October 31, 2009
Get ready for triple-digit oil again soon
Jeff Rubin
Jeff Rubin's Smaller World Blog
Globe and Mail
Friday, October 30, 2009
 Oil tanker |
Nothing is shrinking faster these days than global trade. For the first time in decades, world trade volume, the lifeblood of the global economy, is actually falling. And chances are that downsizing is here to stay.
One reason global trade is shrinking is that most major economies have been contracting. Recession-scarred economies will of course recover. They always do. The Chinese economy is already on the mend and in time other economies will also get back on their feet. But unfortunately for an oil-hungry global economy, so too will crude prices — which is not only the real reason the economy tanked in the first place, but also the reason the economy coming out of this recession will be very different than the one that went into it.
Whether we move goods by air, ship, rail or truck, the global economy runs on oil.
And soon that oil is going to cost more than we can afford. Long distance transoceanic trade is about to go the way of the gas-guzzling SUV. Both are relics of an age of cheap oil that no longer exists.
Oil prices are already trading at around $80 per barrel when the red ink hasn’t even dried yet on the deepest postwar recession in the largest oil-consuming economy in the world. If oil is trading at this level when world oil demand has actually fallen this year, where do you think oil prices will be when the world’s energy appetite recovers?
Everyone, from OPEC to the International Energy Agency to the US Department of Energy, now expects that to happen by early next year.
If so, you can expect to see the return of triple-digit oil prices by next spring. And that means that the armada of empty container ships anchored off Southeast Asia are likely to stay exactly where they are.
In tomorrow’s economy, distance will cost money. Globalization was the product of cheap energy. Deglobalization is the economic face of triple-digit oil prices. The whole notion of sourcing supply from halfway around the world to save on labor costs will no longer make any commercial sense. From making our own steel to building our own furniture to growing our own food, the soaring cost of oil-fired transport will bring production back home to the local markets it once served.
I’m Jeff Rubin, and I believe your world is about to get a whole lot smaller.
October 30, 2009
Suzuki & Pembina: Climate Leadership, Economic Prosperity
COMMENT: On the publication of Climate Leadership, Economic Prosperity, the editors and columnists at the Globe and Mail, and National Post, as well as the Premiers of Alberta and Saskatchewan, went apeshit. Each outdoing the other with hyperbole and invective. All quite predictable.
An excellent assessment of the report is by George Hoberg and Stephanie Taylor at Hoberg's blog site, Green Policy Prof. It is copied below, after the news release about the report.
Media Release
David Suzuki Foundation
October 29, 2009
New study shows Canada can meet global-warming reduction targets while growing jobs and economy
OTTAWA— Canada can succeed economically while meeting targets to reduce global warming pollution, according to an economic modelling study commissioned by the Pembina Institute and the David Suzuki Foundation. Climate Leadership, Economic Prosperity is the first Canadian study of its kind to show regional impacts on employment and gross domestic product, and the first to comprehensively examine how Canada can meet a greenhouse gas reduction target for 2020 that goes beyond the federal government’s target.
Leading economic modelling firm M.K. Jaccard and Associates, on behalf of the Pembina Institute and the David Suzuki Foundation, conducted an in-depth study of federal and provincial policies needed for Canada to meet two targets to reduce its greenhouse gas emissions. The firm modelled how Canada can achieve both the federal government’s current target (20 per cent below the 2006 level by 2020) as well as a more ambitious target (25 per cent below the 1990 level by 2020). The second target is derived from analysis of the emission reductions needed to limit average global warming to 2° C — a limit supported by a broad scientific consensus.
“This new analysis shows that with strong policies, Canada can meet a 2° C target in 2020 and have a strong, growing economy, a quality of life higher than Canadians enjoy today, and continued steady job creation across the country,” says Dale Marshall, climate change policy analyst with the David Suzuki Foundation.
Far stronger policies than the federal government has proposed to date must be implemented, according to the modelling study. “Meeting either target requires governments to put a significant price on global warming emissions broadly across the economy, and to back this up with strong complementary regulations and public investments,” says Matthew Bramley, director of climate change for the Pembina Institute. “The study indicates that Canada can implement much stronger climate policies than the U.S. and still prosper economically.”
Key findings of the Jaccard study include:
• Canada’s gross domestic product would continue to grow at 2.1 per cent per year on average between 2010 and 2020 while meeting the 2° C target, compared to 2.2 per cent for the government’s target and 2.4 per cent under business as usual.
• Canada’s total number of jobs would grow by 11 per cent between 2010 and 2020 while meeting either target — essentially the same rate as under business as usual.
• The urgent need to address very high emissions in Alberta and Saskatchewan would significantly reduce projected growth rates in these provinces. However, Alberta’s per capita GDP would continue to be much higher than that of any other region, and Saskatchewan’s per capita GDP would stay close to the Canadian average.
• To meet the 2° C target, a carbon price would start at $50 per tonne in 2010 and reach $200 per tonne by 2020. To meet the government’s target, the carbon price would need to reach $100 per tonne by 2020, or $145 per tonne if Canada does not purchase any international credits.
• Almost half of carbon price revenue can be returned to Canadians through reductions in income tax. Revenue from carbon pricing can also fund major public investments to reduce greenhouse gas emissions, such as building smart grids and transit infrastructure.
• Technological approaches to achieve major reductions in Canada’s greenhouse gas emissions range from increased energy efficiency and renewable energy to carbon capture and storage.
The Pembina Institute and David Suzuki Foundation view the study as an important contribution to current public policy dialogue on greenhouse gas reductions in the lead up to the December UN climate summit in Copenhagen.
For further information: The report and full study are available at: http://www.davidsuzuki.org/Publications/Climate_Leadership.asp
For media and interview opportunities please contact:
Dale Marshall
dmarshall@davidsuzuki.org
Climate policy cost report casts light on the coming reckoning for the Canadian federation
George Hoberg and Stephanie TaylorGreen Policy Prof
October 30th, 2009
This week the Pembina Institute and the David Suzuki Foundation jointly released a report that finds that Canada can meet its greenhouse gas emissions reduction target – and even more stringent goals – without bringing the economy to a halt. While acknowledging that the policies necessitated by emissions reduction targets will have different effects for different provinces, the report emphasizes that the impact on economic growth for even the most carbon-intensive provinces will be relatively modest.
As expected, the report has prompted hyperbolic responses from the defenders of Canada’s fossil energy establishment: several Western provinces, federal Minister of the Environment Jim Prentice, and the Globe and Mail editorial board. Prentice characterized the report’s findings as “irresponsible” and stressed that Canada could meet its targets through other means, namely by harmonizing its climate change plan with the United States’ as-yet-unfinalized plan. He also made it clear that the costs of any emissions reduction plan must be acceptable to all regions of the country. Such agreement over an effective climate action plan is all but impossible as long as Alberta refuses to “touch the brake” on its oil sands operations. And even before factoring in provincial reactions, such hyperbole coming from the federal Minister of the Environment casts doubt on the sincerity of Canada’s commitment to its own greenhouse gas emission reduction target by 2020.
Politicians from Alberta and Saskatchewan were even more vocal in their opposition to the report. Alberta premier Ed Stelmach denounced the report’s recommendations as nothing more than a wealth transfer to other parts of the country: “There won’t be another wealth transfer to Ottawa under my watch. There is already one wealth transfer program and that’s equalization.” Saskatchewan Energy Minister Bill Boyd echoed Stelmach’s “wealth transfer” theme, adding that technology is the key to combating climate change. Alberta and Saskatchewan have placed large amounts of faith and money in carbon capture and storage (CCS) technology, despite questions surrounding its reliability and cost-effectiveness. Recently the federal government has joined in, pumping $343-million into a CCS-equipped coal-fired generation plant in Wabamun, Alberta while declaring that “Carbon capture and storage has the potential to help us balance our need for energy with our duty to protect the environment.”
This dismissive and defiant rhetoric is part of a long history of resistance and denial that at some point Canada, and especially Alberta, would need to reconcile its energy and climate policies with modern notions of sustainability and, especially, an evolving international climate regime. The ghost of the National Energy Program has given Western provinces a de facto veto over national climate change policy.
National newspapers joined the condemnation. The lead Globe and Mail editorial yesterday denounced the report: “its all-out attack on the oil and gas sector is politically and economically unacceptable, and would euthanize a vital Canadian industry.” It says the report’s policy recommendations are “unsaleable and dangerous.” In its most extreme rhetoric, it proclaims “Canada cannot take its national unity for granted and must not, in the service of international obligations, allow itself to be immolated by a government policy of such wrenching dislocation.” The National Post editorial board joined in the hyperbole, rejecting the report because it “would shake the very pillars of Confederation.” A National Post commentary joined the editorial excess, claiming “there will be blood.” Reactions from farther west are not so shrill. Vancouver Sun columnist Craig McInnes claims the report demonstrates that “with a political will, there’s a way.”
The Report
Pembina and DSF enlisted MK Jaccard and Associates (MKJA) to consider the feasibility and cost of two greenhouse gas emissions reduction targets: 1) a 25 percent reduction below 1990 levels by 2020, as proposed by environmental NGOs (ENGOs), and 2) a 20 percent reduction below 2006 levels by 2020, the Canadian government’s proposed target. Both scenarios were found to be feasible, though only with significantly stricter policy packages than those proposed thus far by the provincial and federal governments. Of particular interest are the carbon dioxide equivalent emissions prices under each scenario: $50/tonne in 2010 rising to $200/tonne in 2020 under the ENGO scenario, and $40/tonne in 2010 with an increase to $100/tonne in 2020 given the government’s target.
Unfortunately, even the stringent policy packages proposed by MKJA (including carbon pricing) are not enough to reach the emissions reduction targets in either scenario. Thus, the policy package examined by the authors includes purchasing of international offsets, pursuit of carbon capture and storage (for the environmental option), and a number of other policy responses to close the gap.
Economic Impacts: National and Regional
Under both scenarios, the report projects that Canada will experience significant economic growth, but not quite as much as it would under the “business as usual” (BAU) scenario of no new controls. Under the BAU scenario, Canadian GDP is projected to grow 27% by 2020. Under the scenario implementing the Government of Canada’s target, GDP would grow 25% by 2020, and under the environmental group target scenario, GDP would grow 22%. The changes in GDP growth are projected to have different affects on different provinces. Growth will be less than projected under BAU in all regions except Manitoba and Ontario. The gap between GDP under both policy scenarios and under BAU is by far the largest in Alberta at 8% under the government scenario and 12 percent under the ENGO scenario.
The number of jobs will increase between 2010 and 2020 in all provinces. Interestingly, job growth will exceed business as usual (BAU) levels under both scenarios in BC, Manitoba, Ontario and Quebec. Alberta is the sole province to whose job growth is less than BAU levels under both scenarios, though it is important not to confuse reduced job growth with negative job growth. Pre-tax salaries in 2020 will also continue to grow under both scenarios, but at a slower rate than under BAU in all regions except Manitoba, which grows faster than under BAU.
GDP per capita will continue to grow in all regions under both climate policy scenarios, though the change from BAU levels will be greatest under the ENGO scenario. Under BAU, Alberta would see per capita GDP growth of 42%, as opposed to 25% under the ENGO scenarios and 31% under the government scenario. As the authors point out, this model does not account for the effects of population growth on GDP per capita. Specifically, population growth in Alberta is likely to be lower under both policy scenarios than under BAU (due to a relative decrease in expected energy sector jobs), which will lead to higher GDP per capita numbers than those projected under the policy scenarios.
Conclusion
As the report clearly shows, effective climate action is possible in Canada without plunging the country, or even the Western provinces, into economic chaos. The report’s authors should be congratulated for advancing the climate policy debate in Canada. By conducting serious economic policy analysis on what needs to be done to significantly reduce Canada’s greenhouse gas emissions, they have spoken truth to power. In so doing, however, they’ve exposed the hypocrisy of Canada’s persistent claims that it is committed to emission reduction targets without having a plan or the political will to do meet those targets. By being transparent about the regional impacts of climate policies, the report also challenges the foundation of political-economic power in the West, and provoked a formidable rhetorical backlash.
