Wednesday, 2 August 2017

Wake up Canada! Get behind energy megaprojects or get ready for the consequences

By: Terry Etam
Published: Fort Nelson News // BOE Report

 
        Not many commodities are hot anymore; investors are quite comfortable shunning the segment. But perhaps you may want to know about a commodity that in contrast is particularly overheated these days.
        Natural gas firm service transportation out of Alberta, for the upcoming winter season.
        Firm service prices are being bid up to unusual levels, even in the face of a relatively low commodity price forecast. Producers appear somewhat panicked about their ability to access markets for their natural gas. This is understandable; current market conditions for AECO-priced gas are extremely shaky with some forecasts of sub $1 gas for the next few weeks due to capacity constraints. This happens not infrequently whenever there is a pipeline outage for western Canadian production, which has few markets that are in the shadow of potential US shale output, which could spring to life at the sign of any price increases. That's not normal behaviour, it's an indication of how few options gas producers have.
         This might seem an inconsequential irritant to the industry, the only by-product of which would be cheaper gas for consumers. But it's actually a big red flag warning of underlying problems. And then, right on top of this fiasco, lands the news that the $36 billion Pacific North West LNG export terminal will not proceed. Petronas, the major partner in the project, politely blamed market conditions, which might be believable were it not for the numberous US LNG export facilities marching towards completion.
         Canada is about to have two of its major economic engines strangled into near oblivion while we stand around and watch. First was the oil sands, and now natural gas development is being throttled. As a country, we are playing with fire. Or maybe more accurately, putting out a fire that we've been relying on.
        We all know that oil sands investment has pretty much stopped dead, knocking out one of the bigger lights in the Canadian economy. Natural gas might follow a similar path if it becomes a stranded commodity that can only be sold at ridiculous discounts. It is true that both the Alliance and TransCanada Pipe Line systems are working to handle substantially more gas in the next few years, but that gas will still be destined for highly competitive US markets that already are digesting growing shale production. The result will be reduced net backs all the way to Canada.
          Capital will not flow into Canadian natural gas developments indefinitely when the only markets are severely discounted ones; at some point investors will tire of pumping money into a sector whose product sells at 20 year lows (and they maybe already have). Lower corporate net backs and decreased investment levels may not make headlines immediately, but those factors surely will prick up ears when people hear about government deficits growing by tens of billions.
         The Canadian economy is under attack on multiple fronts. The softwood lumber industry is once again getting slapped around by the US. If one removes lumber, and oil and gas from Canada's economic equation, or large parts thereof, there will be a massive government revenue gap and the only way the economic equation can be balanced will be to slash the spending side, such as on our vaunted social safety nets.
        Oil, gas and lumber are tough shoes to fill for the nation. Manufacturing is big for southern Ontario, but not so much for the rest of the country. Hydroelectric energy is great, now that it's been built, but creating any new dams will (or should) trigger the same blizzard of outrage that any petroleum based mega project now does. Please don't point to other green energy sources for economic salvation; Ontario's fiasco of subsidizing renewable energy sources has created an unsustainable and bizarre power market where consumers can't afford the power bills and renewable energy sources reap huge benefits, all through the miracle of unsustainable mountains of government debt.
      Canada is a resource-based nation. We may want to get away from that, and at some point we will, but if we decide to make the big switch in the near future we'd better be ready for the pain that will be part of the ride. We can't continue in half hearted manner where we accept low returns by keeping our product from markets where it will be welcomed. That only serves to make our production schemes uncompetitive in a global marketplace, and we've seen recently how quickly capital can evaporate when better opportunities exist elsewhere.
       The environmental movement cheers these sorts of things, because any hindrance to petroleum development is a good thing in their eyes. If they get their wish, the world will go to witness firsthand the effects of strangling one of the world's strongest, safest, cleanest, and most progressive economies, because the debt fairies won't hand around forever to watch it all implode. And on the flip side, for those who think strangling Canada's energy sector will save the planet, remember that Canada in total is responsible for about 2 percent of global greenhouse gases. There is nothing Canada can do short of shutting itself down that will have a meaningful impact on global emissions.
        Wake up, Canada! We are presently a resource-based economy. Every resource based economy on earth tries to diversify, but it's not easy. It won't be for us either. No matter how green you see the future, the path to get there must be a gradual on to avoid economic chaos. For now, our social infrastructure and standard of living are financed by natural resources, and we are accepting a fraction of the value we could be getting by strangling ourselves in red tape and second guessing. To get to a green future, we must first not kill the golden goose.
       Either get behind energy megaprojects by demanding more of our politicians, or be prepared for a substantially reduced standard of living. The death of these developments, one by one, impacts us all.

