FROLITICKS

Satirical commentary on Canadian and American current political issues

May 3

There is a Catch-22 in Pipeline Issues Between Canada and the U.S.

by bcurry

Following Joe Biden’s inauguration as U.S. president, he took the widely expected step through an executive order of cancelling the cross-border permit for the US$14.4-billion Alberta-to-Texas heavy oil pipeline, the Keystone XL pipeline. The decision marks the third time a U.S. president has blocked the construction of this pipeline.  Next occurred the decision by Michigan’s Governor Gretchen Whitmer last November which ordered Calgary-based Enbridge to shut down its nearly 70-year-old Line 5 pipeline by May 12, 2021.  Line 5 carries each day up to 540,000 barrels of crude oil and natural gas liquids across Michigan and under the Great Lakes.  Line 5 is part of Enbridge’s mainland system carrying fuel from Alberta’s oil sands to the Midwestern U.S. and Eastern Canada, especially to refineries in Sarnia, Ontario.  Not surprisingly, President Biden’s and Governor Whitmer’s decisions were applauded by environmentalists and Indigenous groups on both sides of the border.

The difficulty is that Canada is the world’s fourth-largest producer of crude oil, and the U.S. is its top customer.  While past incidents have occurred where crude oil leakages in pipelines, including those which are part of Enbridge’s mainland system, the alternative means of transportation via rail and trucking also represents serious safety issues.  This potential danger was clearly demonstrated in the fiery derailment in July 2013 in Lac-Megantic, Quebec, which killed 47 people and wiped out part of the town.  From an economic point of view, the transport of crude oil and natural gas liquids by pipeline is the most efficient and least costly option.  Realistically, any transition within the U.S. or Canada away from fossil fuels will take time.  While the elimination of fossil fuels makes good environmental sense in light of climate change, there continues to be a dependence on fossil fuels for servicing our industries, running our transportation hubs, producing electricity and heating our homes.  Both countries have to cooperatively work together towards achieving environmental goals without creating bad relations between our governments and citizens.

Back in January, Alberta’s Premier Jason Kenney asked the Canadian government to push the U.S. government to reimburse the $1.5 billion it stands to lose from the cancellation of Keystone XL and to reimburse TC Energy, the project proponent, for the money it has sunk into the project.  Alberta took an ownership stake in 2020, representing more than $1 billion in taxpayer money to fund the construction of the pipeline.  The Biden administration’s decision to block the Keystone XL pipeline has put Prime Minister Justin Trudeau in a very difficult situation, one which he has raised with the President.  On the one hand he has to support Alberta’s oil and gas industry.  On the other hand the Prime Minister has agreed reduce in Canada’s greenhouse gas emissions by 40 to 45 percent within the next decade.  This brings Canada in line with the Biden administration recent pledge to slash U.S. greenhouse gas emissions by 50-52 percent from 2005 levels by 2030.

Critics of the decision to shut down the Line 5 pipeline note that 6,500 good-paying jobs in Sarnia, Ontario, are on the line.  A further 23,500 indirect jobs in that same region could also be impacted, and thousands more across Ontario and Quebec.  Line 5 also feeds into Line 9, which carries oil to refineries in Montreal and Lévis for Quebec’s supply needs.  According to Minister of Natural Resources Seamus O’Regan, Line 5 delivers 66 percent of the crude oil consumed in Quebec.  This means that besides Alberta, the Premiers of Ontario and Quebec are extremely unhappy with the Michigan Governor’s position.  Any decision to move crude oil and natural gas liquids by alternate means is considered less safe, more costly and realistically not viable given the vast quantities that have to be transported.  This is your Catch-22.  For this reason, both Canada and the U.S. need to work much more closely to resolve all relevant issues pertinent to their respective constituents.  Our continuing good trade and political relationships are in the balance.

Canada Cimate Change Climate Change Economy Foreign Policy Foreign Policy Keystone XL Oil and Gas Transport of Oil US

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Oct 5

Can We Believe Canadian Political Parties on Promises to Deal with Climate Change?

by bcurry

During the current federal election in Canada, four of the major parties are each suggesting that they have the answer when it comes to dealing with the issue of climate change. Years ago, Canada under a Conservative government signed onto the Paris Climate Accord. An assertion was made that Canada would reach certain reductions in carbon emissions by 2020. Recent studies have shown that this won’t happen.  The current Liberal government did introduce a tax on fossil fuel usage and greenhouse emissions, but is facing several court battles spearheaded by several Conservative provincial governments.  While Canadians in polls tend to support tackling climate change as an important issue, they appear to not be willing to pay much in support of policies directed at the issue.  Especially where jobs are involved.