If Canada wants to be a responsible member of the international community, it will need to reduce its greenhouse gas emissions, and do so significantly and relatively quickly. This cannot be done without significantly raising the cost of energy production from fossil fuels, including the oil sands as well as coal and natural gas. The Canadian economy will need to adjust to these changes, and the impacts of these costs will have differential impact on regions, just as the regional endowment of fossil energy and the wealth generated from that has had differential impacts on regions. The fact that some areas in Western Canada will not grow as much as they might otherwise cannot be used as a justification for failing to act on our generation’s greatest challenge.
www.greenpolicyprof.org/wordpress/
October 29, 2009
Quebec, N.B. strike $4.8B deal for NB Power
COMMENT: The increasing role of private generation in BC is one thing. Selling BC Hydro and the heritage assets is something else. (Though some would say the role of IPPs is just an incrementalist shift in the same direction.)
This is quite the move on Hydro-Quebec's part - corporatist, hegemonist, imperialist. Interesting to watch unfold. The popular opposition in New Brunswick and other Atlantic provinces is mounting.
CBC News
October 29, 2009
 New Brunswick Premier Shawn Graham explains why his government wants to sell a majority of NB Power's assets to Hydro-Québec. (CBC) |
New Brunswick Premier Shawn Graham and Quebec Premier Jean Charest announced the historic deal in Fredericton on Thursday, concluding a week of speculation.
The deal is contingent on legislative approval in New Brunswick.
It stipulates that Hydro-Québec would take over the majority of New Brunswick's generating stations for $4.8 billion, which represents the equivalent of NB Power's debt.
Additionally, Hydro-Québec would freeze residential power rates in New Brunswick for five years. During the same time, large industrial rates would be lowered to the power prices offered to the same customers in Quebec, but they would not be frozen. That component of the deal is worth an estimated $5 billion to NB Power customers.
'Big winners'
 Quebec Premier Jean Charest says his province's interest in purchasing NB Power is to gain better access to the lucrative U.S. electricity market. (CBC) |
"And ratepayers would see reduced rates to an extent that would have been impossible for NB Power as a stand-alone entity."
Charest said at the news conference that the region's geography made the deal make sense considering the desire to tap into the power-starved U.S. market.
Both premiers used the news conference to address the criticism of Newfoundland and Labrador Premier Danny Williams, who said the deal could hinder his province's ability to transmit its hydro power into the United States.
Charest said he supports open markets and Quebec is eager to work with other provinces.
"The real question for Canadians is this, it isn't whether or not one [province] is succeeding better than the other," he said. "The real issue, if we have our eyes on the ball, is to the south of us, that is where things are going to happen.
"The Americans need clean, renewable energy and they need a lot of it. And guess what? We in Canada are the ones that can supply it. And by doing that, we can make our environment better and we can enrich our respective societies by doing so. There is a condition though: We have to learn to work together."
Now that the proposed deal with New Brunswick has been struck, Charest said his province is negotiating with Prince Edward Island to sign a similar agreement.
Charest said there is no timeline on obtaining a deal with P.E.I.
No impact on Quebec power rates
After the five-year rate freeze is lifted, rates would rise based on New Brunswick's consumer price index. However, the price of any new generation needed in the province could be added by Hydro-Québec.
Under the agreement, Hydro-Québec gains access to more than 370,000 customers and expects a return on equity of more than 10 per cent starting in the first year. The proposed deal will not have any impact on Quebec's power rates.
The proposed deal will wipe out NB Power's $4.8-billion debt, which is 40 per cent of the province's total debt. That debt will stand at $8.2 billion after the deal is approved.
New Brunswick will have to make legislative changes early in the new year as the agreement is designed to take effect on March 31, 2010.
Graham said if the deal is not concluded by March 31, 2010, then NB Power will boost electricity rates by three per cent as originally planned.
Opposition Leader David Alward is demanding Graham call an election over the proposed NB Power sale.
3 stations retained by NB Power
 Hydro-Québec will not buy Coleson Cove or two other thermal generating stations as part of the tentative deal with New Brunswick. The three plants will continue to be owned by NB Power, which will sell the electricity back to the Quebec utility. (CBC) |
The Dalhousie Generating Station will be shut down next year under the agreement, a decision that will be another blow to the northern town that has been reeling after a series of other closures in recent years.
"It's also very important for me to speak to the community of Dalhousie, which will see its generating station phased out," Graham said.
"We will stand by your community and we are already hard at work to find a variety of new opportunities for you."
David Hay, the president and chief executive officer of NB Power, is expected to be in Dalhousie later on Thursday to discuss the impact of the deal with workers in the northern community.
New Brunswick will retain control of Coleson Cove and Belledune, and will sell the power back to Hydro-Québec.
Under the proposed agreement, the Point Lepreau nuclear generating station, Atlantic Canada's only nuclear reactor, will remain under NB Power's control until its $1.4-billion refurbishment project is concluded in February 2011.
The reactor refurbishment project is 16 months behind schedule. However, if the energy pact is approved, it could lessen the financial burden.
Instead of purchasing replacement power on the open market, Hydro-Québec will supply cheaper hydro power to the province.
Also under the proposed agreement, New Brunswick's Independent System Operation will be rolled into Hydro-Québec. That will give control over the transmission lines in New Brunswick to Hydro-Québec.
However, any utility or company that wants to use the transmission lines must bid for it in an open auction.
Hydro-Québec eyes N.B. as 'energy hub'
Bertrand MarotteGlobe and Mail
Thursday, Oct. 29, 2009
Montreal — Hydro-Québec is committed to making New Brunswick into an “energy hub” with the acquisition of most of the assets of New Brunswick Power Corp., says the head of Quebec's giant hydroelectric utility.
“We want to turn New Brunswick into an energy hub and add value to the assets,” Thierry Vandal, president and chief executive officer of Hydro-Québec, said in an interview.
New Brunswick is strategically located as a transmission gateway between Eastern Canada and the northeastern United States, he said.
And Hydro-Québec is open to doing deals with other provinces, including Newfoundland and Labrador, that would allow them to use its transmission corridors to export to the U.S., he added.
“Hydro-Québec is proposing to acquire [New Brunswick Power's] assets, but the network remains open. It's not because we're acquiring it that we're going to close [access to the network],” he said.
Newfoundland and Labrador Premier Danny Williams has voiced his concerns that Hydro-Québec is only out to secure a stranglehold over access to electricity markets in the U.S.
“From a business perspective, Hydro-Québec will exploit those assets, but through a subsidiary that will continue to be called New Brunswick Power,” said Thierry Vandal, the president and chief executive officer of Hydro-Québec.
“There is a lot of continuity that we want to maintain,” Mr. Vandal said in an interview before the formal announcement to be made Thursday morning in Fredericton.
Industrial, commercial and residential customers of debt-laden New Brunswick Power will get a break on their electricity rates and Hydro-Québec will be able to expand its access to the major markets in the northeastern U.S. markets, he said.
Under terms of the memorandum of understanding between the two power companies, New Brunswick's residential and commercial rates will be frozen for five years, while industrial prices will be rolled back, he said.
At the same time, Hydro-Québec will be in a position to invest in and upgrade New Brunswick Power facilities, help shift it to more environmentally friendly power generation and make the province a strategic location for the export of electricity to the U.S., Mr. Vandal said.
“It's a transaction in which New Brunswick's geography is very interesting for us. Strategically, it opens an additional route to those markets.”
He brushed aside suggestions that Hydro-Québec will have an unfair advantage over rivals, such as Newfoundland and Labrador.
Newfoundland and Labrador Premier Danny Williams has warned that the proposed deal between Quebec and New Brunswick would essentially give Hydro-Québec control of electricity transmission corridors between Atlantic Canada and the U.S. markets.
Mr. Williams has reiterated his threat to take his case to the federal Competition Bureau if a deal between the two provinces goes ahead.
Mr. Williams said in a letter to New Brunswick Premier Shawn Graham – made public yesterday – that Hydro-Québec has a track record of “obstruction and delay” and unfair treatment of third parties that deal with it.
Newfoundland has for decades insisted it was shortchanged in a 1960s deal signed with Quebec to build the Upper Churchill River hydro project. Forced to send the power through Quebec to markets, Newfoundland agreed to fixed prices that are now far below market value, a situation that has been a boon for Hydro-Québec.
Newfoundland Hydro now has plans for a massive hydroelectric project on the Lower Churchill, which includes options for a transmission route bypassing Quebec.
Newfoundland Hydro has also had talks with Nova Scotia and New Brunswick over possible electricity export partnerships. It has, as well, applied for access through Quebec's network for exports. Newfoundland has complained in the past that Hydro-Québec doesn't respect requirements from the U.S. regulator that exporters to the American market provide rivals with “open access” through their systems.
Mr. Vandal said in an interview with The Globe and Mail that Hydro-Québec has always made it a point of pride to keep its system open.
And that will be the case in New Brunswick as well, he added.
“The New Brunswick network will remain absolutely open,” he said.
“All transmission requests will be handled on the basis of absolute respect for the rules of the market and of the regulatory framework.”
The proposed acquisition of New Brunswick Power assets – including seven generating stations producing a total of 950 megawatts of electricity – is valued at $4.75-billion.
Several coal-fired and diesel-powered facilities will be phased out and there are plans to install clean energy such as wind power, Mr. Vandal said.
In a second phase, the Point Lepreau nuclear power station will be taken over, but only after Atomic Energy Canada completes a refurbishment project, expected some time in 2011, he said.
If the acquisition goes ahead as planned, Hydro-Québec will gain about 380,000 new customers or about 10 per cent of its existing customer base, said Mr. Vandal.
October 28, 2009
Alberta-Superior pipeline takes center stage in world climate debate
Richard Thomas
Business North
October 27, 2009
 (Photo courtesy of Enbridge.) |
On Aug. 20, the U.S. State Department granted a Presidential permit for the 1,000-mile “Alberta Clipper” pipeline from Canada’s Alberta oil sands to Superior, due for completion in mid-2010.
On Sept. 2 Enbridge (U.S.) Inc., the partner of Canada-based Enbridge, celebrated in Carlton County, where the company had stacks of pipes ready for construction.
The project will result in 3,000 construction jobs. The influx of workers already has created a shortage of rental housing in Bemidji.
On Sept. 3 a coalition including the Minnesota Center for Environmental Advocacy and Bemidji-based Indigenous Environmental Network filed a lawsuit in U.S. District Court in San Francisco to stop the pipeline.
“The projects would spur refinery expansions and modifications in the United States, leading to increased air and water pollution for residents of the Midwest and other states,” the complaint stated.
It also claims the state department failed “to assess all reasonably foreseeable environmental impacts” and did not “take a hard look at the Alberta Clipper project’s stated purpose and need or to adequately consider a reasonable range of alternatives.”
The state department concluded the current plan is environmentally preferable to the alternatives. The other options included different routes and “no action,” declining to issue the permit.
In the case of no action, “Refiners would seek other means of obtaining the heavy Canadian crude oil, or attempt to obtain additional supplies from less stable and less reliable sources,” said the State Department's environmental impact statement.
It also cited “strategic interests” as reason for approval: reducing American dependence on OPEC (Organization of Petroleum Exporting Countries) oil “in a time of considerable political tension in other major oil producing countries and regions.” The department noted the need to send “a positive economic signal, in a difficult economic period.”
Enbridge also is constructing a $2.2 billion return pipeline, called Southern Lights, to ship diluent (diluting agents) from the Chicago area through Superior to Clearbrook, MN. From there an existing pipeline will be used, with the flow reversed, to carry the diluent to Edmonton, Alberta, Canada.
Enbridge also is expanding its terminal in Superior, adding five new storage tanks to the existing 37. Each new tank has a 250,000-barrel capacity.
Other non-Enbridge pipelines under construction from Alberta are the 2,000-mile TransCanada Keystone I to Illinois and the 3,200 Keystone Expansion to the Gulf of Mexico.
Murphy Oil has weighed potential expanding its Superior refinery to cash in on Canada’s oil boom. It wants to expand its refining capacity from 35,000 to 235,000 barrels per day and expand the refinery’s grounds from 200 to more than 600 acres. So far, “there is no commercial arrangement to provide additional heavy crude to Murphy Oil,” said the U.S. State Department. “No formal application have been submitted to federal or state regulatory agencies.”
Oil sands controversy
The tapping of Canada’s oil sands, also known as tar sands, is often cited as the world’s largest industrial project. It’s been an economic boon but arguably an environmental disaster and unquestionably a public relations fiasco.
