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Energy

Indigenous communities await Trans Mountain pipeline share

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Tanker Dubai Angel at the Trans Mountain terminal, Burnaby
(Photo: Radio-Canada / Georgie Smyth / CBC)

From Resource Works

Ottawa’s Commitment to 30 percent Indigenous Stake in Trans Mountain Pipeline Still Awaiting Confirmation.

Indigenous leaders in Western Canada have been waiting for months for confirmation that the federal government will indeed enable Indigenous Peoples to get a 30 percent share in the Trans Mountain oil pipeline system.

That Ottawa has such a share in mind has been confirmed by Alberta Premier Danielle Smith. She says Ottawa is looking at possibly offering a loan guarantee to First Nations.

“They wanted to get the Indigenous partners to own 30 per cent. . . . It’s going to be a great source of income for the Indigenous partners.”

With the pipeline system’s capacity set to almost triple through the expansion project known as TMX, the federal government first announced in 2019, its intention to explore the possibility of the economic participation of 129 affected Indigenous Peoples.

Finance Minister Chrystia Freeland sent Indigenous leaders a letter last August outlining a plan to sell a stake in the pipeline system to eligible communities through a special-purpose vehicle. It said they would not have to risk any of their own money to participate.

But since then Indigenous groups have been awaiting further word from federal authorities on how and when the equity promise will be kept.

All Ottawa has said publicly is this on May 1: “The federal government will launch a divestment process in due course.”

Two key groups have aired proposals for acquiring equity in the oil pipeline:

  • The Western Indigenous Pipeline Group was formed in 2018 “ to acquire a major stake in Trans Mountain for the benefit of Indigenous communities who live along the pipeline.” It’s been working behind the scenes, and, with Pembina Pipelines Corporation, developed in 2021 the Chinook Pathways operating partnership.

“Chinook Pathways is finance ready. There are no capital contributions required for Indigenous communities. We will structure the transaction so that participating communities will make zero financial contribution.”

  • Project Reconciliation, also founded in 2018, proposed a ”framework” that would give ownership of the pipeline system to 129 Indigenous Peoples.
    “We are poised to facilitate Indigenous ownership of up to 100 percent, fostering economic autonomy and environmental responsibility.”

And: “A portion of revenue generated (portion directed by each Indigenous community) will be used to establish the Indigenous Sovereign Wealth Fund, supporting investment in infrastructure, clean energy projects and renewable technologies.”

In Alberta, the pipeline system spans the territories of Treaty 6, Treaty 8, and the Métis Nation of Alberta (Zone 4). In British Columbia, the system crosses numerous traditional territories and 15 First Nation reserves.

Commentator Joseph Quesnel writes: “According to Trans Mountain, there have been 73,000 points of contact with Indigenous communities throughout Alberta and British Columbia as the expansion was developed and constructed. . . .

“Beyond formal Indigenous engagement, the project proponent conducted numerous environmental and engineering field studies. These included studies drawing on deep Indigenous input, such as traditional ecological knowledge studies, traditional land use studies, and traditional marine land use studies.”

And Alberta’s Canadian Energy Centre reported: “In addition to $4.9 billion in contracts with Indigenous businesses during construction, the project leaves behind more than $650 million in benefit agreements and $1.2 billion in skills training with Indigenous communities.”

Not all First Nations have been happy with the expansion project.

In 2018, the federal appeal court ruled that Ottawa had failed to consider the concerns of several nations that challenged the project. In 2019, the project was re-approved by Ottawa, and again several nations (including the Squamish and Tsleil-Waututh) appealed. That appeal was dismissed in 2020. The nations then went to the Supreme Court of Canada, but it declined to hear the case.

Private company Kinder Morgan originally proposed the expansion project, but when it threatened to back out in 2018, the federal government stepped in and bought the existing pipeline, and the expansion project, for $4.5-billion. Ottawa said it was “a necessary and serious investment in the national interest.”

Ottawa at that time estimated that the total cost of the expansion project would come in around $7.4 billion. But cost overruns have since driven the final price to some $34 billion.

On the other hand, Ernst & Young found that between 2024 and 2043, the expanded Trans Mountain system will pay $3.7 billion in wages, generate $9.2 billion in GDP, and pay $2.8 billion in government taxes.

The TMX expansion twinned the 1953 Trans Mountain pipeline from near Edmonton to Burnaby (1,150 km) and increased the system’s capacity to 890,000 barrels a day from 300,000 barrels a day.

The original pipeline will carry refined products, synthetic crude oils, and light crude oils with the capability for heavy crude oils. The new pipeline will primarily carry heavier oils but can also transport lighter oils.

And the Alberta Energy Regulator says it expects oilsands production to grow by more than 17 per cent by 2033 (increasing to four million barrels a day from 3.4 million in 2023). And it expects global oil prices will continue to rise.

