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Supermajors Balk at Canadian LNG Profit Tax

Supermajors Balk at Canadian LNG Profit Tax.

By Joao Peixe | Thu, 27 February 2014 22:45 | 0

Oil and gas companies hoping to win big on Canada’s nascent liquefied natural gas (LNG) export industry are balking at a new gas tax proposed for British Columbia that is great for the province but tough on the industry wallet.

Profits from LNG projects will be taxed at an initial rate of 1.5%, under the proposal, British Columbia Finance Minister Michael de Jong told reporters on 26 February. The rate will rise to as much as 7% after companies recover the costs of building the shipping terminals.

A 7% levy on profits works out to a $0.50/MBtu surcharge,Ziff Energy analysts say – “not a small number when you consider there’s a lot of competition out there.”

Related Article: Small Companies Poised to Ride Canadian Natural Gas Wave

Shell Canada and other supermajors in this game say the proposed tax could hinder the province’s competitiveness.

“We need something that’s globally competitive if we, in British Columbia, are going to build an LNG industry,” said Shell Canada spokesman David Williams.

Shell Canada has proposed a $12-billion plant in Kitimat, with partners PetroChina, Korea Gas and Mitsubishi. The project already has federal export approval and is now awaiting environmental assessment. A final investment decision (FDI) could hinge on the new tax policy.

Exxon Mobil and Chevron are also eyeing British Columbia LNG projects—and all were looking for clarifications of pending tax policies, which has now arrived however unwelcome.

But provincial officials see a chance here to bring in up to $1 trillion by 2046 through the LNG sector alone.

The attraction, despite the tax proposal, is clear: there is plenty of money to be made shipping low-cost Canadian gas to LNG-starved Asian markets, where it fetches a much higher price.

Related Article: Why Europe Won’t See Canadian Crude Anytime Soon

And, as provincial officials have been quick to point out: British Columbia tax and royalty rates as proposed will still be lower than in Australia and the US—at least in the five states competing with LNG projects in the sector.

BC Finance Minister Jong’s response to the supermajor balking is to take it in stride.

“Of course they want zero,” he said, but the proposed tax regime still puts British Columbia ahead of its potential competitors.

The province of British Columbia is promising tax legislation this fall, and is expected to reveal more details about environmental regulation and benefit-sharing plans for First Nations this spring.

By Joao Peixe of Oilprice.com

David Suzuki: Rail versus pipeline is the wrong question : thegreenpages.ca

David Suzuki: Rail versus pipeline is the wrong question : thegreenpages.ca.

Photo: Rail versus pipeline is the wrong question

The question isn’t about whether to use rail or pipelines. It’s about how to reduce our need for both. (Credit: Dieter Drescher via Flickr)

By David Suzuki with contributions from Ian Hanington, Senior Editor

Debating the best way to do something we shouldn’t be doing in the first place is a sure way to end up in the wrong place. That’s what’s happening with the “rail versus pipeline” discussion. Some say recent rail accidents mean we should build more pipelines to transport fossil fuels. Others argue that leaks, high construction costs, opposition and red tape surrounding pipelines are arguments in favour of using trains.

But the recent spate of rail accidents and pipeline leaks and spills doesn’t provide arguments for one or the other; instead, it indicates that rapidly increasing oil and gas development and shipping ever greater amounts, by any method, will mean more accidents, spills, environmental damage — even death. The answer is to step back from this reckless plunder and consider ways to reduce our fossil fuel use.

If we were to slow down oil sands development, encourage conservation and invest in clean energy technology, we could save money, ecosystems and lives — and we’d still have valuable fossil fuel resources long into the future, perhaps until we’ve figured out ways to use them that aren’t so wasteful. We wouldn’t need to build more pipelines just to sell oil and gas as quickly as possible, mostly to foreign markets. We wouldn’t have to send so many unsafe rail tankers through wilderness areas and places people live.

We may forgo some of the short-term jobs and economic opportunities the fossil fuel industry provides, but surely we can find better ways to keep people employed and the economy humming. Gambling, selling guns and drugs and encouraging people to smoke all create jobs and economic benefits, too — but we rightly try to limit those activities when the harms outweigh the benefits.

