Canada Wants To Be Clean LNG Producer

A commendable ambition:

"Natural Resources Minister Jim Carr says Canada’s pathway to a clean energy future includes not only transitioning to renewable sources of energy but also technology that makes traditional fossil fuels cleaner to produce and burn."

However, doesn't this mean he has admitted Canada actually needs fossil fuels? The horror.

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This is political dancing between the socialist/greenie faction living in Ontario and the resolutely gasoline/diesel crowd of Alberta.  Remember that at  one point the governing Liberal Party promised the greenies that there would be this hefty carbon tax.  That led to bleats of outrage in Alberta.  So, now that the Conservatives have utterly demolished the Liberal Party in the Ontario provincial elections this month, to the point that the majority Liberals are not even a recognized Party in their parliamentary system, how do you hold it all together?  Do the dance. 

And who doesn't like cowgirl line dancing in cow country?  Our boy Jim is going to get lots of practice!

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(edited)

How are shale oil and natural gas doing in Canada? Are pipelines to the coasts ever going to be adequate for export demand? LNG facilities?

I have not kept up on Canada lately. Gave up due to Trudeau. Hoping Doug Ford will change the trends. 

https://www.usnews.com/news/best-countries/articles/2018-06-28/prime-minister-justin-trudeau-faces-new-troubles-with-doug-ford?src=usn_li

Edited by ronwagn

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2 hours ago, ronwagn said:

How are shale oil and natural gas doing in Canada? Are pipelines to the coasts ever going to be adequate for export demand? LNG facilities?

I have not kept up on Canada lately. Gave up due to Trudeau. Hoping Doug Ford will change the trends. 

https://www.usnews.com/news/best-countries/articles/2018-06-28/prime-minister-justin-trudeau-faces-new-troubles-with-doug-ford?src=usn_li

I would doubt that pipeline capacity is adequate, or will be any time soon.  There is a discussion of taking the current Trans-Canada Pipe Line from Alberta up over the top of Lake Superior and down into Ontario and MOntreal, and converting it to run with reformulated Sands oils.  I remain unconvinced. The gas pipe is on the surface for a long stretch, and you would have to blast a thousand miles of trench trough the precambrian rock to get it below the frost line.  In theory you can heat the oil and the pipe; how practical that is, I dunno.  But if you take the gas line and change it over to oil, then there goes your gas.  

There are some lines that run from Alberta to Sarnia, Ontario, through the soils of the Dakotas, Minnesota, and Michigan.  I know nothing about those lines. 

To load in Montreal, you need more icebreakers.  You might keep the shipping lines open to the Port of Sorel in winter. Or you can lay the lines all the way to Quebec City, hey who knows. 

the idea that Doug Ford will create some instant improvement is dubious.  Canada has a huge debt overhang, and the big manufacturing powerhouse, Ontario, has fallen apart due to decades of pathetic mismanagement. Just disgraceful.   It is headed for a station in life like Greece. 

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Jan, thanks for the information. I would love to see Canadian oil and natural gas piped to both coasts. If the Alaskan PIpeline could be made to work it would seem possible and I have never heard that Canada faced a difficult topographic or climate problem greater than Alaska. I really do not know, however. 

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On 6/30/2018 at 8:41 PM, ronwagn said:

Jan, thanks for the information. I would love to see Canadian oil and natural gas piped to both coasts. If the Alaskan PIpeline could be made to work it would seem possible and I have never heard that Canada faced a difficult topographic or climate problem greater than Alaska. I really do not know, however. 

The Alaska Pipeline starts up at Prudhoe Bay in the North Slope and runs down to the Port of Valdez.  It is only 800 miles of 4-ft pipe  (and a pumping station every 65 miles).  To run for the segment from Winnipeg to Ottawa across the top of Lake Superior would be perhaps 1,300 miles, and that is all on the solid rock of the pre-Cambrian shield.  OK, so you don't try to blast a trench to down below the frost line, and build it as some elevated structure; how do you intend to keep the oil flowing?  You would have to add a lot of diluent, and you would have to keep that oil heated.  And those are formidable tasks, in difficult terrain. Can it be done?  Probably.  Is it expensive?  Definitely.  But your first problem is that the pipe is longer than in Alaska, 50% longer over the rocky part, and then add another thousand miles for buried pipe.  So it ties up a lot of capital, to move oil that may not have a future.  In terms of shipping costs, I doubt that you come in for less than rail, and the rails are already in place, no pipe to go build.  There is this prejudice in the oilpatch against using rail, the thinking being that it is inherently more expensive.  That is not the case.  It gets more expensive due to monopoly pricing and management sloth. Both those aspects are directly addressable in the context of a dynamic competitive economy. 