The extraction process creates more carbon dioxide than regular oil production. (Estimates as to how much more vary, ranging from 15 percent to triple the amount.) Huge swathes of remote forested land must be strip-mined to extract a tar-like substance called bitumen. Steam plants literally melt oil out the ground.
The water used in the process ultimately flows into toxic tailings ponds miles long. In a much-publicized April 2008 event, 500 ducks died after landing on such a lake.
The extraction process also uses four times more natural gas than mining operations and already accounts for 20 percent of Canada’s natural gas usage. As an alternative, some groups are proposing to build as many as 25 nuclear reactors.
In September the environmental group Greenpeace, which has been staging protest actions at oil sands operations, released “Dirty Oil,” a report carrying apocalyptic predictions for the oil sands: “The rapid development of unconventional hydrocarbons such as Canada’s tar sands could tip the scales toward dangerous and uncontrollable climate change.”
Speaking in defense of the oil sands in Edmonton on Sept. 23, Enbridge (Canada) CEO Patrick Daniel said opposition to the pipeline “has not led to opposition to energy consumption, which is where the vast majority of CO2 (carbon dioxide) emissions are produced.”
Daniel continued, “I would love to see an energy strategy for this country that we can rally the country around, and agree that this is the generally the direction we are going to take and not oppose everything in energy development while still moving toward renewables.”
On the pro-industry website oilsandsreview.com, editor Deborah Jaremko writes, “The oil sands is a massive resource, and undeniably presents some pretty hefty environmental challenges, but I think for Greenpeace it represents the low-hanging fruit of protest potential. Perhaps they should consider consumption-related action, with the understanding that riding bikes everywhere and ditching our jobs and lives to wander the world is simply not feasible (or desirable) for the vast majority of people. Diversifying energy sources is crucial, but it will happen slowly, and it will not happen by ‘stopping the tar sands.’”
Meanwhile, President Obama maintains he is committed to reducing overall greenhouse gas emissions. The massive American Clean Energy and Security Act of 2009, which passed the House in June, promotes low-carbon fuels, conservation and efficiency. A similar bill was introduced into the Senate Oct. 1.
On the same day Duluth Mayor Don Ness, flanked by labor and environmental representatives, held a press conference to express support.
Because they create jobs, the pipelines propose an awkward issue for pro-environmental labor groups such as the Blue Green Alliance, which was represented at the press conference. The Minnesota-based coalition of environmental groups, co-founded by the Sierra Club and United Steelworkers, support clean energy legislation but have not taken a position on the oil sands or the pipelines.
The steelworkers union has objected only to the TransCanada Keystone line citing its use of imported pipes from India, which the union asserts is made of thin material and poses a safety hazard.
The 2008 drop in oil prices slowed but did not stop tar sands development. The number of camp-dwelling workers dropped from 27,000 a year ago to 23,000 now.
“Keeping oil-sands projects ticking along once they are on stream now requires a price of around $35 a barrel,” stated Petroleum Economist magazine in September. “About $80 (per barrel) is necessary for new investments, although in light of a softening of some costs, others put the figure much lower.”
Oil sold at $66.95 per barrel on Sept. 28, according to Bloomberg.com. With oil becoming scarcer, prices only can go up.
Pipeline safety
The Alberta Clipper will cross 162 water bodies in Minnesota and 14 in Wisconsin. Seventeen are within the St. Louis River Estuary that feeds into Lake Superior. The Wisconsin Department of Natural Resources determined the project would produce no significant impact.
“Over the operational life of the Alberta Clipper Project, there would be a very low likelihood of a crude oil release from the pipelines,” concludes the U.S. State Department’s environmental impact statement. The report cites high maintenance standards and leak detection methods. The report also based its conclusion on the assumption that “Enbridge would comply with all applicable laws and regulations.”
Its Web site, www.enbridge.com, encourages that assumption.
“Pipelines are the safest and only practical transportation mode to move large quantities of petroleum,” it states.
But the industry’s safety record shows that “safest” and “practical” doesn’t translate to accident-free.
Enbridge already operates one of the world’s longest pipelines, the 3,100 mile Lakehead system. The first section from Alberta to Superior was built in 1950 when the Canadian region had its first oil boom. Today the Lakehead system transports 1.4 million barrels per day. Over the decades the company has had its share of spills. (Enbridge pipeline accidents, below.)
The safety of pipelines operated by all companies has been a source of contention. There are 168,900 miles of onshore and offshore hazardous liquid pipeline in the United States.
In the 1990s accidents resulted in 200 deaths, and 3,000 injuries (both gas and liquid pipelines) and 1.5 million barrels of spilled liquid.
Enforcement was strengthened when President Bush signed the Pipeline Safety Improvement Act of 2002. (Rep. James Oberstar, D-MN, was a primary House author.) Some pipeline reformers praised the bill as an important step while others criticized it as weak. The act is due for reauthorization in 2010.
According to the U.S. Office on Pipeline Safety, the overall number of “serious” pipeline accidents — involving fatalities and injuries requiring hospitalization — declined from 87 in 1989 to 42 in 2008.
But the number of “significant” incidents (including spills, fatalities and injuries) has increased (277 in 1989 to 292 in 2008). A 2005 spike resulted from the New Orleans flooding.
Between 2003 and 2008 there were 13 fatalities, 39 injuries and $633 million in property damage as a result of pipeline accidents involving hazardous liquid.
1973: Lakehead PipeLine Co. of Superior (now Enbridge) break releases 31,000 barrels of oil near Argyle, the largest spill in Minnesota until 1991.
August 1979: Lakehead pipeline rupture near Bemidji leaks 10,700 barrels. Company initially recovers 60 percent. Later in 1988 the Minnesota Pollution Control Agency requires Lakehead to extract more oil using new technology; removal continues through 2004.
March 1991: The welded seam of a Lakehead pipeline in Grand Rapids ruptures, releasing 40,476 barrels, more than 7,000 of which goes into Prairie River.
September 1998: 8,810 barrels spill from a Lakehead pipeline near Plummer in Northwestern Minnesota.
July 2002: Pipeline rupture spills 6,000 barrels in marsh west of Cohasset.
January 2007: Enbridge pipeline crack spills 1,190 barrels near Whitewater, WI.
February 2007: Construction crew strikes Enbridge pipeline in Rusk County, spilling 3,000 barrels. In January 2009 Enbridge agrees to pay a $1.1 million settlement to the state of Wisconsin for 545 environmental violations.
April 2007: Enbridge Line 3 (From Alberta to Superior) ruptures in Saskatchewan, spilling more than 3,700 barrels.
November 2007: Line 3 leak near Clearbrook in northern Minnesota explodes, killing welders Steve Arnovich and Dave Mussatti Jr. of Superior. U.S. Department of Transportation levies $2.4 million in fines. Enbridge is appealing the amount.
March 2008: Henri St. Pierre dies in an electrical incident at Enbridge’s Kerrobert, Saskatchewan station.
September 2009: Drilling for Alberta Clipper pipeline causes section of U.S. 2 near Bemidji to collapse.
(Related editorial here.)
Scraping bottom
EditorialBusiness News
10/27/2009
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In Isaac Asimov’s 1972 science-fiction novel "The Gods Themselves," scientists discover the seemingly perfect clean energy source. (Don’t ask— it involves pumping matter from a parallel universe.)
Of course there’s an unfortunate side effect: Eventually it’ll cause the sun, and maybe a good chunk of the galaxy, to blow up. But by the time this tidbit is discovered, the economic and scientific forces behind the pump are firmly in place and the information is buried. Hence the title, lifted from 18th century poet Friedrich Schiller: “Against stupidity the gods themselves contend in vain.”
Fortunately the story provides a solution: another pump that draws matter from yet a third parallel universe, counteracting the destructive effect of the first source.
Asimov was optimistic that technology can solve a problem that technology created. There’s no known way to counteract the effect of carbon output, other than, “Stop putting out carbon.” One modern proposal is “sequestration,” which involves separating carbon from emission and injecting it underground, but it’s unproven. Growing more trees helps, because trees consume carbon dioxide and emit oxygen. But it’s doubtful we can plant enough to absorb the carbon produced by all those cars, industries and flatulent livestock.
Finally, the world’s business and political establishments acknowledge the need to reduce carbon output. But we’re still a heavily oil-based economy in the middle of a recession and in need of weaning from Middle East oil. So the exploitation of especially dirty oil in Canada and thousands of miles of new pipeline carrying it to the United States continues.
The Obama administration’s strategy is to treat the oil sands as a temporary fix while we transition to a cleaner, more sustainable energy sources. Meanwhile Congress is hashing over legislation that will support such a direction. The Climate Conference in Copenhagen, Dec. 6-18, is a crucial step to getting the world on the same page regarding carbon output.
Is this all moving fast enough to avoid catastrophe? Whether or not you believe global warming is real, it’s clear we can’t keep pumping pollutants into the environment. The mere fact that we’re extracting tar sands oil is evidence that we’re scraping the bottom of the world’s oil supply. It’s no longer a question whether we have to go green, but when . . . and the sooner, the better. Smart businesses aren’t waiting for federal laws to tell them to embrace green methods.
New book outlines the PR effort behind climate-change skeptics
Stephen Hume
Vancouver Sun
October 28, 2009
Public relations specialist and former Sun writer help dismantle the 'denial machine' that argues against global warming
Climate change skeptics regularly denounce me as a disgrace to journalism for declining to accept their dogma, which is mostly received wisdom from sources that I'd trust to evaluate the published science about as much as I'd trust a plumber to perform open heart surgery.
Nothing against plumbers, mind you. They're just not heart surgeons. And the economists, statisticians and agenda-driven politicians routinely cited by the skeptics aren't glaciologists, botanists, biologists, oceanographers, atmospheric physicists or computer modelling specialists.
In the world of climate skeptics, skepticism is apparently acceptable only when it agrees with the climate change skeptics' point of view. Show skepticism toward their own implausible theory of a vast scientific conspiracy at leading universities to deceive the world about global warming with fraudulent "junk science" and it's just unworthy scoffing from a lazy, dishonest hack.
However, I take heart from a fascinating new book by public relations specialist James Hoggan, written in collaboration with former Vancouver Sun writer Richard Littlemore.
Over 25 years, Hoggan has built his Vancouver firm into an international PR powerhouse with clients in North America, Europe and Asia, so I take what he says quite seriously when it comes to the world of public perception, image-management and strategic communications.
Climate Cover-up: The Crusade to Deny Global Warming is a remarkable deconstruction of what he argues is a carefully orchestrated propaganda campaign whose goal is to set the agenda in climate policy by discrediting legitimate science and manipulating public perceptions of the scientific evidence.
This isn't a book about the science behind global warming scenarios, it's an analysis by a well-informed insider of how the debate was skilfully framed by public relations experts to call that science into question, exploit the media's weakness for a good controversy and ultimately to sow confusion and doubt in the public's mind.
It began, the book says, with fossil fuel industry associations, which had the most to lose financially from any serious attempts to reduce greenhouse gas emissions by curbing the burning of coal, oil and natural gas.
These interests, says Hoggan, deployed strategies developed in Big Tobacco's campaign against the anti-smoking movement. Purported research documents were commissioned with the aim of raising questions about climate change science even though their own scientific advisers knew that science to be sound. Meanwhile, he says, a select group of free-market think tanks implemented the strategy and in the process deliberately polluted public discourse on the subject.
"Reputable newspapers and magazines are today acting in a confused and confusing manner," Hoggan argues, "because a great number of people have worked very hard and spent a great deal of money in an effort to establish and spread that confusion."
Chapter by relentless chapter, Hoggan dismantles what some have called the denial machine.
He begins with an outline of the origins of propaganda and how mercenary spin doctors employed the techniques devised by fascist dictators -- and later refined for war and Cold War by Allies and Axis, capitalists and communists alike -- to deftly frame a broad and benign scientific consensus as a fiercely partisan debate over doubts as to whether or not global warming is actually occurring.
There's a chapter on "astroturfing," the strategy of setting up what appear to be grassroots citizens' groups which are actually fronts for special interests, a process with which British Columbians are already intimately familiar from the erstwhile "War in the Woods" during the 1990s.
