Alberta and NEP ... How do you like the new CHINA EP ? EH !

[bubba zanetti]

All my adult life I have heard about Alberta fighting the the notion of then PM Trudeau, for a National Energy Program ... you can hardly raise the name of Trudeauin Alberta since.

Wow ... I guess we just got ourselves a China Energy Program with barely a hic up or a bark ... so tell me ... how the fuck does that work ?

Eh ??


http://www.cbc.ca/news/canada/story/2012/12/07/cnooc-nexen-takeover.html

I loves me some capitalism ... it sure is good for the country.  

A criminal regime, that deny's simple freedoms ... now owns a chunk of the oil patch.  Amazing. Simply amazing.

[Mike-H]

Typical federal government  (input any political party name in reality) short term gain....long term loss.....selling the country out from under the people without a care for the future ....hey the liberals are wanting a substitute  teacher with zip experience (born with a silver spoon up his butt) to lead their party over an experienced former astronaut (amongst other credentials)....so should we be surprised @ anything politicians due    

[blkhrt81]

All my adult life I have heard about Alberta fighting the the notion of then PM Trudeau, for a National Energy Program ... you can hardly raise the name of Trudeauin Alberta since.

Wow ... I guess we just got ourselves a China Energy Program with barely a hic up or a bark ... so tell me ... how the fuck does that work ?

Eh ??


http://www.cbc.ca/news/canada/story/2012/12/07/cnooc-nexen-takeover.html

I loves me some capitalism ... it sure is good for the country.  

A criminal regime, that deny's simple freedoms ... now owns a chunk of the oil patch.  Amazing. Simply amazing.

Because these are two entirely different things Jim. The foreign companies still have to abide by Canadian rules and regulations regarding environment, hours of work and tax regime. The NEP was a change in the rule structure and it did have a hugely detrimental affect on the oilpatch of the time.

[Kootenanny]

Hmmm...oil sands...what are they gonna do with all the oil they produce?  Won't be shipping it by pipeline to Kitimat any time soon...

BTW, I'm kinda with Bubba on this one--don't like to see Chinese state-owned oil companies owning very much Canadian natural resources.  From everything I've heard and read, the Chinese government has a different idea of "natural conservation" than most Canadians; my concern is that Chinese concerns may end up influencing Canadian policies on things like pipelines.  

[veefer800canuck]

I don't like it. Not one little bit.

FYI: I work for an Alberta owned oil company.

[PatM]

Typical federal government  (input any political party name in reality) short term gain....long term loss.....selling the country out from under the people without a care for the future ....hey the liberals are wanting a substitute  teacher with zip experience (born with a silver spoon up his butt) to lead their party over an experienced former astronaut (amongst other credentials)....so should we be surprised @ anything politicians due    

I dunno. Garneau is a nice chap but is also the nerdy type. I don't think he would be any more successful than Dion or Igy. I agree with you about Trudeau. Not a good choice for the Liberals. They need a strong leader or they'll be in opposition for a long time.

As for Nexen, don't like it either. The question is can Canada afford to say no?

[Mike-H]

I dunno. Garneau is a nice chap but is also the nerdy type. I don't think he would be any more successful than Dion or Igy. I agree with you about Trudeau. Not a good choice for the Liberals. They need a strong leader or they'll be in opposition for a long time.

As for Nexen, don't like it either. The question is can Canada afford to say no?

Should have done it in conjunction with (joint ownership) these foreign  government owned companies until they prove themselves to play fair & keep their word

[Flyer]

Should have done it in conjunction with (joint ownership) these foreign  government owned companies until they prove themselves to play fair & keep their word

Like our "government"?
 

I don't care for the deal either, but no other country I know of can capitalize our oilpatch...
...and as we all know, capitalization is the Mother of Business, which is Good.

[ST1300Rider]

I don't care for the deal either, but no other country I know of can capitalize our oilpatch...
...and as we all know, capitalization is the Mother of Business, which is Good.

Sad but true. Until Canadians themselves have the inclination and ability to fully fund the capitalization we will have foreign investment and ownership. It's just a question of picking your bedmate(s).

[bubba zanetti]

Because these are two entirely different things Jim. The foreign companies still have to abide by Canadian rules and regulations regarding environment, hours of work and tax regime. The NEP was a change in the rule structure and it did have a hugely detrimental affect on the oilpatch of the time.

