April 12, 2018

Affordable Energy News Service for April 12, 2018

Affordable Energy News Service for April 12, 2018

Corporate welfare won’t resolve the Kinder Morgan dispute — Mark Milke

One of the great myths circulated by the anti-energy crowd in Canada is that the energy sector is heavily subsidized by taxpayers. Instead, as I found in my 2017 study for the Canadian Taxpayers Federation, and as economist and taxation expert Jack Mintz has long argued, the claims are inflated based on a misuse of tax expenditure data. But if such taxpayer subsidies are rarer than reflexive energy critics assert, it turns out that Alberta Premier Rachel Notley and Alberta Opposition Leader Jason Kenney are about to give succour to the critics’ accusations. Over the weekend, both said the Alberta government should take a financial stake in Kinder Morgan, the company facing continual problems in twinning its Trans Mountain pipeline from Alberta to its terminus in Burnaby, B.C. - Globe and Mail


As B.C. and Alberta feud, Ottawa has few options that would guarantee pipeline peace — Chantal Hebert

In the increasingly fiery debate over the planned expansion of the Alberta/B.C. Trans Mountain pipeline, there is no mystery about the conflicting end games of the three governments embroiled in the dispute. But what about Kinder Morgan itself? Is the company’s ultimatum merely a prelude to walking away from a project that has become less potentially lucrative in the wake of President Donald Trump? Or is the company looking to minimize risks to its shareholders by getting Canada’s pipeline-hungry governments to shoulder part of the risks? In any case, the solution would involve Alberta and Ottawa joining forces to finance the project in whole or in part. Paving the road to completion with public funds could offer the two governments the path of least resistance to keep the project alive. - Toronto Star  


Filling up in B.C. could cost $120 if Alberta cuts off oil supplies amid Trans Mountain fallout — Geoffrey Morgan

Business groups in British Columbia are turning on the provincial government as analysts fear a proposed law in Alberta could increase costs on a range of goods across the Lower Mainland. A trade war between B.C. and Alberta over the $7.4-billion Trans Mountain pipeline project to the West Coast could soon result in oil-rich Alberta cutting off petroleum supplies to B.C. and send prices for gasoline, diesel and even consumer goods soaring. Alberta Energy Minister Marg McCuaig-Boyd’s Bill 12, Preserving Canada’s Economic Prosperity Act, is now on the order paper in Alberta. “We’ve been clear that if the government of B.C. persists in attacking our jobs and economy, they will face serious consequences. We’ve been saying for a long time that this bill will focus on giving us the power to control our oil and gas products that belong to Albertans,” McCuaig-Boyd said in an email. The prospect of restricting oil flows is causing stress among B.C. businesses, who have begun to call on Victoria to drop its opposition to the pipeline, which caused proponent Kinder Morgan Inc. to announce this week it would pare non-essential spending on the project until the federal government steps in. - National Post  


With almost nothing left to lose, Albertans rise up against Ottawa's empty pipeline promises — Claudia Cattaneo

With almost no pipelines left to lose, Albertans of all backgrounds and political persuasions are uniting and rising against years of what they perceive as unfair treatment by the federal Liberal government and its eco-activist partners. They are showing the tide is turning against Prime Minister Justin Trudeau’s strategy of transitioning Canada away from oil and gas – which has killed oil and gas investment, jobs, economic growth, and is now threatening the last oilpatch lifeline, the proposed Trans Mountain pipeline expansion – while he prioritizes climate change policy and carbon dioxide taxes. The next chapter is uncharted political territory. That pent-up anger spilled over at a Calgary rally in support of the Trans Mountain pipeline Tuesday and is expected to continue at a rally in Edmonton Thursday at the Alberta legislature. Rally 4 Resources and Canada Action organized both events in response to Kinder Morgan Canada putting the project on hold on the weekend in response to the British Columbia government’s continued opposition. - National Post  


Elites bungled their carbon-tax crusade because they don’t understand Canadians — Phillip Cross

A recent poll showing that a majority of Canadians don’t understand or have never heard of a carbon tax demonstrates the gulf between the largely academic-bureaucratic elite who push for this tax and ordinary Canadians. For nearly three years, pro-carbon-tax governments and groups, such as the EcoFiscal Commission, which released last week’s poll, have controlled the commanding heights of this debate with funding and media support the fossil fuel lobby can only dream of. They have nevertheless failed to parlay these huge advantages into public understanding and support. The reasons the public has not rallied behind a carbon tax are clear enough. Promises that the carbon tax would be revenue neutral were quickly forgotten, revealing it as just another tax grab that offended people on the right. Their promised aim of reducing emissions has ended up coming up short because the carbon levies, where they were applied, were not enough to materially change consumption when crude oil prices were falling, disillusioning people on the left. Carbon taxes also failed on the claim they would bridge the gap between the environment and the economy by creating the social licence to build a pipeline. - National Post  