There's a chapter on the strategic whitewash and a chapter on the tactical use of lawsuits to silence critics. Another addresses the use of charged language to distort and polarize discussion -- the term "junk science,"
for example.
"Junk science" is often used by non-scientists to imply that work by scientists is false or incompetent, although the term is an oxymoron since if it's "junk" it can't, by definition, be science. And if it is genuine science, it can't, by definition, be junk.
Particularly interesting for me is a chapter dissecting the mass media.
Manipulating the journalistic principle of balance in coverage -- get both sides and let readers decide -- and the media's appetite for conflict -- the more vigorous the better -- provided spin doctors with a mechanism for creating the perception that there's actually a scientific argument over global warming, Hoggan argues. The mass media, he says, became unwitting pawns in a game to enhance the credibility of the incredible and discredit credible experts, sometimes publishing arguments by climate change skeptics that cynically misrepresented scientific experts by quoting them out of context to imply that they doubted global warming was occurring when, in fact, the opposite was true.
I have no doubt that Climate Cover-up is going to stir up controversy, particularly in the United States where many of these strategies were deployed and fine-tuned.
Good. It's about time we all started thinking about what are facts, what are opinions, what is meant by scientific consensus and what is merely self-interested spin-doctoring intended to manipulate a discussion about the future of humanity that's far too important to be left to politicians, corporations, pundits and public relations machines.
Shale gas could delay Alaska pipeline plans
COMMENT: Yesterday it was the Mackenzie Gas Project, today, Alaska Gas Pipeline. What is that? 60-70 billion dollars in pipeline projects kaput in two days? That shale gas is potent stuff. Well, not kaput, exactly, but back on the drawing board to be hauled out again in another twenty years.
Or am I getting ahead of myself - there's an awful vested interest in seeing these projects come to fruition. If industry investment ain't gonna make them happen, perhaps an intensified lobbying effort to get governments, we the people, pick up the tab for these lame or dead ducks can pull them off? Maybe along with bailouts to banks and car makers, it can be wrapped up in the twenty-first century's new deal for Americans (and Canadians).
Rena Delbridge
Alaska Dispatch, Anchorage
Oct 27, 2009
The more abundant Lower 48 shale gas reserves become, the more likely a delay for a natural gas pipeline between Alaska's North Slope and North American markets, a federal energy analyst says.
According to a new report by the Energy Information Administration, the high costs, high risks and long lead times to develop Arctic natural gas supplies don't stack up well against the huge reserves of natural gas in the Lower 48, close to strong markets.
The report isn't necessarily a black mark against a natural gas pipeline connecting the North Slope resource with markets in Alberta and the Midwest. But its author, Philip Budzik, an operations research analyst with EIA, expects the huge quantities of shale gas to push an Alaska gas pipeline to the back burner, at least for awhile.
"The Alaska gas pipeline has been a gleam in the eye of producers and the State of Alaska ever since the 1970s," Budzik said in a phone interview. "But no one anticipated that the shale gas formations would be viable production possibilities."
The Lower 48 may be awash in shale gas in known fields, but that's only the start, Budzik said. There's more shale gas to be defined in any basin that produces oil, and it's all a couple thousand miles closer to markets than Arctic gas from Alaska's North Slope.
"The resource base is clearly very large (for shale gas)," the analyst said. "How large, I don't even want to begin to speculate."
In a shale formation, thin slices of rock are packed tightly together, almost like a stack of potato chips, with gas trapped between the rocks. By fracturing the tight shale structure (breaking apart the tight stacks of rock), producers can free the gas. Shale production wasn't considered economical until technologies like horizontal drilling and fracturing methods developed. By some counts, shale gas reserves in the U.S. hold more than 2,000 trillion cubic feet of gas. As a comparison, Alaska may be home to 193 trillion cubic feet, according to estimates by the nonprofit Potential Gas Committee in Colorado. The figures represent proven gas reserves as well as those considered probable, possible and speculative.
Some industry professionals question whether shale gas will produce anywhere close to the reserve estimates, while others say that if wells turn out even a fraction of the total, the U.S. will be rich in gas for a long time.
The proximity of shale gas prospects to major markets -- and to an existing or expanding network of distribution pipelines -- offers a financial incentive for producers that's lacking in the $26 billion to $30 billion, 2,000-plus mile Alaska pipeline planned by two separate entities. Those are TransCanada with partner Exxon Mobil Corp., with a state license and $500 million, and North Slope producers BP and ConocoPhillips.
The state's Alaska Gasline Inducement Act coordinator, Mark Myers, says shale gas shouldn't be seen as a deal-breaker for a pipeline. Instead, it's good news, he says. Fast and furious shale gas development will prompt greater demand, particularly from power generation plants and other large-scale users, that shale gas probably won't be able to keep supplying long-term, opening a market door for Alaska's resource.
But that assessment runs contrary to the EIA's take. Alaska's gas will still come into play, but probably not within the next 10 years, which is about how long pipeline proponents say it will take for their projects to begin operation.
"Eventually, we're going to need hydrocarbons that are in the Arctic, including those in Prudhoe Bay," Budzik said. "When does that day arrive? It may be later than we thought three or four years ago. The producers on the North Slope have a much better sense of the economics associated with North Slope gas than I'll ever have."
He expects an open season in 2010 to reveal producers' positions. That's when a pipeline project lays its terms on the table and producers can make commitments to buy space in a line.
The EIA publishes outlooks on U.S. energy, and analysts have been steadily bumping up the estimated shale gas resource as reserves are firmed up in more and more fields across the country. A new estimate is due out at the end of the year.
"That has a tendency to push the Alaska gas pipeline further out into the future," Budzik said. "How far out into the future, I don't know."
Budzik also cautioned that the growth in estimated shale gas reserves probably won't taper off anytime soon. Where there's an oil basin, there are shale beds. Not all are likely producers, of course -- various factors like oil field maturation and pressure affect commercial qualities, and some basins have lots of clay, which makes hydraulic fracturing less effective.
Prices received for natural gas at key North American hubs will also affect shale gas development. While prices have gyrated in recent months, the gas futures market is busy.
"Even though spot prices have been pretty low, in the $4 (per million Btu) range, a lot of producers have been selling much of their production into the futures market, which in fact has a much higher price," Budzik said, warning that the futures market is unpredictable and could trip up some investors. An EIA survey of four futures contracts shows prices between $5.16 and $6.27 as of Oct. 20.
"I'm not gambling," Budzik said.
Prices don't have far to go to hit $6 per million Btu -- that magical threshold at which companies in producing oil basins see value in also turning out natural gas for market, Budzik explained.
However, as gas prices rise, companies that have slowed or even stopped production could release a flood of gas into the U.S. system, possibly triggering another price lull.
A recent report by consultant ICF International for a consortium of North American natural gas pipeline companies agreed that an Alaska gas pipeline faces economic uncertainty related to shale gas.
"What is uncertain is whether the natural gas can be brought to the U.S. Lower 48 at a cost that is competitive with other domestic, Canadian import, and LNG supply alternatives," the report on pipeline and storage infrastructure projections through 2030 states.
Contact Rena Delbridge at rena_alaskadispatch.com
October 27, 2009
Pipeline dream in peril
COMMENT: What's next? Alaska Gas Pipeline? See tomorrow's post.
John Ivison and Carrie Tait,
National Post
October 27, 2009
Mackenzie Valley plan too costly, sources say
Ottawa has decided not to proceed with its investment in the $16.2-billion Mackenzie Valley Pipeline, sources said, throwing the future of Canada's largest construction proposal into doubt.
Sources said that Jim Prentice, the Environment Minister, took a major financial assistance package proposal to a Cabinet committee last week and it was turned down over concerns about the project's price tag.
When asked whether a decision had been taken not to proceed with the project, Mr. Prentice said: "There has been no decision made."
Mr. Prentice said that he was not prepared to discuss any Cabinet discussions relating to the pipeline. He said that work is carrying on with the project's fiscal framework and with an environmental review by a quasi-judicial Joint Review Panel, which is due to complete its work by the end of the year.
However, the suggestion that the government may be re-assessing its position comes as news to its potential partners in the project.
Pius Rolheiser, a spokesman for Imperial Oil, the lead partner on the project, said he has not heard of any changes to Ottawa's intentions.
Fred Carmichael, the chairman of the Aboriginal Pipeline Group, another partner on the project, said he has not heard a word from Ottawa.
To this point, the government has been a firm supporter of the project. In the last budget, the government allocated $38-million to government departments to carry out environmental work and regulatory co-ordination.
A 1,220-kilometre pipeline from the Beaufort Sea in the Northwest Territories to markets in Alberta has been the dream of many northerners for 40 years. This year, Mr. Prentice told a business audience in Calgary that the dream "has never been closer."
The Environment Minister has looked after the pipeline file through three Cabinet posts -- Indian and Northern Affairs, Industry and in his current portfolio -- and has described the project as "one of the most important in Canada's economic history" because of its potential to open up Canada's Far North.
However, market analysts continue to question the viability of the multi-billion-dollar project, which would involve building infrastructure such as roads and waterways, and come at a significant cost at a time when gas prices are sagging and the fossil fuel can be found in abundance in Canada and the lower 48 states.
Bob Hastings, an analyst at Canaccord Adams, who has been following the pipeline saga for decades, does not think it will be built.
"The price of gas isn't fantastic and the only thing that has really happened in the last year or so is that we've found a heck of a lot of shale gas close to consumer markets," he said. "And what would you rather do? Buy gas from up in the Northwest Territories, a long, long, long, long, long, long ways away at a very high cost, or get the gas that is just next door?"
"They killed it the last time ... [in the 1970s because] it wasn't economic. The gas price came down, and the same thing is happening today."
While there is an estimated seven trillion cubic feet of gas in the Beaufort Sea, there are also estimates of 1,000 trillion cubic feet of gas shale deposits in Texas, Louisiana, British Columbia and Eastern North America that are more accessible.
Analysts suggest that a number of the partners involved in the project -- Imperial Oil Resources Ventures Limited Partnership, ConocoPhillips Canada (North) Limited, Exxon Mobil Canada Properties, Shell Canada and Mackenzie Valley Aboriginal Pipeline Limited Partnership -- may have come to the conclusion that the numbers do not add up.
"We can get all the regulatory approvals in place, and all that stuff done, but at the end of the day, it is going to be the producers that make these projects move forward or not," said Lanny Pendill, a senior energy analyst with Edward Jones in St. Louis, who also doubts the prospects for a rival Alaskan gasline. "I think they have better opportunities elsewhere right now."
Mr. Carmichael, chairman of the APG, said he believes natural gas from all sources, not just the prolific shale plays, will be necessary to replace "dirty" sources of energy such as coal.
"I would think the government would do an in-depth study of the need" for all sources of the cleaner-burning natural gas before yanking support for the project, he said.
October 22, 2009
America's dirty little secret
Jeffrey Sachs
Globe and Mail
Thursday, Oct. 22, 2009
The United Nations Climate Change Treaty, signed in 1992, committed the world to “avoiding dangerous anthropogenic interference in the climate system.” Yet, since that time, greenhouse-gas emissions have continued to soar.
The United States has proved to be the biggest laggard, refusing to sign the 1997 Kyoto Protocol or to adopt any effective domestic emissions controls. As we head into the global summit in Copenhagen in December to negotiate a successor to the Kyoto Protocol, the U.S. is once again the focus of concern. Even now, American politics remain strongly divided over climate change – though President Barack Obama has new opportunities to break the logjam.
A year after the 1992 treaty, Bill Clinton tried to pass an energy tax that would have helped the U.S. to begin reducing its dependence on fossil fuels. The proposal not only failed, but triggered a political backlash.
When the Kyoto Protocol was adopted in 1997, Mr. Clinton did not even send it to the Senate for ratification, knowing that it would be rejected.
President George W. Bush repudiated Kyoto in 2001 and did essentially nothing on climate change during his presidency.
There are several reasons for U.S. inaction – including ideology and scientific ignorance – but a lot comes down to one word: coal. No fewer than 25 states produce coal, which not only generates income, jobs and tax revenue, but provides a disproportionately large share of their energy.
Per capita carbon emissions in U.S. coal states tend to be much higher than the national average. Since addressing climate change is first and foremost directed at reduced emissions from coal – the most carbon-intensive of all fuels – America's coal states are especially fearful about the economic implications of any controls (though the oil and automobile industries are not far behind).