Friday, 28 July 2017

A Few Questions for Canada's NIMBY Crowd

By: Mark Scholz - President of CAODC
Published: The Hitch - Summer 2017

President's Message

Locals and globally-funded environmental groups who oppose the Kinder Morgan Trans Mountain expansion project object to any infrastructure that might result in a proliferation of tankers that would disturb the beautiful Saelish Sea ecosystem. This position, while seemingly well-intentioned, is not rooted in fact; and it has presented one of the most compelling threats to Canadian federalism since the Quebec referendum of 1995.

Let’s look at a few facts. To date, there have been no major tanker incidents off of the coast of British Columbia, largely due to developments in double-hulled tanker technology and thoughtful marine planning and cooperation on the part of companies and municipal governments. About 250 large commercial vessels enter the Port of Vancouver every year, five of which are tankers destined for the Westridge Marine Terminal.1 The Trans Mountain expansion is projected to increase that tanker traffic to 34 tankers. That seems like a significant increase, except when you consider the fact that the increased total represents just 14 percent of all marine traffic in the Port of Vancouver.2

Canada is a world-class producer of oil and with new investments in energy infrastructure – namely pipelines – we can increase our potential to be a world-class supplier in a globally competitive market. Currently, less than one per cent of Canada’s oil is exported to markets outside North America, yet world demand for oil will continue to grow.3 Canadian oil production meets the highest standards among producing nations. We should aim to be the global choice in terms of oil and gas. Energy infrastructure is critical to reaching that goal.

So what about those who oppose pipelines in principle, on the grounds that their contents promote catastrophic climate change? Well, they should be encouraged by the fact that Canadian oil and gas are less GHG-intensive than ever.
When will enough be enough for you to divest yourselves of the notion that we need to “leave it in the ground”?
It’s commonly known (but no less remarkable) that the volume of GHGs released by every barrel of oilsands crude has been reduced by an average of 30 percent since 1990. But did you know that technologies such as molten carbonate fuel cells reduce the greenhouse gas intensity of in situ steam generation methods such as steam assisted gravity drainage? In the drilling industry, the time it takes to drill an extended-reach horizontal well has been reduced by up to 70 percent, resulting in significant GHG emissions cuts through dramatic reductions in the use of diesel fuel on site. In terms of the safety record of the existing Trans Mountain pipeline, it has transported oil products with a 99.9 percent spill safety rate since 1956.

Canadian industry will keep making impressive strides toward achieving perfect emissions, safety and conservation outcomes.

So here are a few questions for Canada’s NIMBY (Not In My Backyard) crowd:
  • When will enough be enough for you to divest yourselves of the notion that we need to “leave it in the ground”?
  • Are your objections to Canada’s regulatory processes rooted in conservation and consultation issues, or are they just a stall tactic to prevent investment in Canada’s oil and gas industries?
  • Do you believe that Canadians are really better-served by hobbling our opportunities to participate in the global energy transition by shutting down the production and transportation of our oil and gas resources?
These questions matter. They will determine our country’s energy future, our contribution as global thought leaders in innovation and excellence, and our ability to uphold a cohesive Canada. 
Mark Scholz is president of the Canadian Association of Oilwell Drilling Contractors. He can be reached at mscholz@caodc.ca.
Sources:

1 Transport Canada

2 Kinder Morgan

3 CAPP

Tuesday, 18 July 2017

HEY HEY! HO HO! THE CARBON TAXES HAVE GOT TO GO!

Published: Oilfield Pulse
By: Kevin Turko - CEO - Oilfield Hub Inc

   
       It's almost impossible these days to watch an cable news network or national news broadcast without encountering some sort of story covering a protest rally or group shouting out or marching for their favorite or latest causes. Up until November of last year, there was a constant barrage of environmental groups and eco-activists out there at every opportunity chastising the oil and gas industry, chanting their vocal support to fix climate change and rid the planet of the new demon called 'carbon pollution'. Then, thank God, along came President Donald Trump who, right or wrong, has shifted both the medias and protestors' focus away from the energy sector. Here are just a few of my personal favorite chants:

THE PEOPLE! UNITED! WILL NEVER BE DEFEATED! NO BAN! NO WALL! THE TRUMP REGIME HAS TO FALL! SAY IT LOUD! SAY IT CLEAR!REFUGEES ARE WELCOME HERE!WE WANT A LEADER! NOT A CREEPY TWEETER! HANDS TO SMALL! CAN'T BUILD A WALL! YOU'RE ORANGE! YOU'RE GROSS! YOU LOST THE POPULAR VOTE! HEY HEY! HO HO! THIS PRESIDENT HAS GOT TO GO!