Both transportation methods come with significant risks. Shipping by rail leads to more accidents and spills, but pipeline leaks usually involve much larger volumes. One of the reasons we’re seeing more train accidents involving fossil fuels is the incredible boom in moving these products by rail. According to the American Association of Railroads, train shipment of crude oil in the U.S. grew from 9,500 carloads in 2008 to 234,000 in 2012 — almost 25 times as many in only four years! That’s expected to rise to 400,000 this year.

As with pipelines, risks are increased because many rail cars are older and not built to standards that would reduce the chances of leaks and explosions when accidents occur. Some in the rail industry argue it would cost too much to replace all the tank cars as quickly as is needed to move the ever-increasing volumes of oil. We must improve rail safety and pipeline infrastructure for the oil and gas that we’ll continue to ship for the foreseeable future, but we must also find ways to transport less.

The economic arguments for massive oil sands and liquefied natural gas development and expansion aren’t great to begin with — at least with the way our federal and provincial governments are going about it. Despite a boom in oil sands growth and production, “Alberta has run consecutive budget deficits since 2008 and since then has burned through $15 billion of its sustainability fund,” according to an article on the Tyee website. The Canadian Taxpayers Federation says Alberta’s debt is now $7 billion and growing by $11 million daily.

As for jobs, a 2012 report by the Canadian Centre for Policy Alternatives shows less than one per cent of Canadian workers are employed in extraction and production of oil, coal and natural gas. Pipelines and fossil fuel development are not great long-term job creators, and pale in comparison to employment generated by the renewable energy sector.

Beyond the danger to the environment and human health, the worst risk from rapid expansion of oil sands, coal mines and gas fields and the infrastructure needed to transport the fuels is the carbon emissions from burning their products — regardless of whether that happens here, in China or elsewhere. Many climate scientists and energy experts, including the International Energy Agency, agree that to have any chance of avoiding catastrophic climate change, we must leave at least two-thirds of our remaining fossil fuels in the ground.

The question isn’t about whether to use rail or pipelines. It’s about how to reduce our need for both.

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The secret to fixing a pollution problem: Do something about it | – Environmental Defence

The secret to fixing a pollution problem: Do something about it | – Environmental Defence.

Canada has a problem. Our greenhouse gas pollution is soaring. With climate impacts hitting harder and closer to home (ice storms, polar vortexesfloods…), our country is recklessly racking up a huge carbon bill that will saddle future generations with a debt impossible to pay off.

In a new report prepared for the United Nations, for the first time Environment Canada did the number crunching all the way to 2030. We’ve known for awhile that our 2020 target has become a mission impossible. But this report also paints a sorry picture of 2030, where Canada still doesn’t have its act together and climate pollution, specifically from the tar sands, continues to skyrocket (check out this detailed analysis by the Pembina Institute).

The report reaffirms that the growth in pollution from the tar sands – if the tar sands are allowed to continue expanding as projected – will wipe out any progress made to reduce emissions in any other sector, including Ontario’s coal phase-out, B.C.’s carbon tax, or other provinces’ energy efficiency and carbon reduction measures.

The result is while some pull up their bootstraps and clean up their acts, soaring pollution from the tar sands will cancel out everyone else’s hard work. And this means if Canada is to meet a national goal to cut emissions, some regions and sectors will need to do more than their fair share because one sector – oil – is getting off scott-free.

We hear a lot of talk these days about pipelines as “nation building projects” and being in the “national interest.” But if tar sands expansion is allowed, made possible by big new pipelines, this is a recipe for dividing our country, not uniting it.

Here’s why: At some point, Canada will need to get serious about reducing emissions, and how the carbon pie is divided between regions will become important. We can expect regions to speak up loudly if they’re asked to do more than their fare share to reduce carbon emissions because the oil industry is being irresponsible.

All provinces have a stake in major pipeline proposals like Enbridge’s Northern Gateway and TransCanada’s Energy East. There’s the tangible danger that these pipelines could spill tar sands oil into forests, farmland and drinking water sources. And then there’s the less tangible – but critical – impact they would have on the amount of carbon the country is pumping into the atmosphere and the impacts of climate change.