The U.S. political system poses special problems as well. To ratify a treaty requires the support of 67 of the Senate's 100 members, a nearly impossible hurdle. The Republican Party, with its 40 Senate seats, is simply filled with too many ideologues – and, indeed, too many senators intent on derailing any Obama initiative – to offer enough votes to reach the 67-vote threshold.
Moreover, the Democratic Party includes senators from coal and oil states who are unlikely to support decisive action.
The idea this time around is to avoid the need for 67 votes, at least at the start, by focusing on domestic legislation rather than a treaty. Under the U.S. Constitution, domestic legislation (as opposed to international
treaties) requires a simple majority in Congress and the Senate to be sent to the President for signature. Getting 50 votes for a climate-change bill (with a tie vote broken by the vice-president) is almost certain.
But opponents of legislation can threaten to filibuster (speak for an indefinite period and thereby paralyze Senate business), which can be ended only if 60 senators support bringing the legislation to a vote.
Otherwise, proposed legislation can be killed, even if it has the support of a simple majority. That will certainly be true of domestic climate-change legislation. Securing 60 votes is a steep hill to climb.
Political analysts know that the votes will depend on individual senators'
ideologies, states' voting patterns and states' dependence on coal relative to other energy sources. Based on these factors, one analysis counts 50 likely Democratic “Yes” votes and 34 Republican “No” votes, leaving 16 votes still in play. Ten of the swing votes are Democrats, mainly from coal states; the other six are Republicans who conceivably could vote with the President and the Democratic majority.
Until recently, many believed that China and India would be the real holdouts in the global climate-change negotiations. Yet, China has announced a set of major initiatives – in solar, wind, nuclear and carbon-capture technologies – to reduce its economy's greenhouse-gas intensity.
India, long feared to be a spoiler, has said that it is ready to adopt a significant national action plan to move toward a trajectory of sustainable energy. These actions put the U.S. under growing pressure to act. With developing countries displaying their readiness to reach a global deal, could the U.S. Senate really prove to be the world's last great holdout?
Mr. Obama has tools at his command to bring the U.S. into the global mainstream on climate change. First, he is negotiating side deals with holdout senators to cushion the economic impact on coal states and to increase U.S. investments in the research and development, and eventually adoption, of clean-coal technologies.
Second, he can command the Environmental Protection Agency to impose administrative controls on coal plants and automobile producers, even if the Congress does not pass new legislation. The administrative route might turn out to be even more important than the legislative route.
The politics of the U.S. Senate should not obscure the larger point:
America has acted irresponsibly since signing the climate treaty in 1992.
It is the world's largest and most powerful country, and the one most responsible for climate change to this point; it has behaved without any sense of duty – to its own citizens, to the world and to future generations.
Even coal-state senators should be ashamed. Sure, their states need some extra help, but narrow interests should not be permitted to endanger our planet's future. It is time for the U.S. to rejoin the global family.
Jeffrey Sachs is a professor of economics and director of the Earth Institute at Columbia University.
On a cost basis, carbon-capture projects are madness
Jeffrey Simpson
The Globe and Mail
Monday, Oct. 19, 2009
The small reductions gained by staggering per-tonne costs illustrate what every independent analyst knows: The Harper government's 20-per-cent reduction target will not be met
Prime Minister Stephen Harper makes so many spending announcements, flying like Mary Poppins on speed around the country to distribute billions of dollars, that the news media have given up analyzing any of them.
For the heck of it, let's look back to last week, when Mr. Harper dropped into Edmonton to announce $343-million of federal money for a coal-fired TransAlta Corp. carbon-capture and storage (CCS) project. Simultaneously, Alberta Premier Ed Stelmach announced a contribution of $436-million, for a total investment of $774-million of taxpayers' cash.
That Harper-Stelmach announcement followed an earlier Ottawa-Alberta one for a coal-fired Shell carbon storage project. In that case, the combined federal and provincial contribution was $865-million.
The two announcements – both for coal-fired facilities, the oil sands therefore remaining untouched – mean about $1.6-billion in taxpayer money in the years ahead, or about $220 for a family of four.
What do we get for that sum?
We get, at best, a reduction in greenhouse-gas emissions of 2.1 million tonnes. "At best" because the announcements were tempered with hedging words such as "could" achieve and "up to one million tonnes." Therefore, something less than 2.1 million tonnes might actually be captured.
Let's be generous and assume the two projects costing $1.6-billion do in fact bury 2.1 million tonnes of carbon dioxide, the most-prevalent gas contributing to global warming. Such a reduction would mean a per-tonne carbon-reduction cost of about $761 – staggeringly, wildly, mind-blowingly higher than any other conceivable measure designed to cut greenhouse-gas emissions. Want a contrast? Alberta has a piddling carbon tax on emissions over a certain level that companies can avoid by paying $15 a tonne into an technology fund.
What does 2.1 million tonnes mean in pan-Canadian terms? Canada emits about 720 million tonnes of CO2. Mr. Harper has pledged by 2020 to lower that amount by 20 per cent, or about 144 million tones. The two carbon-capture projects just announced, by lowering emissions 2.1 million tonnes, will therefore achieve about 1.4 per cent of the reductions the Harper government has pledged at a cost, remember, of $1.6-billion. At this rate, achieving the 20-per-cent reduction would cost almost $110-billion between now and 2020.
For Alberta? The province, with 11 per cent of Canada's population, is responsible for about 30 per cent of the country's emissions. Taking 2.1 million tonnes from Alberta's emissions will represent about 1 per cent of the province's total emissions. As the province's emissions rise, courtesy of further development of the oil sands, the predicted carbon-capture and storage gains will necessarily represent less than 1 per cent of total emissions.
But wait. After these announcements, Alberta has more money left in its $2-billion fund for encouraging capture and storage. This is the fund the province whips out to show critics that it is serious about global warming.
There remains about $800-million in the fund, but if future projects are like the two just announced, once the entire $2-billion is spent, Alberta might have lowered its emissions by maybe 2 per cent.
On a cost-benefit basis, these carbon-capture and storage projects are madness, leaving aside the fact that taxpayers are picking up the bill. They are wildly expensive for the small amount of carbon they will (might?) prevent from entering the atmosphere. They are most definitely not a substitute for a serious climate-change policy that, however structured, must put a price on carbon emissions by those who produce them – either upstream emitters such as industrial concerns and/or downstream consumers.
The small reductions gained by such large sums also illustrate what every independent analyst has concluded: The Harper government's 20-per-cent reduction target will not be met; indeed, it is increasingly being seen as a joke.
Can anything good be said for these announcements, apart from the nice public relations they brought Mr. Harper and Mr. Stelmach?
At a stretch, these projects will test technologies that, if successful, could eventually bring unit costs down and perhaps be exported overseas, although plenty of other companies and jurisdictions are now in the race to develop carbon-capture and storage technologies.
CCS will be part of the long-term effort to reduce greenhouse-gas emissions, but the possibilities of its contribution have been hyped by promoters and political actors beyond what is reasonable to expect. And the initial costs, as these projects show, lead to staggeringly expensive per-tonne reductions.
October 16, 2009
Gas shale may be next bubble to burst
By JUDITH KOHLER
Houston Chronicle
Oct. 12, 2009
DENVER — The promise of enough natural gas to last the United States more than 100 years based on discoveries of vast shale formations could be the country's next speculative bubble to burst, a speaker warned Monday at a conference exploring the notion that the world's oil and gas are diminishing rapidly.
Arthur Berman, a Texas-based geological consultant, likened the optimistic projections for production from gas shale fields across the country to banks buying into mortgage securitizations, which spurred the housing market crisis and economic meltdown.
“In the midst of a boom or a bubble, it's hard to sit on the sidelines,” Berman said during the Association for the Study of Peak Oil and Gas conference. “If you're not in one of these plays, then Wall Street says, ‘Well, what's the matter with you guys?'”
That was the psychology leading into the current financial crunch, Berman said. Analyses show that gas shale fields in Texas and elsewhere aren't as profitable and likely don't contain as much retrievable gas as the industry and others portray, he added.
Based on the experience in the Barnett Shale in Texas, Berman said he doesn't expect the yields from the wells to be high enough or last long enough to make the gas shales that profitable, even when current low gas prices rise.
His view contrasts with that of other analysts and the industry who see natural gas as playing a key role in the face of concerns about declining oil supplies and climate change. The Potential Gas Committee at the Colorado School of Mines in Golden said in June that the U.S. natural gas reserves total nearly 2,000 trillion cubic feet, up about 35 percent from 2006 estimates and mostly due to such unconventional gas fields as shale and the Rockies' sandstone formations.
Peter Dea, chief executive of Denver-based Cirque Resources, said the abundance of natural gas “truly is an American treasure.” He called the vast layers of rock containing gas in Texas, the Northeast and elsewhere game-changers.
“It really gives us surety of this 100-plus-year supply that we now have in America,” Dea said.
New technology and hydraulic fracturing — injecting liquids, sands and chemicals underground to open pathways for gas — have increased the efficiency and decreased production costs, Dea said. Natural gas, he added, has the potential to replace coal as the country's main source of electricity and fuel the nation's vehicles.
Natural gas is “truly a win-win-win” for the economy, environment and national security, because it's a domestic energy source, Dea said. Natural gas is 60 percent to 75 percent cleaner than coal, he said.
Energy analyst Randy Udall said after the panel discussion that the peak-oil group, which he co-founded, is studying the implications of discovery of the gas shales.
“The increase in production would suggest that natural gas will play a larger role in the future,” Udall said.
But to boost the role of gas to the levels promoted by Dea and others would require a significant increase in development, Udall said. The U.S. gas production peaked 35 years ago, Udall said, and the roughly 10 percent jump in production over the last four years required doubling the drilling rate.
“It would have big impacts on the Rocky Mountain West,” Udall said.
Subscribers of the peak oil theory believe the world is at or near its maximum oil production and that demand will soon eclipse supply levels. Most of the big oil companies disagree and point to the federal Energy Information Administration's projection that the world's oil production peak could be as far as 40 years away.
The peak oil conference runs through Tuesday.
Curbing Emissions by Sealing Gas Leaks
COMMENT: 30% of atmospheric methane comes from the production, processing, storage and movement of fossil fuels. It comes from equipment leaks, venting and flaring, evaporation losses, disposal of waste gas streams, and accidents and equipment failures.
In British Columbia, with relatively low oil production, virtually all methane emissions come from natural gas production.
BC’s natural gas industry could be responsible for up to half a million tonnes (MT) of methane annually.
That’s NOT a half million tonnes of carbon dioxide equivalent (CO2e). At the 100 year greenhouse intensity figure of 25 the methane represents 12.5 MT of carbon dioxide. At the more realistic 20 year intensity of 72, it is 36 MT of CO2e – more than half the provincial GHG total of 66 MT.
Enough gas escapes that it begs the question – isn't the cost of arresting the fugitive gas less than the value of the lost gas? This article suggests so. Perhaps it doesn't matter, since a policy decision by the provincial government, backed up with appropriate penalties, could ensure that it is a good bottom line decision for industry to put an end to fugitive methane.*
*These comments are taken from an unpublished Watershed Sentinel article on fugitive methane emissions
By ANDREW C. REVKIN and CLIFFORD KRAUSS
New York Times
October 14, 2009
 To the naked eye, no emissions from an oil storage tank are visible. But viewed with an infrared lens, escaping methane is evident. (Photographs by the U.S. Environmental Protection Agency) |
To the naked eye, there was nothing to be seen at a natural gas well in eastern Texas but beige pipes and tanks baking in the sun.
But in the viewfinder of Terry Gosney’s infrared camera, three black plumes of gas gushed through leaks that were otherwise invisible.
 Terry Gosney uses an infrared camera to check for leaks in natural gas pipes in eastern Texas. (Scott Dalton for The New York Times) |
“Holy smoke, it’s blowing like mad,” said Mr. Gosney, an environmental field coordinator for EnCana, the Canadian gas producer that operates the year-old well near Franklin, Tex. “It does look nasty.”
Within a few days the leaks had been sealed by workers.
Efforts like EnCana’s save energy and money. Yet they are also a cheap, effective way of blunting climate change that could potentially be replicated thousands of times over, from Wyoming to Siberia, energy experts say. Natural gas consists almost entirely of methane, a potent heat-trapping gas that scientists say accounts for as much as a third of the human contribution to global warming.