Kinder Morgan controversy signals a bigger problem for Canada’s economy — Tim McMillan

Kinder Morgan’s decision to suspend all non-essential activity and spending related to the Trans Mountain expansion project (TMEP) is a dire issue – for the entire Canadian economy. The pipeline has been in service for more than 60 years and its $7.4-billion expansion to the West Coast was approved 18 months ago by the government of Prime Minister Justin Trudeau. And yet, we still can’t seem to get the expansion pipeline built. While TMEP is a critical piece of infrastructure central to our country’s prosperity, unity and security, its challenges are part of a wider problem facing the Canadian economy that we can no longer afford to ignore. Rising government costs, inefficient regulations and our inability to get major projects built are eroding investor confidence in Canada’s oil and natural-gas industry and Canadians are losing out as a result. Since the economic downturn hit in 2014, Canada has struggled to maintain its position as a reliable place for investment in oil and natural-gas development. Global capital is consistently directed to other countries. - Globe and Mail  


Zapping taxpayers won’t validate green energy — Mark Milke

A few years back, I had a chat with a reporter who had recently moved to Calgary from Europe, where he covered energy issues. In a discussion about renewables, he gave the oft-heard opinion that Europe was, of course, “ahead” of Canada. His eyes widened with admiration for how Europeans were greening their power grid. That chat often reminds me of the mistake some casual observers make about a hoped-for technology, one heavily subsidized by citizens through their taxes or power bills: That the existence of a massively taxpayer-subsidized sector is somehow proof the underlying technology is viable and perhaps one day profitable. In the case of Europe and its electricity sector, heavily tilted to renewables as policy, consumer and taxpayer subsidies come at a heavy price. Consider Germany: The New York Times reported last autumn that Germany spent €189-billion on green subsidies since 2000 (that’s about CAD$300-billion). But greenhouse gas emissions are stubbornly stuck at 2009 levels. - Telegraph Journal  


New technologies dull but don’t cure Canada’s export oil pipeline headaches — Dan Healing

The potential cancellation of the Trans Mountain pipeline expansion is putting a spotlight on oilpatch innovations that might mitigate the need to export capacity as oilsands production rises. But even the most ardent supporters of the new technologies, like Ian MacGregor, president of North West Refining, agree Canada is still going to need new pipeline space. - Chronicle Herald  


Trudeau must move the pipeline forward — Jamie Carroll

The time has come for the prime minister to stop talking about pipelines and start taking the necessary steps to get them built. The folks in Ottawa will say that a commitment to oceans protection, the increase in coast guard presence and other related announcements have all been part of getting British Columbians to say yes. The reality in Ottawa is that the government enjoys 18 seats in B.C. and 2.5 in Alberta (one Liberal is out of caucus). No government would agree willy-nilly to anything that ignored that reality. But pipelines are the safest way to get a legal, globally traded, highly valuable commodity from Point A to Point B. Not only that, but British Columbia’s own production of millions of tons of carbon-spewing coal really should disqualify the province’s politicians from staggering around the supposed moral high ground. - Telegraph Journal  


Alberta premier convinced Ottawa will act soon on Trans Mountain impasse — Michelle Bellefontaine

Alberta Premier Rachel Notley left a meeting Wednesday with federal Finance Minister Bill Morneau feeling "more convinced" Ottawa will soon take action on the Trans Mountain pipeline expansion. Notley told reporters on a conference call from Toronto that they discussed economic, legal and financial options open to Ottawa to help break the impasse, but she declined to say what they are. "I will say that he did assure me the Canadian government plans to take swift action on this file," she said. - CBC News


Oilsands research could be 'game changer' for renewable energy — Kyle Bakx

Originally from South Africa, JT Steenkamp doesn't usually enjoy brisk Canadian winter weather, but this year is different for the engineer who is testing out a new type of battery at Shell Canada's research centre in Calgary. The battery is built using a little-known metal found in bitumen, and the technology could represent a pivotal moment for both the oilsands industry and the renewable energy sector. Shell's project aims to extract a metal called vanadium from bitumen and use the material to produce large, utility-scale electricity storage for the renewable energy sector, which has struggled with ways to store large amounts of energy in a stable, reliable way. - CBC News


