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The battle continues over the future of TransCanada’s Keystone XL tar sands pipeline, with the Tar Sands Blockade continuing and a large forthcoming President’s Day anti-Keystone XL rally set to take place in Washington, DC.
In a nutshell: Keystone XL, if approved by the U.S. State Department, will carry viscous and dirty tar sands crude – also known as diluted bitumen or “dilbit” – from Alberta, Canada down to Port Arthur, TX. From Port Arthur, the tar sands crude will be exported to the global market.
Muddying the waters on the decision is the fact that The Calgary Herald recently revealed that prospective Secretary of State, John Kerry, has financial investments in two tar sands corporations: Suncor and Cenovus. Kerry has $750,000 invested in Suncor and another $31,000 invested in Cenovus.
Which of course all begs the question: Is this another episode of State Department Oil Services all over again?
North America’s Shale Gas Industry’s Keystone XL
North of the border, TransCanada is proposing another export pipeline for the shale gas industry.
Dubbed the Prince Rupert Gas Transmission project, the $5.1 billion project will carry gas obtained via the controversial fracking process from the Montney Shale basin westward to the coast of British Columbia. From there, the gas will be exported in the form of liquefied natural gas (LNG) to Asia starting in 2018.
“Gas producers in British Columbia’s Montney Shale, far from North American population centers, are seeking Asian markets for the heating and power-plant fuel,” the Houston Chronicle‘s “Fuel Flex” explained.
US Debate Over Shale Gas Exports Also Continues
Meanwhile, south of the border, debate continues over the future of U.S. gas markets.
On Jan. 24, the comment period closes for the U.S. Department of Energy’s (DOE) study on LNG exports.
That study, contracted out to the oil, gas and coal industry-friendly NERA Economic Consulting concluded that exports are a net benefit for the U.S. economically. The Sierra Club has filed a Freedom of Information Act to discern how the Obama DOE went about choosing NERA as the contractor.
“Deciding to export the U.S. gas supply is a major public decision,” Deb Nardone, director of the Sierra Club’s Beyond Natural Gas Campaign said in a press release. “We deserve a full and fair conversation about it. That’s why we deserve to know how and why DOE picked this anti-environmental, pro-corporate consultant for this crucial report.”
On top of its looming decision on the Keystone XL, it’s likely that the Obama Administration will make a final decision on whether or not to greenlight shale gas exports sometime in 2013.
Though it’s still the dead of winter, the policy agenda is about to heat up in the energy and environment policy arenas inside the Beltway in the coming weeks.
Cross-Posted from DeSmogBlog
Photo by Travis S. under Creative Commons license
28 Comments
Thank you for writing about this, Steve — I’m doing my best to follow it (see http://www.tarsandsblockade.org), and I just read some of Scarecrow’s writing on it. FYI, relatedly, I’m very thankful for the “Idle No More” movement, which I hope continues to grow and strengthen.
Seconding “Idle No More”
Thank you for reporting Kerry’s conflict of interest.
How much are the American and Canadian governments going to pony up?
Natural gas demand in America does not support a price that makes fracking profitable.
http://www.csmonitor.com/Environment/Energy-Voices/2012/1017/Why-natural-gas-isn-t-likely-to-solve-our-energy-woes
http://my.firedoglake.com/thingscomeundone/2013/01/16/is-global-warming-killing-the-fracking-industry-are-banks-killing-the-fracking-industry/
The banks are forcing the Frackers ( who were extremely stupid to sign such contracts) to pump gas rather than shut down production until the price of natural gas rose to level the Frackers could make a profit.
The banks need to get paid and don’t care if the Frackers go broke.
http://www.nytimes.com/2012/10/21/business/energy-environment/in-a-natural-gas-glut-big-winners-and-losers.html?pagewanted=all&_r=0
But the banks and the Frackers hope that they can make a profit exporting Natural Gas? How tons of other countries are developing their own fracked shale gas. Even if their labor costs were equal to our own greater transport costs plus the cost of special plants to liquify the gas for transport and special ships and port facilities also would add to the cost of Fracked Liquid Natural Gas.
below is a list not a complete list mind you of countries that are fracking or planning to frack for natural gas soon. Once all their wells are pumping gas the Price of Natural Gas should drop even further. Heck the Liquid Natural Gas ports and pipelines we build now for our gas and to create jobs/s will likely be used to transport foreign LNG once foreigners build their frack wells.
