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Page added on May 10, 2015
Alberta Elects a Friendlier Face for Its Oil Sands
Politics in Alberta, Canada’s oil-rich conservative heartland, rarely makes news beyond its borders. The province has been governed by an orderly series of Progressive Conservative (P.C.) Party majorities since 1971; the machinations of a monarchy’s hereditary succession tend to offer more in the way of political fireworks. But on Tuesday the provincial election captured headlines around the world—not just because the longest reigning government in Canadian history, and among the most durable dynasties in any contemporary democracy, had finally fallen but because it had been toppled by the left-leaning New Democratic Party (N.D.P.). If this result wasn’t quite as preposterous as the notion of a socialist Texas—Alberta’s political culture, though it is notoriously conservative by Canadian standards, is more akin to Colorado’s than to Texas’s—it was at least strange enough that images of airborne swine soon filled social-media chatter about the results.
The causes of the P.C.’s catastrophic collapse—from seventy seats in the provincial legislature to a mere ten, with the N.D.P. surging from four to a fifty-three-seat majority—are as many and multivalent as you might imagine would come to roost in a body politic after nearly forty-four years of nearly uncontested governance. They included years of accumulated cronyism, mismanagement, lavish and self-serving spending, and no-bid contracts. The months leading up to the election only added to the mess.
The premier, Jim Prentice, a former federal cabinet minister, had been recruited to quietly clean up the problems left by the previous leader. Instead, he found himself grappling with the worst fiscal crisis since 2008 as oil prices plummeted, bleeding billions of dollars in royalty revenues from the provincial coffers. In December, nine members of the hard-right Wildrose Party, including the leader of the Official Opposition, crossed the floor to sit with the P.C.s, a move possibly without precedent in a peacetime Westminster Parliament, citing a sort of economic-wartime solidarity but angering significant swaths of the bases of both parties. Prentice then brought in a new budget with little input from the public or even his own caucus, filling it with tax hikes on individuals (which riled his right flank) and none on corporations (which riled the left). He then toured the province, selling the package with all the buoyant charm of an insurance-claims adjuster and setting up an election campaign in which he was obliged to talk of little else besides the chaos created by the low price of oil. This amounted to a regular reminder that his party had done nowhere near enough in forty-three years of rule to protect the province from volatile oil prices.
On the campaign trail, Prentice at one point appeared to blame the electorate for his party’s fiscal mistakes, telling Albertans to “look in the mirror” if they wanted an explanation for the deficit.* He also reversed himself, early on, about a plank of the budget that seemed to punish charities. During the only televised debate, Prentice appeared to patronize the capable and likeable leader of the N.D.P., Rachel Notley, when during an exchange about corporate taxes he said, “I know that math is difficult.” His justice minister, who had already been obliged to resign his cabinet post, spent the last day of the campaign in court, fighting to remove a restraining order obtained by his estranged wife.
Perhaps the strangest spectacle—and the one that, in retrospect, most clearly signalled the degree to which the P.C.s and their base had misread the electorate’s mood and lost the public trust—occurred as the campaign entered its final weekend, in a staid boardroom atop an office tower in the provincial capital of Edmonton. Five prominent local businessmen, longtime P.C. supporters and generous donors, called a press conference to reaffirm their support for the party and its business-friendly leader, and to warn of grave consequences should the N.D.P., who were leading handily in the polls, gain control. It was May 1st, International Workers’ Day, an awkwardly symbolic choice that appears not to have occurred to the men, seated in their sharp suits behind the boardroom’s microphones. They had called the press conference, one explained, to make sure that Albertans were “thinking straight” about the consequences of the upcoming vote in these grave economic times. Another C.E.O. fixed an inquisitive reporter with a troubled squint and a shake of his head to explain his opposition to the N.D.P.’s proposed two-per-cent hike in corporate tax rates. “Why is it me?” he asked, jabbing himself in his chest with a pointed thumb. “Why is it the corporation?”
