McCarthy cartoon in Washington Post, 1954
Alberta comes to aid of ‘industry in crisis’ with first associate minister for natural gas, Some believe the challenges facing small gas producers are so intense that many will collapse before the end of the year by Geoffrey Morgan, June 4, 2019, Calgary Herald
Alberta’s battered natural gas producers, languishing in the shadows of the oilsands, can now take their grievances to Dale Nally — and they have plenty to complain about. [Where can harmed landowners go? Nowhere, except if you have hundreds of thousands of dollars, being defamed by the Supreme Court of Canada.]
Nally is Alberta’s first-ever Associate Minister of Natural Gas, working alongside Alberta Energy Minister Sonya Savage, in Premier Jason Kenney’s new government. He is tasked with helping the beleaguered energy sub-sector recover after being stunted by persistently low prices, scrapped export projects and a lack of market access — issues that have been overlooked as larger industry players and governments have fixated on resolving the oilsands’ pipeline issues.
“They absolutely have felt like the second cousins to Big Oil. And here’s the reality, if we can get natural gas to global markets, it’s a game changer for Alberta,” said Nally. [And will totally f*ck Canadians, letting them freeze in winter like LNG is making Australians melt in the heat]
To gas producers, the appointment is a welcome signal the government grasps the extent of their struggles, which have been exacerbated by volatile prices and resulted in many bankruptcies and, in some cases, the liability for thousands of wells and facilities being transferred to the province’s Orphan Well Association for clean up. [blaming prices on the endless bankruptcies is propaganda, companies have been bankrupting themselves in Canada, and elsewhere, to walk from clean up for decades, even when prices where high]
“I think it’s a very good idea. I also think it shows the recognition and understanding that this industry is in crisis,” said Tristan Goodman, president of the Explorers and Producers Association of Canada, which represents companies that produce 60 per cent of the country’s gas.
On the difficulty scale of 1 to 10, it’s probably a 12
For Nally, the most pressing — and contentious — file is a resolution on the simmering dispute between TC Energy Corp. (formerly TransCanada) and producers over a 2017 policy change on the critically important Nova pipeline system, which moves the majority of gas in Western Canada to export points.
“I anticipate a lot of friction. On the difficulty scale of 1 to 10, it’s probably a 12. If we’re going to do this, it’s going to have to be a collaborative approach. Everyone is going to have to be prepared to move a little bit,” Nally said.
Many gas producers say TC Energy’s policy change causes gas prices in Alberta to collapse whenever there’s maintenance on the pipeline system because they have trouble accessing storage and are forced to sell the gas they can’t store at heavily discounted prices.
TC Energy kicked off a new round of maintenance on its Nova gas transmission network last week and since then natural gas prices within Alberta have fallen dramatically.
“TC Energy regularly engages with government to provide updates on our projects and operations. We will continue to work with our shippers on solutions to help strengthen the overall natural gas industry,” company spokeswoman Suzanne Wilton said in an email.
AECO natural gas prices fell a jaw-dropping 84 per cent in just a week in late May when TC Energy began conducting maintenance on the Nova system, falling from $1.70 per thousand cubic feet on May 23 to just 28 cents per mcf a week later. On Monday, AECO averaged 90 cents per mcf, which is $1.53 per mcf lower than the Henry Hub benchmark price.
A 2018 report commissioned by the previous NDP government called “Roadmap to Recover,” written by former gas and pipeline executives Hal Kvisle, Brenda Kenny and Terrance Kutryk, recommends the government push TC Energy “to reverse its July 2017 restriction protocol during maintenance periods.”
Nally wouldn’t commit to pushing TC Energy to reverse that policy.
“If we’re going to move forward on this, it’s got to be collaboratively. We don’t know the direction we’re going,” he said.
Still, producers believe alleviating the volatility in AECO prices should be a pressing short-term priority for the government.
“The issue I see is the volatility in that Canadian prices that get published every day is an additional vote of non-confidence for investing in Canada. Like, one of your commodities in this industry just bounces from sometimes negative to recently as high as $2.50 (per million cubic feet),” said Andy Mah, president and CEO of Advantage Oil and Gas Ltd., which produces from the Montney shale gas formation.
“It can, in a day or two, flip flop,” Mah said.
If the industry’s fortunes can change — either with new liquefied natural gas (LNG) exports, or additional pipeline access to new markets or petrochemical demand — the gas sector could once again become a critical economic growth engine in Alberta.