Shale gas in China is an energy resource yet untapped, but is seen as having large potential.[1] China has set its companies a target of producing 30 billion cubic meters a year from shale, equivalent to almost half the country’s gas consumption in 2008
http://en.wikipedia.org/wiki/Shale_gas_in_China
In January last year, the US Energy Information Administration estimated that India held 38 trillion cubic feet of proven natural gas reserves.
That was good enough for the needs of the nation for 29 years
http://www.dnaindia.com/money/report_india-holds-527-tcf-of-shale-gas-reserves_1685334
Poland will produce “several” billion cubic meters of gas from shale rock by 2020, Treasury Minister Mikolaj Budzanowski said in July. The country’s recoverable shale-gas reserves amount to as much as 768 billion cubic meters, the Polish Geological Institute said in March.
http://www.bloomberg.com/news/2012-10-12/total-to-push-ahead-with-shale-gas-drilling-in-poland-ceo-says.html
Ukraine is heating up as well. TNK-BP Holding, a joint venture of BPBP.LN -0.90%PLC and a group of Russian investors, plans to invest $1.8 billion in shale projects at a half-dozen sites around Ukraine. In June, Italy’s Eni SpA E -1.21% paid an undisclosed amount for a stake in Ukraine-based LLC Westgasinvest, which holds about 1,500 square miles of land with potential shale-gas reserves. And ChevronCorp., CVX +0.74% which has acquired more than 6,250 square miles of potential shale gas leases in Central Europe since 2009, says it is working with Ukraine to negotiate a production-sharing agreement.
http://online.wsj.com/article/SB10000872396390443866404577565244220252020.html
Our geological estimates show that Lithuania can hold 480 billion cubic meters (bcm) of shale gas reserves, with recoverable reserves at 120 bcm,” he added.
Business daily Verslo Zinios reported that Chevron Global Energy had bought 50 percent of Lithuania-registered oil company LL Investicijos, which holds a license to prospect for oil and gas at the 2,400 square kilometer Rietavas field.
http://www.reuters.com/article/2012/10/25/us-chevron-lithuania-idUSBRE89O0NG20121025
http://my.firedoglake.com/thingscomeundone/2012/11/05/will-free-market-forces-stop-natural-gas-fracking-or-will-the-1-demand-a-tax-break-and-loans-from-the-government-2/
Obama will approve the tar sands pipeline. No contest.
fascinating subject.
Canada controls the third-largest amount of proven reserves in the world, after Saudi Arabia and Venezuela. The oil sands now account for approximately 170 billion barrels, or 98 percent, of Canada’s oil reserves.
The oil sands now account for approximately 170 billion barrels, or 98 percent, of Canada’s oil reserves.
Pipelines connect the centers of Canadian production with refining and export centers in eastern provinces, the West Coast, and especially the United States. Pembina, Plains Midstream, Spectra Energy, Access Pipeline, and Inter Pipeline operate some of the largest domestic pipeline systems in Western Canada. Three companies operate the most export pipelines: Enbridge, Kinder Morgan, and TransCanada. In total, members of the Canadian Energy Pipeline Association transport 3.2 million bbl/d of oil over almost 25 thousand miles of pipeline.
Enbridge operates the largest export oil pipeline network. In combination, two of its related systems – the Canadian Mainline from Edmonton to Quebec and the U.S. Mainline (Lakehead) to Chicago – transport 2.5 million bbl/d. The Lakehead system includes the Alberta Clipper pipeline to Superior, Wisconsin that was completed in 2010, which expanded the system capacity by 450 thousand bbl/d with an ultimate capacity of 800 thousand bbl/d available.
US imports from Canada 2,222 thousand barrels per day of which about a million barrels per day is derived from Canadian Oil Sands
Kinder Morgan operates the Trans Mountain Pipeline System, which is the only pipeline system that transports crude oil and petroleum products to the West Coast of North America. The pipeline originates in Edmonton, Alberta and travels to various marketing and refining stations near Vancouver, British Columbia. Its capacity is rated at 300 thousand bbl/d. Kinder Morgan also operates the cross-border Express pipeline (280 thousand bbl/d), which connects with the smaller Platte pipeline in Casper, Wyoming and then travels to Illinois.
