Derrick Digest for Aug. 11, 2017: Opinion: Natural resources are a win for rural communities

Policy choices can stand between workers and opportunities

The Derrick Digest is a weekly collection of curated content, based on events from across the oil and gas industry, that caught our eye at Pennine Petroleum Corporation.

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AUGUST 11, 2017


The government needs to recognize the importance of resource development when it comes to economic opportunity in rural Canada and swear its own political version of the Hippocratic Oath — “first do no harm” —Sean Speer writes in an opinion piece in Postmedia.

“Politicians talk so frequently about job losses stemming from free trade or technological innovation but rarely as a result of government policy. But far too often policy choices – deliberately or inadvertently – stand between workers and opportunity. Harvard economist Ed Glaeser calls it a “war on work.”

Approximately 500 communities in Canada are dependent on mining, forestry and energy for their economic livelihood. The “policy-induced dislocation” of the Pacific Northwest LNG project is B.C. — and the $36 billion in capital investment it would have brought with it — is an example of how “regulatory delays and policy uncertainty” on the part of the federal government can derail a project with immense economic benefits to rural Canada, which includes Indiginous communities.

 “What’s most unfortunate is that it’s working-class people in rural parts of the province that lose out the most,” writes Speer, a Munk senior fellow at the Macdonald-Laurier Institute. “The recent drop in oil sands investment illustrates this point. The loss of jobs among lower-income earners and blue-collar workers is nearly quintuple the losses among the highest-paid workers according to one estimate. Bankers and lawyers in major cities move on to the next deal. Working-class people in rural communities have fewer options and are often forced to uproot their families.”

With continued global demand for resources, the decision to not develop Canada’s vast resources is “a lose-lose” proposition, he writes. “Public policies that delay or block the development of these natural resources undermine these communities and their citizens. It amounts to an anti-regional development policy.”


Canadian Natural Resources president confident Keystone XL pipeline will be built

The Keystone XL pipeline makes economic sense, says the president of Canadian Natural Resources, and as such, his company supports it — to the tune of 150,000 barrels a day, almost one-fifth of the line’s 830,000-barrel-a-day capacity.

In a recent interview with the CBC, Laut said that he is confident the $8-billion project to ship product from Hardisty, Alta. to Steele City, Neb., will be built. But that doesn’t mean it couldn’t use a helping hand, he added. 

“I think it's up to us as industry and the governments, municipalities, everyone, to work together to make sure all the issues are addressed and it gets put through,” Laut said.

CNR is also a committed shipper on the TransMountain expansion and Energy East pipelines. Last week, TransCanada Corp., the company behind Keystone XL, announced an open season call, looking for commitments for 225,000 barrels per day of available room on the project.

On Wednesday, Nebraska Governor Pete Ricketts expressed his support for the project following a meeting with Canadian Finance Minister Bill Morneau in Toronto.

"I'm biased because I'm in favour of it," Ricketts said. "I don't see a reason why it ought not to be [built]."

The governor cited the economic benefits the project would bring to his state, as well as the energy security it would bring to the U.S.


Premiers tout economic benefits of pipeline work

They might not always see eye to eye, but the premiers of Alberta and Saskatchewan can agree on one thing: their economies stand to benefit now that Enbridge is undertaking work to replace its pipeline that runs from Hardisty, Alta. to Gretna, Man.

On Thursday, Alberta Premier Rachel Notley attended a Line 3 Replacement Program (L3RP) right of way tour in Hardisty, along with Energy Minister Marg McCuaig-Boyd, Federal Minister of Infrastructure and Communities Amarjeet Sohi, and Federal Minister of Veterans Affairs and Associate Minister of National Defence Kent Hehr.

“Projects like this benefit the whole country. Line 3 is creating good jobs, growing the Alberta and Canadian economies and ensuring we have safe modern infrastructure to transport our energy resources to market,” Notley said at the event. “As we formally celebrate the start of construction, I want to thank Enbridge and the federal government for all the hard work that brought us to this important milestone.”

Notley estimated that Alberta will see 9,200 direct and indirect jobs as a result of L3RP, which is replacing the existing 34-inch diameter with 36-in. diameter pipe. The Line 3 project, which is expected to take two years to complete, comes at a cost of $5.3 billion. Saskatchewan Premier Brad Wall, who announced his retirement on Thursday, recently said that Saskatchewan welcomes the economic upswing that comes with L3RP as well.

“There’s going to be an impact throughout Saskatchewan obviously if the steel is being made in Regina that that is a significant part of the economic upside for this pipeline, but for sure there is construction jobs both indirect and direct through which all of the regions the pipeline will pass through,” Wall said.

The Evraz steel company in Regina has been benefitting from the Line 3 replacement, even though the project isn’t expected to start in that province until later this summer.

"It's going to be just over 460,000 tonnes of steel produced for this project," Courtland Klein, the recording secretary for United Steelworkers 5980, which represents nearly 1,000 workers at the Regina Plant, told CBC.

The plant has been making steel for the project’s 1,600 kilometres of pipeline for the past two years. The project is expected to bring in approximately $184 million in tax revenue is expected to come to the province of Saskatchewan.

“The new Line 3 will comprise the newest and most advanced pipeline technology—and provide much needed incremental capacity to support Canadian crude oil production growth, and U.S. and Canadian refinery demand,” according to Enbridge, which is also replacing the section of pipeline that runs from the Canadian-U.S. border to Superior, Wisc.

The line is “mixed-service,” meaning it carries a variety of crude oils, including sweets, light and high sours, and light synthetics. The company “has negotiated agreements with approximately 70 Indigenous communities or groups and executed agreements with 100% of the right-of-way landowners, as well as gaining the support of the Canadian Association of Energy and Pipeline Landowner Associations (CAEPLA),” reads a post on Enbridge’s website.


New steam generation technology has major upsides

Eliminating greenhouse gas emissions and water-treatment requirements in SAGD plants two benefits of Suncor-led development

A new method for use in steam assisted gravity drainage (SAGD) could become the go-to method of steam-heating bitumen and pumping it to the surface, seeing as it could eliminate greenhouse gas emissions and drastically reduce the amount of water required to extract the resource.

Canada’s Oil Sands Innovation Alliance (COSIA) is pumped on the Suncor-led direct contact steam generation (DCSG) technology.

“This is a process that could eliminate or drastically reduce the need for water treatment in SAGD plants,” Suncor’s Todd Pugsley, who led the earlier stages of the project, told Mining Magazine.

“Among other benefits, DCSG could also reduce the footprint of steam generation, increase thermal efficiency of steam generation by capturing water of combustion and sensible heat of flue gas while requiring little or no waste disposal, and eliminate direct CO2 emissions from steam generation.”

Instead of using conventional boiler technology, the DCSG method employs a direct combustion process. This results in a flue gas stream of steam and CO2,. This mixture is then pumped underground for use in bitumen extraction.

“So far, we’ve learned that the gas produced from the DCSG process is 90% steam and 10% CO2,” explains Kostis Katsimihas of Suncor, who is helping to lead the research phase to the next step.

“By sequestering CO2 underground, we would have complete control over the CO2 emissions.”