OIL SANDS BOOM DRIES UP IN ALBERTA, TAKING THOUSANDS OF JOBS WITH IT

Original Story: nytimes.com

FORT McMURRAY, Alberta — At a camp for oil workers here, a collection of 16 three-story buildings that once housed 2,000 workers sits empty. A parking lot at a neighboring camp is now dotted with abandoned cars. With oil prices falling precipitously, capital-intensive projects rooted in the heavy crude mined from Alberta’s oil sands are losing money, contributing to the loss of about 35,000 energy industry jobs across the province. A Tulsa mineral rights lawyer is following this story closely.

Yet Alberta Highway 63, the major artery connecting Northern Alberta’s oil sands with the rest of the country, still buzzes with traffic. Tractor-trailers hauling loads that resemble rolling petrochemical plants parade past fleets of buses used to shuttle workers. Most vehicles carry “buggy whips” — bright orange pennants attached to tall spring-loaded wands — to help prevent them from being run over by the 1.6-million-pound dump trucks used in the oil sands mines.

Despite a severe economic downturn in a region whose growth once seemed limitless, many energy companies have too much invested in the oil sands to slow down or turn off the taps. In addition to the continued operation of existing plants, construction persists on projects that began before the price fell, largely because billions of dollars have already been spent on them. Oil sands projects are based on 40-year investment time frames, so their owners are being forced to wait out slumps. A Tulsa oil and gas lawyer represents gas and oil clients in federal and state matters and in federal and state courts.

“It really is tough right now,” said Greg Stringham, the vice president for markets and oil sands at the Canadian Association of Petroleum Producers, a trade group that generally speaks for the industry in Alberta. “We see kind of a lot of volatility over the next four or five years.”

After an extraordinary boom that attracted many of the world’s largest energy companies and about $200 billion worth of investments to oil sands development over the last 15 years, the industry is in a state of financial stasis, and navigating the decline has proved challenging. Pipeline plans that would create new export markets, including Keystone XL, have been hampered by environmental concerns and political opposition. The hazy outlook is creating turmoil in a province and a country that has become dependent on the energy business.

Canada is now dealing with the economic fallout, having slipped into a mild recession earlier this year. And Alberta, which relies most heavily on oil royalties, now expects to post a deficit of 6 billion Canadian dollars, or about $4.5 billion. The political landscape has also shifted.

Last spring, a left-of-center government ended four decades of Conservative rule in Alberta. Federally, polls suggest that the Conservative party — which championed Keystone XL and repeatedly resisted calls for stricter greenhouse gas emission controls in the oil sands — is struggling to get re-elected in October. A Tulsa oil and gas attorney is reviewing the details of this story.

“The pendulum has swung,” said Stephen Ross, the president of Devonian Properties, an Alberta development company that has built several residential and commercial properties in Fort McMurray.

Since the end of the World War ll, oil has made Alberta wealthy. The increase in oil sands development since the early 2000s had only intensified the province’s good fortune and turned obscure Fort McMurray into a boomtown and an outsize contributor to the entire Canadian economy.

When Mr. Ross first bought development land here in 2000, he paid about 27,000 Canadian dollars an acre. He stopped buying land long before it hit one million Canadian dollars an acre.

“The town has had huge growing pains,” Mr. Ross said. “It’s like something you’ve never seen.”

Operating oil sands plants quickly decreased budgets and cut services, like equipment cleaning, which were deemed optional. And as portions of construction projects are finished, construction workers are sent packing. The halt on new projects has left order books increasingly blank at a variety of suppliers, like engineering firms.

Since the price collapse, Teck Resources has delayed the start of its oil sands project by five years to 2026. Cenovus Energy substantially reduced budgets for its long-term developments. And Osum Oil Sands has set aside some of the expansion planned for a project it purchased from Shell last year. The Chinese-owned company Nexen, which had its oil sands production curtailed by regulators for about a month in August because of a pipeline leak, has deferred plans to build another upgrader facility, where tar-like bitumen of the oil sands is converted into synthetic crude oil, until the end of 2020.

These projects, and others that have begun over the last 15 years, have largely been built and operated by an itinerant work force. These workers fly into Fort McMurray’s new airport terminal and are bused to work camps up to two hours away. Their lives are a cycle of three straight weeks of long shifts interrupted by 10-day trips home.

That transient population has little or no connection to the city when working. When laid off, they become unemployment statistics, not in Alberta, but in the provinces of their hometowns. It’s also in those regions, more than Alberta, where the loss of once-large paychecks is most felt, having a ripple effect across the country. A Tulsa environmental lawyer provides professional legal counsel and extensive experience in many aspects of environmental law.

For Canadian oil executives, the significant shift in the province’s politics is of great concern. Rachel Notley, the new premier and leader of the New Democratic Party, has said that she would prefer more refining to take place in Alberta instead of shipping more oil sands production to the United States via Keystone XL. And speaking to the Alberta Chamber of Commerce last month, Ms. Notley told the energy industry that it must “clean up its environmental act.”

