Tag Archives: tar sands

Power: Creating Financial Slaves for Oil Barons

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Through the 1960s and into recent times, Ontarians have been cajoled into making bad decisions when it comes to our energy options.  We had nuclear rammed down our collective throats by over-zealous and naive politicians that thought 25,000 years of radioactive half-life was OK.

The trade-off was a dynamically growing and robust economy that was a hydro pig known as the Car Industry.

Well, that industry has collapsed, but we’re still all shaking our collective heads wondering at the ‘debt servicing charges’ that appear on our monthly bills.

Forty or fifty years ago, the nuke industry got a fat pay cheque and wicked-assed party and we’re paying the tab.  And we’ll keep paying it for decades to come until power generation is transferred to people and not corporations.

Today (thanks to a blog article from Buckdog) I read that Saskatchewan is poised to make the same ridiculously stupid decision to allow nukes for the sake of creation of ‘cheap’ power.  This time, however, it’s not intended for the the manufacturing base of the province.

No … it’s to subsidize the extraction of dirty oil for decades to come.

Talk about stupid.

When are people going to learn?

Why don’t they take the $20 or $30 billion that the industry is probably skulking around looking for and dump it into something that will propel them forward in the renewable space (like R&D, investment in infrastructure, etc)?

Germany to be Carbon-Free by 2050

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Germany has always been known as a leader with wind and solar power collection – two of several options for renewable energies.

However, according to Germany’s Federal Environment Agency, there is a distinct possibility that Germany will have completely quit it’s reliance on carbon-based energy by the year 2050.

Here are some of details to consider:

  • “A complete conversion to renewable energy by 2050 is possible from a technical and ecological point of view,” Jochen Flasbarth, president of the Federal Environment Agency, told reporters earlier this week.
  • The transition would also create new jobs and increase exports of renewable energy technologies.
  • The country already employs some 300,000 in the renewable energy sector and is the world’s leader in installed photovoltaic capacity and second largest generator of wind power after the US.
  • Currently around 40% of Germany’s greenhouse gas emissions come from electricity generation, particularly coal-fired plants, but the Government has committed to cutting emissions 40% on 1990 levels by 2020 and 80-85% by 2050.
  • Meanwhile, the German authorities have finally agreed a two-step plan to reduce feed-in tariffs by 3% later this year.
  • The German Federal Network Agency says that 714 MW of solar capacity was installed in Q1 of this year, a ten-fold increase on last year. The change to the feed-in tariff is expected to calm the market but not lead to a collapse, according to media reports.

Going one step further, I started to browse the German Environment Agency web site and found that most of the articles are those that would make head-in-the-sand Conservatives and environment-deniers shriek:

  • “Germany met its Kyoto Protocol Climate Protection Obligations in 2008”
  • “Unecological subsidies cost 48 billion Euros in tax revenues every year”
  • “How to reduce Germany’s CO2 emissions by 40%”
  • “CO2 capture and storage is only an interim solution” (and not a real one, Steve)
  • “Climate protection fuels employment”

All of this goes to show that ‘necessity really IS the mother of invention’.  Germany’s not known for its natural energy resources – except for coal – so they’ve got to take care of themselves some other way.  And because Canada is sitting on the world’s biggest cess pool of crap some people call ‘oil’, we don’t bother investing in technology and energy supplies that might actually be sustainable.

Despite how distressing the situation is (and how much it makes me want to move to Germany), I can’t help but laugh at the image of Merkel and Harper in a literal wrestling match and exchanging fisticuffs every time they get together for a little $1.2 billion party.  But then, I suppose Merkel’s probably thinking ahead with ideas like “we’ll be selling these trolls everything they need over the next 50 years and we’ll pretty much own Canada”.

Ava-Tar Sands

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This …

AvatarTruck

Or this …

TarSandsTruck

Would you believe that the Tar Sands in Alberta could pose a greater environmental risk than the drilling rigs off the coast of the Gulf of Mexico?

Certainly, if you have time to read this 96 page report from this Ceres-commissioned report authored by RiskMetrics Group.

A brief review of the document was provided on the Ceres website, including the following observations:

  • Alberta’s oil sands are already the world’s largest energy project—with $200 billion in funds committed from the world’s leading oil producers, including BP, ExxonMobil and Shell.  However, these producers face numerous environmental, production and distribution challenges that will grow as the oil sands industry pushes to boost production amid tighter regulations and resource constraints
  • Oil sands companies in Alberta are already producing 1.3 million barrels a day, and their goal is to triple production by 2030.
  • Ceres president Mindy Lubber:  “The energy-and water-intensive nature of oil sands, combined with climate change regulations, permitting obstacles and other challenges, are a recipe for diminishing revenues and returns if not properly managed.”
  • Investors have already filed shareholder resolutions on the oil sands topic with Royal Dutch Shell, ExxonMobil, BP and ConocoPhillips. The Shell resolution will be voted on at tomorrow’s annual corporate meeting in London.  ExxonMobil’s shareholder resolution is up for a vote on May 26.
  • While just over half of U.S. oil comes from overseas countries like Venezuela and Saudi Arabia, the fastest growing source is from two North American regions – the Gulf of Mexico and Canada’s vast oil sands region. Oil production from these two areas has grown to three million barrels a day in recent years, supplying more than 15 percent of total U.S. oil needs.
  • Long-term risks from development in Canada’s oil sands region are arguably greater. Many of these risks stem from already-high financial costs and the environmental impacts of transforming highly viscous bitumen into synthetic crude oil – a process that requires vast amounts of energy and water.
  • “Investors need to question whether this is a wise use of resources,” says Doug Cogan, a report co-author and director of climate risk management for RiskMetrics Group.  “The oil sands process takes natural gas—the cleanest-burning and lowest-carbon fossil fuel—to turn one of the dirtiest and highest-carbon fuels into a saleable product.  Large volumes of freshwater are also consumed in the process, and end up in toxic tailings ponds.  It’s like the Gulf of Mexico spill, but playing out in slow motion.  From a climate and ecological perspective, we’re really no better off.”
  • “This report makes clear that oil sands companies must do more to analyze the far-reaching risks from current and future production in Alberta,” said Jack Ehnes, chief executive officer of the California State Teachers’ Retirement System (CalSTRS), the nation’s second largest public pension fund. “With nearly $1.9 billion invested in the equity securities of BP, Shell, Exxon and ConocoPhillips combined, we have quite of teachers’ money at stake here. We need to ensure these companies are properly recognizing and managing oil sand risks.”

Among the report’s key findings:

Shrinking profit margin: The costs of producing oil sands – already the world’s most expensive source of new oil –  are rising and will continue to do so due to the onset of carbon pricing, higher input commodity prices, and rising costs for water treatment and land reclamation. As a result, global oil prices will need to remain high – possibly approaching $100 per barrel – to ensure a competitive rate of return on $120 billion in planned expansion projects. Oil sand operators must also be mindful that if global oil prices get too high, between $120 and $150 a barrel, it will likely reduce global oil demand and shift markets in favor of alternative fuels.

Vulnerability to changes in U.S. Markets: Presently, the vast majority of of the 1.3 million barrels being produced every day flows to the United States. Long-term access to this market is jeopardized, however, by emerging low-carbon fuel standards in the U.S. that will require a lower carbon intensity in transportation fuels. These fuel standards, already adopted in California, will put carbon-intensive oil sands fuel at a distinct disadvantage because oil sands output will likely have to be mixed with next-generation biofuels that are not yet being produced on a commercial scale.

Other Distribution Obstacles: Transporting expanded oil sands production west to China and other Asian markets is another alternative. However, there is strong opposition to building pipelines to Canada’s West Coast from Aboriginal communities who have significant rights under the Canadian constitution.

Water and Other Resource Constraints: Oil sands production is highly water intensive, with up to four barrels of freshwater consumed for every barrel of oil produced from surface mining extraction. Water withdrawals from the Athabasca River watershed are already restricted during winter months to protect fish habitat. If oil sands production volume grows according to companies’ estimates, some oil sands mining operations could exceed their wintertime allowances as early as 2014, causing possible production interruptions. Climate change may also exacerbate this situation; glaciers feeding into the Athabasca River watershed are already shrinking.

Growing Land Reclamation Costs/Liability: After 40 years of production, no oil sand companies have yet fully reclaimed the extensive tailings ponds used for holding polluted wastewater. This is because the fine tailings in these ponds take decades to settle out. These tailing ponds, already covering an area the size of Washington D.C., pose risks of contaminating adjoining lands and water resources, and present health problems in downstream communities. Alberta’s Directive 74 requires oil sands miners to speed up remediation of existing ponds – an order that creates especially large liabilities for the industry’s legacy miners such as Suncor and Syncrude.

The report specifically recommends that oil sands producers:

  • Review the lasting impact of their proposed development plans and pursue more pro-active, incremental strategies to manage environmental and social risks;
  • Provide guidance for assumed oil, natural gas and carbon prices in future production forecasts.
  • Do a better job of articulating to community groups and other stakeholders their strategies for land use planning, water management and carbon mitigation;
  • Disclose information from these more detailed evaluations to investors;
  • Develop stronger ties with the U.S. biofuels industry both for speeding up development of advanced biofuel capacity and sharing existing infrastructure, such as oil sands pipelines that already feed into the U.S. Midwest.

“All oil is getting dirtier and harder to produce,” said Bob Walker, vice president of sustainability at Northwest and Ethical Investment in Canada. “With Chinese investment and demand set to grow outside the U.S., oil sands production is likely to grow. Investors need to be aware of the environmental and social risks and engage oil sands companies to improve disclosure, operational performance and to make technological investments to reduce environmental and social impacts.”

