March 05, 2018

Affordable Energy News Service for March 5, 2018

Affordable Energy News Service for March 5, 2018

Russian meddling in Canadian oil pipelines uses old Soviet 'useful idiots' ploy — Claudia Cattaneo

An investigation by United States lawmakers that links Russian-sponsored agents to manipulation of U.S. energy markets – including activism against pipelines such as TransCanada Corp.’s Keystone XL pipeline – is a wake-up call to Canadian governments that foreign interests have a big hand in campaigns to block Canadian oil and gas exports. By designing energy and environmental policy to appease that inflated activism – for example, regulatory reforms that are expected to further discourage energy investment in Canada – Canadian governments are accommodating competitors prepared to do whatever it takes to protect and grow their global oil and gas market share, not Canada’s best interest. According to the report by the U.S. House of Representatives Committee on Science, Space and Technology, made public Thursday, Russian agents have been exploiting U.S. social media platforms to influence opinions about U.S. energy and environmental policy. - Financial Post  


As oilpatch spending falls, CEOs warn Canada falling behind U.S. — Chris Varcoe

More money is flowing through the energy investment pipeline into the United States, while Canada isn’t yet ready to mount an aggressive campaign to attract capital here. A new Statistics Canada report shows spending by oil and gas companies across the country will fall by 12% this year to $33-billion, far off the $76-billion mark seen four years ago when commodity prices were riding high. In Alberta, a similar 12% decline is projected this year as spending on oilsands and conventional oil and gas tails off. Canada is now facing a teeter-totter effect. Promising energy plays and tax reform are making the U.S. a more attractive place to invest. On the other side, pipeline constraints and the discount facing oil and natural gas prices in Alberta are beginning to pinch. The heads of three of Canada’s largest petroleum producers say the country is falling behind. “It is hard to not be concerned about Canada’s competitiveness right now,” Husky Energy CEO Rob Peabody said Thursday. “Hopefully we’ll wake up to the situation and we’ll start taking some action to remedy it.” - Calgary Herald  


Pipeline shortage could choke North America’s oil supply with ‘serious implications for global markets’, IEA warns — Yadullah Hussain

Canada will continue to pump out more barrels from the oilsands over the next few years, but delays to pipeline approvals and uncertainty over the provision of more export capacity is undermining the next wave of development, according to the International Energy Agency (IEA). In its annual five-year oil forecast published Monday, the IEA warned that Canadian oil pipeline constraints are part of a wider capacity crisis brewing across North America. “Colossal growth in North American supply from 2018 to 2023 raises the crucial question of whether there is enough pipeline capacity to transport and sell all of that oil,” the Paris-based agency said in a report. “If sufficient capacity is not built, the increase in production we foresee could be at risk, with serious implications for global markets.” - Financial Post  


Oilpatch results reflect improving environment — Deborah Yedlin

Oilpatch earnings season is almost over and the announced results have been a marked improvement from a year earlier. The fourth-quarter numbers, especially for oil-weighted producers, reflect higher oil prices seen in late 2017. Natural gas producers were at the opposite end of that story, however, with constrained pipeline access and a surfeit of supply keeping prices down. Even the severe winter weather wasn’t enough to lift natural gas prices, which speaks to the fact the midstream segment of the industry has not kept pace with drilling volumes. The winners in the natural gas game last year were companies that also had significant liquids production — which sells at, or close to, the price of West Texas Intermediate – a lower cost structure, strong balance sheets and access to transportation. Companies with producing assets south of the border captured higher netbacks as a result of stronger pricing – and greater pipeline capacity. - Calgary Herald  


North West Refining withdrawing proposal to expand Sturgeon Refinery – for now — Geoffrey Morgan

A proposal to build the second phase of the Sturgeon Refinery, the first new refinery in Alberta in the last 30 years, is being withdrawn as the company behind the project evaluates the changing economic environment facing the oil industry. North West Refining and Canadian Natural Resources Ltd. are joint partners on a 50,000-barrel-per-day phase of the Sturgeon Refinery near Edmonton that partially started up in December. The first phase was built with support from the Alberta government in the form of loan guarantees and commitments by the province to refine a portion of the bitumen it collects through a royalty-in-kind program at the Sturgeon Refinery. Those commitments came under increasing scrutiny as costs for the Sturgeon Refinery ballooned from previous estimates of $5.7-billion in 2013 to $9.5-billion. - Financial Post  