The recent demonstrations held across Canada and the world highlighted the concerns of future generations about the impact of climate change and the abysmal efforts of countries to seriously address the issue. One could not help but admire the anger of today’s youth over the lack of real progress in reducing carbon emissions globally and our continuing reliance on fossil fuels.  Indeed, in Canada, it didn’t help that the federal government bought an oil and gas pipeline in the hope of completing its construction down the road. It is hoped that oil from the Alberta oil fields would be transported via the pipeline to the coast of British Columbia in order to be shipped to overseas markets. Somewhat hypocritical, yes!  Then you have the federal Green Party and New Democratic Party stating that they would cancel all pipeline construction, instead preferring to invest in green and alternative technologies.  Somewhat unrealistic, yes!  The Conservative Party’s environment platform is pretty much straight forward: kill the federal carbon tax.  However, its leader has little to offer in the Party’s proposed policies, given few details, timelines and costing.  Some Conservatives, like the Republicans in the U.S., still believe that climate change is a hoax.

All in all, the major federal parties are nowhere near meeting the foreseen needs associated with effectively tackling issues surrounding climate change. The Green Party which represents the main party with a holistic environmental agenda has little chance of ever forming the government.  However, should the October election result in a minority government, the Green Party could become a major player in supporting either the Liberals or Conservatives in forming the government.  Should this happen, then Canada may just have a national government willing to deal with the urgent issues concerning climate change and carbon emissions. Perhaps, this is what Canada needs at this crucial juncture in human history.

 

Canada Cimate Change Climate Change Oil and Gas Transport of Oil US

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Jun 3

Coal, Oil and Gas Are All Very Nice, But ……

by bcurry

Well, it looks like we’ve got a conundrum. On the one hand, everyone is increasingly concerned about climate change, while on the other hand cheap sources of coal, oil and natural gas keep popping up. However, while a hearty supply of coal, oil and natural gas provides cheap energy sources for now, eventually even these sources will become depleted. And then what? By the looks of it, certainly not renewable energy sources! What about seriously dealing with the ongoing impact of fossil fuel usage on the climate?

North Americans aren’t the only ones in this boat. Europeans, the Chinese, the Indians, and the rest of the developed world are rowing to the same tune. Much of the prognosis is being attributed to new technologies in drilling, in particular the recovery of shale oil and gas through a contentious process called “fracking”. In addition, new pipelines are expected to pop up all over the world, including those planned for between Russia and China and the U.S. and Canada. Liquefied natural gas (LNG) facilities are also expected to expand in the U.S. and Canada in order to export natural gas to Asia and Europe. But at what environmental risks?

Oil and gas extraction and production is responsible for about a third of all carbon emissions, while the combustion engine releases about another third of pollutants. Alas, by 2030 the U.S. Environmental Protection Agency (EPA) wants to cut power plant emissions by 30 percent from 2005 levels. The EPA is particularly going after power plants, notably those electrical generation operations powered by coal — coal still producing almost 40 percent of electricity generation in the U.S. The new EPA proposal, if approved, will most likely force power plants to switch to natural gas or to seek out renewable or nuclear energy resources. Remember, the U.S. is currently the second largest contributor to global warming on the planet.

As for Canada, Environment Canada predicts that the country will fail to meet its greenhouse gas emissions reduction target of 17 percent below 2005 levels by 2020, primarily because of the oilsands projects whose emissions are expected to triple. Regulations on Canada’s largest oil and gas emitters have yet to be released, seven years after they were first discussed. The federal government talks a good talk, but has failed to walk the walk.

The problem is that President Obama has to convince the states and the fossil fuel industry to reduce carbon emissions in line with national targets. Despite states such as Missouri and Illinois for example which continue to produce at least 80 percent of their electricity from coal. Prime Minister Stephen Harper believes that Canada doesn’t get enough credit given how hard it is to cut emissions from a system where much of the energy is already clean — namely hydroelectric power. The PM completely ignores the predicted increases in greenhouse gas emissions from the oilsands and the potential environmental issues surrounding the expansion of pipelines to carry oilsands crude oil across Canada and into the U.S. Between Obama and Harper, when it comes to urgently dealing with fossil fuels, one gets a feeling of witnessing — excuse the expression — the blind leading the blind.

Canada Coal Keystone XL Oil and Gas Oil and Gas Transport of Oil US

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Feb 6

Keystone XL – Pipe Dream or Nightmare for Canadian and American Politicians

by bcurry

Well, it appears that the proposal for the Keystone XL pipeline has finally passed at least one of its biggest hurdles. In its Final Environmental Impact Statement, the U.S. Department of State concluded that completing the pipeline’s northern leg would not have a major impact on global greenhouse gas emissions. Yet, this statement still doesn’t guarantee that the pipeline, facilitating the north-south movement of Canadian heavy crude over 4,000 miles across North America, will receive final approval from Washington. As events have shown, there has been a fundamental confusion in the Obama administration’s policy approach to Keystone from the very beginning. Given environmentalists’ opposition and some emerging legal challenges, President Obama may yet choose to take his merry time to decide on whether to allow the pipeline’s construction.

