October 03, 2018

Affordable Energy News Service for October 3, 2018

Affordable Energy News Service for October 3, 2018

Only in the Twilight Zone will carbon taxes make families ‘richer’ — Jack M. Mintz

Canadians for Clean Prosperity published a report last week estimating that a carbon tax will make every Canadian better off, be they rich or poor, if the money is rebated to every person as equal per capita grants. Yippee — everyone’s a winner with a rebate that exceeds the carbon tax! How can rebates be more than household carbon-tax costs for everyone? Shouldn’t they, at most, add up across the population as the same? I went through the thinly documented report of 14 pages to find out. The paper calculates carbon-tax revenues ramping up by $9.2 billion by 2022 in Ontario, Saskatchewan and Alberta for “compliance” GHG emissions. The revenues are returned to households as per capita rebates under three scenarios.  In Ontario, all households earning below $80,000 in income come out ahead with bigger rebates than they pay in taxes. Everyone earning more than $80,000 pays more in carbon taxes than they get in rebates. Given that the median household income in Ontario is just shy of $80,000, about half of the province loses money on the carbon tax. It’s roughly the same case in Alberta and Saskatchewan. But even that exaggerates the amount of people benefiting overall from the rebates. - National Post  


B.C.’s Kitimat LNG deal has Horgan juggling Greens, Liberals, environmentalists — Dirk Meissner

The prospect of billions of dollars in liquefied natural gas revenues has British Columbia’s government preparing for a political and environmental juggling act as Premier John Horgan attempts to hold together his minority government while appeasing ever watchful climate guardians. Horgan said LNG Canada’s decision to build a $40 billion liquefied natural gas project in northern B.C. ranked on the historic scale of a “moon landing,” emphasizing just how much the project means to an economically deprived region of the province. Green party Leader Andrew Weaver whose three members of the Green party caucus have an agreement to support Horgan’s New Democrat government, stood up in the legislature Tuesday and accused the NDP of being part of a “grand hypocrisy,” for its criticism of past proposed LNG projects. Many other environmental organizations are calling on the government to justify this decision while still claiming they will try to reach their climate targets. - National Post  


$40-billion liquid natural gas facility is the light at the end of a long tunnel for Canada’s natural gas sector — Kyle Bakx

On Tuesday morning, hours after LNG Canada announced it would go ahead with its $40-billion export facility on the West Coast, analyst Martin King gave a presentation about the state of the oil and gas industry at the Calgary Petroleum Club in the city's downtown. The LNG announcement is massive for the natural gas sector, but King had some cold truth for hundreds of people who came to hear him despite the heavy snow outside. Until the LNG export facility is up and running, he said, there is little reason for optimism. Technological innovation led to a rise in natural gas production in North America and demand hasn't grown nearly as much, which has caused prices to sag for several years.  In Alberta, some gas companies have shut-in their wells because they don't see the point of producing gas when prices are this low. "It looks like there will be lots of supply and low prices," said King, with GMP FirstEnergy, in an interview with CBC News. "The pressure keeps building on Canadian gas." The massive megaproject on B.C's coast is the first natural gas export facility in the country. Until now, Canada has exported all of its natural gas to the United States, which is also awash in the fuel. - CBC News


Western Canada LNG project boosts natural gas industry confidence but not short-term gas — Dan Healing

Despite boosting investor confidence, the LNG Canada project's ability to provide a new market for natural gas and thus support depressed prices won't be seen until the facility is built sometime in the middle of the next decade, observers say. A continued glut of gas in Western Canada and the march of American shale gas into its traditional markets including Eastern Canada convinced analyst Martin King of GMP FirstEnergy to roll back his forecast for a recovery in benchmark Alberta gas prices next year. At the event Tuesday, he said natural gas prices will average C$1.57 per thousand cubic feet in 2019, just two cents higher than this year, and marked down from an earlier prediction of $3 per mcf. By comparison, New York prices are expected to average US$3.35 for the same amount of gas in 2019, up from US$3 this year. Gas traditionally sells for more in New York because it is closer to major population centres but the difference has been widening recently due to pipeline capacity constraints in Alberta and B.C. - Hamilton Spectator


'First of many': $40B LNG Canada signals revival of mega projects — Geoffrey Morgan

