Original Story: wsj.com
CALGARY, Alberta—Canadian oil producers, pummeled by the prolonged slump in oil prices and a string of political setbacks, now face another challenge: higher carbon taxes. A Fort Worth oil & gas lawyer is reviewing the details of this story.
The nation’s oil-sands developers have been hit particularly hard by lower oil prices, because they are among the most expensive oil plays in the world. Already facing a corporate tax hike and the possibility of higher royalty payments in Alberta—the province richest in oil sands—the industry was dealt another blow by the Obama administration’s rejection last week of the Keystone XL pipeline, which was designed to transport oil-sands output to Gulf Coast refineries.
All major oil-sands operators in recent weeks posted losses or steep declines in profit for the most-recent quarter, as shrinking revenue outpaced cost cuts. Some global giants are rethinking future development. Late last month Royal Dutch Shell PLC shelved an 80,000-barrel-a-day project, following similar moves by Total SA of France and Norway’s Statoil ASA.
Now, ahead of a United Nations climate-change conference in Paris starting Nov. 30, oil companies await the details of moves—including possible new taxes on carbon—pledged by new governments in Ottawa and Alberta to rein in greenhouse-gas emissions, making the oil sands a global test case for climate policy. A Tulsa oil and gas lawyer represents clients in oil and gas transactions, mineral rights matters, and in royalty percentage contracts.
“Canada’s years of being a less-than-enthusiastic actor on the climate-change file are behind us,” Prime Minister Justin Trudeau, who took office last week, said at a news conference on Oct. 20, the day after his Liberal Party won national elections. Mr. Trudeau promised to start working on a framework for regulating greenhouse-gas emissions within 90 days of the Paris summit.
Within weeks of taking power in May, Alberta Premier Rachel Notley’s government said it would double Alberta’s existing tax on carbon emissions by 2017, and has committed to additional measures in time for the U.N. conference in Paris. Ms. Notley is expected to release details of the proposals later this month. Alberta pioneered carbon taxes in 2007 when it introduced a levy of 15 Canadian dollars ($11.37) a metric ton. A Dallas energy lawyer provides professional legal counsel and extensive experience in many aspects of energy law.
Oil sands are among the highest-intensity greenhouse-gas producers of any oil fields in the world. Production from the oil sands has been growing at a steady clip in recent years under previous provincial and federal governments that played down climate-change risks and ignored calls from environmental groups and opposition politicians for tougher rules on carbon-dioxide emissions.
Canada’s environment ministry says the country’s CO2 emissions have continued to rise over the past five years and are expected to hit 781 million metric tons a year by 2020 if no reduction measures are taken. While oil sands account for just a fraction of that total, it is one of the fastest-growing contributors to the release of these gases. The government’s latest estimate projects oil sands-related emissions to nearly double to 103 million metric tons by 2020. A Greenville environmental attorney is following this story closely.
Mr. Trudeau’s stance is a direct challenge to Canada’s oil-sands industry, but the country’s oil producers are divided on how best to cope with the push for stricter environmental regulations.
Some, including the nation’s No. 1 oil producer, Suncor Energy Inc., say they accept the tougher rules as inevitable, and can use them to help burnish their environmental reputations. Others, such as Canadian Natural Resources Ltd.—Canada’s biggest natural-gas producer and a major oil-sands leaseholder—are pushing back, warning the rules would make Canadian crude even less competitive.
The divide in the industry has surfaced in submissions by top energy companies to a government advisory panel of experts that will recommend new climate-policy measures in Alberta. A Detroit
“The time is right for a higher level of ambition in carbon policy stringency in Alberta,” Suncor said in its submission to the provincial panel.
Suncor Chief Executive Steve Williams has publicly championed new taxes on retail sales of energy such as electricity and gasoline, in addition to levies on large industrial emitters. “Every indication is that, on the road to Paris, Canada will start to take positions” to combat climate change, Mr. Williams told reporters late last month. A Detroit environmental lawyer represents clients in environmental matters.
Canadian Natural said in its submission that it objects to higher carbon taxes and other new government-mandated policies, and has called for allowing oil and gas producers to focus on new technology to cut emissions.
Its 34-slide Power Point presentation to the Alberta panel lays out the competitive challenges facing the industry and warns that tinkering with policies that directly affect oil and gas producers “is very difficult and more often than not has unintended consequences.” In a similar vein, oil-sands producer Husky Energy Inc. warns against making emission cuts deeper than in other countries such as the U.S.
