Top 10
Top 10: Guilty as charged
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- Category: Top 10
1. GUILTY AS CHARGED
Judge finds Syncrude guilty in duck case
An Alberta judge has found Syncrude Canada guilty on charges stemming from the deaths of 1,600 ducks that landed on a tailings pond. Syncrude faces a maximum fine of $500,000 for a provincial charge and $300,000 for a federal charge in the case. The company was supposed to have deterrents in place that would keep the ducks from landing on its tailing pond. Those were not in place, however.
Alberta provincial court Judge Ken Tjosvold also noted that Syncrude had cut back its deterrents and staffing for bird protection. “Syncrude did not deploy the deterrents early enough or quickly enough,” the judge said. The ducks were killed in April 2008, when a snowstorm delayed deployment of bird-deterring sound cannons. The judge will decide on Aug. 20 whether to convict the company on both charges or just one, and will deliver his sentence then.
WHY IT MATTERS: Pictures of the oil-soaked ducks heightened and added to international concern about the environmental impacts of developing Alberta’s oilsands.
2. BP FALLOUT
Gulf of Mexico spill may affect sector’s social licence to operate
Fallout from BP’s massive Gulf of Mexico oil spill will be felt industry-wide as the North American oil and gas sector’s social licence to operate has been compromised, says an industry veteran. “I believe the industry is, because of the incident in the Gulf…, rapidly losing what they call a ‘social licence’ to operate,” says David Yager, chief executive officer of HSE Integrated, Canada’s largest national industrial safety services company with operations across the continent. He believes the incident will result in stricter safety and environmental regulations, especially in the United States. And with the industry in Canada already highly regulated, the playing field with the U.S. will level out as companies there will be forced to incur increased costs of compliance as a result of new government measures, Yager told the Petroleum Services Association of Canada’s investment symposium in late June.
WHY IT MATTERS: The April 20 blowout of the BP-operated well killed 11 people and sank the $560-million Deepwater Horizon drilling rig, and the widening spill is hurting coastal economies, harming wildlife and endangering fragile wetlands.
3. MONEY MAKEOVER
Alberta oilsands royalties overtake gas revenue
With natural gas prices in the doldrums and limited gas drilling, oilsands royalties surpassed gas last year as Alberta’s largest source of non-renewable resource revenue. The higher royalty payments contributed to a significantly lower budget deficit of $1 billion, down from the forecast $4.7-billion shortfall for the 2009–2010 fiscal year. Synthetic crude oil and bitumen contributed $3.16 billion to government coffers — more than triple the $1.01 billion budgeted for — the government said. Due mainly to higher oil prices, oilsands royalties also accounted for just under one-half of total non-renewable resource revenue of $6.77 billion.
WHY IT MATTERS: Oil and gas royalties comprise a significant chunk of government revenue, and pay for education and health expenses. The growing exploitation of Alberta’s oilsands means it’ll play an even bigger role in funding the province’s programs and services.
4. WHEN THE WIND BLOWS
Suncor to build wind project near Drumheller
Suncor Energy has received regulatory approval from the Alberta Utilities Commission to proceed with the development of its largest operated wind project to date. The proposed 88-megawatt Wintering Hills project, located about 20 kilometres southeast of Drumheller, will consist of up to 55 1.6-megawatt turbines located on 16,000 acres of privately owned land.
WHY IT MATTERS: At peak operation, the Wintering Hills project is expected to generate enough clean electricity to power approximately 35,000 Alberta homes, displacing the equivalent of about 200,000 tonnes of carbon dioxide per year.
5. POWER PLAY
Coal-fired phase-out could be boon to natural gas industry
The federal government plans to phase out coal-fired power plants in favour of cleaner alternatives in the next several years, a move that should prove beneficial to the natural gas industry as it seeks additional demand for growing supplies. Steve Snyder, president and chief executive officer of TransAlta, responded to the announcement by saying the company supports the need to lower emissions from Canada’s power sector. “We see opportunities to replace our oldest coal plants with a mix of natural gas generation, clean coal technology and renewable energy,” he said.