      Whether you love the man and support his policies, or detest the man and despise his policies, President Trump has single handily polarized the political landscape well beyond the borders of the United States. By the way, it's a lot more fun when you read these chants out loud in a raised and rhythmic voice! Give them a try again; but to truly get into the agitated protesting spirit you should also read each of the chants 3 times in a row. Again, all thanks unwittingly or purposely to The Donald.
       In the last eight months or so, this has remarkably taken the pressure off the oil and gas industry. The boogeyman of climate change, Mr. Carbon Pollution, has taken a second seat to a whole host of other social justice causes on both sides of the border and opposite sides of the political landscape. Not to be out-done, I thought a little reminiscing was in order so we don't lose sight of the past and ongoing fine protesting efforts of our foreign funded environmental activist groups. Again, here goes with some of my personal global warming favorites.

NO MORE COAL! NO MORE OIL! KEEP YOU CARBON IN THE SOIL! NO PIPELINES! NO TAR SANDS! NO DESTRUCTION OF OUR LANDS! KINDER MORGAN! ENERGY EAST! NOT IN THE WEST, NOT IN THE EAST! GIVE US CLIMATE TARGETS! NOT DIRTY TAR SANDS MARKETS! HEY HEY! HO HO! CANADIAN PIPELINES HAVE GOT TO FLOW!

      Ok, ok , ok, if you are paying attention I made the last one up! From where I am leaning, all these folks just don't have to be so damn negative. Why can't we start some cool chants of our own to help modify, in a much more positive manner, the climate change and carbon pollution narrative! Give it a try! I rather like the HEY HEY! HO HO! chants. Snappy little jungles and pretty easy to make up by yours truly and by the countless number of seemingly paid and well funded eco-activists. Several of which are thinly veiled or cloaked as so called charitable organizations, at least for the time being in Canada as long the Trudeau Liberals are in power. But hey hey, ho ho, that's a whole other article! Sorry, couldn't resist.
    These climate change and carbon pricing debates are such divisive issues right now, but what I find fascinating are the unfortunate parallels to the political climate we are being subjected to. If you watch channels like the CBC or CNN you get bombarded with countless hours of 'the world is ending' reporting, and if you watch Fox News you're being swayed for an equal number of hours that its all 'fake news' and that nothing wrong is happening. All in search of higher ratings and increased revenues. Most people just don't have time nor inclination in their daily lives to search out the truth which undoubtedly lies somewhere closer to the middle of our daily news spectrum.
     There's so much time, effort and dollars being spent on indoctrinating everyone on what's wrong and precious little time, effort, and dollars are being devoted to educating the public on what we, our business leaders and politicians, can do to make it right. Let's use pipelines as an example. If we are all so concerned about carbon pollution on a global scale, why no get these pipelines built now! As a first step, doesn't it make more sense to get countries like China, India and other high emitting countries off their dependence on coal and onto clean burning natural gas. Wouldn't this be a massive positive step toward lowering GHG emissions now, versus by 2030?
      The life blood of the oil and gas industry in Canada is access to foreign investors. These investment dollars won't return to Canada until significant and meaningful progress is made on getting our oil and gas to tidewater. On the home front, we seem to care little about making Canada truly energy independent with our own natural resources. Instead we are blocking pipeline construction with petty local and domestic issues. I say petty, because our industry detractors have lost sight of the greater good. Let's get our clean burning natural gas to China, and many other countries, so we no longer have to watch news reports of Chinese people with face masks walking thought their cities under a smoggy and hazy skyline.
      Instead we slap our citizens and businesses with meaningless carbon taxes which don't in any way change consumer behaviours. We distract our people into thinking this is the answer to tackle climate change. We allow civic politicians in cities like Vancouver to ban clean burning natural gas furnaces. These same politicians and local protestors are hurting our Canadian economy, and unwittingly, or stupidly, denying access to LNG to the worst polluting countries of the world. This is small-ball crap and just plainly hypocritical!
    So the next time you see a protestor in your neck of the woods, think of our less fortunate global neighbors and throw back a chant of your own. You're always welcome to use mine as well.

