Trans Mountain Pipeline Construction

[SharperDingaan]

Canada had a big night last night, the conservatives lost badly, and to many - we apparently now have the worst possible minority Liberal government with respect to getting pipelines built. The reality of course, would appear to be a little different.

 

https://www.bloomberg.com/news/articles/2019-10-22/trudeau-team-seeks-to-calm-oil-patch-fears-of-pipeline-debacle?utm_content=business&cmpid=socialflow-twitter-business&utm_campaign=socialflow-organic&utm_medium=social&utm_source=twitter

 

We would love to hear people’s thoughts, and to kick off the discussion;

put forward the following.

 

1) TMP is actually ‘green-lit’, subject to demonstration of a ‘real’ no-bull**** business case, ‘real’ no-bull**** climate change advantage, and a ‘real’ no bull-**** time-line. Show me 'real' declining or static pollution levels, show me ‘real’ native consultation, show me 'real' changing business practices. Liberal/NDP pipeline decisions, supported by oil-patch conservatives.

 

2) Same as a gas tax, dedicate the TMP net benefit to Green investment. We, the people, bought a pipeline – the result of which is supposed to be more wealth for all. Dedicate that wealth to ‘green’ infrastructure, for a period of ‘N’ years? Canada demonstrates progress towards Kyoto accords.

 

3) Oil-patch carbon-tax, contained within the oil-patch. Produce more bitumen in the oil-patch and you pay a carbon tax to oil-patch pollution reducers, that pays for equipment to make that new production carbon neutral. Canada demonstrates progress towards Kyoto accords.

 

4) Energy (oil, gas, electricity, nuke waste) corridor toll fees. Let energy cross provinces, but make it pay an access toll to each province/first nation/sovereign sea way, whose land or waters it crosses. The less polluting &/or toxic the energy, the lower the toll, creating market incentives to lower pollution. Canada demonstrates progress towards Kyoto accords.

 

5) All-women management of the energy file in the various jurisdictions? March the testosterone out the door, and let Canada’s very capable women work on the problems. Their way. Canada both supports male/female equality, and demonstrates progress towards Kyoto accords.

 

6) Alberta/Sask oil-patch refining, & alternative energy generation? Higher value-add capture in the oil-patch, less polluting product in the pipe, and export electricity versus coal – net of C02 sequester. Accidents will still happen, but now it’s a lot easier to clean up afterwards.

 

 

Let the fire begin!

 

SD

 

[Viking]

What a mess. Alberta is so screwed; who in their right mind would think about putting new money into oil and gas in Canada?

[no_free_lunch]

Point 5 is just plain sexist. Why don't you just get the best people?  You are just trying to virtue signal.

 

You clowns put these carbon taxes in place.  Fine.  However we import huge volumes of products from countries without carbon taxes. Shouldn't you put a carbon tax on imports? 

 

In general how are we going to compete internationally when our trading partners don't have a carbon tax?

[sundin]

This appears to be a judicial matter rather than a political one. The appeals are the roadblock to getting the pipeline built. Although they campaigned on it, I don't see how the Conservatives can actually get the pipeline built faster.

 

The Liberals will put the pipeline to am open vote in the House and you can bet on it passing.

[Cigarbutt]

The critical variables defining that project now are: division, uncertainty and economic viability.

The minority government adds some uncertainty but with the election, now the Parliament contains 278/338 elected under a banner that support the expansion project and 67,5% of the votes went to the two parties supporting the expansion.

It also seems that (despite noise) a majority of British Columbians would support a well articulated project to get the deal going.

I would that ingredients are present with a reasonable chance of a constructive and unifying outcome.

[SharperDingaan]

Just to move the discussion along ....

 

Screwed Alberta.

It's not just Alberta, it's the entire fossil fuel industry (coal, gas, oil, etc.). The reality is that the industry is being asset stripped and the capital redeployed elsewhere; implying that any material further growth will have to come from FFO, not capital raises. Leduc was 1947; the last 72 years have been a great run, but everything eventually comes to an end. The resource is still there, but the 'same old' isn't as effective anymore. Opportunity.

 

All-women management.

Ordinarily I would agree; hire for ability, not gender. But in the energy industry it's primarily a boys club, we've done this the same way for many years (ability = male), and it just isn't working anymore. We need a different approach, and have nothing to lose (and everything to gain) by giving women the opportunity. Particularly when women are much better at collaboration and 'working together' than men are. The practical reality is that there will never be 100% women, but a material majority is not unrealistic. Would 'Lehman Brothers' have suffered the same 'fate', had they been 'Lehman Sisters'?

 

Competing internationally

Agreed that if you cant recover the carbon cost (US buyer), you have to eat it. The market solution is to either 1) sell higher volume (economy of scale paying the carbon tax), or 2) sell different product with higher margins. The market (environmentalists) is signalling no scaling up (pipelines to transport this volume) until the carbon issue is addressed. It is also signalling make different product (refine in Alberta) that sell for more. Divert flow into higher value product.

 

A Canada problem, not an Albertan one; but to get to end point will require the co-operation of all of Canada.

A federal versus purely regional approach, and one that would really benefit from more women in the room.

 

Pipeline.

