Monday, May 11, 2015
Contact: Virginia Cramer, 804-519-8449, virginia.cramer@sierraclub.org
WASHINGTON, DC– The Obama administration granted approval today for Shell Oil to move ahead with plans to drill in the Arctic’s Chukchi Sea. The decision comes against a backdrop of growing opposition in Seattle and across the country to Arctic drilling, and just as the U.S. assumes leadership of the Arctic Council.
In response Michael Brune, Executive Director of the Sierra Club issued the following statement.
“We are deeply disappointed that just days after the United States took over chairmanship of the Arctic Council, an international body dedicated to protecting the Arctic environment, the Obama Administration decided to allow Shell to move forward with its dirty and dangerous plan to drill in our Arctic waters. This is exactly the wrong message to send to the world.
“Shell’s poor track record in the Arctic does not inspire confidence in its ability to drill safely in the unique and harsh environment of America’s Arctic Ocean. In fact, an analysis by the Obama administration itself predicts a 75% chance of a major oil spill if Shell is allowed to drill in America’s Arctic Ocean.
“Both science and common sense is crystal clear in telling us that undeveloped dirty fuels, especially those in the Arctic, must remain in the ground if we are to avoid the worst consequences of climate disruption. Downplaying the threats drilling poses to our climate, communities, and environment — as Shell continues to do — does not in reality make the threats any less serious. The Obama administration must say no to drilling in America’s Arctic Ocean, cancel these leases, and remove future leasing from the five-year offshore drilling plan.”
Alberta’s possible pivot to the left alarms Canadian oil sector
By Scott Haggett and Nia Williams, May 4, 2015 7:07am EDT
Alberta NDP Leader Rachel Notley meets with Mayor Naheed Nenshi in his office in Calgary, Alberta, April 30, 2015. REUTERS/Todd Korol
(Reuters: CALGARY, Alberta) – Canada’s oil-rich province of Alberta is on the cusp of electing a left-wing government that can make life harder for the energy industry with its plans to raise taxes, end support for key pipeline projects and seek a bigger cut of oil revenues.
Polls suggest Tuesday’s election is set to end the Conservative’s 44-year reign in the province that boasts the world’s third-largest proven oil reserves and now faces recession because of the slide in crude prices.
Surveys have proven wrong in Canadian provincial elections before and voters may end up merely downgrading the Conservatives’ grip on power to a minority government.
Yet the meteoric rise of the New Democratic Party and the way it already challenges the status-quo of close ties between the industry and the ruling establishment has alarmed oil executives. The proposed review of royalties oil and gas companies pay the government for using natural resources and which could lead to higher levies, is a matter of particular concern.
“Now is not the time for a review of oil and natural gas royalties,” Tim McMillan, president of the Canadian Association of Petroleum Producers, the country’s top oil lobby, said in a statement.
A 2007 increase in the levy was rolled back when the global financial crisis struck and oil executives say today the time is equally bad to try it again.
Yet the left’s leader Rachel Notley, a former union activist and law school graduate, has shot up in popularity ratings in the past months advocating policies that have been anathema for many conservative administrations.
She says she would not lobby on behalf of TransCanada Corp’s controversial Keystone XL pipeline or support building of Enbridge Inc’s Northern Gateway pipeline to link the province’s oil sands with a Pacific port in British Columbia. Citing heavy resistance from aboriginal groups to the Enbridge line, Notley says Alberta should back those that are more realistic such as TransCanada’s Energy East pipeline to the Atlantic ocean.
PACKING UP?
Notley also advocates a 2 percentage point rise in Alberta’s corporate tax rate to 12 percent to shore up its budget that is expected to swing from a surplus to a C$5 billion deficit in 2015/2016 as energy-related royalty payments and tax revenues shrink.
Even with the proposed corporate tax hike Alberta’s overall taxes would remain the lowest nationally. Oil executives warn, however, that any new burdens at a time when the industry is in a downturn, shedding jobs and cutting spending, could prompt firms to move corporate head offices out of the province.
“Business is mobile,” said Adam Legge, president of the Chamber of Commerce in Calgary where most of Canada’s oil industry is based. “Capital, people and companies move.”
Ironically, the challenge the oil industry and the Conservatives face is in part a by-product of Alberta’s rapid growth fueled by the oil-sands boom.