   HEY HEY! HO HO! CANADIAN PIPELINES HAVE GOT TO FLOW!

   

Monday, 17 July 2017

Pipelines for Peace

By: C. Kenneth Reeder
Published: Pipeline Observer - CAEPLA

Why supporting Canadian energy transport projects can mean fewer wars and refugees

We generally think of the pipeline debate in terms of economy and environment, but pipelines can be a war and peace issue as well. 
     An American diplomat once said, "If goods cannot cross borders, armies will." If people can't get what they need through cooperation and trade, then they must resort to violence and plunder. 
     That is why most of history's wars have been fought over land and resources. In the modern era we basically accept that oil and gas have something to do with many conflicts. We know why so many "strategic interests" include the Middle East and not the Congo. 
      We can see this in Syria. The war-torn country is ground zero for clashing foreign interests. There are many layers to the conflict but one of these is competing gas pipelines. 
       It's nearly impossible to understand the irrationality of Middle Eastern politics, and Syria's civil war is no different. We have a nasty secular dictator fighting a hodgepodge of terrorist-rebel factions (including ISIS, Al-Qaeda, and others). Whatever they're fighting over, it's a brutal struggle with no good guys to cheer for. 
       How do pipelines fit in? The Syrian Civil War started in 2011. In 2009,. Syria's leader Assad rejected a pipeline project with Qatar and Turkey, while supporting an Iranian pipeline project through Syria. 
      The Qatar-Turkey pipeline would have gone from Qatar's North gas field through Saudi Arabia, Syria, and on to Turkey with future access to Europe. Qatar is a major gas producer and its rulers want to be main providers of gas for Turkey, which otherwise depends on Russia and Iran for energy. They also have their eyes on Europe, which will be thirstier than ever for natural gas imports as its own production wanes. 
      Now here's a question: who are the main backers of fundamentalist Sunni rebels forces in Syria? Interestingly, it is the fundamentalist Sunnis in Saudi Arabia and Qatar, with help from Turkey. 
      Now on the flip side of this, who is supporting Syria's regime against the terrorist-rebels? Russia and Iran. 
      Both are key Syrian allies. The rejected project would have been a problem for Russia and Iran's own pipeline related goals through Syria and Turkey because they need to preserve market share and economic power. Assad reportedly said he would not sign off on the Qatar-Turkey pipeline to protect Russia's economic interests. 
     All this foreign interference has greatly aggravated the Syrian conflict, leading to hundreds of thousands dead leading to hundreds of thousands dead and a refugee crisis that has spilled into Europe and elsewhere. 
     When politicians point to the tragedies of Syria and tell us to open our arms and wallets for refugees, we should reflect a bit on how we can alleviate conflicts over petroleum resources.  
      Building more energy infrastructure and exporting more oil and gas is a huge part of this.
      Peace isn't created by vapid, sloganeering politicians, nor by pompous bureaucrats making sleazy deals in the halls of the UN. 
      Peace comes through trade. Civilized people know it's better in the long run to have economic relationships, not violent ones. People don't even have to like each other to do business together and make deals. That is the beauty of commerce. 
     Oil and gas are the lifeblood of modern civilization and thankfully there is no problem of running out anytime soon. The challenge instead is actually making our abundant supplies available to those who want to buy the stuff. 
     When Canada's major pipeline projects get stonewalled by political interference, it's bad for the world. It creates smaller global supply for purely political reasons. Having fewer sources of stable supply empowers the world's bullies to leverage their economic power where supplies are constrained. This is especially true with natural gas, which was mostly stuck in its local market before the advent of LNG transportation. 
     And so Canada's restrictive pipeline policies will stimulate more conflict than otherwise. Some of these conflicts will be bloody and make people flee their homelands. 
    Let's be clear about what we're saying here. Ottawa can't end the Syrian civil war and solve the refugee problem just by approving pipeline projects in Canada. 
   But increasing Canadian supply could help reduce demand for product from those who resort to instigating war to promote their exports. 
    So, Canada can do its part for peace and win small victories by selling more oil and gas to the rest of the world. By doing so can we help ease a major conflict on earth. 
    A pretty good reason to end the political paralysis of pipelines in Canada. 