Inclined to agree, but the judiciary does not work in a framework vacuum. An advantage with charging for land transit is that a Quebec would also pay for tankers transiting to/from via the St Lawrence Seaway, and that a facility at Churchill (Manitoba) would bring benefits to a northern canada. Split the egress over multiple deep water ports (BC, Manitoba), and you also reduce the spill risk in each location, making egress (at each port) easier to approve.

 

Lots of possibilities ........

 

SD

 

 

 

 

[no_free_lunch]

SD,

 

You ignored my main point.  If you really want to help the environment, why are you not carbon taxing (tarriffs) imports?  If our local producers have the burden of carbon taxing, economics 101 says the production will just shift to localities that don't have that cost.

[SharperDingaan]

SD,

 

You ignored my main point.  If you really want to help the environment, why are you not carbon taxing (tarriffs) imports?  If our local producers have the burden of carbon taxing, economics 101 says the production will just shift to localities that don't have that cost.

 

I suggest that we would.

 

A tanker delivering Saudi Crude to a Montreal refinery would get taxed twice; a high inbound rate (when its full) as soon as it enters the Seaway, and a low outbound rate (when its empty) until it exits the Seaway. The cost would be passed on to the refinery, raising the cost of the crude, & reducing the refiners margin. To get the refiner to take Alta crude (assume they can) we need Montreal delivery at a landed cost lower than bringing the crude via the Seaway  The ability to adjust cost (net of scaling) + transport + toll, via a 'safer' pipeline, gives a lot of flexibility. Carbon tax, acting like a tariff on fuel imports, to produce behavioral change.

 

Agreed, all else equal, production shifts elsewhere; but all else isn't equal.

Sure US refiners may refuse to pay the carbon tax - but doing so also threatens their supply (now a low margin business), and promotes creation of a refinery closer to source (in Alta, vs the US Gulf Coast); diverting supply, and both stranding and starving their supply line. Ultimately to maintain the reliable supply, they pay up.

 

Sure, a determined polluter can still pollute by moving elsewhere; they just can't do it here.

And that's OK, 'cause we can only change (and benefit) from what is within our control.

Raising the import tariff, also makes it harder for them to sell to us.

 

Ultimately, it means doing business differently.

 

SD

 

 

 

[no_free_lunch]

Tarriff's are very much in our control, just like a carbon tax is in our control.

 

You can spin it any way you want but you aren't helping the environment if you just start replacing Canadian goods with foreign goods that don't have a carbon tax on them.

 

[bizaro86]

Tarriff's are very much in our control, just like a carbon tax is in our control.

 

You can spin it any way you want but you aren't helping the environment if you just start replacing Canadian goods with foreign goods that don't have a carbon tax on them.

 

You're probably actively hurting the environment. Alberta has stringent regulations on venting and flaring associated natural gas production. Many places don't, and vented methane is a way worse greenhouse gas than CO2.

[no_free_lunch]

I guess I don't quite follow how shifting to these external producers is going to help canada's environmental impact.  It just seems like a big lie so that we can pretend we are doing something when really we just outsource the pollution.  The only way to prevent that is to impose the environment regulations on the way in.

[SharperDingaan]

Think of every good coming into Canada as having a carbon/pollution tax.

 

The good may have been produced very cheaply elsewhere, where there are no carbon/pollution charges; but if it is to be sold in Canada we charge a tariff equal to the carbon/pollution taxes that should have been paid. It is now an expensive good, and its cost is a lot closer to its 'true' cost of production.

 

If that good costs less to produce in Canada, we wouldn't buy it; if it costs more to produce locally we would. Everyday trade, and in/out sourcing prevails. But that good is expensive, and we are all going to have to pay more to use it; however, because it IS expensive, we will actively seek substitutes. If the economic substitutes are ultimately less polluting, we all win; and get there via market forces, not someone telling us what we should do.

 

Whatever tariff money that Canada might collect, might be used to buy Alta carbon credits (one example).

The proceeds in turn paying for Alberta carbon/pollution cleanup equipment that reduce Alta's total pollution load. 'Cap' the total pollution load; and whatever you 'save' via these credits, you can 'spend' on a scale-up of Tarsand throughput - to offset uncollectable carbon charges on commodity exports. Environmentalists start allowing pipelines to be built, production curtailments end, and carbon trading becomes the money machine that facilitates change. Everybody 'wins'.

 

It is just a different way of doing things.

That, hopefully, catches on!

 

SD

[no_free_lunch]

Sd,

 

Do it.

 

I will point out that you talk and talk but the carbon tax is now in effect and we aren't doing likewise to our imports.

 

You are going to have to do this because these carbon taxes are going to work their way through the cost structure and affect all natural resources and manufacturing too.  It will affect the east eventually and we all know that cannot be.

[SharperDingaan]

Fully agree that carbon credits have to apply to imports as well.

 

Carbon credits are just in their early stages ... and there are a whole lot of premiers to still persuade; evolution is inevitable.

In the 'east'; it'll be the start of the shut-down and replacement of gasoline for electric car plants - in 5-8 years, or less.

 

The talk will stop when the ASX is Canada's undisputed carbon trading market, it's a thriving business,......

and Calgary is the centre of the universe!

 

SD