The Round-Up: November 1st 2006

Canadian Cities Petition U.S. to Curb Air Pollution

'About half of our airborne pollution comes from across the border in the United States. That pollution is coming from dirty coal-fired plants in the Ohio valley and in the Midwest.'

-Dr. David McKeown, Toronto's medical health officer


Government Cap on Hydro Generation 'Stifling' Wind Projects

A provincially imposed 50 megawatt (MW) cap on new electricity generation is stifling wind power opportunities in northeastern Ontario, says a North Bay wind consultant. The Ontario government may be promoting the virtues of clean, renewable energy, but for Terry Wojick, that policy doesn't seem to apply in his region....

....Wojick says all his projects were progressing well until last April when the province released a second round of RFPs for more renewable energy. He was shocked to discover the Ministry of Energy has imposed a restrictive cap on the North East Zone, north and east of Sudbury, for new wind and water generation projects. The existing transmission infrastructure doesn't have the capacity to carry more power into the Ontario grid.

"All we're asking is a fair opportunity to bid into this RFP process," says Wojick, "and with the 50-MW restriction we can barely compete."

Canada Faces Lawsuit Over Failure to Meet Kyoto Commitment

Environmentalists threatened Tuesday to sue Canada to force cuts to greenhouse-gas emissions agreed under the Kyoto Protocol, despite officials' claims the target cannot be achieved.

The Friends of the Earth presented Environment Minister Rona Ambrose with a legal opinion asserting that Canada is in breach of the international treaty to reduce air pollution that causes global warming, and asked her to respond.

Otherwise, "I anticipate we would be on our way to federal court within six months," said Friends of the Earth chief executive Beatrice Olivastri.

$7-Trillion Warning on Global Warming

Canada signed up to the Kyoto agreement and agreed to reduced greenhouse gas emissions by 6 per cent below its 1990 levels between 2008 and 2012. Instead, those emissions are up considerably and the Conservative government has conceded it won't come close to meeting those commitments.

The report suggests that 1 per cent of global domestic product be spent immediately on dealing with climate change, to avoid higher costs later. Failure to act would lead to a drop of 5 to 20 per cent of global GDP and make large swaths of the Earth's surface uninhabitable.

The New Green Totalitarianism

This is a strongly worded reaction to the release of the Stern report. The issue of the proper role for government regulation as a response to climate change should be debated.

One of the unstated purposes of the Stern review is to bury the Kyoto Protocol, an unworkable plan built around unattainable objectives. Stern does a fine job eulogizing the failed accord with faint praise. "The Kyoto Protocol has established valuable institutions to underpin international emissions trading. There are strong reasons to build on and learn from this approach." So Kyoto is dead, with Stern noting that developing nations have no targets, Australian and the United States will not sign, and Canada will not meet the targets it has.

Treasury's Paulson Plays With the Plunge Protectors

It would be interesting to debate how effective a Plunge Protection Team could hope to be if the markets do go into reverse.

"Since taking the reins in July, the Wall Street veteran has reinvigorated the President's Working Group on Financial markets, which had languished." The article went on to say that before Paulson's arrival, the group met every few months, and sometimes only once a quarter. Now Paulson is insisting that it meet every six weeks.

Among other things, Paulson and the Plunge Protection gang discuss the problems that might occur with hedge funds and derivatives, plus the "government's ability to respond to a financial crisis," according to a source quoted by the paper.

Nov 2nd item on the CBC website
http://www.cbc.ca/money/story/2006/11/01/cnr.html
about drilling for gas in Alberta.
I think we need to worry very much about the wrong signals the Holy Market is sending on energy.
the reference to "lower productivity" of drilling might indicate too many dud holes?  Anyone have any real stats on drilling success in Canada.
BTW, congrats on the good work on TOD Canada and TOD in general.
Well I don't have an answer, however, you might find the following to be interesting.

From a guy named 'Stan'

Just thought I would post a few of my observations for you guys while I was at it. I work in the oil industry as a contractor, mainly working in the field in northern BC, northern AB and rarely the NWT. There are a lot of guys like me who work a potion of the year in the field, usually in 2-4 week bursts and then spend the rest of the time at home in the lower mainland. I have been doing this for more than 10 years and have seen my fair share of boom and bust.
Currently we are heading for a bust. What many people are not aware of is that western canada is mainly a natural gas play with good pockets of heavier oil. Lots of the oil drilling in the last 2 years has been heavy (api <15) oil, such as in the peace river and wabasca areas. These wells were economic when oil was above $40 or so. However due to the labour squeeze, a lot of contractors and suppliers have ramped up their costs dramatically. Daily costs on a large rig are up to $85-100k from $65-75k a couple of years ago. In light of this many of the heavier oil plays are now marginal and investment is slowing. Meanwhile the price of natural gas has softened dramatically from $12 2 years ago whilst the operators have suffered the same cost increases. I have noticed over the last 3 months that some of the bigger nat. gas operators have colluded to try and starve some of the worst offenders in jacking up their rates. Devon, CNRL and Encana have slashed their drilling budgets and are releasing up to 50 rigs between them that were previously contracted long term. Presumably these rigs will be picked up by other operators, but this is feeling like a real slowdown to me. This has reduced the rig count of each operator by half. Bear in mind that the short term rush of jan and feb last year when every available rusting hulk was pressed into service the record rig count was around 860, (summers are 400-550), so you can see that a drop of 60 rigs on year round contract is significant. So far you will read none of this in the press, but it is certainly starting to be whispered in hushed tones around water coolers all over alberta. Many of the guys I work with have never experienced a slow down and will not even entertain the idea that it is possible. A lot of them earn huge money, but are real consumers and still manage to spend it well in advance. One guy I know earns approx $275k a year (you really have to sell your soul and work 280 days a year), but has monthly outgoings of $10k (house, f350, navigator for her, atv, quad, 12k plasma etc) why a guy like this needs to get a plasma on credit is beyond me but it is the pervading attitude of the industry. I realise that this is a dramatic example but it best highlights the attitudes of people in this industry.

http://www.caodc.ca/rigcounts.htm#biwkserv
Plots rig count for last 8 years or so. Note that it plots rigs up and down, so total is #rigs available for service.

thanks for that ... very interesting and helps us remember that there is a real human element to all this ... the rig link is in my bookmarks now ...