Tuesday, 11 July 2017

We can wage our own battle (against the naysayers)

By: Scott Jeffrey
Published:  Roughneck Magazine

The Global Petroleum Show wrapped up on June 15, and we need no further evidence that the industry is not back from its glory days. Less than 600 exhibitors were signed up for the three day event, about 1/3 of record numbers when the show was held every two years. As an exhibitor, we also noticed the number of attendees was down, and a view of cards gathered indicated that many producers didn’t take the time to attend the show.

It’s still a great event, and the exhibitors were enthusiastic, selling oil and gas equipment and services with their usual aplomb. Activity is up, oil prices are stable(ish), and demand for product is strong and rising throughout the globe. We are sitting on reserves that put us in the top five in the world, and we may actually see increased pipeline deliverability in the next five years.

However, it is now time for every individual who makes a living from the industry, or who is a proponent of the industry, to wage their own information campaign with the naysayers who enjoy the benefits provided by the sale and use of oil and gas.

How many times have you sat around a dinner table, listening in outraged silence while some white wine socialist holds forth on the evils wrought by the industry that is the foundation for our modern society? Or, how many times have you been able to take no more, exploding in outrage against falsehoods or half-truths spun by men or women who came to dinner in their gas guzzler, enjoyed the comfort of a heated or air conditioned home, and chowed down on a delicious steak prepared on a natural gas or propane barbecue? If you finally do speak up in such a fashion, you’re seen as a hothead, in no way objective, a destroyer of the planet.

And so, in the certain knowledge that revenge is a dish best eaten cold, you can again invite those individuals to dinner, either singly or as a group, and destroy them with five, and only five, unassailable facts. You won’t need any more than that to have THEM sputtering in outrage, while you remain calm and stick to your guns.

Fact #1- Almost 500,000 people in Canada are employed by the oil and gas sector.
Just using an average salary per individual of $75,000/year, wages paid out to the industry amount to $37.5 billion, at least 35% of that taxable. You then factor in royalties on the sale of oil and gas. The economic benefits to Canada, and to government coffers, are enormous. Whether the money is misspent or not, our current standard of living comes in large part from the oil and gas industry.

Fact #2- Pipelines are by far the most efficient and safe way to transport petroleum products.
In Canada we have over 800,000 km of pipelines, transporting about three million barrels of crude per day. In the last 15 years, pipelines have delivered 99.9995 per cent of product safely. Canadians spill more on the ground when they fill up. In B.C., where new pipelines are debated and often vilified, 43,000 km of existing pipeline could be displaced by using about 4,200 railcars. Who wants that amount of rolling stock passing through their community?

Fact #3- Canada’s oilsands produce 0.13% of global greenhouse gases (GHGs).
Environmentalists all over the world rail against our “tarsands,” which by the way is an absolute misnomer. Tar is produced by the distillation of coal, not to be confused with the oil that is entrapped in sand up in northern Alberta. If you want a real fight on your hands, take on King Coal, which is responsible for 44% of global GHGs.

Fact #4- Over 6,000 household items are produced from petroleum based products.
There is no need to mention the obvious uses for our petroleum products, but when you realize that cleaning products, medicines, cosmetics, synthetic rubber, plastic, fabrics, and foodstuffs are made from petroleum, people tend to get very quiet. If you find a product not made from a petroleum base, you probably chopped it down and carved it yourself.

Fact #5- Canada can supply all its oil and gas needs, but imports over 600,000 bbl/day.
This is ridiculous. We spend about $25 billion a year importing Saudi and other crude, and we are held up by about 1,000 km of new pipeline construction. To the detriment of the rest of Canada, a few Quebec mayors will try to halt Energy East until they get paid. The benefits of using our own natural resources are so obvious that only the most obtuse would object.

So there you have it. In my simplistic way, I’ve presented five facts that are not subject to interpretation. If your dinner guests still dispute the need for oil and gas, ask them to put their money where their mouth is. Ask them to think globally, as they no doubt believe they are doing, but act locally. They can walk to your house, ask you to turn off the furnace or the air conditioner, wear less mascara, and otherwise reduce their consumption of products produced from the oil and gas molecule.

And most important of all, remain calm, and let them do the sputtering for a change.
#Canada #oil #OilandGas #TheRoughneck #Roughneck #Canada150 #import #Export #industry #oilsands #pipelines #environment

Thursday, 29 June 2017

Energy For Tomorrow

By: David Coglon
Published: Context Magazine


Five reasons why Canada's oil and natural gas resources are an essential part of the future energy mix for our nation and the world.

Energy runs the world. It meets our most basic needs, such as having a warm place to live, lights to read by, and a means of cooking food. It also underlies our ability to travel great distances, transport goods for trade, and build amazing products from smart phones to artificial hearts.

