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Canada to buy major pipeline to ensure it gets built

TU Curmudgeon

TU Curmudgeon

B.A. (Sarc), LLb. (Lex Sarcasus), PhD (Sarc.)
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Centrist
From ABC News

Canada to buy major pipeline to ensure it gets built
​

Canada's federal government said Tuesday it is buying a controversial pipeline from the Alberta oil sands to the Pacific Coast to ensure it gets built.


Prime Minister Justin Trudeau's government plans to spend $4.5 billion Canadian (US$3.4 billion) to purchase Kinder Morgan's Trans Mountain pipeline.


The pipeline expansion would triple the capacity of an existing line to ship oil extracted from the oil sands in Alberta across the snow-capped peaks of the Canadian Rockies. It would end at a terminal outside Vancouver, resulting in a seven-fold increase in the number of tankers in the shared waters between Canada and Washington state.

COMMENT:-
No big deal, right?

Consider the fact that, currently it's almost impossible for Canada to sell its oil on the international market which means that the only realistic customer is the US AND Canada is only allowed to sell oil to the US at the Canadian domestic price REGARDLESS of what the international price is.

This pipeline will allow Canada to sell its oil on the international market at the international price.

No big deal, right?

Consider that Canada is only obliged to sell a set amount of oil (and that amount is one hell of a lot less than is currently being sold) to the US, so Canadian oil producers now have the option of sending oil to the US at a low price or sending it off shore at a high price. Selling the oil to the US at an artificially low price is what is known as "dumping" and is illegal under WTO rules.

Possibly most of you don't remember what the Argentinian government paid to the American oil companies when they nationalized their assets in Argentina - it paid the oil companies what the oil companies has said their assets were worth when filing Argentinian tax forms. When the oil companies complained, the Argentinian government offered to pay what the oil companies said their assets were really worth, on the condition that the oil companies pay all of the back taxes, penalties, and interest that refiling their tax forms with the "correct" values inserted would require them to pay.

Guess which price the oil companies elected to accept.​
 
TU Curmudgeon said:
From ABC News

Canada to buy major pipeline to ensure it gets built
​

Canada's federal government said Tuesday it is buying a controversial pipeline from the Alberta oil sands to the Pacific Coast to ensure it gets built.


Prime Minister Justin Trudeau's government plans to spend $4.5 billion Canadian (US$3.4 billion) to purchase Kinder Morgan's Trans Mountain pipeline.


The pipeline expansion would triple the capacity of an existing line to ship oil extracted from the oil sands in Alberta across the snow-capped peaks of the Canadian Rockies. It would end at a terminal outside Vancouver, resulting in a seven-fold increase in the number of tankers in the shared waters between Canada and Washington state.

COMMENT:-
No big deal, right?

Consider the fact that, currently it's almost impossible for Canada to sell its oil on the international market which means that the only realistic customer is the US AND Canada is only allowed to sell oil to the US at the Canadian domestic price REGARDLESS of what the international price is.

This pipeline will allow Canada to sell its oil on the international market at the international price.

No big deal, right?

Consider that Canada is only obliged to sell a set amount of oil (and that amount is one hell of a lot less than is currently being sold) to the US, so Canadian oil producers now have the option of sending oil to the US at a low price or sending it off shore at a high price. Selling the oil to the US at an artificially low price is what is known as "dumping" and is illegal under WTO rules.

Possibly most of you don't remember what the Argentinian government paid to the American oil companies when they nationalized their assets in Argentina - it paid the oil companies what the oil companies has said their assets were worth when filing Argentinian tax forms. When the oil companies complained, the Argentinian government offered to pay what the oil companies said their assets were really worth, on the condition that the oil companies pay all of the back taxes, penalties, and interest that refiling their tax forms with the "correct" values inserted would require them to pay.

Guess which price the oil companies elected to accept.​
Click to expand...
It is Canada's right to be able to sell their oil where they can, but I had heard
the First Nation was not giving the OK, and it will cross their land.
There also might be some issues selling the idea of a pipeline cutting through a national park.
 
longview said:
It is Canada's right to be able to sell their oil where they can
Click to expand...