“This for me is an absolute no-brainer, even more so than putting in those compact fluorescent bulbs in your house,” said Al Armendariz, an engineer at Southern Methodist University who studies pollutants from oil and gas fields.
Acting quickly to stanch the loss of methane could substantially cut warming in the short run, even as countries tackle the tougher challenge of cutting the dominant greenhouse emission, carbon dioxide, studies by researchers at the Massachusetts Institute of Technology suggest.
Unlike carbon dioxide, which can remain in the atmosphere a century or more once released, methane persists in the air for about 10 years. So aggressively reining in emissions now would mean that far less of the gas would be warming the earth in a decade or so.
Methane is also a valuable target because while it is far rarer and more fleeting than carbon dioxide, ton for ton, it traps 25 times as much heat, researchers say.
Yet while federal and international programs have encouraged companies to seek and curb methane emissions from gas and oil wells, pipelines and tanks, aggressive efforts like EnCana’s are still far from the industry norm.
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As a result, some three trillion cubic feet of methane leak into the air every year, with Russia and the United States the leading sources, according to the Environmental Protection Agency’s official estimate. (This amount has the warming power of emissions from over half the coal plants in the United States.) And government scientists and industry officials caution that the real figure is almost certainly higher.
Unless monitoring is greatly expanded, they say, such emissions could soar as global production of natural gas increases over the next few decades.
The Energy Department projects that gas production could rise nearly 50 percent over the next 20 years as companies race to discover and tap new sources. In the United States, 4,000 miles of new pipeline was laid last year alone.
But the industry has been largely resistant to an aggressive cleanup.
The Bush administration, which opposed mandatory limits on greenhouse gas emissions, expanded an existing voluntary domestic program for capturing methane emissions and began a related international program — with both aimed at promoting profitable ways for businesses to cut methane emissions as a relatively easy first step to combat climate change.
In April the Obama administration signaled that it could adopt rules requiring the biggest American companies to report all of their greenhouse gas emissions. Oil and gas industry groups countered that the cost and complexity of dealing with some 700,000 wells were too great.
In September the E.P.A. announced that the obligatory reporting would begin in 2011 but that it excluded oil and gas operations, at least for the time being. (Agency officials say they plan to issue rules for oil and gas by late next year.)
Some scientists reject the industry arguments. “Further delay on finding and stopping such releases would be irresponsible, given the financial and environmental benefits,” said F. Sherwood Rowland, a Nobel laureate in chemistry at the University of California, Irvine.
Internationally, the amount of methane escaping from gas and oil operations can be only crudely gauged. But in 2006 the E.P.A. estimated that Russia, the world’s largest gas producer, ranked highest, with 427 billion cubic feet of methane escaping annually, followed by the United States at 346 billion, Ukraine at 225 billion and Mexico at 191 billion.
Reflecting the uncertainty in such estimates, Gazprom, Russia’s giant state gas monopoly, estimated its annual emissions at half that figure last year.
An E.P.A. review of methane emissions from gas wells in the United States strongly implies that all of these figures may be too low. In its analysis, the E.P.A. concluded that the amount emitted by routine operations at gas wells — not including leaks like those seen near Franklin — is 12 times the agency’s longtime estimate of nine billion cubic feet. In heat-trapping potential, that new estimate equals the carbon dioxide emitted annually by eight million cars.
In the routine operations, great yet invisible plumes of gas enter the atmosphere when new wells are activated, old wells are invigorated to boost gas flows and wells are purged of fluids by letting out cough-like bursts of gas.
In many gas fields, said Roger Fernandez, a senior methane expert at the E.P.A., fluid-clogged wells are still purged the old-fashioned way, by opening valves or using outdated equipment in ways that release a misty burst of gas directly into the air.
For the E.P.A. and environmental scientists, the challenge is convincing gas and oil producers here and abroad that efforts to avoid such releases often more than pay for themselves.
The use of infrared cameras is expanding as word spreads of the payoff in saved gas, said Ben Shepperd, executive vice president of the Permian Basin Petroleum Association, which represents 1,200 companies in the oil and gas business around West Texas.
“We would like to see more people doing it,” he said. “People are very surprised when they shoot their equipment with these cameras and they see that there are releases in places they wouldn’t have expected.”
The benefits are there not only for gas producers but also for companies handling oil. Thousands of oil storage tanks emit plumes of methane and other gases, said Larry S. Richards, the president of Hy-Bon Engineering in Midland, Tex., which is using infrared cameras to survey storage tanks in 29 countries and sells systems that capture the gas.
A clearer view of the worst methane emissions could come next year, when Japan plans to start releasing data from Gosat, a satellite that began orbiting the Earth in January. It may be able to identify the top hot spots within a few miles.
That may increase pressure on countries with particularly large leaks.
As the biggest methane emitter, Russia has begun seeking high-tech solutions. In April, for example, Gazprom, the Russian Defense Ministry and an Israeli aerospace company began discussing the potential use of miniature remotely piloted helicopters to monitor pipelines for leaks.
But gadgets alone will not halt the vast exhalation of methane from Russia, environmentalists say. There is some hope that a successor to the 1997 Kyoto climate change pact will include more incentives for money to flow to Russian methane-reduction projects.
Western companies that have captured methane point out the money that is often to be made by doing so.
Starting around 2000, BP began introducing methane-catching techniques at 2,300 well sites in New Mexico. At well after well, gas that would have otherwise escaped now flows through meters that field crews affectionately call the “cash register.”
Among other actions, BP engineers have fine-tuned a system for purging fluids that can stop up wells. The process uses the pressure of gas in the well to periodically raise a plunger through the vertical well pipe. This removes the liquids but typically allows gas to escape.
The new computerized process, which BP calls smart automation, tracks well pressure and other conditions to more precisely time the plunger cycles in ways that avoid gas emissions. From 2000 to 2004, emissions from BP wells in the region dropped 50 percent, the company says. By 2007, they had essentially ended.
On average, installing the systems has cost about $11,000 per well, but they have returned three times that investment, said Reid Smith, an environmental adviser for BP working on the project.
“We spend a lot of money to get gas to the surface,” Mr. Smith said. “It makes a huge amount of sense to get all of it through the sales meter.”
Andrew C. Revkin reported from New York and Farmington, N.M., and Clifford Krauss from Franklin, Tex. Andrew E. Kramer contributed reporting from Moscow.
October 13, 2009
Hot air fuels carbon-capture pact
By Graham Thomson
Edmonton Journal
October 8, 2009
Politicians may use Thursday's announcement as a conference prop
Carbon dioxide might be an invisible gas, but the Alberta government is doing its best to use it as a political smokescreen.
Look no further than Thursday's announcement of $865 million in taxpayers' money for Alberta's first major pilot project for carbon capture and storage (CCS).
At first glance it seems impressive --major government funding;eager private partners;a potential solution to climate change through reductions of greenhouse gas emissions; an actual physical project after a year of promises.
Except look closer and you realize we are no closer today to the pilot project than we were yesterday.
Thursday's announcement was a photo op gathering together Alberta Energy Minister Mel Knight, Natural Resources Canada minister Lisa Raitt and Shell Canada vice-president Graham Boje.
With the news cameras clicking away, they put pen to paper--not to write a cheque but to sign a "letter of intent."
This was not about putting shovels in the ground to start construction. This was about putting lawyers in the room to start negotiations. And there is no guarantee the negotiations between the two levels of government and Quest, the private consortium headed by Shell, will sequester an ounce of carbon dioxide underground.
After a year of backroom talks and negotiations between government and private companies, we are now looking at another "few years" of backroom talks and negotiations. Shell and its partners will not move ahead on the pilot project until they have government funding, regulatory approval and a properly engineered plan. "Construction will only begin after all of these aspects have been addressed successfully, with the aim to start operations in 2015," according to a Quest news release.
So, why did they hold a news conference now?
Well, because Thursday was the last day Knight and Raitt would be in Canada before jetting off to England for the Carbon Sequestration Leadership Forum, a meeting of government ministers from around the world promoting co-operation on CCS. Thursday's signing ceremony gives the ministers political cover. They can show up in London waving the letter of intent in front of anyone who's been reading headlines about Alberta's "dirty oil" and Greenpeace protesters chaining themselves to oilsands equipment.
"I think that we're all looking forward now to going to London and being able to share with our counterparts from around the world this great news about what's happening here in Alberta," said Knight.
"This is not just discussion, this is not just policy proposals; this, ladies and gentlemen, is action, action that will have immediate results locally as it markedly reduces greenhouse gas emissions."
Except that it won't have immediate results. We won't see results for another five years--if the project goes ahead.
The plan is to capture "up to" 1.1 million tonnes of carbon dioxide a year from the Scotford upgrader near Edmonton (the same plant Greenpeace protesters occupied last week), compress the carbon dioxide into a liquid, transport it by pipeline to a yet-to-be determined site and inject it more than two kilometres underground into a saline aquifer, a sponge-shaped rock formation filled with salt water.
On paper, the pilot project is actually an ideal carbon capture and sequestration model. It will be well-funded, moderately scaled, carefully selected, closely monitored and will inject the carbon dioxide deep underground into a geological formation unmolested by a drill bit. If you're going to isolate carbon dioxide from the atmosphere, this, in theory, is how you're supposed to do it.
However, Shell and its project partners reserve the right to use the captured carbon dioxide for enhanced oil recovery. That means injecting the liquid gas into old oilfields to force out more oil that is then refined and burned-- producing more emissions of carbon dioxide. Using CCS to recover more oil might make sense economically but calling enhanced oil recovery "carbon sequestration" in the context of reducing global emissions is, environmentally speaking, a fib.
Then there's the issue of trying to store millions of tonnes of highly pressurized carbon dioxide in old oilfields that are punctured by old oil wells. It's called the pincushion effect and could create leaks of carbon dioxide into groundwater or into the atmosphere. The former could leach elements such as arsenic into underground sources of drinking water. The latter could be a health threat in large enough quantities, but even small amounts over time could undo any climate change good done by sequestration in the first place.
Scientists studying carbon sequestration have high hopes for its safety and effectiveness but cannot, at this point, give us any long-range assurance, especially if we go large scale.
Alberta says it will use carbon sequestration to bury 140 million tonnes of carbon dioxide a year by 2050.The federal government wants to bury 600 million tonnes annually by the same year.
Politicians are making promises for the technology that scientists and the energy companies don't know they can keep.
So far, in Alberta, carbon capture and storage has managed to generate plenty of political hot air--if only there was some way to sequester that.
gthomson@thejournal. canwest.com
© Copyright (c) The Edmonton Journal
Graham Thomson is the author of Burying Carbon Dioxide in Underground Saline Aquifers: Political Folly or Climate Change Fix?. See Climate action plan 'sheer folly'
A new route beyond the Last Frontier
COMMENT: Eyes and ears we may have, but we're not seeing or hearing. We're pouncing on the melting Arctic, not because it's such a vast manifestation of the consequences - the early consequences at that - of climate change, but because it's become a new land of opportunity for expansion of business as usual - for tourism, fishing, shipping, and resource extraction. "Trillions of tons of coal", for crying out loud. We're insatiable vultures, feeding off the newly exposed bits of a dying Earth. Where are the international voices calling for the Arctic to be a global conservation area? Silent, or blind and deaf - national and corporate greed appears to have already won the newly accessible Arctic, with no discussion at all.
By Kim Murphy
Los Angeles Times
October 11, 2009
The melting polar ice cap is opening the forbidding waters at the top of the world to shipping -- and intensifying concerns about regulating maritime operations and protecting the fragile environment.
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Reporting from Nome, Alaska
Most days in Nome, you're not likely to run into anybody you didn't see at the Breakers Bar on Friday night. More than 500 roadless miles from Anchorage, rugged tundra and frigid Bering Sea waters have a way of discouraging visitors.
So it was a big deal when the World, a 644-foot residential cruise ship with condos costing several million dollars apiece, dropped anchor during the summer for a two-day look-see.
"We never had a ship anywhere near this size before," Chamber of Commerce director Mitch Erickson said. "My guess is they've probably been everywhere else in the world, and now they're going to the places most people haven't seen yet."
That's about to change.