Oil and natural gas have formed the backbone of an energy revolution that has transformed the lives of billions for the better. Oil and natural gas have the promise and opportunity to transform the lives of billions more, with Canada at the lead as a sustainable, responsible and innovative energy producer.

As the world moves to a lower-carbon future, some have pronounced the doom of the hydrocarbon industry. This does not stand up to scrutiny. Oil and natural gas have a critical role to play in meeting the world’s energy needs for the foreseeable future. We examine five reasons why.

Reason 1: We need more energy

“If you look at any forecast, we’re going to see growing energy demand,” says Jackie Forrest, director of research at the Calgary-based ARC Energy Research Institute.

Forrest’s comment is backed by the latest energy outlook from the International Energy Agency (IEA). The IEA’s World Energy Outlook 2016 projects that by 2040 the world will need 31 per cent more energy than we use today. Others draw similar conclusions. BP in its latest report estimates global energy demand to grow around 30 per cent by 2035, while the U.S. Energy Information Administration says this could even reach 48 per cent by 2040.

“We’re going to see a huge increase in the energy system because we’re seeing a growth in population, more countries increasing their wealth and many people demanding mobility,” Forrest says.

The IEA numbers make for serious reading. According to the agency, 1.2 billion people still lack access to electricity. And 2.7 billion are without clean cooking fuels, instead depending on wood, charcoal or animal dung for fuel. It’s clear many people around the world are looking to low-cost, efficient energy sources simply to boost their quality of life to standards we in the West have long taken for granted.
So if more energy is required, what’s it going to take to get us there? In practical terms, it’s going to take all forms of energy—and that includes oil and natural gas.
“People often hear about the rapid growth rate of renewable energy. But even if this happens, at the end of 2040, renewables will still make up only seven per cent of the world’s entire energy mix,” says Terry Abel, CAPP’s executive vice-president. “Most people would be surprised to learn that hydrocarbons—oil, natural gas, coal—together will still make up more than three-quarters of the future energy mix in 2040.”
This forecast is part of the IEA’s central or “New Policies” scenario, which incorporates countries getting serious about meeting climate pledges made in Paris in December 2015.
“If government leaders stick on the path today, even including the agreements signed in Paris, this future still implies growth in oil and gas,” Forrest says.

Reason 2: Oil and natural gas: plentiful, powerful, transportable

We don’t have to go far to realize what’s behind continued demand for oil and gas: They pack a lot of energy punch within their molecules.

“Nothing can compete with oil and natural gas in terms of economics or their utility. At $50 a barrel, it’s fairly cheap to use oil versus other alternatives,” says Forrest. “Liquids fuels have a lot of energy density. When you get a tank of gas, you can travel really long distances—and that’s a big advantage,” Forrest says.

There’s also their abundance. It used to be that society worried about peak oil. But through innovation, we’ve found plenty more. That’s true especially today, as unconventional technologies have unlocked new shale gas and tight oil reserves, vastly growing the world’s hydrocarbon reserves. In fact, according to BP’s latest energy outlook, there’s enough technically recoverable oil in the ground to meet double the world’s needs by 2050.

Alternatives to oil and gas are becoming more viable. Improvements to solar technology are allowing this energy source to take on a larger role, specifically in electricity production. As well, more electric cars are entering the market. Even so, they do not spell an end to hydrocarbon-driven energy.

“There are still a lot of cars that run on gas and diesel in the world,” says Forrest, who estimates there are more than a billion light duty vehicles (LDVs) on the road currently. As well, while more cars may be electric, hydrocarbons are often used to generate the electricity needed to charge up these vehicles. For example, both the U.S. and China currently depend on hydrocarbons for at least two-thirds of their electricity production.

Another important advantage for hydrocarbon energy sources—particular in supplying developing and emerging economies—is they can be efficiently transported over large distances via tankers and pipelines. Places like Canada with plentiful energy resources and modern energy infrastructure can export these resources to places elsewhere where energy is in short supply and high demand. This option isn’t possible for most alternative energy sources where you need to be relatively close to the source (as is required for hydro) or build significant infrastructure to access or create the energy supply (think nuclear, solar and wind).

As well, energy sources such as natural gas can be counted on to fuel electricity generation backstopping more wind and solar.

“When the wind isn’t blowing or the sun isn’t shining, we will still need a backup. That can come from natural gas, which is always available when you need it and is economic,” Forrest says.