The event came across almost as a satire of political arrogance and backslapping old-boy culture, and it prompted widespread mockery inside the province. Alberta in 2015 is not the Alberta of 1971, nor of 1993—the last time the party faced a serious electoral challenge from its left flank. It’s not even the Alberta of 2012, the last time the P.C.s won reëlection. The province has spent the past decade growing richer than ever before, buoyed by a mammoth oil-and-gas boom that has placed its most abundant fossil-fuel deposit—the oil sands—at the center both of Canada’s economy and of an international debate about climate change. At the same time, Alberta has grown more diverse, adding tens of thousands of immigrants from Asia and Africa each year, plus tens of thousands more from provinces in eastern Canada, where marking an “X” next to an N.D.P. candidate’s name is not regarded as an act of treason.
Still, the result was a shock even to political insiders who’d been obsessively tracking the polls. On election night, the live broadcasts called the N.D.P. majority less than an hour after the polls had closed. Every single riding in Edmonton went N.D.P. The finance minister’s small-town riding fell to a retired pulp-mill worker. A Calgary riding that overlaps substantially with that of Canada’s Conservative Prime Minister, Stephen Harper, is now represented in the N.D.P. caucus by a twenty-eight-year-old who formerly managed a Red Lobster.
Despite the worries of the five C.E.O.s, and despite some breathless international headlines about the implications of the N.D.P.’s victory, whether delighted (the Guardian) or aghast (the Wall Street Journal), Notley is, by all reports, not much of a revolutionary and certainly no anti-oil-sands crusader. “On many issues, it’s hard to find a lot of daylight between N.D.P. policies and those of the other two front-running parties,” Andrew Leach, an energy economist at the University of Alberta, wrote in Maclean’s about the party’s oil-and-gas plan. It will likely come as a surprise, not only to American anti-pipeline activists but even to N.D.P. boosters elsewhere in Canada, that Notley rejects Keystone XL and the equally contentious Northern Gateway pipeline, more because she believes they stand little chance of being built than because she or her party believe that the oil flowing through them is irredeemably dirty.
Alberta already ships an average of two million barrels of oil each day to refineries in places like Chicago and Texas. Thousands of members of the unions that backed Notley’s campaign collect paychecks extracting, upgrading, and shipping those barrels. And now, for the first time ever, that messy business has not a staunch corporate conservative but a personable social democrat representing it on the international stage. To the surprise of fusty P.C. stalwarts inside the province, and likely to the dismay of many environmentalists across Canada and beyond, the N.D.P. may well help Alberta sell the rest of the world on how the province makes its money.
21 Comments on "Alberta Elects a Friendlier Face for Its Oil Sands"
shortonoil on Sun, 10th May 2015 7:51 am
Interesting, that not one of those candidates mentioned that the tar sands is now operating by selling a $60 barrel that cost $80 to produce. Maybe they think that if everyone ignores the problem it will go away? We hate to be the ones to tell them, but this problem is here to stay.
http://www.thehillsgroup.org
electrorail on Sun, 10th May 2015 8:48 am
Interesting, that not one of those candidates mentioned that the Extraordinarily Dirty* & Evil Tar Sands is now operating by (Suncor Q1) selling a WTI-based USD $60 (~CAN $72) barrel that cost CAN $28 (USD $23) to produce. Since the Froth has gone from the AB Oil Patch, Suncor expects this reduce another CAN $800M a year or ~ $2/bbl. Maybe they hope that if the G7G Railway goes forward and Brent pricing is available, along with 2 more Pacific tidewater ports available for Canadian commodity exporters, that if Canada diverts this stable and large energy resource over to Asian markets, this opportunity to lower USA Angst around GHG emissions problem will be blocked at the AK-YT border? We regret to be the ones to tell them, but these low carbon-footprint Asian countries want energy security and diversity of supply for their 18-20M bpd Consumer Demand.