Canada's First Nations seek bigger stakes, profits from oil sector — Rod Nickel

Canada’s First Nations are boosting investments and leveraging their clout with regulators to gain stakes in oil and gas projects as they seek greater returns on energy produced or transported across their territory. Aboriginal groups in Canada have traditionally played a more passive role in the energy industry, collecting royalties from oil and gas output. That model is changing as some indigenous groups buy oil wells and negotiate ownership stakes in proposed pipelines and storage projects. “It’s assets that create cash flow,” said Joe Dion, Chief Executive of First Nations-owned Frog Lake Energy Resources Corp, which produces 2,000 barrels of oil per day. “We get a piece of the action.” First Nations play a pivotal role in Canada’s oil industry because governments and companies have a legal duty to consult and accommodate them before proceeding with resource projects affecting their territories. - Reuters  


Trump steel tariffs a ‘troubling’ sign for Canadian oil industry — Bloomberg

The threat of American tariffs on Canadian steel sent shivers through the northern nation’s oil industry, sparking fears of higher costs for everything from pipelines to drilling equipment. U.S. President Donald Trump’s 25% levies on foreign steel and 10% duties on imported aluminum are a “troubling development” that will require close attention, said Nick Schultz, vice president of pipeline regulation and general counsel for the Canadian Association of Petroleum Producers. “Steel is important in every part of the oil and gas industry from drilling, production, processing, storage and transportation utilizing pipelines,” Schultz said in an e-mailed statement. “If Canada is not exempt, these proposed tariffs on steel imports will add a significant burden to the industry on both sides of the border and there could be unintended consequences if there are retaliatory measures taken.” - JW Energy  


Ontario Progressive Conservative candidates’ vow to scrap carbon plan could trigger compensation claims — Shawn McCarthy

Ontario's Progressive Conservative leadership candidates, who are pledging to kill the province's cap-and-trade program, could face billions of dollars in compensation claims if their party wins the June election and moves quickly on that pledge. Should the PCs win the election, however, they will find it challenging to keep that vow, and it will likely prove expensive for taxpayers and businesses covered by the existing cap-and-trade regulations. As of last week, Ontario had sold almost $2.4-billion in greenhouse gas emission allowances, primarily to energy companies in the province that are covered by the cap-and-trade program. The province had four Ontario-alone auctions last year, which raised $1.92-billion. In February, for the first time, it participated under the Western Climate Initiative (WCI) in a joint sale with Quebec and California and raised an estimated $471-million from companies in the three jurisdictions. But it will take time to extricate the province from the WCI and could require compensation for businesses that are holding emission allowances, said Mark Cameron, executive director of Canadians for Clean Prosperity, a think tank that advocates for a revenue-neutral carbon tax. - Globe and Mail


United States

Report finds Russian agents used social media to disrupt U.S. energy policy, markets — Aaron Martin

Russia has used social media to spread propaganda designed to disrupt U.S. energy markets and influence U.S. energy policy, according to a report released by the House Science, Space, and Technology Committee on Thursday. “Russia benefits from stirring up controversy about U.S. energy production. U.S. energy exports to European countries are increasing, which means they will have less reason to rely upon Russia for their energy needs,” Republican Congressman Lamar Smith said. “This, in turn, will reduce Russia’s influence on Europe to Russia’s detriment and Europe’s benefit. That’s why Russian agents attempted to manipulate Americans’ opinions about pipelines, fossil fuels, fracking and climate change. The American people deserve to know if what they see on social media is the creation of a foreign power seeking to undermine our domestic energy policy.” - Daily Energy Insider  


U.S. oil expected to meet most of world’s growth in demand — AP

A global energy watchdog says booming production in the United States will meet 80 percent global growth in demand for oil over the next five years. The International Energy Agency believes slow growth from OPEC will be offset by oilfields in the U.S. The group, based in Paris, issued its annual oil market report on Monday. The resurgence in U.S. production is the most prominent change since the group’s last forecast. - CBS  



Energy crisis over? A blackout-free summer and power prices are falling — Ben Potter

A flood of new clean power and a summer without major outages is increasing confidence in the power system and helping to reduce prices, Meridian Australia chief executive Ed McManus said. Meridian's retail business Powershop recently said it would cut electricity prices 5 per cent this year because a swag of hydro, wind and solar power deals it signed last month will deliver cheaper electricity than the company could buy in the wholesale market. "The price we can get the energy from those wind and solar farms is cheaper than the energy we can get from the normal wholesale market day to day," Mr. McManus said, in a video sent to customers to announce the price cut of about $70 for a typical residential customer. - Australian Financial Review