That concept has a bit of opposition from the American "charities" which are funding the Canadian anti-pipeline movement.

Not only that, but you should be aware of the fact that it simply isn't true - as long as NAFTA remains in place


Article 605: Other Export Measures

Subject to Annex 605, a Party may adopt or maintain a restriction otherwise justified under Articles XI:2(a) or XX(g), (i) or (j) of the GATT with respect to the export of an energy or basic petrochemical good to the territory of another Party, only if:

a) the restriction does not reduce the proportion of the total export shipments of the specific energy or basic petrochemical good made available to that other Party relative to the total supply of that good of the Party maintaining the restriction as compared to the proportion prevailing in the most recent 36month period for which data are available prior to the imposition of the measure, or in such other representative period on which the Parties may agree;

b) the Party does not impose a higher price for exports of an energy or basic petrochemical good to that other Party than the price charged for such good when consumed domestically, by means of any measure such as licenses, fees, taxation and minimum price requirements. The foregoing provision does not apply to a higher price that may result from a measure taken pursuant to subparagraph (a) that only restricts the volume of exports; and

c) the restriction does not require the disruption of normal channels of supply to that other Party or normal proportions among specific energy or basic petrochemical goods supplied to that other Party, such as, for example, between crude oil and refined products and among different categories of crude oil and of refined products.​

On the other hand, "We don't have the oil to sell you at $40/bbl because we sold it to someone else at $60/bbl." (technically) is NOT a "restriction".

Of course, if you can't get the oil to a place where you can sell it at $60/bbl but can only get it to a place where you can sell it at $40/bbl then that wouldn't apply - would it?

[NOTE - I made up the numbers for illustrative purposes so I'm not interested in getting into a "debate" based on "Those aren't the real prices.".]​

longview said:
, but I had heard the First Nation was not giving the OK, and it will cross their land.
Click to expand...

What you have heard about is the minority of First Nations bands who have not yet reached a sufficiently lucrative deal regarding the pipeline's construction.

longview said:
There also might be some issues selling the idea of a pipeline cutting through a national park.
Click to expand...

Considering that the pipeline is scheduled to follow the same route as the existing pipeline (which crosses national, provincial, regional, and municipal parks) I don't think that that is going to be any serious obstacle (especially since the people [the Canadian government] who "own" the pipeline also "own" the national parks).
 
TU Curmudgeon said:
That concept has a bit of opposition from the American "charities" which are funding the Canadian anti-pipeline movement.

Not only that, but you should be aware of the fact that it simply isn't true - as long as NAFTA remains in place


Article 605: Other Export Measures

Subject to Annex 605, a Party may adopt or maintain a restriction otherwise justified under Articles XI:2(a) or XX(g), (i) or (j) of the GATT with respect to the export of an energy or basic petrochemical good to the territory of another Party, only if:

a) the restriction does not reduce the proportion of the total export shipments of the specific energy or basic petrochemical good made available to that other Party relative to the total supply of that good of the Party maintaining the restriction as compared to the proportion prevailing in the most recent 36month period for which data are available prior to the imposition of the measure, or in such other representative period on which the Parties may agree;

b) the Party does not impose a higher price for exports of an energy or basic petrochemical good to that other Party than the price charged for such good when consumed domestically, by means of any measure such as licenses, fees, taxation and minimum price requirements. The foregoing provision does not apply to a higher price that may result from a measure taken pursuant to subparagraph (a) that only restricts the volume of exports; and

c) the restriction does not require the disruption of normal channels of supply to that other Party or normal proportions among specific energy or basic petrochemical goods supplied to that other Party, such as, for example, between crude oil and refined products and among different categories of crude oil and of refined products.​

On the other hand, "We don't have the oil to sell you at $40/bbl because we sold it to someone else at $60/bbl." (technically) is NOT a "restriction".

Of course, if you can't get the oil to a place where you can sell it at $60/bbl but can only get it to a place where you can sell it at $40/bbl then that wouldn't apply - would it?