Will Ontario, British Columbia or Quebec be keen to do more than their fair share to cut carbon to make up for the impact of these pipelines? Doubtful. And they should not be asked to. All sectors and regions will need to reduce emissions. For the oil sector, that means keeping production at current levels and cleaning up existing operations – not expanding. It also means seeing the government put in place robust regulations on the oil sector that will see emissions go down, rather than up. Even the weak regulationsunder discussion now have just been punted  ‘a couple of years’ further down the road by the Prime Minister.

The idea that Canada may fail to rein in soaring emissions by 2030 may not seem like the brightest news to kick off the New Year, but there is an important caveat to this story. It can only come true if industry and government get their way when it comes to rapid and reckless tar sands expansion.

The good news is that new pipelines and oil projects aren’t getting a free ride these days. With ever-growing public concern about moving oil (by tanker, rail, or pipeline), a world feeling the early impacts (and paying the price) of a changing climate, and new conversations in the financial sector about the risks of investing in high-carbon fuels, the tar sands are facing a serious uphill battle.

The world is waking up to climate change and the environmental devastation of projects like the tar sands, and while our current government chooses to leave their head in the sand, Canadians are also standing up to demand the safe, smart, clean energy future we deserve.

Battle ramps up over Canada oil pipeline plan – Features – Al Jazeera English

Battle ramps up over Canada oil pipeline plan – Features – Al Jazeera English.

Canada’s pipeline projects have been the focus of a series of mass demonstrations [Reuters]
Two decades ago, deep within British Columbia’s coastal old-growth forests, a fierce battle was waged and won to preserve Clayoquot Sound from large-scale clearcutting.

The legendary clash between environmentalists and industry in Canada’s westernmost province sparked a new kind of eco-activism – and the biggest fight since is poised to play out in the months ahead, as the country moves closer towards approving a controversial oil pipeline to the Pacific coast.

Last month, project proponent Enbridge Inc received a substantial boost through a federally commissioned report, which recommended approval of the Northern Gateway pipeline – subject to a host of environmental and administrative conditions. Advocates say the pipeline, which would whisk more than 500,000 barrels of oil daily from the Albertan tar sands to supertankers in Kitimat, BC, would benefit the country by opening Canada’s oil industry to growing Asian and Pacific Rim markets. But environmental and aboriginal groups, whose lands the pipeline would cross, maintain it would threaten some of the country’s most precious natural resources.

While the federal Conservatives – who have vowed no project will be approved unless it is “safe for Canadians and safe for the environment” – have until July to consider the report and come to a final decision, it is widely expected the government will green-light the Northern Gateway. And once that happens, Chief Martin Louie of the Nadleh Whut’en First Nation says aboriginal groups will swiftly launch court action.

“That’s the only avenue that we have to try to protect our rights,” Louie told Al Jazeera, speaking on behalf of a group of aboriginal bands known as the Yinka Dene Alliance, who have banned Enbridge’s pipeline from their territories under indigenous law. “Beautiful British Columbia – that’s what it should be for our kids too. The way I grew up enjoying the land and everything, I want my children and grandchildren to do too.”

Stamp of approval

The Northern Gateway twin pipeline would stretch 1,177km between Bruderheim in northern Alberta and the deep-water port of Kitimat, BC. The westward line would have the capacity to transport 525,000 barrels per day of oil for export, while the eastward line would carry up to 193,000 barrels per day of condensate, a product used to thin oil for pipeline transport.

We remain hopeful that we can work to address all concerns that our opponents have in a mutual spirit of cooperation and collaboration.

– Ivan Giesbrecht, Enbridge spokesperson

The $8bn project has been years in the making; in 2009, Enbridge announced it was seeking regulatory approval, setting off a public and governmental review process that will culminate with this summer’s final decision.

A major part of that process was the independent joint review panel, mandated by the Environment Ministry and the National Energy Board, which delivered its final report last month.