TransCanada has established a foothold in Canada’s crude export market through its Keystone system, which includes two operational phases, one in construction, and another awaiting regulatory approval. The first phase of Keystone, which travels from Hardisty, Alberta to Illinois, commenced operation in June 2010 at a capacity of 435 thousand bbl/d. A second phase became operation in February 2011, connected the Keystone system to the Cushing, Oklahoma hub, and increased the system’s rated capacity to 591 thousand bbl/d.
The carbon emissions associated with pumping oil over the Rockies and transporting the Canadian oil to China by supertanker exceed the carbon emissions associated with transporting it by pipeline to Texas.
more info
http://www.eia.gov/countries/cab.cfm?fips=CA
Also the gas companies pay land owners for mineral rights. Many contracts contain clauses specifying continuous or consistent use. If the gas companies shut down the wells and wait for the price to go up, the contracts become null and void and need to be renegotiated again later, with new signing bonuses etc. Better to lose a little each day than give away future profits.
I would love to see the Press ask Kerry just how do you intend to make money fracking given that Fracking loses money at current prices?
Just how many foreign deals to frack are the companies you invested in part of and what is their size.
Given that tons of cheaper foreign Fracked Natural Gas is coming online soon how can American Fracked Natural Gas wells compete?
If American wells cannot compete then how many jobs will be lost?
Do you support building wells and LNG ports?
Without LNG wells and pipelines would foreign LNG have a market in America?
( answer no )
So to keep jobs American tax payers should not support LNG pipelines and ports
Just what Moron law firm advised the Fracking industry to accept contracts with these provisions. The words criminal malpractice come to mind also the words the Gas industries lawyers were in the tank for the banks.
Who writes contracts that screw your client when prices drop? Nobody should think that prices are never going to drop.
Contracts need provisions to help both parties if for some reason they are in trouble equally.
The banks very well may bankrupt the fracking industry because they insist on getting paid.
The banks don’t have the expertise to run wells. The banks can’t afford to have the billions they invested in fracking become both a non productive loan which is what happens if the Frackers go bankrupt.
But also the Banks don’t want assets like Fracking wells on their books that will lose value if we build LNG pipelines and ports and open America to cheaper foreign LNG.
I’ll defer to you on the anti-bank slant. I just remember a few years ago gas companies were doing anything to get land under contract. Some signing bonuses went above $26,000 per acre, plus a percentage (about 20%)of any gas recovered.
http://fuelfix.com/blog/2013/01/10/transcanada-plans-5-1-billion-pipeline-to-lng-terminal/
My bold why would Malaysia invest in a Canadian natural gas pipeline? Malaysia has its own fracking Natural Gas deals with Hal they don’t need Canada’s gas.
http://www.forbes.com/sites/greatspeculations/2012/02/14/halliburton-has-high-hopes-for-asian-fracking/
However Malaysia probably would love to sell Canada and America cheaper LNG.
There is no way Canada and America LNG can compete against low cost Malaysian labor and lax government regulation.
Inauguration speech “End the tyranny of Oil”…said the servant of the Oil tyrants. Keystone will be operational and will leak and we will pay the damages/clean up costs and Oil industry will keep profits. Not to mention the price that will be paid when the tipping point is reached. Hope those uber wealthy people can use the gold and paper wealth they are collecting to keep them warm.
The Frackers I think deserve some blame prices like that are only justified if America were to do something about global warming and turn all the coal power plants to Natural gas plants to boost demand.
Natural gas cars however are dependent on low Natural Gas prices.
Power Plants make sense even at higher Natural gas Prices if we both believe in Global Warming and are willing to take drastic steps to stop it.
But I don’t see this President telling all the coal miners they are out of a job.
Coal does make more economic sense than gas as long as Global Warming and health costs from pollution are not factored in.
However if they are factored in then Geo Thermal, Wind sun etc make much more sense than even Natural Gas.
I hope they can swim lots of 1%ers have beach front property and the ocean’s levels are rising.