Stay tuned….as I mentioned on TOD many many years ago….but no one was listening that a State-of-the-Art Un-conventional RR/RW will be/can be safe, as it must be to secure social license from FN’s along the route.
Yet everyone is seeing, conventional North American Class One rail CBR is flying off the tracks on a regular basis.
Fortunately, we won’t be operating this way.
We can’t afford any derailments for the 12 trains per day required to deliver 1.5 M bpd.
* New irony-soaked oil sands moniker courtesy of Mr. Fracking Frenzy President Obama
paulo1 on Sun, 10th May 2015 8:51 am
Go NDP. Best of luck reigning in indiscriminate growth and development at any cost.
GregT on Sun, 10th May 2015 9:08 am
‘Meet the new boss, same as the old boss’
justeunperdant on Sun, 10th May 2015 9:41 am
shortonoil is just another person selling his paper for money. I am starting to doubt the conclusion of his model and especially the data that he is using.
tar sand oil are not sold at the same price that WTI. Tar sand oil has its own market called WCS.
http://www.baytexenergy.com/files/pdf/Operations/WCS%20Historical%20Pricing%20-%20April%206,%202015.pdf
justeunperdant on Sun, 10th May 2015 9:43 am
The benchmark crude oil price in North America is West Texas Intermediate (“WTI”). WTI represents the underlying commodity of the New York Mercantile Exchange’s oil futures contracts, and is a light, sweet crude with an API gravity of approximately 39.6 degrees.
As a largely heavy oil producer, our production is typically priced based on a Canadian heavy oil benchmark price, referred to as Western Canadian Select (“WCS”). WCS is made up of existing Canadian heavy conventional and bitumen crude oils blended with sweet synthetic and condensate diluents, and has an average gravity of 20.5 degrees API.
WCS trades at a discount to WTI due to the higher cost of refining WCS crude into refined products, such as gasolines, jet fuel, kerosene, and diesel. This discount is referred to as a heavy oil differential.
Approximately 80% of Baytex’s heavy oil production is priced off WCS. The actual raw heavy oil price that Baytex receives for its heavy oil production is further reduced by the cost of blending the heavy oil with diluent to meet pipeline specifications.
http://www.baytexenergy.com/operations/marketing/benchmark-heavy-oil-prices.cfm
shortonoil on Sun, 10th May 2015 9:57 am
selling a WTI-based USD $60 (~CAN $72) barrel that cost CAN $28 (USD $23) to produce.
Now tell me that didn’t come right off an investor presentation? With an ERoEI of 5:1, no one other than God himself who can change the laws of physics, can produce that oil for $23. $23 may have been true in 1995, but the overburden has more than doubled, and the oil seam is less than half of what it was. The bitumen per ton content has fallen by 30%. Suncor is doing what every other high cost producer is doing right now. Fudging their books, and waiting until oil prices go back to $100. Oil prices aren’t going back to $100, and chances are they won’t even reach $80. Shale, bitumen, ultra deep water, and high sulfur extra heavy are now the Dodo birds of petroleum.
joe on Sun, 10th May 2015 10:25 am
Saudi is promising Asia they will be their supplier. Like any drug dealer they will say anything, that they love them, just to get that cash to recycle. Think ten years down the road, there will have to be a fundamental balance. Europe and USA will have underlying growth and emigration related to increased services associated with an aging and lazy and wealthy population. Developed economies are merely cycling through bubbles now to seem motivated but in truth are not doing much. This relates to peak oil only in the sense that middle east light sweet will be used up faster as per the classic model of consumption in the current climate (saying ‘market share’ really means ‘sorry no help here guys’). When middle east oil is used up or uneconomic to get, that’s the end for all oil as to make up the difference would imply massive extra cost and a new global cartel to prevent conflict between suppliers. But as we all know, if we burn the easy oil that’s left, kiss our collective cities goodbye and with it fat lazy old Europe and USA and the little Britons in Albert a.
marmico on Sun, 10th May 2015 10:45 am
The quart shy of oil is an effing buffoon.