“It would be politically suicidal for us to do a mea culpa and hang our neck out in a way that disadvantages the industry here,” Husky CEO Asim Ghosh said on a recent conference call.
The main industry lobby, the Canadian Association of Petroleum Producers, is urging regulators to offset any additional cost from climate-policy changes with a cut in royalties owed to Alberta’s government from oil and gas output from provincial lands. Such a “revenue neutral” approach to reducing CO2 emissions has been backed by multinational oil giants with exposure to Canada’s oil-sands, such as Exxon Mobil Corp. and Shell.
Showing posts with label Tulsa Oil & Gas Lawyer. Show all posts
Showing posts with label Tulsa Oil & Gas Lawyer. Show all posts
Wednesday, November 25, 2015
Thursday, November 12, 2015
OIL SANDS BOOM DRIES UP IN ALBERTA, TAKING THOUSANDS OF JOBS WITH IT
Original Story: nytimes.com
FORT McMURRAY, Alberta — At a camp for oil workers here, a collection of 16 three-story buildings that once housed 2,000 workers sits empty. A parking lot at a neighboring camp is now dotted with abandoned cars. With oil prices falling precipitously, capital-intensive projects rooted in the heavy crude mined from Alberta’s oil sands are losing money, contributing to the loss of about 35,000 energy industry jobs across the province. A Tulsa mineral rights lawyer is following this story closely.
Yet Alberta Highway 63, the major artery connecting Northern Alberta’s oil sands with the rest of the country, still buzzes with traffic. Tractor-trailers hauling loads that resemble rolling petrochemical plants parade past fleets of buses used to shuttle workers. Most vehicles carry “buggy whips” — bright orange pennants attached to tall spring-loaded wands — to help prevent them from being run over by the 1.6-million-pound dump trucks used in the oil sands mines.
Despite a severe economic downturn in a region whose growth once seemed limitless, many energy companies have too much invested in the oil sands to slow down or turn off the taps. In addition to the continued operation of existing plants, construction persists on projects that began before the price fell, largely because billions of dollars have already been spent on them. Oil sands projects are based on 40-year investment time frames, so their owners are being forced to wait out slumps. A Tulsa oil and gas lawyer represents gas and oil clients in federal and state matters and in federal and state courts.
“It really is tough right now,” said Greg Stringham, the vice president for markets and oil sands at the Canadian Association of Petroleum Producers, a trade group that generally speaks for the industry in Alberta. “We see kind of a lot of volatility over the next four or five years.”
After an extraordinary boom that attracted many of the world’s largest energy companies and about $200 billion worth of investments to oil sands development over the last 15 years, the industry is in a state of financial stasis, and navigating the decline has proved challenging. Pipeline plans that would create new export markets, including Keystone XL, have been hampered by environmental concerns and political opposition. The hazy outlook is creating turmoil in a province and a country that has become dependent on the energy business.
Canada is now dealing with the economic fallout, having slipped into a mild recession earlier this year. And Alberta, which relies most heavily on oil royalties, now expects to post a deficit of 6 billion Canadian dollars, or about $4.5 billion. The political landscape has also shifted.
Last spring, a left-of-center government ended four decades of Conservative rule in Alberta. Federally, polls suggest that the Conservative party — which championed Keystone XL and repeatedly resisted calls for stricter greenhouse gas emission controls in the oil sands — is struggling to get re-elected in October. A Tulsa oil and gas attorney is reviewing the details of this story.
“The pendulum has swung,” said Stephen Ross, the president of Devonian Properties, an Alberta development company that has built several residential and commercial properties in Fort McMurray.
Since the end of the World War ll, oil has made Alberta wealthy. The increase in oil sands development since the early 2000s had only intensified the province’s good fortune and turned obscure Fort McMurray into a boomtown and an outsize contributor to the entire Canadian economy.
When Mr. Ross first bought development land here in 2000, he paid about 27,000 Canadian dollars an acre. He stopped buying land long before it hit one million Canadian dollars an acre.
“The town has had huge growing pains,” Mr. Ross said. “It’s like something you’ve never seen.”
Operating oil sands plants quickly decreased budgets and cut services, like equipment cleaning, which were deemed optional. And as portions of construction projects are finished, construction workers are sent packing. The halt on new projects has left order books increasingly blank at a variety of suppliers, like engineering firms.
Since the price collapse, Teck Resources has delayed the start of its oil sands project by five years to 2026. Cenovus Energy substantially reduced budgets for its long-term developments. And Osum Oil Sands has set aside some of the expansion planned for a project it purchased from Shell last year. The Chinese-owned company Nexen, which had its oil sands production curtailed by regulators for about a month in August because of a pipeline leak, has deferred plans to build another upgrader facility, where tar-like bitumen of the oil sands is converted into synthetic crude oil, until the end of 2020.