“If you think about it, it’s almost like we’ve got an equal amount of gas versus oilsands. In the old days, you’d talk about the oilsands being an elephant in terms of size — well, the gas is as big or bigger,” Mah said.
Nally said “there’s no silver bullet” to fix the province’s gas sector but said he’s committed to implementing many of the recommendations in the report by Kvisle, Kenny and Kutryk.
In fact, he said Kenney instructed him to read the “Roadmap to Recovery” report commissioned by the previous government before he was sworn in as associate minister. He said he’s now read it three times.
The newly minted ministry also takes some pressure off Alberta Energy Minister Sonya Savage, who has been focused on oil pipelines and regulatory issues. In an interview, she said she has “piles and piles of briefing binders” to read through on matters related to the oil side of the business.
“In the last few years, the issue of crude oil pipelines has been so prominent in the media and in public dialogue that we’ve forgotten about gas,” Savage said.
There is some overlap between the two roles. While Nally is overseeing the gas sector, Savage remains responsible for the ongoing commitments through the Petrochemical Diversification Program, also established under former premier Rachel Notley.
The program provides royalty credits to projects that would process Alberta gas into plastics such as polypropylene, ethylene or products like acrylic acid. Nally said the new government would honour existing agreements under the program, and may eventually announce new credits under the program to encourage the sector’s continued growth.
While producers believe the petrochemical program will provide some support in the long-run, they believe Nally can take measures in the short- to medium-term to address challenges the sector is facing.
Some within the gas industry believe the challenges facing small gas producers are so intense that many will collapse before the end of the year. Privately held junior Trident Exploration Corp., a Calgary-based gas producer, blamed a combination of low prices and high tax and regulatory costs [cowardly cop out] for its decision to cease operating on April 30, when it foisted thousands of orphan wells on the province’s regulator.
“The combination of extremely low natural gas prices and high surface lease and property tax [What!? Those are way less than what companies pay big propaganda, including lying machine extraordinaire CAPP! if companies quit paying so much to con the public via CAPP and synergy groups, they could easily turn big profits and clean up their toxic messes] payments (totalling $0.72 / GJ) has exhausted the liquidity of the company,” the company stated in a release, announcing its 4,700 wells would be transferred to the Alberta Energy Regulator.
More companies in Trident’s position are expected to follow suit in the coming months.
“On the industry’s current course, I expect a wave of corporate bankruptcies this year, and with them, obligations will go unfulfilled and hundreds of millions of dollars of abandonment liability will hit the orphan well fund,” Jupiter Resources president and CEO Simon Berghazzi said on his company’s first quarter earnings call earlier this month.
“The Alberta natural gas sector is atrophying to a point where we simply will not have the capacity to bounce back, even if market conditions recover,” Berghazzi said.
‘Complacent approach doesn’t work’: UCP energy war room set for Calgary by Emma Graney, June 4, 2019, Calgary Herald
Calgary will play home to the government’s planned oil industry war room, and Energy Minister Sonya Savage promises it’s going to start its work “very soon.”
Establishing a $30-million energy war room to “counter the lies” about the industry was a key plank in the UCP election platform.
Savage said Tuesday morning on her way into cabinet the group will be small, tight and compact, in keeping with her government’s “measured restraint” on spending.
“It’s got to be integrated in with the larger fight-back strategy. That includes things like the litigation fund, the public inquiry,” she said.
“We’re trying to knit all those pieces together to make sure we get it right.”
As for why it will be in Calgary, Savage said, “that’s where the industry is and that’s where the punchy communication experts are.”
Part of a larger strategy
Savage said the war room was the policy that most resonated with her constituents when she knocked on doors during the campaign.
“I think that’s because they saw an approach before that was way too complacent, and that approach had been going on for 10 years,” she said.
“We knew about the tar sands campaign starting back in 2008, and the complacent approach doesn’t work.”
Premier Jason Kenney said during the election the $30-million price tag was a fair one.
“I think it’s the best investment we could possibly make in defending an industry that is the source of about one-third of the jobs in this province, directly and indirectly,” Kenney said at the time.
Kenney’s planned oil strategy includes boycotting banks that won’t co-operate with oilsands financing, demanding the energy industry increase its own advocacy and education efforts, and establishing a $10-million litigation fund “to support pro-development First Nations in defending their right to be consulted on major energy projects.”
He also wants to strip Canadian environmental think-tank the Pembina Institute of provincial funding and launch a public inquiry into what he believes is the large-scale foreign funding of anti-oilsands campaigns.