According to CAPP basic statistics, in 2013 oil sands mining production was 956,000 b/d and in situ production was 1,000,000 b/d.
The only overburden is the depth required to drill to depth to locate the pea brain of the buffoon.
Plantagenet on Sun, 10th May 2015 10:50 am
Good to hear that there is now friendlier leftist face in charge in Alberta. That should make selling the tar sands oil to the oil a little bit easier.
shortonoil on Sun, 10th May 2015 11:00 am
“The quart shy of oil formula:
Well Marm, we’ll be sorry to see you go! With your oil buddies now taking a $1.3 trillion a year beating there soon won’t be much left to pay your per word trolling fees. Everyone here will miss your wit, charm, and sweet nature. Maybe, you’ll be able to get a job trolling for some garbage collection outfit? Your style would be perfect for it! If you can’t find another job right away you can keep your spirits up by kicking a dead rat down the street for awhile.
Cheers, and all that good stuff!
justeunperdant on Sun, 10th May 2015 11:45 am
Why should we take the hill group research seriously when your website is not providing an actual name and postal address.
The web is now a place for scammers like Gerald Celente and others to beg for money and scam people with dubious products.
This is why blogging is dying.
MSN Fanboy on Sun, 10th May 2015 11:55 am
If Short is a scammer, I would be more impressed. Managing to predict oil prices like his graph has is extraordinary.
dissident on Sun, 10th May 2015 12:15 pm
Why do you need to know his personal information? So you or your pals can terrorize him? Slash his tires, throw bricks through his windows. Or maybe assault his children near their school.
Anyone using the “you didn’t give me your address and phone number information so you are not credible line” is highly suspicious. His arguments do not require you to know his personal details to show their merit.
BobInget on Sun, 10th May 2015 12:34 pm
Energy East means less Energy South
Saskatchewan group says Energy East pipeline project benefits outweigh risks
The Saskatchewan Association of Rural Municipalities believes that the benefits of the Energy East pipeline project far outweigh the risks.
The pipeline would ship oil from Alberta and Saskatchewan to the East Coast.
Association president Ray Orb says the pipeline would bring taxation revenues to the rural municipalities that have the pipeline on its land, plus it would create more jobs and also bring in revenue for the province.
One of the terminals for the project would be based in Saskatchewan.
Orb says that pipeline oil is also safer than the current option of hauling oil by train cars.
He says that they see a lot of oil cars on the rail line, and they don’t want another disaster like Lac Megantic in Quebec in 2013.
In July, 2013, a train carrying crude oil derailed in the town, catching fire. It killed 47 people, forced 2,000 from their homes and destroyed much of the downtown core.
The completion of the Energy East pipeline is scheduled for 2020.
http://boereport.com/2015/05/07/saskatchewan-group-says-energy-east-pipeline-project-benefits-outweigh-risks/
Apneaman on Sun, 10th May 2015 12:40 pm
justeunperdant, who the fuck is “we”. Feel free to comment on the Hills group as you like, but don’t include me.
BobInget on Sun, 10th May 2015 12:51 pm
As for Shorty, he at least makes valuable contributions to one of our most vital, ongoing dialogs. His message is always the same, “because wages are too low oil will become unaffordable”. “Raising crude oil today uses far more energy then in the past”.
“oil prices are falling because ….”
All truisms.
Be careful of ‘isms’.
I’ve yet to understand what shortonoil is saying but figure that’s my fault not his.