The influx of immigrants from other parts of Canada and overseas has changed the once overwhelmingly white and rural province. Today Alberta is one of the youngest provinces and polls show younger and more diverse population is more likely to support left-wing causes such as environment and education and more critical of big business. The New Democratic Party still only got 10 percent of the votes in the 2012 vote, but an election of a Muslim politician as a mayor of Calgary in 2010 served as an early sign of the changing political landscape.
The Conservatives themselves and their gaffe-prone leader Premier Jim Prentice also share the blame for the reversal of fortunes with one poll showing them trailing the left by 21 percent to 44 percent.
Prentice angered voters when he told Albertans to “look in the mirror” to find reasons for the province’s fiscal woes and then passed a budget in March that raised individual taxes and fees for government services but spared corporations.
Scandals – Prentice’ s predecessor left last year because of a controversy over lavish spending – and blunders added to the party’s woes.
The NDP vaulted to the top of the polls after Notley’s strong performance in an April 23 televised debate, when Prentice, former investment banker, drew fire for suggesting his rival struggled with math.
Then there is voter fatigue with a party seen as too comfortable and scandal-prone after decades in power.
“It’s still the same gang, the same policy, same procedures, the same concept of entitlement,” said one executive at a large oil and gas producer who declined to be named because he is not authorized to talk to the media. “I know some extremely neo-conservative guys who have said enough is enough.”
(Additional reporting by Julie Gordon in Vancouver and Mike De Souza in Ottawa; Editing by Amran Abocar and Tomasz Janowski)
Repost from onEarth, Natural Resources Defense Council
Whatever Shall We Do with All this Extra Oil?
Oil companies want the crude-export ban lifted. Is that a good idea?
By Brian Palmer | December 13, 2014
If oil industry lobbyists didn’t have so much money, Congress would get pretty sick of them. They’re constantly whining. They don’t like the carbon pollution rules. Fuel-economy standards are too tight. Something about a pipeline from Canada. Today, they’re back on Capitol Hill moaning about the crude-export ban.
What’s that you say? You’ve never even heard of the crude-export ban? Well, now you have, and I’ve compiled a few FAQs for you.
What does the ban say?
The short answer: Crude oil drilled in the United States must be refined in the country. But as with most laws, there are exceptions. Companies can export oil to be refined in Canada as long as the products are sold there or back to the States. Some Alaskan crude has been exported. And a particular kind of heavy crude from California can be sent abroad because presidents George H.W. Bush and Bill Clinton decided it was in the national interest. Such exceptions can be significant: Total exports peaked at 104 million barrels in 1980, representing about 3 percent of total U.S. extraction that year. In recent years, though, that number has fallen below 50 million barrels.
That law’s been around since the 1970s. What’s the big deal now?
Well, we’re talking about an industry in which greed is considered good. Money, of course! Until recently, energy companies weren’t drilling enough oil to make a big splash on the international market. But U.S. production surged by nearly 50 percent between 2008 and 2013, and those CEOs now think they can take home even bigger bonuses if they’re allowed to sell abroad.
Why was it created in the first place?
Basically because the Arab members of the Organization of Petroleum Exporting Countries got mad that the United States and a few other countries were siding with Israel during the 1973 Arab-Israeli War—and cut production and banned petroleum exports to those nations. The price of crude quadrupled, causing a five-month-long oil crisis that majorly disrupted global commerce and American lives. Since then, energy independence has been a goal for every U.S. president; Gerald Ford, for example, signed the 1975 Energy Policy and Conservation Act, which prohibited most crude exports and established a national strategic oil reserve.
Will I pay more for gas either way?
The ban certainly depresses the price of U.S.-produced crude oil, but gas prices involve a lot of factors. Energy analysts and industry advocates have debated the ban’s effects for years. So, in an attempt to settle the argument, the somewhat more impartial U.S. Energy Information Administration recently published a report on what would happen to gas prices if exports were allowed. You can read it here if you’re an oil-price wonk. Here’s the short version, from the organization’s administrator, Adam Sieminski: “[I]t probably wouldn’t do a great deal one way or the other with gasoline prices.”
Apparently, when it comes to economics, the controversy has more to do with profits than your family budget.
What would it mean for the climate if we allowed the exports?