Toxic tailings do not belong in the Athabasca River by David Schindler and Maude Barlow, June 4, 2019, The Globe and Mail
David Schindler is Professor Emeritus of Ecology, University of Alberta and the first recipient of the Stockholm Water Prize (1991). Maude Barlow is honorary chairperson of the Council of Canadians and author of the upcoming book Whose Water is it Anyway? Taking Water Protection into Public Hands.
Releasing more polluted mine tailings into the Athabasca River may soon become a lot easier for oil sands companies. According to The Globe, the federal and Alberta governments are working with companies on new regulations to authorize the discharge of treated effluent.
This follows on recent revelations from a leaked Alberta Energy Regulator presentation that in a “worst-case scenario” total liabilities for oil and gas operations could be as much as $260-billion. Taxpayers have purchased a used pipeline from Kinder Morgan for $4.5-billion so the industry can ship its product to unspecified markets, which we are assured will be profitable. The industry is also demanding weakened review procedures to fast track new development, despite the oil-sands expansion likely making it impossible for Canada to meet international commitments for greenhouse gas reductions. Are there no limits to the concessions that we must make to facilitate this ill-conceived industry?
In the 1960s when oil (then called tar) sands were in their infancy, regulators approved the use of tailings ponds to dispose of fluid fine tailings (FFT), swallowing the industry assurances that pollutants would quickly settle and Mother Nature would neutralize any toxins. Unfortunately, the assurances were wrong, so bigger tailings ponds became necessary. The industry was allowed to expand without solving the FFT dilemma, so soon the toxic ponds resembled a moderate-size lake district in extent. Simply put, pollutants did not disappear because they were associated with tiny clay particles that required hundreds of years to settle, and some contaminants were too toxic to be decomposed by normal biological processes.
In 2008, public outrage over the burgeoning tailings ponds caused the Alberta government to pass Directive 074, designed to eliminate the discharge of FFT. Unfortunately, compliance proved too difficult for the industry. After grandfathering release of FFT for several years, regulators in 2015 replaced 074 with Directive 085, which once again allows the release of FFT into toxic ponds.
Several new mines were approved under the promise that FFT could be covered with fresh water and turned into delightful productive lakes. Environmental review panels approved more than 30 such “end pit lakes,” despite the fact that only one large-scale experiment was undertaken to test the end-pit-to-recreational-lake fantasy. After seven years, results have shown little promise. In 2018, the bad news started to leak out, that after a half-century of operation, oil-sands companies and regulators still don’t seem to know how to deal with FFT.
Meanwhile, more than one trillion litres of FFT have been allowed to accumulate in tailings ponds, some of near great-lake magnitude.
The latest desperate proposal would allow toxic tailings to be slowly discharged into the Athabasca River, using the age-old industry trick that “dilution is the solution to pollution.” But the river downstream of the oil sands is already polluted enough to cause some concerns.
A wide variety of toxic metals and organic compounds are already being released to the river and the air, confirmed by an upgraded monitoring program run co-operatively by provincial and federal agencies. Fish and the eggs of fish-eating birds contain mercury high enough to require consumption restrictions for humans who rely on them for food. Exposure of fish embryos to even low levels of bitumen in water causes increased mortality and a high rate of malformations in surviving embryos. Detectable concentrations of organic compounds, some toxic or carcinogenic, are found in water and sediments. Both traditional knowledge and scientific studies have shown that the high rates of malformations persist into adult fish, with incidences similar to those found near Superfund sites (areas in the United States that require long-term cleanup because of the most hazardous pollution).
These were among the findings that prompted UNESCO to consider downgrading the status of Wood Buffalo National Park at the mouths of the Athabasca and Slave Rivers from “heritage” status to the list of “world heritage in danger.”
Indigenous people downstream of the oil sands have largely ceased eating fish or drinking water from the Athabasca River. With the proposed increased discharge of toxins, the area affected could expand farther down the system to the Slave and Mackenzie Rivers and adjacent communities. At best, the situation would be a violation of the terms of Treaty 8, which guarantees the livelihood of the area’s Indigenous peoples, a clear violation of human rights. The plan to dump toxic tailings into the river should be scrapped. Canadians have been catering to the oil sands long enough.
one of the comments:
Apart from his own peer-reviewed scientific research, it’s worth noting that one of the links provided here by Dr. Schindler is from that well-known hotbed of radical environmentalism, Oil Sands Magazine. [Because I know irony is lost on climate change deniers, it’s an industry-focused trade news site.]
It’s a very useful, only moderately technical discussion of the problems of fine tailings and why the industry and provincial government have largely given up and kicked the problem down the road for future generation to deal with.