[NOTE - I made up the numbers for illustrative purposes so I'm not interested in getting into a "debate" based on "Those aren't the real prices.".]​



What you have heard about is the minority of First Nations bands who have not yet reached a sufficiently lucrative deal regarding the pipeline's construction.



Considering that the pipeline is scheduled to follow the same route as the existing pipeline (which crosses national, provincial, regional, and municipal parks) I don't think that that is going to be any serious obstacle (especially since the people [the Canadian government] who "own" the pipeline also "own" the national parks).
Click to expand...
I still see that as it is ok for Canada to increase it's production and send the new production west,
But I still think it will be hard for the Government to sell the idea to many Canadians.
I can Alberta going for it, but BC could have it's own group of protestors.
 
longview said:
I still see that as it is ok for Canada to increase it's production and send the new production west,
Click to expand...

That isn't what "proportion" means.

longview said:
But I still think it will be hard for the Government to sell the idea to many Canadians.
Click to expand...

If the Canadian government needed the permission of the Canadian people to do whatever the Canadian government wanted to do with the assets of the Canadian government, that might be relevant.

longview said:
I can Alberta going for it, but BC could have it's own group of protestors.
Click to expand...

Indeed it does, and they receive generous funding from American "charities" which receive generous donations from very rich people who are deeply involved in the oil business (and which "charities" don't do anything other than fund anti-pipeline movements in Canada).

Fortunately for those BC "anti-pipeliners" consciences they don't know where the money that is supporting their "environmental resistance" is coming from.
 
TU Curmudgeon said:
That isn't what "proportion" means.



If the Canadian government needed the permission of the Canadian people to do whatever the Canadian government wanted to do with the assets of the Canadian government, that might be relevant.



Indeed it does, and they receive generous funding from American "charities" which receive generous donations from very rich people who are deeply involved in the oil business (and which "charities" don't do anything other than fund anti-pipeline movements in Canada).

Fortunately for those BC "anti-pipeliners" consciences they don't know where the money that is supporting their "environmental resistance" is coming from.
Click to expand...

Not meaning to change the subject, but do you know why Canada is shipping the tar sands oil to Houston?
There is really a 2 part answer,
First the stuff is difficult to refine in large volume , but within the capabilities of the plants on the Gulf Coast,
but secondly, there are regulations that prevent finished fuel products made from US oil being exported.
The law is bypassed by using Canadian oil.
The pipeline protestors do not know, or do not want to know that the oil is already getting here
through an existing pipeline, and by rail, and additional pipeline would eliminate the riskier and more expensive rail transport.
At least that is what I have heard from people who work in that industry
 
longview said:
There is really a 2 part answer,
First the stuff is difficult to refine in large volume , but within the capabilities of the plants on the Gulf Coast,
but secondly, there are regulations that prevent finished fuel products made from US oil being exported.
The law is bypassed by using Canadian oil.
Click to expand...

Don't forget the third part - there is a lot of money to be made by buying below the world price and then selling at the world price.

longview said:
The pipeline protestors do not know, or do not want to know that the oil is already getting here through an existing pipeline, and by rail, and additional pipeline would eliminate the riskier and more expensive rail transport.

At least that is what I have heard from people who work in that industry
Click to expand...

And they are correct.
 
TU Curmudgeon said:
Don't forget the third part - there is a lot of money to be made by buying below the world price and then selling at the world price.



And they are correct.
Click to expand...
I wonder how much of a price the tar sands oil would command in BC, because it would still have to be
transported and refined. Canada Would do far better to refine the oil themselves in BC, for local supply,
and maybe sell to local restrictive markets like Alaska and Hawaii.
 
longview said:
I wonder how much of a price the tar sands oil would command in BC, because it would still have to be
transported and refined. Canada Would do far better to refine the oil themselves in BC, for local supply,
and maybe sell to local restrictive markets like Alaska and Hawaii.
Click to expand...

Ecologically it makes sense to transport the oil sands sludge to the place of use/export as is. The stuff is pretty inert and simply doesn't spread out much in the form that it is shipped through the pipelines.