The real problem remains: is there an economic basis for Alberta tar sands heavy oil?  Maybe not.  And if not, then why build pipelines - unless you are duplicating the Channel Tunnel?

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(edited)

Jan, that is an excellent answer. You have an encyclopedic knowledge of the oil business. 

If rail transportation is the answer what is the hold up? I know of the disasters. Is it capital? Are the railroads anemic? Tough Terrain again? Maybe you already answered this above. I just reread your comments of June 26. I am surprised the Chinese aren't offering the capital. Venezuela may be a better bet for all their interests including geopolitically.

Edited by ronwagn
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(edited)

11 hours ago, ronwagn said:

Jan, that is an excellent answer. You have an encyclopedic knowledge of the oil business. 

If rail transportation is the answer what is the hold up? I know of the disasters. Is it capital? Are the railroads anemic? Tough Terrain again? Maybe you already answered this above. I just reread your comments of June 26. I am surprised the Chinese aren't offering the capital. Venezuela may be a better bet for all their interests including geopolitically.

Sorry to disappoint, Ron, but my knowledge of the oil business is pretty much zero.  I do have a large knowledge base in Canadian politics, having lived there for two decades and gotten sucked up in those politics.  I also have a large knowledge base on rail.  OK, so here goes.  The Canadians are not keen on letting the Chinese get involved, and there is a "Foreign Investment Review Act"   ["FIRA"] that acts as a barrier to those sorts of investments.  That part is politics, of course.  The rail business in Canada is a duopoly, with only two railroads that are "national," the Canadian National ["CN"]  and the Canadian Pacific ["CP"].   Basically there are these two tracks, typically on the opposite sides of some river, that run across the country and in theory compete with each other, in practice simply engage in rate-setting until the government gets tired of it and intervenes in the tariffs. 

Now Canada has this historical wheat-growing industry and practices "supply management," to prevent foreign buyers from using market muscle to impoverish the wheat farmers.  So they set up the Wheat Marketing Board, to control export pricing and deliveries.  To satisfy that, the Wheat Board then invested in this vast fleet of special wheat-carrying cars, all painted brown with gold lettering and "Canada Wheat Board" on the sides.  The cars are hauled by the two RRs  (and a number of small RR companies that operate on little branch lines, typically sold off by the two majors so they don't have to bother with light-use track) from the grain elevators to the ports.  And that is where the problems begin.

The RR guys know that the wheat is only going to be moved by rail. So when there is demand for oil by rail, they let the grain traffic sit and go hault the oil cars.  Those cars are typically owned by car-leasing companies, such as GATX, and the shippers pay a fee to use them per trip.  Since the oil business just might go away, and it pays a premium, the RR guys CN and CP have been letting the grain "sit" and go haul the oil in oil-by-rail.  The grain farmers have been screaming and the farmers vote!

Meanwhile back in about 1923 "somebody" built a rail line that runs from basically Winnipeg, Manitoba  (OK, technically Thompson, with CN the connecting track, but not to quibble) some 500 miles to the port of Churchill, up on the left bank of Hudson Bay.  It is only open for 4 months of the year due to Arctic ice, but the track is only 500 miles so it is a short run for grain.  The RRs wanted to use that port for oil shipments, but the natives cringed, so it never happened.  Meanwhile Canadian wheat customers started the long shift to Asia, so the grain was being headed over to West Coast ports.  And there is not enough rail capacity to handle both oil and grain for that West Coast.  And there is where the pressures started for Kinder Morgan to build that twinning pipeline to Vancouver  (technically, Burnaby, but that is an inlet upstream from Vancouver). 