These projects, and others that have begun over the last 15 years, have largely been built and operated by an itinerant work force. These workers fly into Fort McMurray’s new airport terminal and are bused to work camps up to two hours away. Their lives are a cycle of three straight weeks of long shifts interrupted by 10-day trips home.
That transient population has little or no connection to the city when working. When laid off, they become unemployment statistics, not in Alberta, but in the provinces of their hometowns. It’s also in those regions, more than Alberta, where the loss of once-large paychecks is most felt, having a ripple effect across the country. A Tulsa environmental lawyer provides professional legal counsel and extensive experience in many aspects of environmental law.
For Canadian oil executives, the significant shift in the province’s politics is of great concern. Rachel Notley, the new premier and leader of the New Democratic Party, has said that she would prefer more refining to take place in Alberta instead of shipping more oil sands production to the United States via Keystone XL. And speaking to the Alberta Chamber of Commerce last month, Ms. Notley told the energy industry that it must “clean up its environmental act.”
One executive and investor, who did not want to be named while the province is reviewing his industry, said growing sentiment that the industry does not pay Alberta enough in royalties and lags on environmental protections will kill new investments, even if prices start to rise.
“There’s never been a time when I’ve been less optimistic,” he said. “The general public doesn’t know how bad it is. It just hasn’t hit yet.”
He did, however, acknowledge that environmentalists had won the debate on Keystone XL as well as various other pipeline plans.
“I don’t know how the issue got away, but it’s obvious now that it did,” he said.
And the workers who have benefited from the boom are now realizing that their stretch of good luck might be over, permanently.
Réjean Godin, a truck driver and heavy equipment operator, began the long-distance commute from the Atlantic province of New Brunswick 13 years ago. Since then, he’s earned wages four or five times the rate of those back home, an area of high unemployment.
Standing near his well-worn Toyota RAV4 that still bears New Brunswick license plates, Mr. Godin, who lives in a work camp, recited all of the different projects in which hundreds of workers had been laid off — layoffs that he’d learned about over the previous few days. He fears that the days of high pay for delivering water to work camps and hauling their sewage away may be over for both himself and his 30-year-old son, who joined him in Alberta.
“I’m not sure if we’re going to come next year,” Mr. Godin said in the dusty yard of a trucking company in Fort MacKay, Alberta, a town down the Athabasca River from Fort McMurray. “What you hear everywhere is the price is low so we’ve got to cut this, we’ve got to shut that down a little bit. We go day by day because we never know.”
FORT McMURRAY, Alberta — At a camp for oil workers here, a collection of 16 three-story buildings that once housed 2,000 workers sits empty. A parking lot at a neighboring camp is now dotted with abandoned cars. With oil prices falling precipitously, capital-intensive projects rooted in the heavy crude mined from Alberta’s oil sands are losing money, contributing to the loss of about 35,000 energy industry jobs across the province. A Tulsa mineral rights lawyer is following this story closely.
Yet Alberta Highway 63, the major artery connecting Northern Alberta’s oil sands with the rest of the country, still buzzes with traffic. Tractor-trailers hauling loads that resemble rolling petrochemical plants parade past fleets of buses used to shuttle workers. Most vehicles carry “buggy whips” — bright orange pennants attached to tall spring-loaded wands — to help prevent them from being run over by the 1.6-million-pound dump trucks used in the oil sands mines.
Despite a severe economic downturn in a region whose growth once seemed limitless, many energy companies have too much invested in the oil sands to slow down or turn off the taps. In addition to the continued operation of existing plants, construction persists on projects that began before the price fell, largely because billions of dollars have already been spent on them. Oil sands projects are based on 40-year investment time frames, so their owners are being forced to wait out slumps. A Tulsa oil and gas lawyer represents gas and oil clients in federal and state matters and in federal and state courts.
“It really is tough right now,” said Greg Stringham, the vice president for markets and oil sands at the Canadian Association of Petroleum Producers, a trade group that generally speaks for the industry in Alberta. “We see kind of a lot of volatility over the next four or five years.”
After an extraordinary boom that attracted many of the world’s largest energy companies and about $200 billion worth of investments to oil sands development over the last 15 years, the industry is in a state of financial stasis, and navigating the decline has proved challenging. Pipeline plans that would create new export markets, including Keystone XL, have been hampered by environmental concerns and political opposition. The hazy outlook is creating turmoil in a province and a country that has become dependent on the energy business.
