Top 10
Top 10: Redford Rallies
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There's a new premier in town, and she's going to have her hands full as Europe proposes regulations that would deem the oilsands a dirty fuel source. We've got these stories and more in our regular roundup of the month's top Alberta energy stories.
1. Redford rallies
Candidate comes from behind to become new Alberta premier
Alison Redford edged out her competitors with 51 per cent of the vote to become leader of the Progressive Conservatives and Alberta's new premier. Neither Redford nor fellow contenders Gary Mar and Doug Horner were able to take a majority in the first round of voting, which meant third-place finisher Horner was dropped from the ballot and the second choice of his voters tallied. On the strength of those votes, Redford squeezed ahead of frontrunner Mar.
Why it matters: It remains to be seen how Redford's new cabinet will handle Alberta's energy industry, but a shift in tone seems likely. Ron Liepert is moving from energy to finance, while former finance minister and leadership candidate Ted Morton is taking over the energy portfolio. The environment department, now led by Diana McQueen, has been renamed the ministry of environment and water, suggesting a renewed emphasis on provincial water issues.
2. And stay out
Proposed fuel guidelines may keep oilsands out of Europe
The European Commission has recommended that the oilsands be ranked as a higher polluter than other oil sources when the European Union finalizes its fuel-quality directive. According to the proposed guidelines, the oilsands would be given a greenhouse gas value of 107 grams per megajoule of fuel, compared to 87.5 grams for conventional crude oil.
Why it matters: The federal government has come out swinging against the proposed directive, with Natural Resources Minister Joe Oliver saying the government would consider taking the matter to the World Trade Organization. That might seem like a severe response considering the European Union doesn't currently import much Canadian oil, but the proposal is a major blow to the international reputation of the oilsands. It could also serve as a policy model for other countries if it passes into law.
3. Snare the flare
Power plant to run on flared gas from oilfield
Natural gas flared from a Husky Energy Inc. oil battery near Peace River, Alta., will soon become fuel for a three-megawatt plant owned and operated by Genalta Power Inc. The $9-million plant will help power the site, with any additional electricity sold back into the provincial power grid. The project should be completed by June 2012.
Why it matters: Because the area lacks pipelines for shipping natural gas to market, Husky says it is forced to flare between 750,000 and one million cubic feet of gas per day—and it's not alone. According to the Energy Resources Conservation Board, 21 billion cubic feet of gas was flared in 2009 in Alberta. Genalta's project offers an economical and conservation-minded alternative to companies looking to tap into that wasted resource.
4. Keeping connected
New utility rules help vulnerable Albertans avoid disconnection
Just in time for winter, the Alberta Utilities Commission has announced new procedures aimed at protecting customers from utility disconnection. Utility providers will be expected to make multiple attempts to reach customers via phone and in person before disconnecting the gas. In addition, processes will be put in place to help identify vulnerable customers—such as those suffering from physical or mental difficulties—who may need help from government agencies.
Why it matters: The new procedures came out of a review prompted by the death of John Davis in 2006. The man froze to death in his own apartment, despite the fact that his mother had paid his overdue utility bill and reconnection fee. The new regulations now include procedures that make it easier for a friend or family member to assist someone facing disconnection.
5. Out on the Mainline
Companies argue over tolls on half-empty gas pipeline
A fight is brewing between natural gas companies and TransCanada Corporation over its Mainline, with the National Energy Board (NEB) serving as referee. Weak gas prices and declining production have left the pipeline half-empty in recent times, prompting TransCanada to raise tolls by 50 per cent. Now the company's customers are fighting back and demanding the NEB look at marking down the pipeline's value and possibly even shutting down sections, either temporarily or permanently.
Why it matters: TransCanada has countered by offering to decrease Mainline tolls and shift the cost to its pipeline networks in Ontario and Alberta. Still, the solution is of little comfort to Albertan companies, which are suggesting the change could increase the cost of transporting gas in Alberta by 40 per cent. With gas prices still low and expected to remain so in the near future, any increase in costs will be deeply felt by an already struggling industry.