So now the rail line to Churchill gets sold by the Feds to a short-line operator in Denver, called "OmniTrax," and the guy that owns that thinks he is a version of Donald Trump. He want s to play monopoly with his railroads, so when he bought the rail line he also bought the entire Port of Churchill installation, including the docks and the grain elevators, for the lump sum of about $16 million US. I recall his name as Pat Broe, something like that, I have never met him, don't really know much about him other than he made a ton in real estate like The Donald.  So he buys the rail line and re-names it "Hudson Bay Railway" and his OmniTraxx company then owns the shares of Hudson Bay RR, which insulates his wallet from claims against the Hudson Bay.   The story then goes that about 2015 he shuts down the entire Port operation and cuts back the RR to one train a week, claiming he is losing money, and he wants subsidies  (probably, more subsidies) from the Province and the Feds to operate his RR.  At one point that is given him. He leaves the Port closed, so now there is no Arctic deep-water port for grain shipments, or for anything else.  And the supplies that used to come in by boat for the Inuit now come in on his creaky rail line which has had no serious maintenance since - OK, nobody knows, -  figure WWII. 

Then in Spring 2017 there is this big Spring melt of the snow and since the land up there is all flat and muskeg, the water cannot drain, so it builds up and floods, and the rail line washes out for some 130 miles in perhaps 30 places at least,, together with a bunch of bridges, so now the line needs some $50-60 million in repairs to even operate, and our man Broe simply leaves it shut, saying he does not have the money to fix.  That part is not true, rather his subsidiary rail "Hudson Bay Railroad" has no money to fix, OmniTraxx has lots of coin, and Mr Broe is probably a billionaire anyway.  So what is happening is the old Canadian sport of shaking down the Feds.  And they refuse to bite.

So since about March or May 2017 there has been No rail line, and NO port, and the people all up and down the line can get their plywood by air or do without.  And their broccoli, which now costs $7.80 a bunch in Churchill  (that 4x8 plywood is $79.00). So you are getting into Gaza or Caracas pricing all because there is no rail line. 

And meanwhile there is no outlet for Western oil, in or out, and that shifts permanent pressure on rail lines headed over the Rockies. 

So Justin Trudeau, the son of the legendary Pierre Elliott Trudeau who was prime minister back around 1970, and is now the Prime Minister, goes and pays $3.4 Billion to Kinder Morgan to buy their worn-out first trans-mountain pipeline, and plans to complete the second twinning line, both to move oil and to free up rail capacity to move the grain.  And here is the final wrinkle:  there are at least 16 Native groups that have veto power over the pipeline, as Indigenous Peoples, who have "independent nation" status in Canada, and by the new Canadian Constitution have to be "properly consulted" on any project that affects their lands, and the Natives are against moving oil, so now that pipeline is all tied up in legal wrangling, probably for the next five years. 

So there you have it: no line for the oil, little rail for the oil and the grain, sometimes no rail for the grain, one entire port shut in, nothing on the horizon to fix that rail line, and the shipping to the East Coast a dim prospect due to the thousand miles of hard granite rock to go blast through.  Problems?  Nah.  Contract it out to the Americans, they get that fixed in a flash. 

Edited by Jan van Eck
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Well that ^ was certainly entertaining...

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Jan, excellent answer but I guess I should let Canadians worry about it. Their greenies are benefitting the USA. as long as their influence doesn't change our current politics. 

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34 minutes ago, ronwagn said:

Jan, excellent answer but I guess I should let Canadians worry about it. Their greenies are benefitting the USA. as long as their influence doesn't change our current politics. 

Unfortunately, their Greenies do not benefit the USA at all.  Remember that Canada is the US's largest trading partner, although now neck and neck with China. The US and Canada have these highly integrated supply lines for all manner of products and services, and large numbers of businessmen and tourists historically have flowed over the common Border  (less now, given that the USA requires Passports and those Border Crossing ID cards and has this aggressive border stance, which has seriously discouraged casual tourism).  When the Greenies wreck things in Canada, the ripple effects come right back to the USA, and hit up here. If Canadian Wheat cannot get to market and just sits because the EPA requires ultra-high fumes standards on diesel locomotives and the Canadian locomotives routinely cross the Border, in what is in effect a common fleet, and thus new locomotives are not purchased and the industry ends up short of equipment, then the farmers cannot get paid and then do not buy new John Deere tractors and Ford pick-up trucks, and that hits US manufacturers.  And you can duplicate that experience across millions of transactions that do not happen, so it hits US producers and thus US workers. 