The $40-billion LNG Canada project is already facing opposition from environmentalists in British Columbia, but the business community and First Nations supporting the project cheered its positive final investment decision on Tuesday. Wetselaar said global demand for LNG has grown 9% in the last year alone and the LNG the project will produce is half as emission-intensive as coal, a power source which Asian countries are trying to replace with LNG. There is a broad base of support for LNG Canada among Indigenous communities in British Columbia as well as at the provincial government level – meaning the project will face less opposition than other energy infrastructure projects in the province, including the Trans Mountain pipeline expansion. Dulles Wang, director, North America Gas at Wood Mackenzie said, “It seems that mega-projects are back.” - Windsor Star


Red Deer and area residents embrace energy efficiency — Staff

When it comes to adopting Energy Efficiency practices and using the many programs available to Albertans, Central Alberta is leading the way. Energy Efficiency Alberta CEO Monica Curtis was in Red Deer today and provided an update to an event on the agency’s first year of operations. “Through advances in alternative energy and energy efficiency, Alberta’s new energy economy is benefiting today’s students, creating new jobs, driving economic growth, and helping make businesses more competitive and productive,” said Curtis. “Alberta’s economy is growing – by $475-million – through investments in energy efficiency and renewable energy, helping create more than 2,300 jobs.” - Red Deer Express  


LNG Canada megaproject breathes new life into country’s energy sector — Chris Varcoe

As Royal Dutch Shell Plc and its international partners gave the green light to their mammoth liquefied natural gas (LNG) project on the west coast. Yet, the mood in both cities was upbeat, given the positive signal the country’s first major LNG development sends to the natural gas sector, foreign investment and the ability of Canada to get large energy projects built. Costing up to $40-billion once it’s completed, the B.C. facility represents the largest private-sector investment in the country’s history. It represents a significant breakthrough for the oil and gas sector. LNG Canada, with a liquefaction plant and export facility to be located at Kitimat, B.C., is the first major LNG proposal to move ahead in the country. Once it begins operations in the middle of the next decade, the project will consume about two billion cubic feet (bcf) of natural gas per day. That’s significant, as western Canadian production now sits around 16.5 bcf per day. LNG Canada will mark the first major opportunity for natural gas producers in this country to access export markets outside of the United States, where domestic output is climbing. - Regina Leader-Post  


‘First of many’: $40B LNG Canada signals revival of mega projects — Geoffrey Morgan

The $40-billion LNG Canada project is already facing opposition from environmentalists in British Columbia, but the business community and First Nations supporting the project cheered its positive final investment decision on Tuesday. Royal Dutch Shell Plc. and joint-venture partners Petroliam Nasional Bhd., PetroChina Co. Ltd., Mitsubishi Corp. and Korea Gas Corp. announced they would fund the $40-billion LNG mega-project in Kitimat, B.C. on Tuesday with construction beginning immediately. The first phase of the project includes a $6.2-billion natural gas pipeline through northern British Columbia and an $18-billion liquefaction facility in Kitimat, B.C., where the natural gas will be super-cooled until it reaches a liquid state for transport to Asian markets. Wetselaar said global demand for LNG has grown 9% in the last year alone and the LNG the project will produce is half as emission-intensive as coal, a power source which Asian countries are trying to replace with LNG. - Regina Leader-Post  


Aspen oilsands project hearing cancelled after First Nation strikes deal with Imperial — Staff

The Alberta Energy Regulator says it’s no longer considering holding a public hearing for a new oilsands project after an Indigenous community reached a deal with the proponent, Imperial Oil. In a notice on its website, the AER says it doesn’t need to schedule a hearing on the 162,000-barrel-per-day Aspen project after the Fort McKay First Nation withdrew a request to participate. The regulator says the First Nation has indicated it would address project concerns directly with Imperial. AER says the panel for the Aspen project requested and received additional information from the company and decided there are no issues that need to be reviewed in a public proceeding without participants. Imperial CEO Rich Kruger has complained about how long the regulatory process has taken since the company first applied for approval in 2013. Aspen’s first phase would cost $2.4-billion and produce 75,000 barrels per day of bitumen from wells using steam and solvent technology. The company has not made a final investment decision to build it yet. - Edmonton Journal  


LNG Canada boosts gas producer confidence but does little for short-term pricing — Staff

The approval of Canada’s first LNG export terminal is expected to boost investor confidence in Western Canada’s natural gas sector. But the LNG Canada project’s ability to provide a new market for natural gas and thus support depressed prices won’t be seen until the facility is built sometime in the middle of the next decade, observers say. The announcement ensures Canada will be able to export domestic energy products to global markets at a fair price, said Chris Bloomer, CEO of the Canadian Energy Pipeline Association. Global natural gas demand is expected to increase 45% to 199 trillion cubic feet per day by 2040, according to the Canadian Association of Petroleum Producers, which welcomed news that Canada will be able to export to customers other than those in the United States. The five partners in LNG Canada say they’ve agreed to build the $40-billion project that includes a gas liquefaction plant in Kitimat on B.C.’s coast and a 670-kilometre pipeline delivering gas from the northeast corner of the province. - Calgary Herald


