10 Things You Didn’t Know About The Oil & Gas Industry in 2018

The Oil & Gas industry has more than its fair share of misinformation directed at it.  This site is intended to expose and explore facts and so as part of our new series on the Oil & Gas industry we thought you would like a quick run down of some interesting facts:

      1. LNG Does Not Burn: Companies compress Natural Gas into what is known as Liquified Natural Gas (LNG) it is much easier to move and store.  However, one concern that is often heard relates to how dangerous LNG (think of an LNG tanker as a floating bomb or an LNG pipeline as scary torch), but LNG is safer than nearly any other petroleum product.  It will not burn and if it spills it LNG will quickly clean itself up.  LNG is incredibly safe.  Watch this short fun video:

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Oil & Gas: Why ‘Keep It In The Ground’ Is A Formula For Environmental Disaster

The environmental lobby has mislead many well intentioned companies and intelligent individuals with the “keep it in the ground movement”.   That logic only applies to “western societies” and has sadly resulted in serious efforts to block even the cleanest Oil & Gas projects for the last decade.  The most recent tactic is to block the infrastructure required to make Oil & Gas functional; in particular pipelines are being opposed at every turn.

These next two points should clearly demonstrate that “keep it in the ground” is both naive and environmentally damaging.

1: OIL & GAS GROWTH THROUGH 2040

The fact is that the most scientificly trustworthy energy industry research body in the world, the International Energy Association (IEA), agrees with dozens of other government and industry analysts that Oil & Gas demand will continue to EXPAND through the year 2040.  2040-2050 is the magic decade when China and India will have moved most of their citizens into the middle class.

Before you start thinking, ‘but wait, that will change if we ‘go electric”, note that the IEA is expecting massive amounts of electrification in the next 20+ years and has already wrapped those expectations into their projections.  If we don’t have substantial electrification (solar, wind, electric cars,…) 2040 will not be the

Keep in mind the word EXPAND.  This means that at about 2040, the world will not have stopped using oil and gas; this means that consumption will have peaked.  After 2040, there will take between 100 to 200 years to cycle out of petroleum based products.

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A Tale Of Two Cities: How Chestermere is Spending $100K More Than Lacombe To Find a New CAO

In a vacuum it is often difficult to see the value of one city’s processes over another.  There are always differences that outsiders do not understand.  However, there are unique situations in which very similar cities perform the same task at the same time but one costs radically more.  We found just such a circumstance and are comparing the search for a City Manager in Chestermere with that in Lacombe.

Let’s start by showing their similarities:

  • Both are similar size cities in Alberta
  • Both have very similar annual budgets
  • Both are located just outside major cities (Calgary & Edmonton)

WHAT IS A CAO?

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A Chief Administrative Officer (CAO) is the ONLY employee of your City Council.  Under the Alberta Municipal Government Act (MGA) those elected to Council are explicitly forbidden from giving direction to staff; only the CAO can hire, fire and direct staff.  The CAO is sometimes referred to as the City Manager and that is a good description.  CAO’s must be intimately familiar with the Alberta MGA and generally well connected in the municipal political sphere.

Put simply the CAO prevents elected officials from breaking the law and translates the will of City Council into action with city staff, so it is an important position to be sure.

The real question should be “how much is that position worth” but that is a discussion for another day.  Today, we are looking at what it costs to hire them and we think you will be startled by the numbers.  Specifically, what are the costs incurred between the time the old CAO left and the new CAO started.

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The Poor Are Getting Much Richer In Canada

In a world of ever increasing political division in which those on the ‘right’ side of the spectrum are forever vilified for cutting social programs and making tough choices to balance budgets, it was quite refreshing to see that under a Conservative federal government in Canada, the poor became much less so.

Quartz research released a study of Statistics Canada data titled “The American dream still exists—in Canada”.  It showed that between 2013 and 2016 poorest 20% grew TWICE as fast as Canada’s richest 20%.  Canada poorest had their incomes move up a staggering 24% in just 4 years.

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VIDEO: How The Left Plans To Win the 2019 Alberta Election

Recently I attended a Progress Alberta event titled ‘Emergency Town Hall: Why Progressives Can Win in 2019’.  This event had four notable presenters and I was very pleased that they allowed me to record the event.  Personally, I found sessions 3 and 4 (below) on how the left has to respect the United Conservative Party and Jason Kenny to be the most interesting.