The TMX expansion finally opened and began to fill on May 1 this year.

And, as our CEO Stewart Muir noted, there was a quick reduction of eight cents a litre in gasoline prices for Vancouver due to completion of the project.

From Trans Mountain’s Westridge Marine Terminal at Burnaby, around three million barrels of oil have been shipped to China or India since the TMX expansion opened.

But because the port of Vancouver can handle only smaller Aframax tankers, more than half the oil has first been shipped to California, where it is then transferred to much larger VLCC (Very Large Crude Carrier) tankers. That makes for a longer but potentially cheaper journey.

At Westridge, because of limited tanker size, cargoes are limited to about 600,000 barrels per Aframax vessel. The largest VLCCs can carry two million barrels of oil. Westridge now can handle 34 Aframax tankers per month.

Some 20 tankers loaded oil there in June, a couple fewer than TMX had hoped for.

“This first month is just shy of the 350,000-400,000 bpd (barrels a day) we expected ahead of the startup,” said shipping analyst Matt Smith. “We are still in the discovery phase, with kinks being ironed out . . .  but in the grand scheme of things, this has been a solid start.”

The Dubai Angel became the first Aframax tanker to load at Westridge. It took on 550,000 barrels of Alberta crude in the last week of May, and headed for the port of Zhoushan, China.

Now the Dubai Angel is headed to Burnaby for another load, and is expected to arrive there on July 8.

Energy

What does a Trump presidency means for Canadian energy?

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From Resource Works

Heather-Exner Pirot of the Business Council of Canada and the Macdonald-Laurier Institute spoke with Resource Works about the transition to Donald Trump’s energy policy, hopes for Keystone XL’s revival, EVs, and more. 

Do you think it is accurate to say that Trump’s energy policy will be the complete opposite of Joe Biden’s? Or will it be more nuanced than that?

It’s more nuanced than that. US oil and gas production did grow under Biden, as it did under Obama. It’s actually at record levels right now. The US is producing the most oil and gas per day that any nation has ever produced in the history of the world.

That said, the federal government in the US has imposed relatively little control over production. In the absence of restrictive emissions and climate policies that we have in Canada, most of the oil production decisions have been made based on market forces. With prices where they’re at currently, there’s not a lot of shareholder appetite to grow that significantly.

The few areas you can expect change: leasing more federal lands and off shore areas for oil and gas development; rescinding the pause in LNG export permits; eliminating the new methane fee; and removing Biden’s ambitious vehicle fuel efficiency standards, which would subsequently maintain gas demand.

I would say on nuclear energy, there won’t be a reversal, as that file has earned bipartisan support. If anything, a Trump Admin would push regulators to approve SMRs models and projects faster. They want more of all kinds of energy.

Is Keystone XL a dead letter, or is there enough planning and infrastructure still in-place to restart that project?

I haven’t heard any appetite in the private sector to restart that in the short term. I know Alberta is pushing it. I do think it makes sense for North American energy security – energy dominance, as the Trump Admin calls – and I believe there is a market for more Canadian oil in the USA; it makes economic sense. But it’s still looked at as too politically risky for investors.

To have it move forward I think you would need some government support to derisk it. A TMX model, even. And clear evidence of social license and bipartisan support so it can survive the next election on both sides of the border.

Frankly, Northern Gateway is the better project for Canada to restart, under a Conservative government.

Keystone XL was cancelled by Biden prior to the invasion of Ukraine in 2022. Do you think that the reshoring/friendshoring of the energy supply is a far bigger priority now?

It absolutely is a bigger priority. But it’s also a smaller threat. You need to appreciate that North America has become much more energy independent and secure than it has ever been. Both US and Canada are producing at record levels. Combined, we now produce more than the Middle East (41 million boe/d vs 38 million boe/d). And Canada has taken a growing share of US imports (now 60%) even as their import levels have declined.

But there are two risks on the horizon: the first is that oil is a non renewable resource and the US is expected to reach a peak in shale oil production in the next few years. No one wants to go back to the days when OPEC + had dominant market power. I think there will be a lot of demand for Canadian oil to fill the gap left by any decline in US oil production. And Norway’s production is expected to peak imminently as well.

The second is the need from our allies for LNG. Europe is still dependent on Russia for natural gas, energy demand is growing in Asia, and high industrial energy costs are weighing on both. More and cheaper LNG from North America is highly important for the energy security of our allies, and thus the western alliance as it faces a challenge from Russia, China and Iran.

Canada has little choice but to follow the US lead on many issues such as EVs and tariffs on China. Regarding energy policy, does Canada’s relative strength in the oil and gas sector give it a stronger hand when it comes to having an independent energy policy?

