Mør Nooz

Alberta's oil sands royalties surge

Alberta's revenue will jump by hundreds of millions this year as the soaring price of crude pushes oil sands megaprojects into a higher royalty bracket. The province is already swimming in record energy income, which will top $14.3-billion in fiscal 2005-06, according to the budget update released last week. But most of that comes from natural gas royalties of $8.2B. Oil sands royalties are a distant fourth, with $1.2B projected for the current fiscal year, even though just under half of Canada's crude production comes from the megaprojects of northern Alberta. The reason for the discrepancy - the generous royalty breaks that Alberta has extended to the oil sands sector, which allow a project to pay a much lower rate until it has recouped its initial capital investment. So, many new projects will have to earn billions before they start paying the higher rate, when royalties typically rise eightfold. But Syncrude Canada, the second-oldest oil sands project, has already started to pay higher rates, since it will shortly exhaust its credits. And that will give Alberta - already racking up a budget surplus of more than $10B for 2005-06 - an additional half a billion dollars in oil sands royalties for this year.
(Globe and Mail 060308)

So much freakin' money. We really need some competent leadership at the helm, now. Otherwise this fabulous windfall is going to disappear due to political idiocy.

Report accuses oilsands of fuelling US war machine

Canada should slap a double-barrelled moratorium on oilsands and Arctic pipeline development, according to a group of think-tanks that believe the country needs time to take a sober second look at its energy future. Ottawa has a duty to address far-reaching questions about Canada's cross-border trade relationship and the wisdom of a current energy export policy which, they say, is feeding the US energy addiction at the expense of domestic supplies. The attention-getting call is packaged in an offering commissioned by three left-leaning policy groups titled, Fuelling Fortress America: A Report on the Athabasca Tar Sands and US Demands for Canada's Energy. While long on principle, the report's author admits that calling for a moratorium is unlikely to see any practical follow through. "It's intended to be a kind of wake-up call," said Hugh McCullum, a journalist retained by the University of Alberta's Parkland Institute, the Polaris Institute and the Canadian Centre for Policy Alternatives to write the report. "It's intended to try to draw attention in as graphic a way as we can . . . to these serious issues." Moratoria aside, the report says Canada's open-door export policy puts its own energy security at risk. Specifically, the policy groups believe Ottawa needs to rescind NAFTA's energy-sharing clause, which basically says Canada can't curtail exports without cutting back consumption by a proportional amount. Philosophically, the report says Canada's energy policy offers complicit support to American foreign policy in general, and the US military-industrial complex in particular.
(Calgary Herald 060308)

This is an interesting development. I think a lot of Canadians have secretly wondered this themselves, but because of the FTA and NAFTA, everyone knew we had no recourse. We really still don't - oil is still sold on the global market. If you're getting into selecting customers based on what they do with the product, then you're getting into planned economy territory. IF things become dire and oil becomes a lot more sought after than now, and it's a matter of keeping Canadians from freezing in the dark or selling it to the American or International market, what would happen?

Exxon Mobil to boost spending

Exxon Mobil forecast Wednesday that its spending on oil and gas drilling, refining and chemicals manufacturing would rise from about US$18 billion now to almost $20B a year between 2007 and 2010. The world's largest publicly traded oil company said in a presentation prepared for Wall Street analysts that roughly three-fourths of that amount would go to oil and natural gas exploration and production, and that this would help boost its output capacity by two million barrels a day by 2015. In 2005, Exxon said it produced more than four million barrels of oil equivalent. Exxon ceo Rex Tillerson said the company's estimated boost in spending "is not driven by short-term swings in commodity prices or earnings," but rather reflects a methodical completion of projects already waiting in the wings. "We invest our shareholders' money wisely, in projects that remain attractive over the long term," Tillerson said. Tillerson said the company is also focused on reducing costs, pointing out that the company found $1B worth of operating efficiencies in 2005 and would hit that target again in 2006 - "more than offsetting inflation." He said Exxon's workforce is about 14% smaller than it was five years ago. The company identified 46 major projects that would start up between 2006 and 2008, including development of oil and gas fields in Canada, the Gulf of Mexico and West Africa.
(Associated Press 060308)

Oil exploration, extraction and processing is only going to get more and more expensive as we have to plunder more exotic locales to find less and less of the stuff in poorer qualities. This all costs a lot more to bring to market. Of course some people would argue the point with me that there's still a lot of easy oil still to be found. I beg to differ.

Carmakers join oil companies in synthetic fuel venture

International oil companies and carmakers have joined forces to promote a new generation of synthetic fuels derived from natural gas or coal at a time when many are seeking alternatives to oil. DaimlerChrysler, Renault and Volkswagen have teamed up with Royal Dutch Shell and SasolChevron in a new body, the Alliance of Synthetic Fuels in Europe. The two oil companies are pioneering a novel technology that can be used to produce high-quality diesel fuel from natural gas or biomass instead of oil. Diesel engines burning the synthetic fuels are cleaner-running, making them appealing both to carmakers facing strict exhaust gas controls and to governments trying to deal with vehicle pollution in cities. But only fuel made from biomass -- a process still at the experimental stage -- provides improved greenhouse gas emissions, with coal-based fuel producing almost twice as much carbon dioxide as ordinary diesel. GTL produces about the same level as ordinary diesel. Oil companies are investing billions of dollars in new "gas to liquids" plants that use a method developed in Nazi Germany and apartheid-era South Africa to turn gas, coal or biomass into products traditionally refined from oil. Of the three processes, GTL is the most commercially advanced. The first large-scale commercial GTL plant is due to open in the coming weeks in Qatar, a joint venture between Sasol and Qatar Petroleum.
(National Post 060308)

I've read that these ventures are very optimistic in the amount of energy required to produce viable energy alternatives. The EROEI (energy returned on energy invested) for most of these alternative fuels is very low, thus barely, if ever, economical. Maybe that sort of stuff won't matter much in a future of energy shortages - maybe it will. Who knows?