Oh I hear you. I did look heavily into the NEP some years ago and Lougheed was right to object. I just had to bring it up here to stir the pot Bill. It is far too quiet in here lately.    

Yet ... it is a serious issue. Sole foreign ownership should be off the table. Partnerships and an initial partial buy should be the agenda. You prove yourself over ... hmm ... say a ten year period, then we consider foreign ownership. Eh ?  

[bubba zanetti]

Hmmm...oil sands...what are they gonna do with all the oil they produce?  Won't be shipping it by pipeline to Kitimat any time soon...

BTW, I'm kinda with Bubba on this one--don't like to see Chinese state-owned oil companies owning very much Canadian natural resources.  From everything I've heard and read, the Chinese government has a different idea of "natural conservation" than most Canadians; my concern is that Chinese concerns may end up influencing Canadian policies on things like pipelines.  

Strange bedfellows indeed ! Yet you are so right about a fragile resource that needs to be exploited judiciously. Pipelines where? To China?
Instead of just ownership get them to invest in emerging refining and processing industries. I am tired of buying back a crap product, made from a scarce local resource.

But I will say again. This is a corrupt regime. I would out source anywhere in the world but these assholes. But not our oil.

[Kootenanny]

Bubba, it seems we agree on this.  I'm just not comfortable with the Chinese government owning too much Canadian resource.

If they were to invest in Canadian refining and processing, OK then...but I get the feeling the goal here is to purchase Canadian crude, then ship it to China for processing (where it will be less expensive, in part due to lower environmental standards).  This, of course, would require the construction of new pipelines in BC, either through to Kitimat or down to Vancouver...the crude's not worth much if they can't move it.

And yeah, the oil must be processed judiciously.  I wonder at the "boom" mentality so prevalent in Alberta...haven't they ever heard that "boom" is often followed by "bust?"  The oil's not going anywhere, and the market is unlikely to go away anytime soon...I'd prefer to see oil sands expansion slow down a bit, just cool off a bit and plan more long term.

[mikebr]

Bubba, it seems we agree on this.  I'm just not comfortable with the Chinese government owning too much Canadian resource.

If they were to invest in Canadian refining and processing, OK then...but I get the feeling the goal here is to purchase Canadian crude, then ship it to China for processing (where it will be less expensive, in part due to lower environmental standards).  This, of course, would require the construction of new pipelines in BC, either through to Kitimat or down to Vancouver...the crude's not worth much if they can't move it.

And yeah, the oil must be processed judiciously.  I wonder at the "boom" mentality so prevalent in Alberta...haven't they ever heard that "boom" is often followed by "bust?"  The oil's not going anywhere, and the market is unlikely to go away anytime soon...I'd prefer to see oil sands expansion slow down a bit, just cool off a bit and plan more long term.

Why can't Canada refine and process oilsands  

[Mike-H]

Because that would be (1) creating jobs @ home, thus pissing off the tree huggers .....(2) keep Canadians employed (oh no ).....& finally....it would make sense ....& politicians hate anything that make sense ....just saying

[Kootenanny]

Because that would be (1) creating jobs @ home, thus pissing off the tree huggers ..

"Creating jobs at home" is exactly the thing that does NOT "piss off the tree huggers."  I live in BC, where people in the interior LIKE to see sawmills operating.  What we DON'T like is seeing raw logs being exported, to be processes somewhere else--especially when there are BC sawmills shutting down for lack of timber.

Granted, however, part of that lack of timber is due to poor foresight on the part of the industry, which has somewhat painted itself into a corner--all the "easy" old growth timber is pretty much gone, so the choice is either old growth that is hard to access, or 2nd (or 3rd or 4th) growth timber, which takes some decades to mature and is being outstripped by the rate of cutting.  We actually cut less timber now than we did a decade ago, while at the same time we can mill it much faster and more efficiently--all with more automation and fewer people.

Oil is going the same way.  "Easy" deposits are getting tapped out, so oil that is harder to access (such as the oil sands) is becoming profitable.  But shipping crude oil directly to China is like exporting raw logs.  The difference is, oil doesn't grow on trees...

[Flyer]

...and trees don't grow on oil sands.

[Kootenanny]

...and trees don't grow on oil sands.

Actually, they do...until, of course, the area is cleared and mined...