It might be bad news. In an era of high domestic production, the ban holds down the price of West Texas Intermediate, North America’s benchmark crude, which then keeps Canada’s tar sands crude prices low. (The price points of the two crudes move roughly in sync.) So if Congress lifts the ban, the tar sands industry, which is currently in a major funk, could be saved—and this would mean a lot more extraction of the most carbon-intensive fossil fuel source around.
That’s the theory. And a March study from Oil Change International supports it: The report concluded that allowing exports would result in added carbon emissions equivalent to the output of 42 coal plants. The factors influencing global oil prices are complex, though, so it’s difficult to say exactly how much fossil fuel the crude-export ban is keeping in the ground.
The lack of certainty, however, makes its own point. Before Congress even considers repealing a 39-year-old law dealing directly with fossil fuels, it ought to understand the implications for climate change. It’s appalling that politicians would consider lifting the ban without full information. But I guess they’re not scientists.
Outlook for Oil Prices ‘Only Getting Murkier,’ Energy Agency Says
By Stanley Reed, April 15, 2015Royal Dutch Shell is expecting prices to recover much of their recent drop over the next few years. It projects prices to hit $90 a barrel in 2018. Chris Ratcliffe / Bloomberg
LONDON — The outlook for oil prices is still uncertain after the sharp fall that began last summer, the International Energy Agency said on Wednesday.
Given the price collapse, “one might be hoping for more clarity on supply and demand,” the agency acknowledged in its monthly Oil Market Report, which was released on Wednesday. “Yet in some ways, the outlook is only getting murkier.”
Oil prices, which have fallen about 50 percent since June, rose after the report and a separate United States government report that said that American crude stockpiles had risen less than expected.
The international benchmark, Brent crude, was up about 3 percent on Wednesday, to $60.35, while its American counterpart jumped more than 5 percent to about $55.97.
The agency’s report reflects a broad debate inside and outside the oil industry about where prices might eventually settle.
Citigroup, for one, expects prices to continue falling in the coming months, as output remains high, supply is building up and investors who had helped prop up prices begin to sell.
“While prices have held relatively firm, there are significant signs of weakness ahead,” Citigroup said in a note to clients on Tuesday.
Royal Dutch Shell, the oil giant that announced an almost $70 billion takeover of the British oil and gas producer BG Group last week, is expecting prices to recover much of their recent drop over the next few years. It projects prices to hit $90 a barrel in 2018.
As the International Energy Agency noted, competing forces are still playing out in the market, making the direction difficult to discern. Low prices have stimulated higher-than-expected demand for oil products in China, India and even Europe, which has been plagued by lethargic economic growth, the agency said. But whether that increased consumption is a “temporary aberration” remains to be seen, it added.
There is much uncertainty, for instance, over future crude demand from China, which on Wednesday reported economic growth of 7 percent, the weakest rate since early 2009.
Supply is also hard to gauge. While there are signs that low prices are beginning to have an impact on the production of oil from shale rock, overall oil output in the United States is expected to grow this year, the agency said.
In addition, the Organization of the Petroleum Exporting Countries is showing no signs of backing away from the policy, backed by Saudi Arabia, of holding onto market share regardless of falling prices. OPEC production rose almost 900,000 barrels a day in March from a month earlier, the agency said, as Saudi Arabia increased production to more than 10 million barrels per day.
Among the uncertainties in the market is the potential effect on oil supplies of a proposed nuclear accord with Iran, a major producer, the agency said. International sanctions have sharply reduced the country’s sales of oil, and an accord is expected to ease, or lift, those sanctions.
While it would take time for Iran to organize the enormous investment that would be required to sustainably bolster its production capacity, the agency said that the country might be able to make short-term changes to increase output and exports relatively quickly.
For instance, the agency said, Iran has 30 million barrels of oil stored on tankers, which could quickly feed an increase in exports. The agency also estimated that Iranian oil fields could ramp up production to as much as 3.6 million barrels a day, a 29 percent increase, within months of sanctions being lifted.
Specialists have been working at some of those sites, and “some of Iran’s core fields,” which were run down, may already have been revived, the agency said.
Under the pressure of sanctions, both Iranian production and exports have been curbed. Exports are down about 50 percent since 2012, to an average of around 1.1. million barrels a day, though they rose to 1.3 million barrels a day in March on high demand from China.