Tasked with assessing the environmental, social and economic impacts of the pipeline, along with the effects of tanker traffic within Canadian territorial waters, the panel ultimately recommended approval of the project subject to 209 separate conditions. “We have concluded that the project would be in the public interest,” the panel noted in its final report. “We find that the project’s potential benefits for Canada and Canadians outweigh the potential burdens and risks.”

Enbridge has said it will work to meet all of the panel’s 209 conditions – which range from developing a marine mammal protection plan to researching the behaviour and cleanup of heavy oils – along with a broader set of five criteria, including addressing aboriginal land rights, for heavy oil pipeline development set out by the BC government.

“We remain hopeful that we can work to address all concerns that our opponents have in a mutual spirit of cooperation and collaboration,” Enbridge spokesperson Ivan Giesbrecht told Al Jazeera, calling the December report “just one important step in a long process”.

The company contends the Northern Gateway will deliver more than $270bn in GDP to Canada over 30 years, along with $300m in employment and contracts for aboriginal communities and billions more in tax revenue and labour-related income during construction. Enbridge and other advocates, including the Alberta government, have described the pipeline as key to diversifying Canadian crude oil exports to markets beyond the United States.

“Access to ocean ports for Alberta’s abundant resources is important to not just Alberta’s but Canada’s economic future,” Alberta Energy Minister Diana McQueen said, noting resource developers get a lower price in the North American market than they could globally. The situation is compounded by the stalled Canada-US Keystone XL pipeline proposal, which has been awaiting US government approval amid years of debate over its route and environmental impacts.

Treacherous waters

Opponents, meanwhile, question Enbridge’s employment numbers and suggest the pipeline’s economic benefits have been overstated. The Northern Gateway has generated a wall of opposition from aboriginals and environmental activists who cite the risk of an Exxon-Valdez-level oil spill in BC’s pristine coastal waters. Dozens of aboriginal bands have signed a declaration against the project, pledging to refuse Enbridge access to their lands and watersheds, including the salmon-stocked Fraser River.

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In addition to the risk of spillage from the pipeline itself, Greenpeace Canada – which has criticised Enbridge’s history of spills and leaks – points out that the oil-loaded, Asia-bound supertankers would have to navigate “one of the trickiest marine routes in Canada”, passing by a series of small islands in the Douglas Channel. More than a year ago, Enbridge came under fire for releasing promotional materials in which the islands had apparently been erased from a rendering of the channel, in what critics called an effort to downplay the risks.

“Enbridge’s Northern Gateway pipeline would stream the world’s dirtiest oil from northern Alberta to the BC coast and would be the catalyst for unbridled exploitation and potentially calamitous disturbance of our land, air, freshwater and marine environment,” said Chris Genovali, executive director of the Raincoast Conservation Foundation in Sidney, BC. Industrial activities accompanying the transportation of oil could destroy habitats for caribou, wolves, whales and wild salmon, he added.

Opposition House Leader Nathan Cullen, the federal New Democratic MP for BC’s Skeena-Bulkley Valley, believes a major spill from either the pipeline or tankers over the 50-plus-year lifespan of the project is a certainty. “The ability to clean up bitumen in the water is virtually nil,” Cullen told Al Jazeera.

The Northern Gateway proposal faces an additional hurdle from BC’s provincial government, which has refused to lend support to the pipeline until Enbridge proves it will employ “world-leading practices” on oil-spill prevention and response, respect aboriginal rights and ensure the province gets a fair slice of the economic pie. “Enbridge hasn’t met any of the conditions yet,” government spokesperson Sam Oliphant said.

Legal fight ahead

Enbridge points out that it has already incorporated input from British Columbians and aboriginal communities, resulting in almost two dozen changes to the pipeline route and other alterations, such as thicker-walled pipes and an increased capability to respond to marine spills. In addition, the federal panel found Enbridge had taken steps to minimise the chances of a large spill “through its precautionary design approach and its commitments to use innovative and redundant safety systems”.

Given the overwhelming First Nations and public opposition here, I believe the pipeline will likely never happen.