 SLIDESHOW - Alaska: A warming frontier As the Arctic Circle warms, some see a chance for economic growth. Others see a threat to their way of life. (Photography and audio by Robert Gauthier / Los Angeles Times) |
The record shrinking of the polar ice cap is turning the forbidding waters at the top of the world into important new shipping routes.
Four other cruise ships also docked in Nome recently. The Coast Guard deployed its first small Arctic patrol vessels last year. Fleets of research vessels steamed north all summer, while ships surveying the vast oil and gas deposits under the Arctic seabed have talked of using Nome as a base.
In fact, this town of about 9,300 on the edge of the Bering Strait sees itself as the gateway to a newly accessible maritime frontier. Nome's ship traffic is eight times what it was in 1990, and the town recently spent close to $90 million renovating its port to accommodate bigger ships.
 Fishing for food in Kotzebue, on the Chukchi Sea, where some hope to build a new port. Others are skeptical. "It's about what cuts costs for multinational corporations. It's not about what's best for the Arctic communities," one official says. (Robert Gauthier / Los Angeles Times / August 19, 2009) |
To the north, Kotzebue would like to build its own deep-water port a few miles outside town. And Barrow, a remote Eskimo whaling village that sits at the very top of the continent, for the last few summers has had cruise ships full of German tourists and Coast Guard patrol boats docking near its rudimentary landing facility.
"We can no longer assume," Alaska Gov. Sean Parnell said at a congressional hearing, "that the Arctic is an impenetrable barrier."
The coming shipping boom has intensified concerns about how to regulate maritime operations and protect one of the most fragile and least-understood environments on Earth.
Binding international rules on what kind of vessels can operate in the Arctic do not exist. Nor do uniform regulations for routine waste discharges from ships, or reliable protocols for cleaning up spills under extreme ice conditions.
Detailed terrain maps that meet international standards exist for only about 9% of the Arctic floor, and there are no reliable high-frequency communications systems.
The Coast Guard has just two operable icebreakers in its fleet, and its closest refueling station is 1,000 miles to the southeast in Kodiak, Alaska. That's eight hours away by rescue helicopter should a cruise ship founder on an iceberg.
"There's water where there didn't used to be, and we're responsible for it," Adm. Thad Allen, Coast Guard commandant, said in Nome this summer. "The real question is, what kind of presence and capability do we want to have up there?"
More than 6,000 ships ply the Arctic waters, according to one of the first comprehensive studies of shipping in the region, completed by the international Arctic Council in April.
The fabled Northwest Passage, linking the Atlantic and Pacific across the top of Canada, saw periods of ice-free navigation in 2007 and 2008. Forecasts anticipate 120 or more largely ice-free transit days a year by the century's end. And last year's record-breaking ice melt for the first time opened both the Northwest Passage and the Northeast Passage, above Russia, for several weeks.
Two German cargo ships completed a rare transit of the Northeast Passage on Sept. 7 when they sailed under escort by Russian icebreakers into the Siberian port of Yamburg. The journey, one of the first by a Western merchant vessel, began in South Korea in July and proceeded on to Europe.
The shortcut across Russia allows ships to travel the 8,700 miles from the Korean Peninsula to Europe in 23 days, rather than the 11,000-mile, 32-day voyage through the Suez Canal. Beluga Shipping, which operated the German ships, estimated that it saved 200 tons of fuel per vessel.
The Arctic Council found that growing worldwide demand for Arctic minerals is playing an even bigger role than climate change in the opening of new shipping routes in the Far North.
 Red Dog Mine, the world's largest zinc mine, operates the Arctic's only major U.S. marine cargo port. A longer ice-free period could open access to untapped ore and coal. (Robert Gauthier / Los Angeles Times / August 18, 2009) |
Red Dog -- the largest zinc mine in the world, about 90 miles northwest of Kotzebue -- operates the only major U.S. marine cargo port in the Arctic. Some of the largest ships in the world pull up off the mine's barren stretch of frigid coastline, bound for markets all over the world.
Operators said they have no plans to expand operations or reroute their Europe-bound vessels through the Northwest Passage as part of their current operations. (They now travel south through the Panama Canal.)
But a longer ice-free period, said John Egan, the mine's operating manager, means ore deposits in even more remote locations, including trillions of tons of coal that have lain untapped beneath northwest Alaska, might soon be made accessible.
On Baffin Island in the Canadian Arctic, development is underway to ship 18 million tons a year of high-grade iron ore through icy waters to steel mills in Europe.
Norilsk Nickel, the biggest nickel and palladium producer in the world, operating high in the Russian Arctic, this year completed delivery of its own ice-reinforced fleet.
And the Obama administration will decide soon whether to open up large sections of the offshore Arctic in Alaska to access billions of barrels of oil and gas.
"What's really driving marine activity in the Arctic is not climate change," said Lawson Brigham, a former Coast Guard icebreaker commander who chaired the marine shipping assessment for the Arctic Council. "It's global economics."
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Rumbling up from Kodiak, Coast Guard C-130 aircraft twice a month patrol the Arctic -- surveying ice conditions, looking for potential security threats, monitoring the barges that in the summer deliver fuel and supplies to coastal villages, and eyeing the busy oil and gas operations creeping steadily seaward from the North Slope.
"There wasn't as much of a need to get up there before," Capt. William Deal, commanding officer of the Kodiak Coast Guard base, said as a C-130 prepared to fly north to Kotzebue and -- skimming 500 feet above the gray Arctic chop -- west over the Chukchi Sea. "But now we're trying to make sure we're ready for anything."
A study now underway of Coast Guard resources is expected to determine whether the agency needs a full forward operating base in the Arctic.
If one is built, Nome wants it.
"Our argument . . . is that we're already established; our port is already here -- we just need to go out a little deeper," Mayor Denise Michels said.
But where will it lead, many here wonder, in a region whose villages have been among the most isolated on Earth?
"There is increasing talk of Arctic shipping lanes, expanded fisheries, new tourism opportunities and other competing uses," North Slope Borough Mayor Edward Itta told senior Obama administration officials who traveled to Anchorage in August to deliberate what approach the government should take to the northern seas.
"In the midst of all these claims, we are trying to preserve our traditional use of our land," said Itta, whose borough includes Barrow. "We are not afraid of change as Inupiat Eskimos. . . . But all of us know that change involves risk, and the risk of some of these potential activities in the Arctic are substantial."
Traditional whalers worry that increased shipping and offshore oil and gas operations could injure or scare away the whales that have supported Arctic Slope residents for generations.
"With the increased traffic, just like anywhere else, the more sound that is put out there, especially the high pitches, that's extremely harmful to [the whales]. So they're naturally going to disappear or avoid you," said Roy Mendenhall, who has hunted belugas from Kotzebue for years.
And conservationists fear that widespread shipping in the Arctic could triple the region's ozone pollution and accelerate the melting of the ice, which supports the walrus, seals and polar bears on which Alaska Natives depend.
"The trade between Asia and Europe -- that's what's driving it," said Tom Okleasik, planning director for the Northern Arctic Borough in Kotzebue. "It's about cutting multiple days off the shipping time. It's about what cuts costs for multinational corporations. It's not about what's best for the Arctic communities."
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The warming seas, however, probably would result in one economic benefit of particular interest to communities across Alaska's Arctic Coast: Fuel must be hauled in by barge, and the limited shipping window often locks towns into accepting deliveries when gas and heating oil are at cripplingly high prices. A longer ice-free season means more purchasing flexibility.
The majority of shipping here involves regional traffic rather than vessels crossing the polar region. And analysts say that's not likely to change soon, because even with the increased ice melt, the Northwest Passage is notoriously unpredictable. Ten ships navigated the entire length last year, and nine made it through in 2007. But this year the passage remained clogged with ice for much of the summer.
The problem, said Trudy Wohlleben, a forecaster with the Canadian Ice Service, is that heavy melting in the waterway allowed large chunks of ice from the Arctic Ocean to flow in from the north, making for treacherous waters.
That's anathema to shipping, which depends on firm schedules and delivery dates planned months in advance.
"If you've got a 40% savings in distance but you can't reliably capture that savings, then regular Arctic shipping isn't going to happen," said Mead Treadwell, chairman of the U.S. Arctic Research Commission.
Whether or not the route through Russia or Canada opens up, Nome expects its port to be booming with oil and gas exploration vessels, delivery barges, tourist ships and, once the region is opened for fishing, fleets of trawlers bound for Arctic waters.
"My wife and I keep pinching ourselves in amazement," David Clyde, a tourist from Brisbane, Australia, said recently as he prepared to board a plane in Nome after an Arctic cruise. "We kept saying, 'Are we really here watching polar bears?' "
"I think we're going to see a far larger impact than we're even conceiving," said Leo Rasmussen, Nome's former mayor. "People are going to be coming past Alaska. And if we are there to offer the services to those ships that want to go either way, if we're there to protect the ships while they're in our sphere of influence, if we offer better services than our neighbor next door in Russia -- then we become the entrance and exit to the entire Arctic Ocean."
Times photographer Robert Gauthier contributed to this report.
Copyright © 2009, The Los Angeles Times
October 12, 2009
Alberta announces 15-year $850M carbon capture and storage project
By The Canadian Press
Red Deer Advocate
October 09, 2009
EDMONTON — The Alberta and federal governments promised $865 million in funding for a carbon capture and storage project near Edmonton on Thursday, but officials acknowledge that it will be years before any greenhouse gas emissions are piped underground.
“We have to start somewhere,” said federal Natural Resources Minister Lisa Raitt. “We start today, and we think — we know — we’re on the right path.”
The two levels of government have teamed up with Shell Canada, Chevron Canada and Marathon Oil Sands to push forward the Quest project, which is projected to eventually collect up to 1.1 million tonnes of climate change-causing carbon dioxide a year from the Scotford oilsands upgrader, pipe it to a wellhead and inject it more than two kilometres underground.
Total cost of the project is expected to be $1.35 billion, with the balance coming from the companies involved.
It would be the first funding agreement to draw on Alberta’s $2-billion carbon capture and storage fund and Ottawa’s $1-billion pool for such projects. Alberta Energy Minister Mel Knight said other projects will be announced soon.
If the project proceeds, it would become one of a handful around the world injecting CO2 on this scale.
Carbon capture and storage is held out by industry and government as a major part of the strategy to reduce Canada’s greenhouse gas emissions by 20 per cent over 2006 levels by 2020. It works by collecting carbon dioxide from large emitters, piping it to wellheads and injecting it deep underground in geological formations that are sealed off from the surface by impermeable rock or clay caps.
The technology has worked on a small scale but remains unproven in large, commercial projects. In addition to engineering challenges, questions about the regulatory regime and legal liability for the CO2 remain unanswered.
Those unknowns are a big part of the reason why Shell won’t promise to start injecting gas until 2015. The companies won’t even make a final decision on spending the money for several years to come, said Shell vice-president Graham Boje.
“This project has gone through a couple of decision gates, but it’s still got more to go before it gets to what we call final investment decision,” Boje said.
Boje said the location of the injection site hasn’t been determined. He expects it will be within “10s of kilometres” of the Scotford facility.
Knight said any new infrastructure for the project would have to go through public hearings in front of the Energy and Resources Conservation Board.
“There’s ample opportunity at that point for full public hearings,” said Knight. “Not just public meetings, but public hearings in front of a quasi-judicial board to address those issues that will come forward.”
Suncor sues Greenpeace
By Shaun Polczer
Calgary Herald
October 9, 2009
$1.5M lawsuit comes after protest at mine
Environmental protesters say they will continue to target oilsands facilities in the face of lawsuits and criminal charges after Suncor Energy filed a $1.5-million lawsuit against the environmental group Greenpeace in the wake of a protest at its Fort McMurray mine earlier this month.
Greenpeace leader Mike Hudema confirmed the group has been served with a statement of claim in relation to the Sept. 30 incident in which 23 activists forced their way into Suncor's plant site and occupied an oilsands ore processing unit. The standoff ended after RCMP moved in to arrest the demonstrators.
"We're going to continue to do this work," he said in a phone interview from Edmonton. "I think it's criminal that these companies can get away with what they're doing. The damage they're doing pales to the actions of peaceful protesters. For them to prosecute peaceful protesters at the end of the day is wrong."
