Call me maybe

September 23, 2013

Production from Alberta’s oil sands stands at about 2 million barrels per day, with an expected rise to 3.7 million bbl/d. by 2021. The number of “call me maybe” decision makers continues to grow.

The oil sands areas in northern Alberta contain an estimated 1.84 trillion barrels (initial volume in place) of crude bitumen.  About 9 percent of this volume (168.7 billion barrels) is recoverable using current technology and is considered to be a proven reserve. Of the total 168.7 billion barrels of proven bitumen reserves, about 80 percent is considered recoverable by in-situ methods and 20 percent by surface mining methods.  Oil sands within 75 meters of the surface can be mined; whereas, oil sands below this threshold must be extracted using in-situ methods. 

The Canadian Natural Resources Minister noted “Despite difficulties related to new pipeline capacity, Canadian crude producers are unlikely to slow down production and will turn to rail to ensure their product reaches market.” The Alberta and federal government are actively seeking markets for bitumen. They are awaiting a number of “call me maybe” decision makers.

• President Obama. If completed, the Keystone XL pipeline would add 830,000 barrels per day of oil being transported into the Gulf of Mexico refineries, mainly from Canada. The State Department is reviewing and publishing some 1.5 million public comments on the report. Many of the comments center on the State Department’s assertion in the review that the pipeline would not lead to an increase in emissions linked to global warming because the oil will find its way to market one way or another even if Keystone XL was not built. President Obama has not been in a hurry to make a decision on Keystone XL, as the approval process is entering its 6th year.
• BC Premier Christie Clark. The proposed Northern Gateway pipeline would carry 525,000 barrels of oil per day from Edmonton to Kitimat and from there via ship to export markets in Asia. Clark was quoted in July 2012 as saying no to the proposed pipeline, unless Alberta entered negotiations with BC on revenue sharing. “If Alberta is not willing to even sit down and talk, then it stops here,” she said. This is in response to the disproportionate risk that BC would have to take on with this pipeline. Since the recent BC election Premier Clark and Premier Redford have met and the tone of the news conference was conciliatory on the part of both Premiers.
• BC Premier Christie Clark. Kinder Morgan proposes increasing capacity of its Trans-mountain pipeline from Edmonton to Vancouver from 300,000 to 890,000 barrels per day (bpd). The opposition NDP stated they opposed the project during the recent provincial election, in spite of the company not yet having made a formal application to build it. That position many believe cost the NDP the election when the party was perceived as being too anti-development.
• BC Premier Christie Clark. Nexen proposed to CN Rail that the railway carry bitumen to Prince Rupert for export. CN stated that it will consider concrete crude-by-rail proposals, including any specific project to move crude to Prince Rupert. However, there is no infrastructure in place at Prince Rupert to transfer crude oil from train tank cars to vessels. The BC Government has not voiced an opinion on such a proposal.
• Quebec Premier Pauline Marois. The Energy East Pipeline project would feature a 4,500-kilometre pipeline to carry 1.1-million barrels of crude oil per day from Alberta and Saskatchewan to refineries in Eastern Canada. The existing Trans-Canada mainline gas pipeline would be converted to carry crude and a new leg would be constructed through Quebec to New Brunswick. Premier Marios has not opposed or supported the project.
• Manitoba Premier Greg Selinger. OmniTRAX, Inc. wants to ship 330,000 barrels of crude oil from the Port of Churchill in a test in October. Hudson Bay Railway and Hudson Bay Port Company, owned by OmniTRAX, Inc.held a community meeting and presentation on moving unrefined petroleum products through the Port of Churchill in August. Premier Greg Selinger said the fallout from the Lac-Magantic disaster will shine a brighter light on Omnitrax’s safety and environmental plans. “That puts the bar higher for them to demonstrate they’ll do it responsibly and safely,” said Selinger. The province has told Omnitrax it must lay out a plan to ensure towns along the rail line won’t be at risk, and that spills or derailments won’t damage the environment or Hudson Bay.
• First Nations leaders. Prime Minister’s Office met recently with First Nations representatives, asking what Ottawa could do to address their concerns. The meeting on Sept. 23 is a followup. Representatives from the B.C. Assembly of First Nations and Coastal First Nations are also invited.

Meanwhile a parade of cabinet ministers and senior bureaucrats will head to British Columbia starting this month as part of a major push to mollify opponents of building oil pipelines to the West Coast. Prime Minister Stephen Harper is signalling he intends to make progress on proposals to connect Alberta’s oilsands with ports in British Columbia and the lucrative Asian markets beyond. The new initiative is in large part a response to a report from the prime minister’s special pipelines representative in British Columbia. Douglas Eyford told Harper last month that negotiations with First Nations — especially on Enbridge’s proposed Northern Gateway — are a mess.

 

 

 

 

Commentary

The inexorable rise in oil sands production and the rail disaster at Lac Magnetic have increased the urgency of the federal government to find a market for Canada’s #1 export commodity. It hopes to convert a few “call me maybes” to “OK to proceed”.

In the case of First Nations that do not have self-government, this may be an opportunity to spur the federal government into settling outstanding claims and putting in place self-government arrangements.

Sources

• a)http://www.energy.alberta.ca/OilSands/791.asp



• b)http://business.financialpost.com/2013/09/23/cn-ottawa-eyeing-oil-by-rail-to-prince-rupert/?__lsa=b427-43f1



• c)http://en.wikipedia.org/wiki/Enbridge_Northern_Gateway_Pipelines



• d)http://www.transcanada.com/6246.html



• e)http://www.winnipegfreepress.com/business/bumpy-ride-for-omnitrax-plan-219526291.html



• f)http://www.cbc.ca/news/politics/harper-cabinet-readies-major-b-c-pipelines-push-1.1704476