Meanwhile The Donald whacks Canada with those steel and aluminum tariffs, disrupting supply chains that have developed over decades.  Donald thinks that some plant in the US can just go buy their steel from some US mill.  It is not that simple.  Steel today is rolled into sheet with large numbers of variables as to the specifications, and getting the same type of steel with equal tensile strength, finish, anti-corrosion treatment, ductility, formability, and lots of other aspects is not easy.  In some cases it cannot be done, so the Canadian stuff gets bought anyway and now the US plant faces higher costs.  Who benefits from that deal?  And he has seriously ticked off the Canadians and once again they get all nationalistic, including restaurants pulling California wines off the wine list and refusing to serve Heinz ketchup. Note that the big Heinz plant in SW Ontario closed in 2104 and put 700 workers out of a job, so the Canadians now whacked a retaliatory duty specifically on US ketchup - the Heinz tariff.   And that means the container manufacturer now loses that business volume also, because if the Canadians are refusing to buy US ketchup, then there is no need for US ketchup bottles either. Nor the caps to those bottles.  Nor the trucks to haul it to Toronto. 

We expect the Greenies to be whack-a-doodle screw-ups, and make a big mess of what they touch.  Now we also have the American Administration making a big mess.  Guess what: this is going to get expensive fast. 

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Jan, thanks for your feedback. Sounds like you have a lot more information than I do. I want the best for Canada and the USA. Seems like Canada is waking up to the damage that environmental extremism is doing to the economy. I hope the trade situation is worked out fairly and amicably. 

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17 minutes ago, ronwagn said:

Jan, thanks for your feedback. Sounds like you have a lot more information than I do. I want the best for Canada and the USA. Seems like Canada is waking up to the damage that environmental extremism is doing to the economy. I hope the trade situation is worked out fairly and amicably. 

Probably not. It will continue to deteriorate, because both sides are getting dug in and once it gets emotional, it takes decades to cool.  As I write this, the US Border Patrol, never known for subtlety and nuance, is out there in those RIB boats, set up with twin high-hp outboards  (probably built in Japan), roaring around the SW end of Grand Manan Island, in the Gulf of Maine where the Maine-New Brunswick Border extends out into the water.  There is this one little island sitting out there which has been part of the boundary dispute for the past two centuries, never been resolved, but the locals of both countries both lobster in the waters around the island and are content and at peace with each other.  Along come the Border Patrol boats and they start challenging the Canadian fisherman, demanding ID and searching the boats.  The claim is they are looking for  "illegal immigrants."  Now the prospect that Canadian lobstermen are smuggling people from say Romania into the USA via some little boat all stuffed with lobster traps is ludicrous. It is classic boorish, indeed clownish, overreach by the Border Patrol louts, and guess what, in the current incendiary atmosphere that gets all the way back to Ottawa and the launching of Official Protests, especially because there is no clear status as to just who is in charge of those waters. And so you have Americans packing big cannons on their thighs deeply insulting some very ordinary fishermen and intimidating them from historical lobstering grounds, and that really does not go over big.  Why do they do that?   In short:  Donald Trump.  He sets the tone. 

Edited by Jan van Eck

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Sounds like a bad move if the lobstermen are all on the up and up. Hopefully, it will be resolved amicably and soon. 

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20 minutes ago, Jan van Eck said:

Probably not. It will continue to deteriorate, because both sides are getting dug in and once it gets emotional, it takes decades to cool.  As I write this, the US Border Patrol, never known for subtlety and nuance, is out there in those RIB boats, set up with twin high-hp outboards  (probably built in Japan), roaring around the SW end of Grand Manan Island, in the Gulf of Maine where the Maine-New Brunswick Border extends out into the water.  There is this one little island sitting out there which has been part of the boundary dispute for the past two centuries, never been resolved, but the locals of both countries both lobster in the waters around the island and are content and at peace with each other.  Along come the Border Patrol boats and they start challenging the Canadian fisherman, demanding ID and searching the boats.  The claim is they are looking for  "illegal immigrants."  Now the prospect that Canadian lobstermen are smuggling people from say Romania into the USA via some little boat all stuffed with lobster traps is ludicrous. It is classic boorish, indeed clownish, overreach by the Border Patrol louts, and guess what, in the current incendiary atmosphere that gets all the way back to Ottawa and the launching of Official Protests, especially because there is no clear status as to just who is in charge of those waters. And so you have Americans packing big cannons on their thighs deeply insulting some very ordinary fishermen and intimidating them from historical lobstering grounds, and that really does not go over big.  Why do they do that?   In short:  Donald Trump.  He sets the tone. 