“We recognize that oil companies will continue to invest in the oil sands,” continued Lubber, “but they shouldn’t do so blindly. Investors need assurances that the risks outlined in this report are being taken into account.  This includes the fact that carbon will be regulated, that water will be increasingly scarce, that tailings ponds need to be cleaned up, and that doing all this will be expensive. Companies need to build solutions in up front or they shouldn’t be building these projects at all.”

The full report is available at http://www.ceres.org/oilsandsreport and http://riskmetrics.com

About Ceres
Ceres is leading coalition of investors, environmental groups and other public interest groups working with companies to address sustainability challenges such as climate change. Ceres also directs the Investor Network on Climate Risk, a network of 90 institutional investors with $10 trillion of collective assets focused on the business impacts of climate change.

About RiskMetrics Group
RiskMetrics is a leading provider of risk management and corporate governance services.  Its ESG Analytics Group analyzes cutting edge issues like climate change, water and ecosystem services that support the global economy.

State-Owned Tar Sands?

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For the record, I don’t think anyone should be making money from the Tar Sands because, quite simply, there’s no true-cost economic rationale to actually allow the Tar Sands to exist.  The Tar Sands represent the ultimate in greed and ultimate in mortgaging the environmental (and subsequent economic) future of the entire planet.

However, I have a question:  if a state-owned oil company from China can buy into and profit from the Tar Sands,why is it that Canada cannot have a state-owned company that buys into and profits from the Tar Sands?

I mean, if someone’s making a shit-pile of cash off this monstrosity, can’t it at least be us?

This goes under the file of ‘un-f-in-believable’.

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Why Prorogue Canadian Democracy? For the Oil

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Late in the evening on December 30th, one thing survived Stephen’s Harpooning of Canadian democracy:  oil.

That’s right.  While the rest of us were being distracted about losing our ability to have even a moderate sense of democracy in this country, the Harper-crites were busy ramming through an approval on the Mackenzie Pipeline.

And then I realized:  the prorogue moment was a very risky smoke screen on the part of the Cons in order to ensure that it was business as usual for Big Oil.

Is this even legal since everything was shut down at the same time by ‘Tsar-per’?

Original story from the New York Times:

Canadian Board Approves Western Gas Pipeline

By CLIFFORD KRAUSS

Published: December 31, 2009

HOUSTON — A long-delayed natural gas pipeline in Western Canada, which has the potential to provide significant amounts of energy to North America, has cleared a crucial hurdle by receiving the endorsement of a Canadian government review panel.

The $15.4 billion Mackenzie Valley project, which involves Royal Dutch Shell, Exxon Mobil and ConocoPhillips, would connect natural gas fields in the Arctic with the rest of Canada and potentially with the United States.

Some Indian communities and environmental groups have called the 750-mile pipeline a threat to local species and native cultures and have expressed concern about the greenhouse emissions created if the gas is used to heat and upgrade Tar Sands into usable fuels. Greenhouse emissions from oil sands are substantially higher than from conventional oil and gas production.

But the joint review panel, after five years of study, concluded late Wednesday that the project “would deliver valuable and lasting overall benefits and avoid significant adverse environmental impacts.” It continued, “The project itself, as long-term infrastructure, provides a key basis for future economic development.”

The National Energy Board and federal cabinet still need to approve the project, but they are expected to follow the recommendations of the review panel. The board is scheduled to hold hearings in April.

If the project is approved, the oil companies would then have to decide whether to build the pipeline, given the current low gas prices, the prospects for competing gas fields in western Canada and the uncertainty of financial support from the Canadian government. Furthermore, a competing and also delayed gas pipeline project in Alaska might overtake the Canadian project.

“If the oil companies think prices are firming on gas, they will go ahead with this,” said Donald Hertzmark, a consultant who advises energy companies on international projects. “It could still be important for the United States and Canada, especially if gas takes off as a transportation fuel or if environmental issues slow down or derail the development of shale gas resources.”

The oil companies originally filed applications for the project in 2004, and hoped to begin operations five years later. But the review panel took longer than expected to complete its study. Now gas industry experts say operations could start in 2014 at the earliest.

The review panel, which assessed the environmental and socioeconomic impacts, concluded that the pipeline would not harm fish in the Mackenzie River. But it called for regional planning to protect many species including polar bears, caribou and beluga whales.

It also recommended that the gas be used to replace coal-fired electrical generation to control greenhouse gas emissions that have been linked to global warming and climate change.

The three gas fields that the pipeline would connect have reserves that are estimated at six trillion cubic feet — an amount equal to more than two years of total Canadian consumption of gas. The pipeline would initially supply about one billion cubic feet a day, which could be expanded after future offshore and onshore drilling.

The United States Energy Department has projected that Canadian annual gas consumption will increase from 3.3 trillion cubic feet in 2006 to 4.7 trillion cubic feet in 2030, largely because of the expanding needs of the oil sands industry.

Production in Canada’s conventional natural gas fields have been in decline, along with exports to the United States.