower pits fish against climate

Desertec: an energy, CO2, water and food solution

U.S. clean energy stimulus both a boon and a threat to B.C. companies

July 25, 2009

Teck resurrects plans to expand coal output

Plans shelved for new Saint John refinery

July 24, 2009

California Legislature plan falls short of closing entire deficit

California Coast Spared by Vote of Assembly

53 Environmental Groups Oppose Use of Budget Process To Approve New Offshore Oil Drilling Project

July 23, 2009

Climate and CCS debate: Coal can’t have it both ways

Realistic Costs of Carbon Capture

Carbon capture for coal costly, study finds

Clean Coal: Competitive Someday, Just Not Today

July 22, 2009

Dig the coal, bury the carbon

July 21, 2009

At what price 'white man's money'?

July 20, 2009

TransAlta offers $654 million in cash to acquire Canadian Hydro Developers

TransAlta signals green intentions with Canadian Hydro bid

Operators See No Immediate Need For Pipelines To Kitimat

Chinese buying spree bypasses Canada

July 18, 2009

Oil sands catches break from recession

July 17, 2009

US: offshore drilling in the news

California Budget Deal May Mean New Offshore Oil Drilling

Interior Plans Offshore Drilling Despite Questions

Offshore drilling debate resurfaces

A Guide to the Governor’s Race, One Year Before the Primary

July 14, 2009

Five 'threat groups' identified for Alberta, B.C. oil industry

Resource Industries and Security Issues in Northern Alberta

July 11, 2009

Thawing Arctic relations

Barge hauling 1 million gallons of gas runs aground in Columbia Gorge

July 10, 2009

Who's doing the math here?

July 07, 2009

New US Natural Gas Pipeline Displacing Canadian Gas

Swimming in natural gas

July 05, 2009

The Graph: A Picture of the Present and Future

How our economy is killing the Earth

The facts of overconsumption

Grit leader flatters Alberta, criticizes Tories

July 02, 2009

On Canada, trade and climate change

Preparing for Oil Spills in the Future Arctic

Opponents try late rally against Enbridge pipeline

Enbridge Proposes $500MM Walker Ridge Gathering System for GOM
Enbridge Inc.