Suncor spokeswoman Sneh Seetal confirmed the company filed the statement of claim on Oct. 7 as part of a broader injunction seeking to bar Greenpeace protesters from its plant site. The statement of claim is a necessary component of the injunction, which was filed Sept. 30, and the $1.5 million is a preliminary figure based mostly on the value of lost oil production, she added. "We are continuing to review what the total damages may be in relation to the civil claim," she said in an interview.
The Suncor protest was one in a series of actions against oilsands producers carried out by Greenpeace in recent weeks, including a similar demonstration at Shell Canada's Scotford upgrader near Fort Saskatchewan last weekend featuring live webcam footage, media interviews and commentary that was made available over the Internet.
The Shell incident earned Greenpeace a rebuke from Premier Ed Stelmach, who vowed to use "the force of the law to deal with these people." Greenpeace in turn accused the premier of using his political influence to undermine the justice system.
On Thursday, the protests shifted to France, where activists entered a Total refinery in Normandy and hung banners denouncing the French state oil company's involvement in northern Alberta. On Friday, the group defaced four Total billboards in the Edmonton area, accusing the company of being committed to "environmental destruction."
In a media release, Greenpeace claims 37 of its members from Canada, France, Brazil and Australia have been arrested in the past three weeks on charges ranging from break and enter, trespassing and mischief.
Other oilpatch protests have been less than peaceful. On Wednesday in B. C., Dawson Creek RCMP urged local residents to be vigilant on the first anniversary of a series of bombings against EnCana Corp.'s natural gas pipelines. The company has posted a reward of$1 million after six bomb attacks in the past year. The perpetrator remains at large.
John Redekop, a professor emeritus at Sir Wilfrid Laurier University in Waterloo, Ont., who also teaches part time at Trinity Western University in Abbotsford, B. C., said western cultures have a tradition of disobeying laws perceived to be unjust extending back to biblical times. He has lectured extensively on the topic and written a book, The Christian and Civil Disobedience, that has been translated into multiple languages.
He said civil disobedience is "moral" provided that nobody is hurt and all other avenues of appeal have been exhausted. As with Greenpeace, perpetrators are often willing to be arrested to make a point, he added, similar to Rosa Parks and Martin Luther King, who were both arrested protesting U. S. racial laws in the 1960s.
Civil disobedience is more common in British Columbia, where protest groups, including Greenpeace, have disrupted logging operations in old growth forests. In that sense, Redekop said, he's prepared to assert the validity of the oilsands protests, but refused to condone the bombings.
"Some trespassing, some disruption, I can accept," he said. "But that (the EnCana bombings) is not civil disobedience, it's a crime."
Seetal argued that Greenpeace didn't respond to overtures to meet with the company and its members placed themselves and others in harm's way. Protesters at the site refused the company's offer to provide basic protective equipment such as hard hats and safety glasses, she said. Consequently, the company chose to shut down operations until the demonstration ended.
"The fact of the matter is that they were trespassing. Not only were they putting themselves in danger, but they put our employees in danger, our subcontractors in danger along with all the other visitors on the site."
spolczer@theherald.canwest.com
© Copyright (c) The Calgary Herald
See also:
Tar sands action 3:
Greenpeace strikes again: Activists occupy Shell upgrader expansion site in Fort Saskatchewan
Tar sands action 2: Greenpeace takes action again, blocking Suncor tar sands operations International activists join Canadians in saying no to tar sands
Tar sands action 1: Activists block tar sands mining operation to send message to Obama and Harper: Climate leaders don’t buy tar sands
October 10, 2009
House bill requires two tugs for tankers
Wesley Loy
Petroleum News
October 11, 2009
Provision in Coast Guard bill would extend dual escorts even to ships with double hulls; similar legislation pending in Senate
Federal legislation authorizing Coast Guard appropriations for 2010 has a provision expanding the requirement for dual tug escorts of oil tankers traveling through Alaska’s Prince William Sound.
The Coast Guard bill, H.R. 3619, would require that double-hulled tankers, and not just single-hulled ships as the law now specifies, be accompanied by at least two emergency towing vessels.
Supporters of the provision say it’s important because nearly all the tankers carrying North Slope crude oil through the sound today are equipped with double hulls, a result of reforms Congress mandated after the wreck of the single-hulled tanker Valdez.html'>Exxon Valdez in 1989.
Oil industry watchdogs as well as Alaska’s congressional delegation say they prefer that the oil industry continue with the dual tug escorts, even though the double-hulled tankers are thought to be less vulnerable to oil spills.
Two tugs “will allow for greater redundancy in a place where severe weather and human error can lead to disaster,” said Alaska Republican Congressman Don Young, calling the Exxon Valdez oil spill “the worst tragedy” in state history.
The House Transportation and Infrastructure Committee passed out the Coast Guard bill on Sept. 24. Young has a seat on the committee.
The dual tug escort language is similar to that in a standalone piece of legislation Alaska’s two senators, Republican Lisa Murkowski and Democrat Mark Begich, introduced on May 14.
That bill, S.1041, isn’t expected to advance. Rather, the two senators are expected to try to insert the tug provision into other legislation, possibly the Senate’s Coast Guard authorization bill.
Escorting each oil-laden tanker with two tugs is expensive, and industry watchdogs with the Prince William Sound Regional Citizens’ Advisory Council have said they’re worried oil companies might try to eliminate the expense now that the fleet has gone almost exclusively double-hulled.
But oil shippers have insisted they have no immediate plans to drop dual escorts.
The tanker fleet now numbers about 16 ships that regularly call on the oil terminal at Valdez. The bulk of them carry crude for BP, ConocoPhillips and ExxonMobil.
See also:
Support lawmakers for escort tug efforts
October 05, 2009
Push for LNG pipeline from Oregon's Coos Bay
David R. Baker
San Francisco Chronicle
Sunday, October 4, 2009
Coos Bay snakes from the Pacific into the hilly Oregon coast, its waters sheltered from the ocean by a long, sandy spit.
Resident Jody McCaffree sees it as a place of sand dunes and shore birds, where the slumping local economy hasn't destroyed a high quality of life. But a group of energy companies, including PG&E Corp., sees Coos Bay as a potential source of fossil fuel.
The companies plan to build on the bay's northern shore a terminal for importing liquefied natural gas, deeply chilled fuel that, when warmed up, can run power plants, furnaces and stoves.
A proposed pipeline from the terminal would cut through 234 miles of rural land, mostly forest, before stopping at the town of Malin on the California border. There, an existing pipeline would move the gas north to the Pacific Northwest and south to California.
"You're tearing up half of Oregon for a pipeline to import foreign energy," said McCaffree, who has helped spearhead opposition to the project with her group Citizens Against LNG.
McCaffree fears that if an LNG tanker suffered an accident in the narrow bay, it would form a vapor cloud capable of igniting into a fast-moving fireball. About 17,000 people live within a 3-mile radius of the proposed terminal, called Jordan Cove.
"Maybe there's a reason California doesn't want these things on its shore," McCaffree said.
Radical market change
Five years ago, energy companies were racing each other to build LNG terminals on the West Coast. Natural gas production in the United States was falling, and prices were rising, pushing up home heating bills in the process. Despite fierce opposition from people like McCaffree, many state and federal officials saw importing liquefied natural gas as the answer.
But the natural gas market has changed radically since then. Improved technology helped energy companies tap gas that had been locked in shale rock in places like Arkansas, Louisiana and Texas. Domestic production boomed. Prices fell. And interest in LNG - at least in America - fizzled.
Diversify for future
So why are PG&E and its partners pushing ahead in Coos Bay?
Jonathan Marshall, a spokesman for the San Francisco company, said PG&E is trying to plan ahead. The company is part of a consortium that would build the $1.1 billion pipeline, called the Pacific Connector, while another consortium would build the $1.2 billion terminal.
"None of us has a crystal ball," Marshall said. "It goes back to supply diversity. As we've seen before, prices can shift very quickly. Right now they're shifting down. But small changes in demand, in supply, can trigger big changes in price."
The projects have applied for approval from the Federal Energy Regulatory Commission, and a vote could come as early as the commission's next meeting, later this month. The projects would still need permits from several other federal and state agencies.
Demand fuels project
But Bob Braddock, project manager for the terminal, said neither the terminal nor the pipeline will be built if there isn't demand for the gas. If LNG exporters overseas don't think they can get a good price in America, they won't sign contracts to use either facility.
"This will never be built unless the capacity for the terminal and the pipeline are contracted," he said. "Right or wrong, (the exporters) are making decisions based on what they see the prices will be in America 25 years from now."
Big energy infrastructure projects - from coal-fired power plants to wind farms - often provoke opposition. But not like LNG. Fierce resistance already helped block proposals to build LNG import terminals in Eureka and Long Beach, on Vallejo's Mare Island and off the coast of Ventura County.
Opponents tend to focus on safety.
Ignition danger
LNG is natural gas cooled to minus 260 degrees Fahrenheit, at which point it turns into a clear liquid. Ships carry it in insulated tanks. If those tanks are punctured and the liquid escapes, it will turn back into gas and hover on the surface of the ocean until it disperses in the wind, rather than forming a slick like spilled petroleum.
But before it disperses, spilled LNG can ignite. In 1944, a Cleveland facility that produced and stored liquefied natural gas leaked, creating a vapor cloud that seeped into a nearby residential neighborhood. The vapor ignited, and 130 people died. In 2004, an explosion at an Algerian LNG plant killed 27 people.
Proponents of the fuel say that despite those rare incidents, the LNG industry has a good safety record. And some parts of the world welcome LNG. San Ramon's Chevron Corp., for example, announced recently that it would build a $37 billion project off Australia's northwest coast to pump natural gas from undersea reservoirs, chill it and ship it to customers in China, Korea and Japan. Chevron has already signed contracts for much of the gas.
Purpose questioned
The fact that other countries are eager to buy LNG while America isn't makes McCaffree and other Jordan Cove opponents wonder if it isn't an export terminal in disguise.
The Pacific Connector pipeline, they note, could easily link to another proposed pipeline, called Ruby, that would enter Oregon from the east, supplying the West Coast with natural gas from the Rocky Mountains. If Jordan Cove is really designed for export, then any private property condemned to build the Pacific Connector pipeline would be condemned solely for corporate profit, McCaffree said, not to fill a community need the way an import facility arguably would.
"I just don't understand why PG&E's still pursuing it, unless it's going to be an export terminal," she said. "There's no way we need all that gas." She considers any LNG project - import or export - a waste of money and effort when the country needs to be building more renewable power facilities and weaning itself off fossil fuels.
Export too costly
Braddock said that turning Jordan Cove into an export terminal would require completely redesigning the project and reapplying for government permits. And the proposed site on Coos Bay isn't big enough to accommodate the equipment needed for cooling the natural gas into a liquid, he said. An export terminal would also cost far more to build - closer to $5 billion.
"I couldn't make the economics of that work no matter how hard I'd try," Braddock said. "It's not like someone can just flip a switch. The technical issues are huge."
E-mail David R. Baker at dbaker@sfchronicle.com.
October 03, 2009
Greenpeace strikes again: Activists occupy Shell upgrader expansion site in Fort Saskatchewan
Greenpeace Canada
October 3, 2009
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Activists from Canada, France, Brazil and Australia scaled the chimneys at an under-construction upgrader to stop more destruction before it can start. Two activists have been detained.
“Greenpeace is occupying this site in the heart of what many affected land owners call ‘cancer alley’ to continue exposing the climate crimes associated with producing dirty, dangerous and destructive tar sands oil. We are sending out a global climate SOS because we need help, we need climate leaders willing to forge a new green path for our planet not more dirty oil politicians ready to sacrifice our future.” — Melina Laboucan-Massimo, Greenpeace climate and energy campaigner from outside the Shell plant.
“The tar sands represent the bleak future that awaits the world if we refuse to listen to science and fail to make significant commitments to cut greenhouse gas emissions. It’s time for world leaders to stop gambling with people’s lives. It’s time to stop the tar sands.” — Mike Hudema, Greenpeace climate and energy campaigner
See also:
Tar sands action 2: Greenpeace takes action again, blocking Suncor tar sands operations International activists join Canadians in saying no to tar sands
Tar sands action 1: Activists block tar sands mining operation to send message to Obama and Harper: Climate leaders don’t buy tar sands