By Graham Hicks
With little government regulation, the USA’s overall greenhouse gas emissions have been dropping. The USA is now expected to meet its Paris greenhouse gas reduction commitments – despite having torn up that agreement last year.
Why? Market forces! Utility companies can make more money converting coal-burning electricity plants to natural gas. There’s so much natural gas, it’s so easy to produce, it’s cheaper to burn than coal and it burns far cleaner than coal.
In the mid-2000s, 50% of American electricity was produced from coal, 20% from natural gas. Today, 30% of American electricity is from coal, 35% from gas.
Meanwhile that great polluter China is cleaning up its act as fast as a country of 1.4 billion people can possibility do, with state-led programs to reduce the percentage of power generated by coal from 66% in 2016 to 59% by 2021, replacing it with hydro, wind, solar, nuclear, natural gas, and cleaner coal.
Beijing’s once-soaring air-pollution index has dropped by 50% in just three or four years. The consensus of various experts is that China is cracking down on pollution as never before.
If these two global giants are moving toward dramatic emissions reductions, must Alberta and Canada continue to constrain Canada’s economy with ambitious but meaningless (on a global scale) government-imposed GHG reduction targets and carbon taxes?
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It is a mantra endlessly repeated by leaders in the Canadian oil and gas sector, and by every Alberta-elected politician.
If new pipelines can be built to either coast, says the truth of the day, Alberta will get much better world prices for its bitumen, rather than the much cheaper price it currently fetches in the USA.
But ultra-heavy oils like bitumen are already traded globally. Tanker loads of the stuff – slurp they call it – crosses oceans from oil-producing to oil-consuming countries.
That “slurp” also fetches a discounted price (compared to conventional light crude oil), just as Canadian bitumen sells at a steep discount to our only international customer, the USA.
Along the same line, the Kinder-Morgan pipeline to Vancouver has been shipping 300,000 barrels per day of dilbit (bitumen with added diluents so it will flow) from Alberta to the coast for 65 years. What’s not refined for the Vancouver market is passed on to refineries in nearby Washington state.
If bitumen is worth more sold overseas, why hasn’t at least some of the bitumen, now going to the state of Washington, been diverted to China-bound tankers?
Is bitumen cheaper than conventional crude simply because it costs that much more to produce, ship and refine?
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Why B.C. is so opposed to oil pipelines and oil tankers but seems comfortable with natural-gas pipelines and LNG (liquified natural gas) tankers is beyond me. With a rupture, one would leak, the other mightily explode.
Be that as it may, how encouraging that energy behemoth Shell appears confident it will receive all permits and will invest billions in Canada’s first LNG port at Kitimat. It would take six or seven years from now to go into production, but, finally, our endless supply of natural gas from northeast B.C. and northwest Alberta could be sold in Asian markets.
North America has so much natural gas (thanks to fracking technology) that the price is expected to remain low no matter how many coal-burning plants are converted to gas, no matter how much gas is liquified and shipped to overseas markets.
The reason there’s so much activity in some Western Canada’s natural gas fields is because other “liquids” extracted with natural gas – stuff used to make plastics or diluents – have higher value than poor ol’ natural gas itself.
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Another reassuring thought on a global level: Much as we worry about losing Alberta’s #1 industry due to the demonization of carbon fuels (now matter how green), it ain’t going to happen.
The industry might slim down to 75% of its current capacity, but it won’t disappear. At least not according to the international oil giant ExxonMobile.
ExxonMobile publishes a highly-respected, exhaustively-researched oil outlook report every year. If every country in the world met its climate-change targets, says ExxonMobile, if renewal energy projects proceed as fast as humanly possible, global demand for oil by 2040 would still be 78 million barrels a day – as opposed to today’s global production of 100 million barrels a day.