THAT is one of the very important and bad side effects of all this, Trump sets the tone.  Here in the country that is my host the military took over by coup and then installed itself as the civilian "caretaker" interim government, until elections can be allowed in such a way that does not disrupt civil society.  Translation: they like the power and don't want to cede control back to a bunch of civilians that don't understand, order is everything, don't question me!  (Cartman: You must respect my authoritay!)  Meanwhile, corruption is the game of the day and it filters all the way down through society (hey, it's good enough for the leaders and they aren't watching, so let's get in on the game!), all the way to and through the education system.  It is disgusting and damaging, to say the least, especially since we've got a preteen in school.  Normally, the school system is graded by the central government and it worked pretty well.  Now, it is an envelope to the national testers and you're good to go.  Leadership absolutely sets the tone, until a true leader stands up and does the old "we're mad as hell, and we're not going to take it anymore".  Yeah, I know, that can't happen in the current polarized environment because it's likely to start the 2nd civil war (but where will the lines be drawn?).  

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2 minutes ago, Dan Warnick said:

 Yeah, I know, that can't happen in the current polarized environment because it's likely to start the 2nd civil war (but where will the lines be drawn?).  

I predict that it will take another four or five election cycles before the confrontations between the two modes of thinking resolve themselves.  And that will be a very long time.  And incidentally, I fault BOTH political parties for the mess, for their abusive behavior and mentality and flat refusal to open their primaries, and to seek to limit voting, and by their rapacious gerrymandering  (of which Illinois and Maryland are apparently the worst offenders).    

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7 minutes ago, Jan van Eck said:

I predict that it will take another four or five election cycles before the confrontations between the two modes of thinking resolve themselves.  And that will be a very long time.  And incidentally, I fault BOTH political parties for the mess, for their abusive behavior and mentality and flat refusal to open their primaries, and to seek to limit voting, and by their rapacious gerrymandering  (of which Illinois and Maryland are apparently the worst offenders).    

Yep!  Ain't it grand!  And I come from Illinois, Land of Lincoln, Honest Abe, Barrack Obama, Al Capone (and his current relatives in both parties).  Illinois stands in ruins and the only thing people want to hear is that they have a budget.  Help us Abe.  Oh, that's right, they shot him.  Next!

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(edited)

8 minutes ago, Dan Warnick said:

Yep!  Ain't it grand!  And I come from Illinois, Land of Lincoln, Honest Abe, Barrack Obama, Al Capone (and his current relatives in both parties).  Illinois stands in ruins and the only thing people want to hear is that they have a budget.  Help us Abe.  Oh, that's right, they shot him.  Next!

Yet, America has this long tradition of presidents doing overreach.  Your. Mr. Lincoln had zero authority to go start a war against the seceding States.  It is axiomatic that anyone who joins a confederation has the inherent right to peaceably leave.  For an example of this in action (in more civilized realms), I point you to Canada, and the Vote inside Quebec on whether or not to leave official Canada, become independent, and then have an "association" with Canada  (a concept known there as " sovereignty-association").  Or take a look at Scotland and its recent vote on leaving the United Kingdom.  Now, that is how civilized people approach these matters.  Your Mr. Lincoln bypassed COngress and started up his own little war, and my guess is that he figured it would be short and swift and decisive.  650,000 dead later, we note it did not quite work out that way.  And that is the inherent problem with Presidents: they get wrapped up in their own ideas, and fail to look out from inside their Bubble.  Oh, well.  

Edited by Jan van Eck

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Yes, ole Abe committed some fantastic crimes but, as president, he knew better than everybody else, didn't he?  Not if you ask anyone in the south, he didn't (anyone white, that is), and I suppose quite a few in the north for that matter.  I wonder if race relations would be different if the question had been addressed and worked out differently... Certainly possible.  Some might say it would have taken longer, but I would counter that it still hasn't been worked out.

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5 minutes ago, Dan Warnick said:

Yes, ole Abe committed some fantastic crimes but, as president, he knew better than everybody else, didn't he?  Not if you ask anyone in the south, he didn't (anyone white, that is), and I suppose quite a few in the north for that matter.  I wonder if race relations would be different if the question had been addressed and worked out differently... Certainly possible.  Some might say it would have taken longer, but I would counter that it still hasn't been worked out.

And now you know why I am a committed Monarchist.  Save us all from the looming First Galactic Empire.  (Why is it that with The Donald I think I am living through some surreal movie?)

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(edited)

Donald, I am your father, Donald (heavy breathing, heavy breathing, oh, it's Hannity.  Ha-ha!).

Edited by Dan Warnick

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