Don't get me wrong...I do not protest the extraction of oil from the oil sands (or "tar sands," a more descriptive term), but rather the escalation of development there.  Everyone seems to want to get the oil out NOW! with little or no concern for the future of the industry (or protection of the environment).  I favour the idea that development of the "oil sands" should proceed more slowly--"judiciously," as Bubba puts it--with an eye to still having industry there in, say, 50 years (and with northern Alberta not being completely turned into a wasteland of sand heaps and polluted lakes).

I also protest the idea of pipelines through relatively pristine wilderness, delivering crude oil to ports in the fjords of the BC coast for shipping to support rampant industrialization in countries with little or no environmental control.  The hazards and negative implications of this far outweigh any short-term gain.

[Baz]

Well I can comment now.  

1st of all Nexen equals about 3% of the entire oilsands lease area. While existing companies here such as Syncrude can claim to be a Canadian company, here is the actual truth.

Syncrude Owners The Syncrude Project is a Joint Venture undertaking among Canadian Oil Sands Partnership #1, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Oil Sands Partnership, Sinopec Oil Sands Partnership and Suncor Energy Oil and Gas Partnership, as the project owners, and Syncrude as the project operator.

Canadian eh?  (Most of the other projects are partnerships also).

Nexen is actually one of the few oilsands players that upgrade their bitumen to synthetic crude. So to claim that the Chinese purchased Nexen to hook up a tanker to and export raw bitumen to China is way out in left field. The reason for the purchase is to tap into Nexen's technology to use on their shale plays back home to develop on their own. Nexen currently and will continue to upgrade and sell to primarily the North American market.

(This will i hope, answer Kootenanny's concerns)

2nd of all.

The federal Government does NOT own this resource. The province of Alberta does. So unless the federal Government wants to change the constitutional act, development of all natural resources remain in the hands of each Province. Pierre Elliot Trudea's plan in essence ripped up the Constitutional act of 1867, and why it failed. Any future ideas such as this one would be challenged also fail.

I wonder what the folks of BC would do if the Fed's came along and said "we now own all the trees in BC and we are taking over the industry?"

Under the CONSTITUTION ACT, 1867, the original provinces of Confederation retained ownership of crown lands and resources within their boundaries. When BC and PEI joined Confederation in 1871 and 1873, they too retained ownership of natural resources. But when the Prairie provinces were created (Manitoba in 1870, Alberta and Saskatchewan in 1905) a new and controversial policy emerged. In these provinces, ownership of natural resources was retained by the federal government to provide funds for colonization and railway building. Not until 1930, after a sometimes bitter political struggle, were natural-resource rights transferred by the federal government to the Prairie provinces.

Now here are some statistics for you guys. Last year something like 32 Billion dollars worth of infrastructure building was announced in the Ft. Mac area. That amount is equal to the combination of all infrastructure projects in Canada. (Government and Private). This should give you the scope of what sort of capital is required to fully develop the Oilsands. Which by the way will take another 20 years at least to fully develop.

There is no way in God's green earth that the Federal Government could even fund a small portion of what is needed in capital here. PetroCanada was formed to be our National Oil Company (Another leftist pipe dream) Before they were swallowed up by Suncor, PetroCanada was developing more projects in Nigera than they were in Alberta. In fact to date, PetroCanada only developed one small SAGD operation in Fort Mackay that produces a thimble full of raw bitumen each day. (So our venture into State Run Oil was a complete failure if you want to count jobs created at home)

I own a minority part of a small oilsands SAGD company. While we have a lease agreement with the Provincial Government, we do not actually own the resource, but develop it in partnership with the Province of Alberta via a royalty program. (Every barrel that is produced and sold, we pay a percentage on in a very complicated formula) If we for a minute broke the terms of our agreement we would loose our lease, and be put out of business. So would Suncor, so would Nexen. The general public feels that once you own a lease you just have to scoop up the oil and send it where you want. (It is as far from the truth as you can get)
Our company is presently searching out a partner (It will more than likely be a foreign one) in order to develop our lease to its full potential. If we can't find one, we will remain a very small player which has now created all the jobs possible. If we find one, we will create more operational jobs, more service jobs and more jobs in the manufacturing field across North America and overseas. By the way, everyone working at our site is from somewhere else in Canada.

Now I have many friends living on the left coast with a "screw Alberta" attitude. If you spent anytime in Fort. McMurray you would realize just how much the Oilsand's mean to BC and other Canadian Provinces. The ex mill towns of Campbell River, Gold River, Mackenzie just to name a few are staying alive right now thanks to jobs those ex mill workers have in Ft. Mac.