Reason 3: Innovation can solve the carbon dilemma

To meet the world’s growing energy demands while shifting towards a lower-carbon future requires innovation. This applies to renewable energy sources which today cannot meet the burden of providing energy security to large populations without improvements that deal with the high cost, large land footprints and intermittency of these sources.

By the same token, innovation will enable oil and natural gas to continue as an important part of a growing energy mix within a lower-carbon future. Canadian producers are already working hard to find ways to significantly reduce carbon emissions associated with the production of oil and natural gas.

Groundbreaking research, for example, is taking place through Canada’s Oil Sands Innovation Alliance (or COSIA). Five years ago, 13 oil sands companies formed COSIA—a unique partnership that’s committed to better environmental performance in key areas, including greenhouse gases. To do that, they’ve set aggressive targets. They’re pooling their resources and sharing knowledge, best practices and even intellectual property. Already they’ve shared more than $1.3 billion of intellectual property representing more than 900 technologies and innovations. This is a magnitude of intellectual property sharing unique in the world.

“Through literally hundreds of projects, the companies are achieving environmental performance goals they’ve set for themselves. And the improvements through innovation are translating into new value for the companies involved and the industry,” says Gordon Lambert, a former vice-president of sustainability at Suncor Energy and one of the founders of COSIA.
“To be positioned for success in the 21st century, our industry has to be resilient in a carbon-restrained future."
Gordon Lambert
Elsewhere, industry is partnering with research institutions, like the University of Calgary, to create environmentally effective technologies. Armed with a $75-million grant from the Canada First Research Excellence Fund, a team of 270 researchers at the university is working with producers to find lower impact ways to extract energy from unconventional oil resources with less energy and less water.

Lambert, who’s also a former member of the Alberta government’s climate change leadership panel, calls these and similar efforts “mission critical” to the industry’s future.

“To be positioned for success in the 21st century, our industry has to be resilient in a carbon-restrained future. And the way in which we can do that is through innovation. Innovating to produce hydrocarbons with less energy inputs, which in turns translates into less GHG outputs and lower costs, will be the essence of our industry’s future carbon competitiveness,” he says.

Reason 4: Canadian energy: abundant, reliable, sustainable

While we’re still very much a continental oil and gas player supplying mostly our neighbor to the south, new pipelines and export facilities could change all that, putting us on the world stage. When that happens, the “made in Canada” sticker on oil and gas products could carry a lot of weight with foreign customers.

“I think we’ll find that the world will welcome Canadian oil and gas production. Our resources come from a stable political regime. The sources are consistent and constant, and we have long, steady-producing entities,” Abel says.

Add to that, Canada's oil and natural gas is produced under a world-class regulatory system. A 2014 study by Worley Parsons comparing Alberta’s environmental policies, laws and regulatory systems with other oil-producing regions, ranked Canada near the top.

“Canada undergoes quite a bit of scrutiny in the development of its resources. We have some of the most stringent environmental regulations, and the transparency to go with it,” says Abel, who previously worked as a senior executive at the Alberta Energy Regulator.

Abel says Canada, with its responsibly produced oil and gas, has the opportunity to make a difference on the world stage. Alberta has introduced a carbon leadership plan with a hard cap on oil sands GHG emissions. And the industry already invests heavily in technology and innovation.

“If the world wants to see cleaner, more responsible oil and gas, then they will want Canada to be in the mix of suppliers,” he says.

Reason 5: Petrochemicals and almost everything you own

We shouldn’t forget that oil and natural gas are needed to create petrochemicals, the building blocks used to manufacture many of the products we count on every day.

Walk into any home, and there’s something made using petrochemicals: the paint on the walls, the lightweight winter jacket, the smartphone in our pockets. Petrochemicals are also behind carbon fibre and other advanced materials that make airplanes lighter (and more fuel efficient) and wind turbine blades stronger, while allowing for breakthroughs like lightweight and flexible artificial limbs.

“Our chemistry industry touches many aspects of our society, and petrochemicals are a big part of that,” says David Podruzny, vice-president of business and economics for the Chemistry Industry Association of Canada (CIAC). CIAC represents Canada’s $53-billion chemistry sector, which relies on natural gas liquids and oil for high-value feed stocks.

According to Podruzny, just under five per cent of oil and about 20 per cent of Canada's natural gas consumption gets converted to petrochemicals. And that’s an application he doesn’t see disappearing soon.