– Drew Mildon, lawyer

None of this is enough for the project’s opponents, who maintain the Northern Gateway will be a pivotal issue in the 2015 federal election – and set the stage for a landmark court fight.

The expected avalanche of legal cases upon the pipeline’s approval will tie it up for years, said Keith Stewart, climate and energy coordinator for Greenpeace Canada. And if the government tries to proceed regardless, he said, thousands of people have pledged to engage in peaceful civil disobedience, just as protesters did decades ago in Clayoquot Sound – using blockades and peaceful demonstrations to achieve their environmental goals.

The question of land ownership, meanwhile, is a complex one. Aboriginal rights are protected under section 35 of Canada’s constitution, but proving aboriginal title requires proof of use and occupation, said lawyer Drew Mildon, who works for a BC-based firm planning to represent aboriginals in the anticipated Northern Gateway court battle. While many aboriginal groups living along the pipeline route assert title and rights, they have not yet gone to court to prove them, Mildon told Al Jazeera.

“I have no doubt the governments will try to ram through the pipeline regardless of First Nations objections,” he said. “As a lawyer working for First Nations in BC, and given the overwhelming First Nations and public opposition here, I believe the pipeline will likely never happen.”

Stewart agreed, citing a failure on the part of Enbridge and the federal government to shore up public support for the pipeline.

“Without that support,” he said, “it won’t be built.”

 

SIRC chair’s pipeline lobbying seen as symptom of larger problem – Politics – CBC News

SIRC chair’s pipeline lobbying seen as symptom of larger problem – Politics – CBC News.

Former cabinet minister Chuck Strahl was appointed last year to chair the Security Intelligence Review Committee, which oversees Canada's spy agency, CSIS. Word that Strahl has been hired as a lobbyist for pipeline company Enbridge has raised concerns among environmentalists and others.Former cabinet minister Chuck Strahl was appointed last year to chair the Security Intelligence Review Committee, which oversees Canada’s spy agency, CSIS. Word that Strahl has been hired as a lobbyist for pipeline company Enbridge has raised concerns among environmentalists and others. (Canadian Press)

A former head of the committee that oversees Canada’s spies has a warning for the current chair: It’s generally not a good idea for someone in their position to act as a lobbyist.

Paule Gauthier was commenting on questions surrounding former Conservative cabinet minister Chuck Strahl, currently the head of the Security Intelligence Review Committee.

Strahl has come under fire after it was revealed he is also a registered lobbyist for Enbridge, the company pushing to build the Northern Gateway pipeline from Alberta to B.C.

SIRC’s job is to monitor the activities of CSIS, the Canadian Security Intelligence Service, which has been known to keep tabs on environmentalists and native groups opposed to pipelines. Forest Ethics, a group opposed to Northern Gateway, issued a statement this week calling on Strahl to step down as SIRC chair.

Gauthier, who served as chair of SIRC from 1996 to 2005, doesn’t see a conflict of interest in Strahl working as a lobbyist, but acknowledges it could create the perception of one.

“I think it would be much better to refrain from these activities,” she said in an interview from her law office in Quebec City.

Gauthier says if Strahl has followed the rules and is satisfied he’s not in conflict, there shouldn’t be a problem. But she can see how a SIRC chair doing lobbying work could raise eyebrows.

“It’s putting himself or herself in maybe a difficult situation that you cannot expect when you accept the mandate as a lobbyist,” she said.

Strahl has been quoted as saying he has checked with the federal ethics commissioner to make sure his work is above board. He told one interviewer if SIRC were asked to look at any files involving pipelines, he wouldn’t touch them.

Part-time job

The position of SIRC chair is a part-time job paid on a per diem basis — about $600 a day plus travel expenses. Another former chair says that’s part of the problem.

Ronald Atkey was appointed the first-ever SIRC chair when the committee was established in 1984. He now teaches at the University of Toronto and the University of Western Ontario.

Atkey has long argued the position of chair should be a full-time job with a full-time salary so anyone serving would not have to look for outside work.

“I think the two organizations that Canadians should worry the most about are CSEC (Communications Security Establishment Canada) and CSIS,” he said by phone from London, Ont.

