Author: Markham Hislop

(Video) Alberta fugitive methane emission regulations: Prescriptive, carbon levy, or let industry lead?

Posted by | Oct 12, 2017 | |

First priority is to understand how much methane is actually leaking from Alberta oil/gas operations – Read Both the Alberta and Canadian governments want fugitive methane emissions reduced 45 per cent by 2025. But how best to achieve that goal isn’t clear. Industry watchdogs are pushing prescriptive regulations that producers fear will inflate compliance costs and inhibit adoption of better technologies. No one is even sure just how much methane is leaking from wells, pipes, and facilities. Containing methane emissions is important because they are a potent greenhouse gas, 25 times more significant than carbon dioxide over a 100-year period. The Alberta government says that 2014 methane emissions from oil and gas were 31.4 megatonnes of CO2 equivalents – 48% from direct venting or venting from equipment, 46% from fugitive emissions or leaks, and 6% from flaring or other sources. Kent Fellows is an energy economist with the School of Public Policy at the University of Calgary. He says that measuring fugitive methane emissions is very difficult. “For other greenhouse gas emissions – non-fugitive emissions, combustion emissions – we’ve got a pretty good sense of ratio between how much fuel is burned and what the greenhouse gas emissions of that are going to be,” he said in an interview. “On the fugitive emissions side, it’s much harder to figure out exactly what the emissions look like. There are a number of...

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Energy East pipeline: Risky business gamble or Liberal regulatory, political machinations?

Posted by | Oct 10, 2017 | |

TransCanada blames “regulatory uncertainty” for Energy East withdrawal, evidence thus far supports that view Someone is lying about why the Energy East pipeline project was cancelled. Either it’s TransCanada, which blamed the “substantial uncertainty around the scope, timing and cost” of the federal review. Or it’s Prime Minister Justin Trudeau, who on Saturday penned a Facebook note blaming “market forces” for the $15 billion project’s death and vigorously denied his government’s energy regulatory reforms were responsible.  In yesterday’s column, I demonstrated that TransCanada had customers committed to long-term – likely 20-year – contracts for the 1.1 million b/d of crude oil capacity of the pipeline. Furthermore, that those customers were on the hook to pay the Energy East tolls regardless of the price of oil or their own profitability. Rather than a failing business case due to current low oil prices, the market forces alluded to by the Prime Minister, TransCanada probably had a good business case (though, to be fair, industry sources do say Energy East economics were not as robust as some other proposals). But on Monday, respected energy economist Andrew Leach published an op-ed in The Globe and Mail that provided a hypothetical alternative for the Calgary-based pipeline giant’s decision. Leach’s argument is that President Donald Trump basically killed Energy East when he approved Keystone XL (in late January), TransCanada’s controversial and long-delayed 890,000 b/d pipeline...

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Is Prime Minister Trudeau lying about why Energy East pipeline was cancelled?

Posted by | Oct 9, 2017 | |

All 1.1 million b/d of Energy East capacity was legally committed to by oil producers for 20 years – that is the business case Justin Trudeau did something unusual Saturday, speaking directly to Canadians about a contentious and current political issue – TransCanada’s decision to cancel it’s $12.4 billion Energy East pipeline project – via a Facebook note, without the filter of the news media. Unfortunately for voters, much of what he wrote about the company’s decision and his government’s regulatory process was egregiously disingenuous. Two comments stand out. The first is arguing that the Calgary-based pipeline giant backed out of Energy East, swallowing a $1 billion charge spent over the past four years, solely because oil industry economics have changed. “Energy East was conceived at a time when the global supply of crude was relatively tight, and practical alternatives for shipping Canadian heavy oil to global markets were few,” he said, adding that since then prices have plummeted and “other pipelines are now in the works. TransCanada is a private company. Its directors are entitled to make decisions for their business based on market forces.” The Prime Minister doesn’t understand Pipeline Economics 101. As distinguished economist Robert Mansell explained in my Thursday column, pipeline companies don’t decide to build (or not build) infrastructure intended to last 30 to 50 years based upon the price of oil today, next...

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Energy East critics in Eastern Canada need lesson in pipeline economics

Posted by | Oct 7, 2017 | |

You can always find a point in time where conditions are such that if you start the project that day, it wouldn’t be economic. – energy economist Robert Mansell The number of media pundits trashing the Energy East project as uneconomic from the outset is amusing as hell. None of them is an economist. Nor did they ask an economist their opinion about the pipeline’s viability. Yet, their uninformed opinions will sway many readers in Eastern Canada, and no doubt a few in Alberta as well. They shouldn’t. For instance, here’s Alan Freeman, a former business journalist and communications flack for the Canadian government, now an Honorary Senior Fellow at the University of Ottawa’s Graduate School of Public and International Affairs, bloviating about Energy East on the iPolitics site: The Energy East pipeline was never a Plan B project. It was a Plan C project — and it was always a stretch. Its wonky economics were only going to make sense if oil stayed at $100 or more a barrel, and if every other project to expand pipeline capacity — Keystone XL, Northern Gateway, Kinder Morgan — failed. Hundred dollar oil a necessity? Every other pipeline project must fail? Says who? That’s not a frivolous question. We journalists aren’t experts, we interview experts. So where is Freeman’s expert? Where is the on-the-record interview with at least one energy economist who says...

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Why did TransCanada cancel $12 billion Energy East pipeline project?

Posted by | Oct 6, 2017 | |

Reasons include Canadian regulatory uncertainty, changed economics, opposition in Quebec and from First Nations Canadians outside the Wildrose Province may be shocked to learn just how angry Albertans are about TransCanada’s decision to cancel the Energy East pipeline project. Our Alberta readers are fuming – and they’re not shy about telling me why on social media or by email. They blame Justin Trudeau and the Liberals or Rachel Notley and the Alberta NDP or Quebec or environmentalists and First Nations – there are plenty of scapegoats to go around. So, why did TransCanada axe Energy East after spending $1 billion to this point? The short answer is, we don’t know for certain. TransCanada is keeping mum, citing “changed circumstances,” which most observers interpret to mean the recent decision by the National Energy Board to include assessments of upstream and downstream greenhouse gas emissions in the project’s environmental review, but could mean any number of things. A great deal has changed since the company formally launched Energy East in 2013: Oil prices plummeted, significantly lowering Alberta oil sands output projections. Alberta oil sands output forecasts by the Canadian Association of Petroleum Producers show that in 2014, Energy East’s 1.1 million b/d of capacity would be needed by 2025. But the much lower 2017 forecast suggests Energy East isn’t required until after 2030. Several economists, including influential Andrew Leach of the University of...

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