Category: Drill, Baby, Drill

Take out the Trash Day – Trans Mountain Expansion edition

So, if you didn’t see this news come out on Friday, because all horrible news is released on Friday, the Trans Mountain Pipeline just went up something like 44 per cent in cost. That’ll be paid for by us, by the way. The cost is now $30.9 billion. But wait! In 2013, Kinder Morgan figured they could build it for $6.8 billion. The current cost is only 4.5x what Kinder Morgan had planned.

Is it any wonder why ExxonMobil is walking away from longstanding, but never used offshore oil and gas leases off the BC coast? Any guesses why a company would walk away from a major oil and gas project in BC?

By the way, this clip from the first season of The West Wing is the absolute best nugget of political knowledge you can sum up in one minute (the first minute of this clip). Fridays are “Take out the Trash Day.”

A similar thing happened the Friday of the Family Day long weekend, when the feds released their just transition plan. Watch for upcoming stories on that.

Pay attention to this Newfoundland offshore oil case

Bay du Nord project artist conception. Equinor

Uncertainty about the regulation of downstream emissions was one of the things that ultimately killed the Energy East Pipeline project. This was one of the clearest cases of the federal Liberal government “moving the goalposts.” If legal ecowarriors Ecojustice are successful in this case, it could have profound implications for all oil production in Canada. That’s especially is we are to be “net zero” by any particular date.

Note in the story how the Bay du Nord offshore project was approved by CN-tower climber himself, Steven Guilbeault. The story notes how it was one of the hardest choices in his life. Interesting, how a Newfoundland offshore project could get approval from none other that Guilbeault, and yet the rest of the oil industry feels it has no hope with him. Would that have anything to do with Newfoundland’s consistent election results of nearly every seat going Liberal red for decades? And that this project will be enormously profitably for Newfoundland? Yet when it came to the $20 billion Teck Frontier oilsands project in Alberta, the company walked away because it didn’t feel it could get any regulatory confidence from the feds?

$40 billion in oilpatch CAPEX sounds great for 2023, until you realize it is half of 2014

Oilwell battery construction in southeast Saskatchewan, fall of 2022. Photo by Brian Zinchuk

Back in the lofty, pre-Trudeau government days of 2014, back when oil was booming, pipelines were planned to east and west coasts, and Alberta and Saskatchewan were swimming in money, around $81 billion was spent in capital expenditures (CAPEX) in the Canadian petroleum industry. On Wednesday, the Canadian Association of Petroleum Producers (CAPP) forecast CAPEX of $40 billion, which is just about double the disaster year of 2020, but half of 2014. And that’s before #justinflation. What would it be if we had a federal government supportive of the industry, instead of trying to make it disappear?

Curiously, Enbridge announced on the same day its spending a lot of money in Texas, including a port facility for Houston. Funny how it’s not talking about Northern Gateway to Kitimat, or Churchill, or even Valdez, Alaska? Wonder why?

And here’s Brian Zinchuk’s column analyzing all this.

A gusher of losses

If an oil company can’t make money in a period when oil prices skyrocket, it’s probably safe to say that there’s no hope for them. The darling of Mexican socialism seems to have fallen into that rut. How long until the defaults start and the country becomes another Venezuela?

The Mexican state oil company said Monday it had a fourth-quarter net loss of 172.4 billion pesos ($9.4 billion) compared with a net loss of 52 billion pesos in the third quarter, once again foregoing profits at a time when many major oil companies are raking in record billions.

Pemex is struggling to pay down debts that have risen to the highest of any oil major in the world. It must find the means to pay for about $8 billion in maturing debt this year.


Teck was going to spend $20 billion in the oil sands, now it’s totally out. Blame the feds

Teck, one of Canada’s largest mining companies, has been around for over 100 years. But even with all that experience, they couldn’t handle the federal government’s Impact Assessment. They were going to spend $20 billion on their Frontier Oil Sands Project. The initial application was in 2012, but eight years later, they didn’t have an answer, so they pulled it. On Thursday, they sold off their last oil sands interests and are out of the oil sands entirely. Wonder why?

Y2Kyoto: Facts Don’t Care About Your Models

From the Javier Blas’ Elements newsletter: A world still thirsty for oil

For years, energy experts modeling the impact of 2050 net zero targets on oil demand had the advantage that the deadline, and the incremental steps to getting there, were a long way off. If time proved their scenarios wrong, they’d be long forgotten anyway.

But now, those first intermediate waymarks are around the corner, and they look increasingly farfetched.

Earlier this week, BP Plc published its annual Energy Outlook, presenting three scenarios — not forecasts — for how oil demand may evolve. The Net Zero path, broadly in line with the goals of the Paris Agreement, is difficult to reconcile with current trends.

In such a narrative, BP’s model shows global oil consumption collapsing to 21 million barrels a day by midcentury, down from about 98 million today.

Ignore 2050 and focus instead on the intervening milestones, starting with 2025. In just two years’ time, BP’s Net Zero scenario sees oil demand 4 million barrels a day lower than it is now. That would mean removing the equivalent of Germany’s entire consumption in 2024 and repeating that feat again the following year.

Every oil forecast I’ve seen shows demand rising in 2023, and the few 2024 projections already published — including one from the US government — see growth continuing.

Looking further ahead, BP’s Net Zero readout suggests demand would need to plunge a further 9 million barrels a day from 2026 to 2030, falling to 85 million a day by the end of the decade. That equates to eliminating the consumption of France each year and, on the final year, striking out Italy as well.

Then the really difficult period starts. The scenario sees the world using just 70 million barrels a day in 2035, requiring the annual removal of 3 million a day. That equals the demand of Japan, currently the world’s fourth-largest consumer.

Net zero models look increasingly at odds with short-term trends. It’s possible oil demand can sink by 2050, but is it going to plummet in a matter of months and keep falling precipitously every year for the next decade? No.

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Related: Australia just extended a coal mine approval to 2063.

There’s No Point

The Telegraph- Biggest North Sea producer refuses to drill new oil wells because of windfall tax

The North Sea licensing round was launched in October, with then business secretary Jacob Rees-Mogg saying it was “more important than ever we make the most of sovereign energy resources”.
Since then, a windfall levy on oil companies, which was first introduced in May, has been increased to take the overall tax rate on North Sea producers from 40pc to 75pc until 2028.

For Peat’s Sake!

By now it should be apparent that a “green” future is not going to be high tech at all, but rather a reversion to a pre-industrial existence. I’m sure the peasants will rejoice at spending hours each week digging in a swamp.

Earlier this year the government introduced curbs to peat cutting to protect Ireland’s bogs – which are important carbon sinks and sources of biodiversity – but Europe’s energy crisis has boosted what is supposed to be an anachronism. It costs approximately €500 to heat a household with peat for a year versus several thousand euros for more climate-friendly sources of energy.

Provided, of course, that the green lobby will even allow homeowners to stave off freezing to death:

The European Commission has threatened to impose sanctions on Ireland unless it curbs peat cutting in special areas of conservation.