One thing is for sure, whether the Keystone XL pipeline is built or not, the development of the Alberta “oilsands” will continue. Too much has been invested to date to stop the flow and transport of its so-called dirty heavy crude. Indeed, North American railroads have been taking up a good deal of the slack, much to the dismay of communities located along their tracks and a real fear of future derailments of oil-hauling trains. The cry of “remember Lac Megantic” goes up and rightly so.

In addition, the Americans don’t appear to be in any hurry to bless such endeavours given the vast amounts of oil now coming out of American ground. The U.S. has become fairly energy self-sufficient in oil and natural gas supplies due to “fracking” technologies. Indeed, record U.S. oil production, which rose by 992,000 barrels per day in 2013, more than cancels out the amount of oilsands bitumen that the pipeline would transport to Texas Gulf Coast refineries. However, experts estimate that within the next 15 years the U.S. will still have to import about 30% of its daily oil requirements. This compares to only a few years ago when Americans were looking at importing 70% of their needs. Having ready access to Canadian heavy crude oil could provide one distinct advantage with respect to ensuring American national security. If all of that 30% were to come from Canada, future “energy independence” would most likely encompass an entire continent. No more need to rely on Arab oil imports.

However, Prime Minister Stephen Harper and his government have dropped the ball on this file. Refusing to take “no” for an answer, the PM even gave hints of a threat to divert the heavy crude to China via a new pipeline to the Pacific coast. The mighty Chinese already have a very small but important stake in oilsands development. Sorry, but trying to bully the American President into quickly approving such a project is probably not a good strategy! Demonstrating that the Canadian and Albertan governments are really serious about dealing with the problem of carbon pollution may have been more advantageous and useful. Furthermore, TransCanada and the other pipeline companies will have to better demonstrate their capacity to minimize any environmental and economic damage from potential pipeline leaks — and inevitably there will be more such leaks.

In the meantime, numerous American industry associations and environmentalists continue to battle it out to convince the Obama administration and Congress as to the merit of their respective positions. All the Canadian administration can do is sit awkwardly on the sidelines, patiently wait and see what will happen. Who knows, Canada’s pipe dream scenario may yet become its worst nightmare!

Keystone XL Transport of Oil

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Jul 11

Quebec’s Deadly Train Derailment At Lac-Megantic Is Only Tip of the Iceberg

by bcurry

The horrendous derailment of tank cars carrying thousands of liters of crude oil and the resulting explosion and fire killing dozens of people in the small community of Lac-Megantic represent a further reminder of the dangers of transporting hazardous materials through populated areas. In addition, waves of crude oil were dumped into nearby water bodies in what officials call an unprecedented environmental disaster for the province of Quebec.

According to the American Association of Railways Rail, such shipments of crude oil have increased enormously since 2008 when 9,500 carloads were shipped. Last year, crude oil shipments topped 230,000 carloads. That figure is expected to jump again this year with first quarter shipments already at 97,000 carloads. On top of which, the National Transportation Safety Board in Washington reported that older, unsafe tank cars make up about 70 percent of the existing North American fleet — and that those cars will be on the rails for decades. These older tank cars have a service life between 30 and 40 years and the industry is apparently resisting the billion-dollar-plus price tag to retrofit them. As well, getting the new stock is expected to be a very slow process given the current back orders in the industry.

In 2008, a parliamentary committee investigating railway safety in Canada stated that it had “serious concerns” about delays and the manner in which railway safety management systems have been implemented by railway companies and the federal government. More recently, agencies such as the Canadian Transportation Safety Board and federal Environment Commissioner issued scathing audits raising safety concerns over the transportation of dangerous goods by rail. However, the Board and Environment Commissioner can only make recommendations to the government based on their findings. It is up to the government and the responsible departments, in this case Transport Canada, to respond to their recommendations with changes in policies, legislation and regulatory practices. Furthermore, it has been more than five years since the last federal comprehensive safety review of the rail industry. While a number of their recommendations have since been implemented by the government, the freight-rail industry continues to evolve particularly as a result of the above-noted rapid growth in moving crude oil by rail.

The primary problem is with the government’s past and current policy aimed at deregulation of the transportation industry, making it primarily industry’s responsibility to implement effective safety policies and practices. With deregulation and in light of the industry’s growth, there are fewer inspectors to carry out safety inspections and to follow up on corrective measures by employers where safety violations are uncovered. Moreover, the government relies heavily on the industry to police itself. Yet, as we have witnessed in Canada, the series of derailments involving dangerous goods in recent years, including that at Lac-Megantic, have demonstrated that greater enforcement and regulator activity is really what is needed. Otherwise, more such tragic incidents will occur with both significant human and environmental impacts. Be it rail cars or pipelines, governments have been far to slow to respond to the increasing dangers, suggesting that Canadians and Americans will themselves have to step forward and demand better policing and mitigation measures.

Transport of Oil

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