The ‘Coles Notes’ version of the night would be:

  • Calgary will be the only notable battleground in the 2019 election
  • Alberta is far more left than presented in the media
  • Jason Kenny is a machine that must not be underestimated
  • The left has a natural role in governing that is not understood or accepted by the general public
  • Conservatives own the media, including social media
    • I find it amusing that every side thinks the other side controls the media
  • The center cannot consistently win elections, which could be extended to ‘people need a common enemy to rally around and that means left or right’

1: Why Progressives Can Win in 2019 Alberta: Alberta is More Progressive Than You Think – 8 mins

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VIDEO: Highlights of the Canadian Federal Government Carbon Tax

On January 15 2018, the Canadian Federal Government laid out the details of it plan to implement a  $50/tonne carbon tax in proposed legislation named the “Greenhouse Gas Pollution Pricing Act”.  The highlights are:

  • The Federal Tax will only apply in Provinces and Territories that do not have a comparable carbon tax already in place
    • That means, as of today, it will apply only to 20% of the Canadian population
    • Specifically those in Saskatchewan, most Atlantic provinces, NWT, Nunavut, Yukon will be subject to the Canadian Federal carbon levy
    • Newfoundland & Labrador and others are expected to announce their own carbon tax systems in the spring of 2018
  • The tax will start at $10/tonne in 2018 and will be at $50/tonne by the end of 2022
  • There are two parts to the system, a consumer gas tax and and industrial emissions tax

Consumer Gas Tax:

  • 2018 Gasoline = $0.023 / liter       2022 Gasoline = $0.115 / liter
  • 2018 Diesel = $0.027 / liter             2022 Diesel = $0.135 / liter
  • 2018 Propane = $0.015 / liter         2022 Diesel = $.075 / liter

Industrial Carbon Emissions Tax:

  • The tax is an “output based system” which means it will be charged where the carbon is released (think burning gasoline in your car vs producing gasoline)
  • Only those companies that produce more carbon than the average today will pay the carbon tax
    • Before the end of 2018 the Canadian Government will evaluate each industrial sector (think Oil & Gas, Mining, Transportation…) and determine the current average energy used per unit of output in each of those sectors
    • Companies that produce more carbon than industry average will have to buy carbon credits
    • Companies that produce less carbon than the industry average will be able to sell the difference in carbon credits

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Recycling Crisis as China Closes Doors To Junk Plastic & How EPR Can Help Solve It

There is a global crisis with municipal recycling programs that is affecting YOUR community as of January 1st 2018.  China is now rejecting all used plastic, except “high grades”.  High Grades are used materials that are fully sorted.  This means mixed plastics, aka Low Grade, will no longer be taken.  The problem for us is that we rely on China’s cheap and efficient labour force to sort low grade plastics for us.

This video explains the Chinese “National Sword” policies that bans 24 different types of products (read: mixed paper, mixed plastic and mixed clothing) and how the US is beginning to deal with this.

We talked to Dr. Christina Seidel, Executive Director of the Recycling Council of Alberta about this issue earlier today.  She said that “… (consumer) education is good.  We need to be more careful about what goes in…(to the recycling system).

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Alberta’s Carbon Tax: The Right Tax at the Right Time?

Alberta's Carbon TaxIt used to be very clear that Alberta had a spending problem and not a revenue problem.  However, since the 2014 oil crash, the world and Alberta have forever changed.  Historically, oil ‘busts’ were the result of a downturn in some key economy that reduced the demand for oil & gas products.  Today we have the worlds first notable price downturn caused by over production of oil, with no end in site.

Saudi Crown Prince Mohammed bin SalmanThis over production was started intentionally by Saudi Crown Prince Mohammed bin Salman in an effort to kill shale oil fracker’s and other non-state owned small players.  The idea was to have OPEC lead an over production that would drop the price of oil for a few years and force the marginal upstart players (i.e. US based frackers) out of the industry.  Then Saudi lead OPEC would reduce supply and drive the price back up.  Well, the Crown Prince was wrong and it didn’t work.

More importantly it won’t work in the future.  Saudi Arabia and friends can reduce the global price of oil by increasing production but they can no longer raise the price because they no longer control the global output, here’s why:

  1. American fracking companies scale up their oil production in a matter of weeks
  2. Canadian oil sands in Alberta and Saskatchewan have vast reserves backed by billion dollar upgrader investments that just keep coming online
  3. Iran, which has had its oil embargoed for decades, now is pushing 3 billions of barrels onto the open market as of the 2017 lifting of sanctions
  4. OPEC nations like Venezuela and Nigeria are desperate states the need cash and they will continue to cheat their OPEC agreements and produce produce produce
  5. Putin and Russia so desperately want to be a world powerhouse but only has an economy the size of Spain’s, with 20% of its citizens without even running water.  The Russian federal government gets nearly HALF of its revenue from oil so when the price drops, they just produce more which keeps pushing the price down.

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