Carbon tax, sales tax breaks finally make B.C. LNG happen — Tom Fletcher

The B.C. government is adamant it will meet its ambitious greenhouse gas reduction targets while greatly expanding natural gas production to feed a new plant that will burn some of its gas to cool and liquefy the rest for shipment to Asia in tankers. Not only will the $40-billion LNG Canada project burn gas, it will greatly increase gas production and processing in northeast B.C. Asian sales will free the vast shale gas reserves now trapped in a North American market so oversupplied that the B.C. and Alberta gas spot price sometimes dips into negative territory, meaning producers must pay to ship it. LNG Canada is estimated to add another 3.4 megatonnes of greenhouse gas to B.C.’s annual emissions, now mostly coming from vehicles, building heat and traditional industries. That increase set off a testy exchange in the legislature Tuesday between B.C. Green Party leader Andrew Weaver and NDP Environment Minister George Heyman. The NDP government’s revised tax incentive package for the LNG industry, released in March, included a freeze on carbon tax increases that applied to all other carbon fuel use starting this spring. - Victoria News


United States

Returning Competition to the US Energy Market — Adam Brandon

Competition is the bedrock of the U.S. market economy. It fosters innovation, which leads to greater investment, which then, in turn, leads to more innovation. This cycle goes on and on and continually produces better products at more affordable prices for consumers across the country. And, as this cycle creates more consumers, it also creates more high-paying jobs for businesses and entrepreneurs. Competition alone turns the wheels of prosperity in the United States. Unfortunately, when it comes to electricity, among the most important resources for American families, we have operated under a monopoly structure that has stifled innovation for years. Public utility companies, with basically no competition to speak of, charge exorbitant prices that would be unacceptable on an open market where price competition would rein them in. This leaves families with the choice between paying these higher prices or be forced to simply not power their home. - Real Clear Energy   


Canada challenges US energy dominance with 'megaproject' one day after NAFTA deal — John Siciliano

With a major announcement by oil giant Shell on Tuesday, Canada has set itself up to become the U.S.'s biggest energy rival in supplying liquefied natural gas to Asia. Shell officials said LNG Canada, a massive multibillion dollar LNG export project in British Columbia, will compete directly with U.S. LNG terminals on the Gulf Coast by being able to beat U.S. companies on the price of shipping the fuel to customers in China, Japan, Malaysia, and South Korea. The announcement came less than 36 hours after the Trump administration announced it had reached a deal with Canada on NAFTA. Shell will control a 40% stake in the project. - Washington Examiner  



Australia a fringe player in next global LNG boom — Angela MacDonald-Smith

Shell's go-ahead this week for the $C40-billion ($43-billion) LNG Canada project is seen marking the start of a new era of LNG mega-projects, but this time round, Australia looks set to be a bit-player in the action. The final investment decision on LNG Canada in northwest British Columbia is the first greenfield export project worldwide to get the green light for construction in five years, with Wood Mackenzie pointing to Yamal LNG in northern Russia as the most recent one, in 2013. During the last wave, Australia had the starring role, with more than 61 tonnes a year of capacity sanctioned for construction in 2009-12, some 15% of the global total. The $200-billion-plus investment boom that those decisions triggered is now at its tail end, with only Inpex Corporation's $US40-billion Ichthys project and Shell's $US12-billion-plus floating Prelude venture yet to fully be commissioned and ship their first LNG. - Australian Financial Review  


Remember the energy crisis? It's coming back — Jennifer Hewett

Remember the energy crisis? The same one that triggered a prime ministerial implosion a little over a month ago. It's been temporarily pushed out of the political spotlight, mainly due to the spectacular financial fireworks regularly erupting at the Hayne royal commission. The Hayne fallout for the banks will continue to rock the industry and public perceptions, well beyond the fringe theatre of banking chief executives also being required to turn up to hearings in Canberra next week. But energy – in particular pricing – is soon going to come roaring back to compete as a political issue despite reassuring statements from the Coalition. When Malcolm Turnbull's leadership fell head-first into the political pitfalls of the national energy guarantee, for example, the Morrison government suggested its sole focus on "price, price, price" over emissions reduction would inevitably lead to lower household bills. Well at least lower than they would have been … ahem, over time, that is. - Australian Financial Review