I dont think press is going to do investigation on Kerry or any other politician. It has other sensational fish to fry. The real issue that I dont see in the discussions is, why bring this crap all the way from north to gulf coast refineries. I think the answer is that the huge refineries on the gulf coast (each one of them capable of output of 300,000-400,000 Barrels per day. you can multiply barrels with 42 to get gallons per day)are set up to handle sour crude mainly from Venezuela. Crude with sulfur or acidic components causes corrosion in refining equipment. So special material of construction or expensive corrosion resistant material is used to avoid replacement or maintenance cost. Also some additional Chemical processing is involved to remove pollutants.
Political climate changed. We no longer want to depend on Venezuelan oil to keep these monster running. And shutting them down or modifying them would mean economic consequences. The alternative was to bring the sour oil from somewhere and refine it and sell it overseas.
It is possible that key politicians used this information to invest in key companies. It would be something to investigate that how these politicians knew before anyone else. Perhaps Greg Palast could lend a hand!
Agree the Press will never ask him anything. I do like your idea about the pipeline Hugo is trying to sell more oil to China and South America that means the oil refineries in New Orleans will likely soon sit idle as American oil production declines.
We cannot go to war with Iran unless we either get rid of Hugo but keep access to his oil or we find a replacement for Hugo’s oil.
Because the second we attack Iran Hugo will likely tells his oil tankers headed to America to turn around.
The idea is to export the natural gas and cause a shortage in the US. That will enable producers to charge much higher prices to US customers. The export terminals, of course, are subsidized by the taxpayer.
As our water supplies are fouled by fracking, some corporation will make billions cleaning up drinking water to sell to US consumers.
Yes! That is the point I was trying to make with facts! All this talk about Fracking cresting jobs in America is a joke its been years since fracking made a profit in America assuming fracking ever made a profit.
http://www.ibtimes.com/natural-gas-prices-hit-10-year-low-398522
http://www.forbes.com/sites/richardfinger/2012/10/14/8-natural-gas-were-right-on-schedule/
The Business Press however is still cheerleading $8 natural gas.
http://www.tradingeconomics.com/commodity/natural-gas
The last time Natural gas was near or over the $8.68 break even point seems to be 2008 or 2009 the chart at the link is unclear.
http://www.csmonitor.com/Environment/Energy-Voices/2012/1017/Why-natural-gas-isn-t-likely-to-solve-our-energy-woes
http://my.firedoglake.com/thingscomeundone/2013/01/16/is-global-warming-killing-the-fracking-industry-are-banks-killing-the-fracking-industry/
It is funny that Forbes is again pushing the idea of $8 natural gas when they got it wrong last year however $8 is still below the $8.68 break even point.
Of course foreign Natural Gas made with cheaper labor and less costly government regulation might be able to be sold at a profit for less than $8. This of course would kill the American Fracking industry jobs and if cheap enough kill our coal jobs too.
What kind of a Moron at Forbes would push an investment that is not going to break even even if the Price doubles?
“Kerry has $750,000 invested in Suncor and another $31,000 invested in Cenovus.”
The notion that Mr. Heinz will be swayed by an ivestment worth less than a million is laughable. That’s the equivilent of the lint covered change in my couch to him.
He will do what Obama tells him to do. Mark this a when question, not an if question.
If Hugo lives or doesn’t he’s accomplished a couple of big things which cannot be undone, very easily. He’s instilled the poor with a taste for a middle class future based on the collective ownership of their natural resources. And, he’s aligned himself with the Chinese, who have plenty of cash and a credit line to support those aspirations. Hugo has the advantage of weathering price gyrations because his country can borrow against their rich ground. He knows what cards he’s holding and he’s pretty sure he can pony up the table stakes to play, regardless. You have to admire the man’s huevos.
Agree completely but I worry about him in order to attack Iran America must first make sure we don’t lose access to his oil. I admit the morons who planned the wars in Iraq and Afghanistan very well might poo poo such worries.
I admit American oil companies would love to see $300 plus a barrel of oil. But if Obama has any sane people working for him he can’t risk $300 a barrel oil at $300 a barrel the banks and world economy would collapse.
Given that Iran has Russian faster than the speed of sound missile tech that can beat our Navy’s anti missile defense and we have no faster than sound missile tech Iran can easily sink our fleet and close the Persian Gulf.
The US will not attack Iran for the same reasons it hasn’t yet attacked Iran, which are that Iran has too many ways to put a major hurt on the US and Israel.
Not to worry, they have 5 to 10 thousand years to learn how to swim.