Trans Mountain and the slow western break from Confederation — Jen Gersen

Dear God, it's come to this. We've got Conservatives advocating an NDP plan to invest taxpayer cash in oil and gas. The last decade of pipeline politics has culminated in a set of conditions so bizarre that there now seems to be no option other than threatening to nationalize the Trans Mountain pipeline. Yes, nationalizing a goddamn pipeline. Kinder Morgan says it's going to suspend all non-essential expenditures for Trans Mountain – and suggests the whole project could be mothballed by May 31 – if some significant progress isn't made on the political side. Alberta Premier Rachel Notley is suggesting Alberta could invest in the line to ensure it goes forward. United Conservative Party leader Jason Kenney backs the moves, and adds he wants to see Ottawa pitch in as well. - CBC News


The federal NDP as pipeline peacemaker. Really? — Don Braid

On Wednesday, the pipeline crisis brought a stunning case of hypocrisy on the hoof. Federal NDP Leader Jagmeet Singh said the B.C. and federal governments should go to the Supreme Court, hand in hand, for a ruling on the constitutionality of the Kinder Morgan pipeline expansion. That would bring peace and understanding in our time. - Edmonton Journal


United States

Record U.S. natural gas production: The good news and bad news — David Blackmon

The U.S. Energy Information Administration (EIA) has good news for us this week where domestic natural gas is concerned: the oil and gas industry will set a new record for natural gas production in 2018. The fact that domestic natural gas supplies remain abundant and cheap is terrific for consumers, since it is the main fuel used for home heating across the country, and also provides a very large and growing share of electric power generation. When natural gas is abundant and cheap, utility bills are lower in most areas, with the notable exception right now of the New England area, where politically-motivated pipeline constraints have led the absurd outcome of residents of the states north of New York paying much higher prices than the rest of the country and having to actually import LNG from Russia in order to meet the region's natural gas demand. - Forbes


U.S. natural gas production sets records, becomes net exporter for first time in nearly 60 years — Chris Galford

The U.S. Energy Information Administration (EIA) reports that the nation set two records for natural gas production last year, in both gross withdrawals – 90.9 billion cubic feet per day (Bcf/d) – and marketed natural gas production – 78.9 Bcf/d. The only area in which it failed to set a new record was dry natural gas production, which failed to exceed 2015 levels. Beginning last July, however, natural gas gross withdrawals climbed for five straight months to reach a monthly high of 96.7 Bcf/d in December, while marketed natural gas production reached a monthly high of 84 Bcf/d. Accordingly, the volume of natural gas exports also rose. Both pipelines and liquefied natural gas operations increased by a total of 36% and made the United States a net natural gas exporter for the first time in nearly 60 years. - Daily Energy Insider  


U.S. sees wave of new cyber attacks on energy infrastructure — Haley Zaremba

In the past few weeks at least seven natural gas pipeline operators were the victims of hackers that targeted third-party communications system Latitude Technologies, causing service disruptions and breakdowns in electronic communications with customers – and that’s lucky. The hacks, while extremely concerning, did not disrupt the supply of gas to U.S. consumers, but the industry may not be so fortunate next time. In addition to the attack on Latitude Technologies, four pipeline providers (Oneok, Boardwalk Pipeline Partners, Energy Transfer Partners and Eastern Shore Natural Gas) confirmed that they were also direct victims of cyber-attacks. This recent slew of pipeline hacks, while it was thankfully without severe consequences, serves as a wake-up call, bringing attention to the vulnerability of our energy systems and vital infrastructure like pipelines. The vulnerability of vital national institutions like oil and gas pipeline infrastructure will only continue to grow as the energy industry becomes more and more automated and internet-dependent with each passing year. - Oil Price  



'Light touch' NEG trims Big Power's wings — Ben Potter

The Energy Security Board has issued a draft design outlining a light touch approach to the National Energy Guarantee (NEG) that will make it easier for small retailers to challenge the market power of energy giants such as AGL Energy, EnergyAustralia and Origin Energy. The draft NEG design distributed ahead of next Friday's Council of Australian Governments energy ministers' meeting won't require electricity contracts to specify physical sources of generation or privilege coal generation over other forms of on-demand supply that can "firm" up intermittent wind and solar energy. The "high level design" draft takes the Turnbull government's signature energy policy aimed at ending 15 years of climate and energy policy wars forward another step, although there is still a long way to go before all states and territories are on board and legislation can be drawn up. - Australian Financial Review