I don’t think we want an independent energy policy. I would argue we both benefit from alignment and interdependence. And we’ve built up that interdependence on the infrastructure side over decades: pipelines, refineries, transmission, everything.

That interdependence gives us a stronger hand in other areas of the economy. Any tariffs on Canadian energy would absolutely not be in American’s interests in terms of their energy dominance agenda. Trump wants to drop energy costs, not hike them.

I think we can leverage tariff exemptions in energy to other sectors, such as manufacturing, which is more vulnerable. But you have to make the case for why that makes sense for US, not just Canada. And that’s because we need as much industrial capacity in the west as we can muster to counter China and Russia. America First is fine, but this is not the time for America Alone.

Do you see provinces like Alberta and Saskatchewan being more on-side with the US than the federal government when it comes to energy?

Of course. The North American capital that is threatening their economic interests is not Washington DC; it’s Ottawa.

I think you are seeing some recognition – much belated and fast on the heels of an emissions cap that could shut in over 2 million boe of production! – that what makes Canada important to the United States and in the world is our oil and gas and uranium and critical minerals and agricultural products.

We’ve spent almost a decade constraining those sectors. There is no doubt a Trump Admin will be complicated, but at the very least it’s clarified how important those sectors are to our soft and hard power.

It’s not too late for Canada to flex its muscles on the world stage and use its resources to advance our national interests, and our allies’ interests. In fact, it’s absolutely critical that we do so.

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Energy

What Will Be the Future of the Keystone XL Pipeline Under President Trump?

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From EnergyNow.ca

By Terry Winnitoy, EnergyNow

The Keystone XL Pipeline, proposed in 2008, was designed to transport Canadian crude oil from Alberta to refineries in the United States, specifically to Steele City, Nebraska, and onward to refineries in Illinois and Texas, as well as to an oil pipeline distribution center in Cushing, Oklahoma.

Spanning approximately 1,179 miles and designed to transport up to 830,000 barrels of oil per day, the pipeline promised significant economic and energy security benefits. However, it became a focal point of political and environmental controversy, leading to its eventual cancellation by Presidents Obama and Biden.

Here’s a brief look at its history, the reasons it should have been built, the political dynamics that led to its cancellation and will President-elect Trump revive it?

Why the Keystone XL Pipeline Should Have Been Built

Economic and Job Creation

The pipeline was projected to create thousands of construction jobs and several hundred permanent jobs, providing a significant boost to the economy. It was also expected to stimulate economic activity through the development of related infrastructure and services.

Energy Security

By facilitating the efficient transport of a large volume of oil from a stable and friendly neighboring country, the pipeline would have reduced American dependence on oil imports from more volatile regions, enhancing national energy security.

Environmental Safety

Pipelines are generally safer and more environmentally friendly for transporting oil compared to rail or truck, with lower risks of spills and accidents. The Keystone XL was designed with the latest technology to minimize leaks and environmental impact.

Regulatory Oversight

The project underwent extensive environmental reviews and was subject to strict regulatory standards to ensure it adhered to environmental protection and safety measures.

Political Reasons for Cancellation

Environmental Activism

The pipeline became a symbol for environmentalists who opposed further development of fossil fuel infrastructure. They argued it would contribute to climate change by enabling the extraction and consumption of oil sands, which are more carbon-intensive than other oil sources.

Obama’s Cancellation

President Obama rejected the pipeline in 2015, citing environmental concerns and its potential impact on global climate change. He argued that approving the pipeline would have undercut America’s leadership on climate change.

Trump’s Reversal and Biden’s Final Cancellation

President Trump revived the project in 2017, citing economic benefits and energy security. However, President Biden canceled it again on his first day in office in 2021, fulfilling a campaign promise to prioritize climate change issues and transition towards renewable energy.

Political Symbolism

For both Obama and Biden, the decision to cancel the Keystone XL Pipeline was also a symbolic gesture, demonstrating a commitment to environmental sustainability and a shift away from fossil fuel dependence in line with their administrations’ climate policies.

Will President-Elect Trump Reinstate It?

Currently, there is no definitive answer on whether President-elect Trump will reinstate the Keystone XL Pipeline. His previous administration showed support for the project, citing its potential economic and energy security benefits. However, reinstating the pipeline would require navigating significant political, legal, and environmental challenges that have developed over the years.

It would also depend on the current geopolitical, economic, and environmental priorities at the time of his taking office. The Keystone XL Pipeline’s history is a complex tapestry of economic aspirations, environmental concerns, and political maneuvers.

Its cancellation has been a contentious issue, reflecting the broader national and global debates over energy policy and climate change strategy. Whether it will be reinstated remains a significant question, contingent on a multitude of factors including political will, environmental policies, and market dynamics.

That all said, re-instating its approval might be the perfect “in your face” moment for Trump to Obama and Biden as he begins his second term of presidency. We’ll have to wait and see.

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