Canada is now dealing with the economic fallout, having slipped into a mild recession earlier this year. And Alberta, which relies most heavily on oil royalties, now expects to post a deficit of 6 billion Canadian dollars, or about $4.5 billion. The political landscape has also shifted.
Last spring, a left-of-center government ended four decades of Conservative rule in Alberta. Federally, polls suggest that the Conservative party — which championed Keystone XL and repeatedly resisted calls for stricter greenhouse gas emission controls in the oil sands — is struggling to get re-elected in October. A Tulsa oil and gas attorney is reviewing the details of this story.
“The pendulum has swung,” said Stephen Ross, the president of Devonian Properties, an Alberta development company that has built several residential and commercial properties in Fort McMurray.
Since the end of the World War ll, oil has made Alberta wealthy. The increase in oil sands development since the early 2000s had only intensified the province’s good fortune and turned obscure Fort McMurray into a boomtown and an outsize contributor to the entire Canadian economy.
When Mr. Ross first bought development land here in 2000, he paid about 27,000 Canadian dollars an acre. He stopped buying land long before it hit one million Canadian dollars an acre.
“The town has had huge growing pains,” Mr. Ross said. “It’s like something you’ve never seen.”
Operating oil sands plants quickly decreased budgets and cut services, like equipment cleaning, which were deemed optional. And as portions of construction projects are finished, construction workers are sent packing. The halt on new projects has left order books increasingly blank at a variety of suppliers, like engineering firms.
Since the price collapse, Teck Resources has delayed the start of its oil sands project by five years to 2026. Cenovus Energy substantially reduced budgets for its long-term developments. And Osum Oil Sands has set aside some of the expansion planned for a project it purchased from Shell last year. The Chinese-owned company Nexen, which had its oil sands production curtailed by regulators for about a month in August because of a pipeline leak, has deferred plans to build another upgrader facility, where tar-like bitumen of the oil sands is converted into synthetic crude oil, until the end of 2020.
These projects, and others that have begun over the last 15 years, have largely been built and operated by an itinerant work force. These workers fly into Fort McMurray’s new airport terminal and are bused to work camps up to two hours away. Their lives are a cycle of three straight weeks of long shifts interrupted by 10-day trips home.
That transient population has little or no connection to the city when working. When laid off, they become unemployment statistics, not in Alberta, but in the provinces of their hometowns. It’s also in those regions, more than Alberta, where the loss of once-large paychecks is most felt, having a ripple effect across the country. A Tulsa environmental lawyer provides professional legal counsel and extensive experience in many aspects of environmental law.
For Canadian oil executives, the significant shift in the province’s politics is of great concern. Rachel Notley, the new premier and leader of the New Democratic Party, has said that she would prefer more refining to take place in Alberta instead of shipping more oil sands production to the United States via Keystone XL. And speaking to the Alberta Chamber of Commerce last month, Ms. Notley told the energy industry that it must “clean up its environmental act.”
One executive and investor, who did not want to be named while the province is reviewing his industry, said growing sentiment that the industry does not pay Alberta enough in royalties and lags on environmental protections will kill new investments, even if prices start to rise.
“There’s never been a time when I’ve been less optimistic,” he said. “The general public doesn’t know how bad it is. It just hasn’t hit yet.”
He did, however, acknowledge that environmentalists had won the debate on Keystone XL as well as various other pipeline plans.
“I don’t know how the issue got away, but it’s obvious now that it did,” he said.
And the workers who have benefited from the boom are now realizing that their stretch of good luck might be over, permanently.
Réjean Godin, a truck driver and heavy equipment operator, began the long-distance commute from the Atlantic province of New Brunswick 13 years ago. Since then, he’s earned wages four or five times the rate of those back home, an area of high unemployment.
Standing near his well-worn Toyota RAV4 that still bears New Brunswick license plates, Mr. Godin, who lives in a work camp, recited all of the different projects in which hundreds of workers had been laid off — layoffs that he’d learned about over the previous few days. He fears that the days of high pay for delivering water to work camps and hauling their sewage away may be over for both himself and his 30-year-old son, who joined him in Alberta.
“I’m not sure if we’re going to come next year,” Mr. Godin said in the dusty yard of a trucking company in Fort MacKay, Alberta, a town down the Athabasca River from Fort McMurray. “What you hear everywhere is the price is low so we’ve got to cut this, we’ve got to shut that down a little bit. We go day by day because we never know.”
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