“They’re fine organizations with fine people doing important work. But they’re asked to go close to the line in complying with the law. I think, therefore, to give public comfort that these groups are monitored properly after the fact, I think a full-time watchdog may be in order.”

Wesley Wark sees merit in that idea. He’s a security expert and visiting professor at the Graduate School of Public and International Affairs at the University of Ottawa. A part-time chair, he says, is “one of a number of problems that makes the Security Intelligence Review Committee less robust than it could be.”

“I think the position should be full-time and we should also define the job properly,” Wark said.

“You do want someone with considerable stature, considerable power, considerable experience. And somebody really to be a critic when criticism is needed.”

Office cut in 2012

Wark says there was more of that critical oversight when CSIS had its own inspector general.

The Conservative government abolished that office in 2012, arguing it would save money and end duplication by allowing SIRC to take over all monitoring of CSIS. The outgoing director of the inspector general’s office, Eve Plunkett, warned at the time the closure would be a “huge loss.”

Wark believes the government regarded the office and its often critical reviews of CSIS as “an annoyance.” As for Chuck Strahl, Wark says he’s less concerned about the former cabinet minister’s lobbying work than he is with SIRC’s overall ability to act as an effective watchdog.

“I just think, given the ways in which the intelligence world in Canada has been transformed and the problems that it presents and the skepticism that I think now surrounds the notion that anybody is really keeping a watch on intelligence agencies to make sure they don’t break the law or abuse their powers, I think something does need to be done,” he said.

“And that’s the real story. It’s not whether Mr. Strahl is a lobbyist. It’s what do we need to do to fix SIRC.”

H1N1 flu surge in B.C. Lower Mainland lands people in ICUs – British Columbia – CBC News

H1N1 flu surge in B.C. Lower Mainland lands people in ICUs – British Columbia – CBC News.

Fraser Health says an outbreak of H1N1 flu has sent over a dozen people into intensive care in Lower Mainland hospitals. Officials say that H1N1 flu vaccines are effective but previous vaccinations against H1N1, which many people sought in 2009, may not help anymore due to mutations in the virus.Fraser Health says an outbreak of H1N1 flu has sent over a dozen people into intensive care in Lower Mainland hospitals. Officials say that H1N1 flu vaccines are effective but previous vaccinations against H1N1, which many people sought in 2009, may not help anymore due to mutations in the virus. (Chuck Stoody/The Canadian Press)

 

More than a dozen patients are in intensive care, some on ventilators, because of the H1N1 flu virus, according to the chief medical officer for a B.C. Lower Mainland health authority.

Dr. Paul Van Buynder, with Fraser Health, said Friday that 15 patients, many of them otherwise healthy, young people, were recently admitted to hospitals in the region.

“It is a lot for us at this particular time, especially because there is not a lot of circulating disease in the community at this point, and so we’re worried that this has happened to so many people so quickly,” he said.

He says the ages of the patients turning up with H1N1 flu span the spectrum, and include those in their 30s. He also said at least one of the patients is pregnant, and also that one person may have died from this flu strain.

“I have one person who hasn’t been confirmed, but I’m pretty sure did pass away from this,” Van Buynder told CBC News.

Van Buynder said medical officials are seeing small pockets of H1N1 breaking out across the region, in a pattern mirroring the flu’s spread in Alberta, Ontario and Texas.

Alberta’s Health Minister Fred Horne says there have been 965 lab-confirmed cases, another 251 people have been hospitalized due to influenza and five people have died so far this flu season.

The H1N1 flu outbreak of 2009, which the World Health Organization declared a global pandemic, prompted mass immunizations across Canada.

Van Buynder said anyone visiting a hospital or health facility in B.C. will either need to wear a mask, or be vaccinated against the flu — and he said that previous vaccinations against H1N1 may not help anymore due to mutations in the virus.

“Certainly we don’t think everybody should be reassured by previously being vaccinated, and we’d like them to make sure that they go out and get it again,” he said.

Fraser Health serves more than 1.6 million people from Burnaby to Hope, to Boston Bar.

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