“Nor should it disappear,” he adds, noting there are close to $12-billion in investment decisions under consideration for Canada that would use natural gas or biomass as raw material to make petrochemicals. “We make petrochemicals with the lowest carbon footprint on the planet,” says Podruzny, “Who will benefit if these investments move elsewhere?”

“Even as society talks about decarbonizing our economy and some talk about even eliminating the use of oil and natural gas, I challenge that. I see new value from hydrocarbons 50 years from now where they are used to make new materials that add to our quality of life,” Podruzny says.

It’s a broader outlook for oil and natural gas that ultimately challenges industry to capture even more value from the resource, yielding new products and applications for now, and well into the future.

Thursday, 15 June 2017

THE OIL SERVICE INDUSTRY OF THE FUTURE LOOKS THE SAME AS THE PAST

By: David Yager
Published: OilWeek July 2017


            Reams have been written about how the oil and gas industry of the future will be different. For many, it has no future. Fossil fuels are environmental suicide. Solar-powered airplanes, wind-driven automobiles, and plant-based substitutes for all plastic and petrochemical products are imminent.

           If people in the battered oilfield services (OFS) industry thought the last two and a half years were awful, the future is worse. Except in Alberta, where maybe you get one of those government jobs installing efficient light bulbs or low-volume show heads.
           Fortunately, a world without oil is utter fantasy. The only reason so many dream about life without petroleum and its derivatives is because they have no conception of how big or integral it is. The U.S. Energy Information Administration figures global oil consumption will bust through 100 million bbls/d sometime next year. This is one-third more than the 76 million bbls/d at the turn of the century, shortly after Ottawa ratified the Kyoto Protocol to get on with replacing fossil fuels in 1997.
          Yes, there is indeed a great divergence between what we humans say and what we do. Which means OFS is going to be around in some form or another for the foreseeable future. 
           Therefore, discussions continue on how to keep the Canadian oilpatch competitive in a world of low oil and gas prices. We're repeatedly told exploration and production (E&P) companies must focus on technology to keep costs down. What is discouraging is the premise that nothing has advanced or improved recently. In the real OFS world, everything is continually changing with such meteoric velocity, most struggle to remain employed, solvent or adaptable. As deep thinkers opine on the need for change, anybody who actually works in this business knows nothing else.
            Take drilling. When I got my start on the rig floor in the 1970s, it used to take three months (if everything went well) to a year (with the customary fishing jobs and sidetracks)) to drill a 5,000-metre wellbore in the foothills, the only place anybody had to drill that far at the time. In an employment study I did for the Petroleum Services Association of Canada and MNP in 2014, I found our industry was drilling 6,000-metre horizontals in 20 days from spud to rig release. It's surely faster now. In the old days, a well required dozens of rock bits. Now, most of the hole is drilled with one. Most of the rigs that paid the rent for decades are racked and obsolete and will never drill again.
          The same thing goes for completions. Early in the multistage horizontal revolution, a big completion had 16 stages. Last fall, a JWN article reported NCS Multistage provided the equipment for a 92-stage frac in the Montney in northeastern B.C. Anybody who built anything new a decade ago for frac fluids, sand, cuttings-handling and disposal, solids control, mud motors or MWD systems has likely seen technology eclipse the commercial value of what used to be their bread and butter assets. Several times.
          And we're still lectured on the on the need to adapt, embrace technology and get with the program to stay relevant.
          The only thing Canada's upstream oil and gas industry needs to stay competitive is reduced finding and development (F&D) costs, whereby operators can replace and add production profitably at current prices. In the face of relentless tax increases and non-operational operating cost pressures, this is the economic definition of technology. OFS cannot survive without successful clients. E&P cannot succeed without a robust, supportive, adaptive and innovative supply chain.
         But the financial contribution OFS has made in recent years to its clients succeed has been incredible and unsustainable. Billions in new equipment, billions in new technology, billions in price cuts, billions in credit extended to customers who see no need to pay invoices promptly.
Appalling. 
         The lasting solution is a new business model, abandonment of the historically uneven relationship and the creation of new commercial relationships in which everybody succeeds. E&P and OFS companies understand the only path to success is lower F&D costs, which cannot be achieved in an environment that remains predatory and abusive. This goes both ways: terrible work and service at high prices when things are busy and purchasing policies that don't care if vendors go broke on the job when they are not.
         With no material changes in the way business is conducted three years after WTI last saw US$100/bbl, the future for OFS looks exactly the same as the past.