However, once it reaches the point of use/export that is - ecologically - the best place to refine it since the stuff simply won't degrade in water and will constitute a floating ecological glop for decades. Yes, it won't burn worth spit in its "pipeline form", but the much lighter refined products actually disperse much more readily and can, if needed, actually be burned off in the case of a spill.

At the last reports I saw, there is still a floating (it's actually in suspension) "lake" from the Exxon Valdez wandering around off the BC/Alaska coast and killing fish. The crude that the Exxon Valdez carried was much more "volatile" than the oil sands sludge that it proposed for export.
 
TU Curmudgeon said:
Ecologically it makes sense to transport the oil sands sludge to the place of use/export as is. The stuff is pretty inert and simply doesn't spread out much in the form that it is shipped through the pipelines.

However, once it reaches the point of use/export that is - ecologically - the best place to refine it since the stuff simply won't degrade in water and will constitute a floating ecological glop for decades. Yes, it won't burn worth spit in its "pipeline form", but the much lighter refined products actually disperse much more readily and can, if needed, actually be burned off in the case of a spill.

At the last reports I saw, there is still a floating (it's actually in suspension) "lake" from the Exxon Valdez wandering around off the BC/Alaska coast and killing fish. The crude that the Exxon Valdez carried was much more "volatile" than the oil sands sludge that it proposed for export.
Click to expand...
If that is the case, maybe going south is best, oil in the gulf get eaten, the oil eating microbes bloom
after an oil spill.
https://www.cnbc.com/2017/06/26/muc...pill-has-disappeared-because-of-bacteria.html
 
TU Curmudgeon said:
That isn't what "proportion" means.



If the Canadian government needed the permission of the Canadian people to do whatever the Canadian government wanted to do with the assets of the Canadian government, that might be relevant.



Indeed it does, and they receive generous funding from American "charities" which receive generous donations from very rich people who are deeply involved in the oil business (and which "charities" don't do anything other than fund anti-pipeline movements in Canada).

Fortunately for those BC "anti-pipeliners" consciences they don't know where the money that is supporting their "environmental resistance" is coming from.
Click to expand...

Hi, TU. Do you have a link for this? Not a gotcha, really interested, as I've been struggling with this one. I like the idea of reduced dependence on selling to the states, but I also am concerned about the environmental impact. Would love to see the material you're reading.
 
longview said:
If that is the case, maybe going south is best, oil in the gulf get eaten, the oil eating microbes bloom
after an oil spill.
https://www.cnbc.com/2017/06/26/muc...pill-has-disappeared-because-of-bacteria.html
Click to expand...

Unfortunately you still have to get it someplace where you can sell it profitably.

In the case of the oil sands, there is more profit to be made selling it on the world market than there is by selling it into the US market.

Fortunately Mr. Trump's actions - which the Canadian government can accept as a resiling from NAFTA - could well mean that Canada is no longer compelled to sell a major portion of its oil production to the US (regardless of any increase in Canadian domestic oil requirements).

PS - You might note that the microbes only worked on the portions of the spill that floated or settled on the bottom (the EXXON Valdez "oil glob" has done neither) and required the use of dispersal agents (which are rather difficult to apply underwater). Personally I'd rather have a tanker full of avgas go down than one full of "oil sludge" because the avgas will "disperse" all on its own (and is pretty easy to burn off if it doesn't.
 
OlNate said:
Hi, TU. Do you have a link for this? Not a gotcha, really interested, as I've been struggling with this one. I like the idea of reduced dependence on selling to the states, but I also am concerned about the environmental impact. Would love to see the material you're reading.
Click to expand...


All of NAFTA is available on line, but you might want to start with Article 605.

Part of the problem with dealing with the "oil spill issue" is the ever changing definition of what constitutes a "reportable spill". The (former) Chevron Refinery in Burnaby BC was required to report spills as small as a quarter cup in some cases.

In another area, I dealt with a situation where there was a "reportable spill" that required bio-remediation and that "reportable spill" amounted to approximately one drop per hour. In fact, the "reportable spill" was so small that no one even knew that it was taking place until some construction had to be done on the site and the results of a (multi-year long) one drop per hour spill were discovered.

You might find


interesting
 
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