6. Oil takes a tumble
Prices unsettled by economic uncertainty
Rattled by the unstable European and American economies, oil prices took a sudden dive to below $78 per barrel in early October. Prices have since climbed back up to around $86 per barrel, but uncertainty remains. Speaking in the Calgary Herald, John Stephenson, an analyst with First Asset Fund Inc., says, "It's kind of ugly out there and until we see the bottom out of Europe, which probably isn't any time yet, you're probably going to see oil maybe trade to the low $70s, maybe to the $60s."
Why it matters: Any prolonged decline in oil prices could play havoc with the province's finances. That's because Alberta's budget for the 2011-12 fiscal period forecasted oil prices would average $89.40. If prices stay below that mark, it could lead to belt-tightening measures to compensate for the drop in resource revenues.
7. Holding their liquor
Federal program encourages pulp mills to harness black liquor
The Canadian government has provided a boost to the ongoing greening of the country's forestry industry with $41.9 million in funding. As part of the government's pulp and paper green transformation program, 15 projects at mills across the country were chosen to receive support.
Why it matters: Among the recipients was the West Fraser Mills plant in Slave Lake, Alta., which will receive $5.1 million in order to help generate energy from black liquor, one of the waste byproducts of the pulping process. The substance has long been used as a fuel source in the pulp and paper industry, but new subsidies like this one are encouraging mills to upgrade to more energy-efficient methods.
8. Taking the first train out of Oklahoma
Rail offers new alternative to congested oil hub
Cushing, Okla., may be overrun with oil, but relief is on the way for the major supply hub. Several rail projects are in the works that will divert shale oil heading to the region, including North Dakota projects like the 100,000-barrel-per-day loading terminal near Dickinson that is expected to come online in November. Enbridge Inc. is also currently looking at building a rail terminal at Cushing to ship oil to the Gulf Coast and expects to make a decision on the project by year-end.
Why it matters: Canada's oil industry has long been frustrated by the supply glut at Cushing, which has been driving down prices for North American crude. Any plan to relieve congestion at the oil hub is likely to benefit Canadian producers by decreasing storage supplies and therefore bringing up prices.
9. Speak up and be heard
Thousands ready to participate in Northern Gateway pipeline hearings
A record-breaking 4,000 people and groups have signed up to speak at hearings on Enbridge Inc.'s proposed Northern Gateway pipeline from Alberta to Kitimat, B.C., vastly exceeding the previous record of 558 speakers at the Mackenzie Valley pipeline review panel. Each speaker will have 10 minutes to present his or her views on the project. Hearings are expected to begin next January.
Why it matters: "This is really just a wall of public opposition," says Jolan Bailey, Canadian outreach coordinator for ForestEthics. "It's people everywhere from Kitimat to Kalamazoo in Michigan." The environmental group helped promote the hearings to those interested in speaking out against the project, suggesting the regulatory review promises to be a lengthy and contentious process. The pipeline is a key part of Alberta's plan to reach Asian markets, but has faced staunch environmental criticism over fears of pipeline spills.
10. Chinese takeout
Another Canadian oil company sold to Chinese investors
China continues to build its presence in Canada's oilpatch with Sinopec Corp.'s $2.2-billion takeover of Calgary-based Daylight Energy Ltd. It's not the first major Chinese investment of the year, either—CNOOC Limited bought OPTI Canada Inc. earlier in 2011 for $2.1 billion.
Why it matters: Mid-sized companies like OPTI and Daylight make tempting targets for Chinese investors because they offer affordable entry points into the Canadian energy industry. And with the push now on to build pipelines to the west coast in order to export oil and gas to Asia, it's likely Chinese interest in securing petroleum assets on Canadian soil will remain high for the near future.