WHY IT MATTERS: Coal plants are responsible for 13 per cent of the country’s greenhouse gas output. The federal government believes the gradual phase-out of traditional coal-fired electricity generation will have a “significant impact” on reducing emissions.
6. LONG, HOT SUMMER
Summer drilling expect to warm up
Thanks to relatively high oil prices, an improved royalty regime in Alberta and more favourable capital markets for producers, Canada’s drilling and service rig contractors are anticipating a busier summer than last year. A forecast by the Canadian Association of Oilwell Drilling Contractors calls for a doubling of activity between July 1 and Sept. 30 — 400 rigs at work — compared to the 200 rigs active it had predicted in an earlier estimate.
WHY IT MATTERS: Higher drilling rates leads to greater employment levels. But if the estimate for activity levels proves accurate, personnel will definitely be an issue and the industry may be “maxed out” for rig hands.
7. LOOM AND GLOOM
Oilpatch will struggle to find employees this decade
Looming workforce shortages are expected across the petroleum industry, says a new report from the Petroleum Human Resources Council of Canada. Right now the industry is still in recovery mode and some sectors may experience even more layoffs, but employment growth is expected to resume in 2011. Shortages could return as early as 2012 as new jobs are created and existing workers retire. According to the report, approximately 105,000 workers will be needed over the next 10 years to support new oil and gas activity and replace retiring workers. Of those, approximately 65,000 will be in the industry’s core occupations, such as engineers, trades, operators and field workers. The study also recommended attracting more women, immigrants, youth and aboriginal people to the sector.
WHY IT MATTERS: Workforce shortages would limit the industry’s future growth.
8. ATOMIC AWAKENING?
Economics probably don’t support nuclear power in oilsands
Alberta’s deputy premier and Suncor’s chief executive agreed at a recent conference that nuclear power probably isn’t a good fit for oilsands projects requiring steam to soften the molasses-like bitumen. Boilers for those projects currently consume enormous volumes of natural gas. “It’s very difficult to move this supersaturated steam over more than about 10 to 15 kilometres,” said Suncor president Rick George, alluding to the remoteness of oilsands projects. But regardless of its role in the oilsands, George said he’s “personally…in favour of nuclear. I do understand [there are] issues around handling of waste and how important that is to the overall equation.” A few proposals have been floated in recent years to build nuclear plants in Alberta and Saskatchewan, but none have proceeded. “I can tell you this: the Alberta government isn’t going to subsidize it,” said deputy premier Doug Horner.
WHY IT MATTERS: Nuclear proponents say it is a clean energy source that produces low greenhouse gas emissions. George argues it should be part of an overall energy strategy for Canada.
9. CONTRIBUTION TIME
IEA study cites oilsands role in North American crude oil increase
Strong growth from Canada’s oilsands will offset large crude oil declines in the United States and Mexico for a total North American supply increase of 110,000 barrels per day by 2015 to 13.7 million barrels per day, says the International Energy Agency. Total oil supply in Canada will grow by 1.1 million barrels per day to 4.3 million barrels per day in 2015 from 3.2 million barrels per day in 2009, says the agency in a new medium-term oil and gas markets study.
WHY IT MATTERS: The growth in oilsands production will be offset by a reduction in conventional crude and natural gas liquids.
10. SOLID PLAN
ERCB conditionally approves Suncor’s tailings plan
Alberta’s oil and gas regulator, the Energy Resources Conservation Board (ERCB), has conditionally approved a plan by Suncor Energy to improve its management of tailings ponds. The ERCB also approved the use of new technology designed to reduce fluid tailings volumes. Suncor’s Tailings Reduction Operations (TRO) process speeds up the conversion of fluid tailings into a solid landscape suitable for reclamation.
WHY IT MATTERS: The oilsands industry’s vast tailings ponds remain an all-too-visible reminder of the environmental effects of resource development. Suncor hopes a significant improvement in the speed of reclamation will help meet the changing expectations from stakeholders.