Not once has Shorty launched personal attacks on those who post contrary opinions. On this board, that fact alone deserves respect.
shortonoil on Sun, 10th May 2015 2:25 pm
There is a phone number at the site, and I’m happy to talk to anyone between 9:00 to 5:00 EST. I’ll leave it there unless it gets abused. Who is the Hill’s Group? I posted that yesterday, and I’ll put it up here again at the bottom of this post. As far as charging for our work; I think you have us mixed up with that fat guy in a red suit that shows up with a pack of reindeer. I asked around, and none of us even own a red suit, so I don’t know how you came to that conclusion? As we have gotten some of our investment back for our work we have been reducing the price; we will continue to do that. We are a privately funded group, so we don’t need to lick someone else’s lollypop. We did a a whole lot of research, and came up with a result. We publish exactly how we did it minute detail. If someone doesn’t like the result, that is their problem! Unless they can come up with a study of their own, of equal caliber, to refute it, they are background noise.
http://www.thehillsgroup.org
shortonoil on Sun, 10th May 2015 2:26 pm
“Where do you get these amazing numbers? Are they at the Hills site? I would like to send some folks a link to a source.
I think all wizards smoke pipes. Longbottom leaf and Old Toby are favorites.”
Can’t send Longbottom, the frack trucks tore up the all the fields in that part of the Shire!
To explain where all the numbers come from:
The Hill’s Group is an assortment of rag-tag consulting engineers. We are folks who worked together on various projects around the world over the years. The project to investigate the status of the world’s petroleum reserves began in 2003; that was after Shell cut its reserve estimates by 20% out of the blue. A couple of the guys lost a load of money when Shell’s stock crashed after the announcement.
The question of just how much oil remains in the world’s reserve became a matter of constant debate between us. After several years of discussion, and reviewing a lot of reports and articles, we came to the the conclusion that no one really knew? So, we decided that we would figure it out for ourselves; being that what we were was a bunch of professional problem solvers.
The rest of the story would make a book. Someday I might get around to writing it. The first Chapter I’ll call “A few drinks in a bar”; that’s how the whole thing got started. Anyway, after determining that no one really knew, and even if they did there was absolutely no motivation for them to tell the truth about it, we created a mathematical model to calculate it.
The methodology we settled on is called “entropy analysis”. That may sound esoteric, and very complex, but its not! It is a common engineering approach. It is just that we were the first (that we know of) to apply it to petroleum. The only thing that we did that was complex was to write a lot of software to do the calculations. What we came up with we called the Etp Model, and that is were all the numbers come from.
The Model has been amazingly accurate when viewed from a historical perspective, so we concluded that it had to be right. We used it last year to project the present decline in prices. Being engineers, we felt compelled to produce a report on what we had concluded; you can download the first ten pages of the PDF here:
http://www.thehillsgroup.org/depletion2_015.htm
look for the red box that says “download first ten pages for review”
Being that the report is not good news, at least its not likely to give the industry any “warm fuzzy feelings” we decided to take the slow route for introducing it. Otherwise, the industry was likely to call out they expert hired guard dogs to protect the value of their stock. We’ve worked for those guys, so we have a pretty good idea what they’ll do.
Take a look at the site, and drop me a comment sometime.
http://www.thehillsgroup.org
justeunperdant on Sun, 10th May 2015 3:45 pm
I am engineer and I agree with the energy approach. I don’t agree about the debt part and the future price projection of oil. Government will probably bail out the oil industry and the customers by printing money . This will distort oil price widely . No big banks went bankrupt since 2008, probably because they are being bailing them out on a yearly basis. Same with Japan.
As long as your approach talk about Btu only I agree with everything. It seems to me impossible to calculate the future price of oil because of the way financial entities redefined the financial rules all the time.
And frankly, when you sell a service and demand money payment, it is good business practice to give your name and your full business address, especially if you are offering consulting services. This show that you are serious and can stand behind your work. The web is now a giant garbage pool with less and less honest people. I bought a lot of stuff from China and always receive my stuff, but before buying I always check that I can easily contact them.
Apneaman on Sun, 10th May 2015 3:53 pm
justeunperdant, you should always ask for a retina scan and a cheek swab before purchasing. Just to be sure.