I came out of the Pulp & Paper industry and can tell you their are many of my old clients which are now my new clients. So if you have ever heard the saying "don't bite the hand that feeds you" it applies here. There is so much development going on here that companies are having to source manufacturing work out all over the world because there just is not enough manufacturing in North America to handle it locally. I work for a company that manufactures vessels and closures to the oil & gas industry (This is what pays the bills). We are getting requests for quotation from our offices in Europe and the far East, just  because there are two year backlogs in equipment here.

Now back to the actual oil business.

Refining/upgrading is a very margin poor business. Yes, refining all the bitumen in Alberta sounds really nice but here is why that will never happen.  There has not been a new refinery built in North America in something like 40 years. (This gives you a little insight on how much money refining does not make) Increasing refining capacity in North America would be silly, as the trend (and the right one) is to decrease consumption). It is much more efficient to retrofit an old refinery to upgrade bitumen into gasoline than it is to build a new refinery. (Keeping in mind we do not have the manpower here to do this anyway). There are also other factors such as infrastructure, water supply etc. Also, it is not economically feasible (or safe) to ship a tanker full of finished gasoline over to Asia.

But back to the Nexen deal. You are either a free market country or a socialist state owned mess. You can't go around and say "Canada is open for business, we want to trade with you" and then say "but don't think of setting foot on our soil". You can't have your cake and eat it too. I am pretty sure that this Nexen deal will open many doors for Canadian companies in China.

[Kootenanny]

(This will i hope, answer Kootenanny's concerns)

Thanks for this.  A well written post, overall.  I will, however, continue to harbour a few concerns.

Oh, and as an Albertan myself by birth, with still a lot of family there, I would certainly never have a "screw Alberta!" attitude.  However, living as I do (and have for most of my life) in BC, I also do not believe that the rights of Albertans to sell oil should trump the rights of BCers to protect their ecology.  A pipeline itself poses large enough risks (especially when constructed and operated by a company with such a laissez faire attitude as Enbridge has displayed); tanker traffic up Douglas Channel would pose far more.  

Rather than thinking 20 years down the road (the term you suggested the tar sands development would continue), why not think 50 years down the road, 100 years, even further?

[Baz]

Thanks for this.  A well written post, overall.  I will, however, continue to harbour a few concerns.

Oh, and as an Albertan myself by birth, with still a lot of family there, I would certainly never have a "screw Alberta!" attitude.  However, living as I do (and have for most of my life) in BC, I also do not believe that the rights of Albertans to sell oil should trump the rights of BCers to protect their ecology.  A pipeline itself poses large enough risks (especially when constructed and operated by a company with such a laissez faire attitude as Enbridge has displayed); tanker traffic up Douglas Channel would pose far more.  

Rather than thinking 20 years down the road (the term you suggested the tar sands development would continue), why not think 50 years down the road, 100 years, even further?

Kootenanny:

Of course I have no concerns about the folks in BC having Ecological concerns, providing they are made from a scientific view and not the present one that uses "lets stop the dirty oil" anyway we can.  Oil tankers, and even single hulled ones have been navigating the inside passage for 30 some years. Yes, they had one incident, but of course their is risk with anything. (I personally feel that Prince Rupert would be a wiser choice than shipping down the Douglas channel).  

Right now many barrels pass daily through Vancouver via rail which is about 99% more risk than pipeline transport. Without the Northern Gateway pipe line, this procedure will grow 100 fold (and so will the risk)

Oil has moved via pipeline from Edmonton to Vancouver through a National park with zero incidents for the last 50 or so years. Pipelines built today are so much more robust than anything built in the last few decades that spillage would be very slim if it happened.

My main contention coming out of BC right now (And please excuse me by generalizing) is the attitude that Alberta oil does not benefit us. Well until those that protest about the need to get something to market stop all use of petroleum products, refuse any Federal transfer money that comes from tax dollars as a result of Alberta oil, and stop taking employment from any oil industry related opportunities, your Province needs to face the reality of things. Instead of asking what is in it for us?  

Sort of ironic we are having this debate on a site that would probably not exist if oil disappeared tomorrow. (I guess we could divert to Horse touring - Net.) Oh but wait, my computer screen is derived from Oil.  

100 years out? Oil hopefully will be so passe.... I believe the calculated end of oil is 2040. (Mankind will probably kill each other by then fighting over it).