One executive and investor, who did not want to be named while the province is reviewing his industry, said growing sentiment that the industry does not pay Alberta enough in royalties and lags on environmental protections will kill new investments, even if prices start to rise.

“There’s never been a time when I’ve been less optimistic,” he said. “The general public doesn’t know how bad it is. It just hasn’t hit yet.”

He did, however, acknowledge that environmentalists had won the debate on Keystone XL as well as various other pipeline plans.

“I don’t know how the issue got away, but it’s obvious now that it did,” he said.

And the workers who have benefited from the boom are now realizing that their stretch of good luck might be over, permanently.

Réjean Godin, a truck driver and heavy equipment operator, began the long-distance commute from the Atlantic province of New Brunswick 13 years ago. Since then, he’s earned wages four or five times the rate of those back home, an area of high unemployment.

Standing near his well-worn Toyota RAV4 that still bears New Brunswick license plates, Mr. Godin, who lives in a work camp, recited all of the different projects in which hundreds of workers had been laid off — layoffs that he’d learned about over the previous few days. He fears that the days of high pay for delivering water to work camps and hauling their sewage away may be over for both himself and his 30-year-old son, who joined him in Alberta.

“I’m not sure if we’re going to come next year,” Mr. Godin said in the dusty yard of a trucking company in Fort MacKay, Alberta, a town down the Athabasca River from Fort McMurray. “What you hear everywhere is the price is low so we’ve got to cut this, we’ve got to shut that down a little bit. We go day by day because we never know.”

Energy Companies Targeting Mozambique

Story first appeared in The New York Times.

The world’s largest energy companies have big plans for Mozambique.

Until recently, the East African country was better known for its long civil war, and had few energy resources compared with regional heavy-hitters like Nigeria and Angola.

But in the last 10 years, companies like Exxon Mobil, the BG Group of Britain and Eni of Italy have used the latest technologies, including advances in deep-sea offshore drilling for oil and gas, to find new natural gas resources that are turning Mozambique into the center of an energy boom.

Up and down the country’s shoreline, Western energy companies, as well as a number of Asian competitors, are drilling wells thousands of feet below the Indian Ocean in hopes of striking it rich. The rewards could be huge. Mozambique may have more deposits of natural gas — used in everything from manufacturing to electricity generation — than the European energy giant Norway.

The East African country is not alone in its newfound energy wealth. Countries like Tanzania and Kenya also are attracting billions of dollars in investment from the world’s largest energy companies as they search for new oil and gas reserves.

In total, the Italian company Eni expects to spend $50 billion to develop natural gas projects off the coast of Mozambique. While production may not start until the end of the decade, the energy firm has designated the new reserves for customers in fast-growing Asian markets like India and China.

Other companies, including Anadarko Petroleum of Texas, also have multibillion-dollar plans for such new African oil and gas finds. Most, too, expect to sell the energy to emerging economies hungry to drive domestic growth.

The quickening pace of exploration in East Africa is part of a wider shake-up in the global energy industry as it scrambles to adapt to a series of major changes. Those range from the nuclear disaster in Japan last year, to slashed subsidies for alternative energy amid Europe’s economic crisis, to a boom in unconventional fossil fuels like shale gas that has spread across continents.

The changes have been particularly drastic in fast-growing China, now the world’s largest energy user and emitter of carbon dioxide. Since opening its economy over three decades ago, the Asian giant has become an insatiable consumer of natural resources. The country still relies predominantly on dirty coal for its electricity, but has fast-tracked oil production, as well as newer technologies like shale gas, and hydroelectric and wind power, to maintain its high levels of domestic growth.

With demand from emerging economies continuing apace, the quest for new fossil fuels is opening up unexplored territories for production. That may help to offset the effect of rising oil prices, which have reached almost record highs.

The demand from billions of people worldwide to consume energy isn’t slowing down. Companies ability to find new energy reserves, especially in remote locations, is altering the global market.

The opportunities are welcome in more ways than one. The new discoveries, including the so-called tar sands of Canada, are allowing Western companies like Royal Dutch Shell and BP to diversify and safeguard future production. State-owned firms like Sinopec of China and Gazprom of Russia have slowly taken over production of their domestic reserves, leaving them in control of roughly 85 percent of the world’s oil resources, according to the Energy Information Administration.

The discoveries also are helping countries from the United States to Romania to decrease their dependence on foreign energy imports as well as generate tax revenue and employment.

Poland presents a case in point. Since 2009, Chevron and other Western energy giants have been exploring there for shale gas, using many of the techniques pioneered in the United States with Natural Gas Expert Witnesses and Fracking Experts on hand for the process. The new energy resources could have a major effect on Poland, which currently imports more than 80 percent of its natural gas from Russia, its once dominant neighbor. The potential reserves may provide Poland with enough gas for more than 50 years, according to the country’s national geological institute.

There’s a real desire in Poland to build their own natural gas supplies.

So far, the American energy company has been drilling test wells to figure out how much shale gas can be extracted. Chevron has permits to explore more than one million acres in the southeast of Poland. It expects to have a clear picture of the potential size of the region’s energy reserves by the end of next year.

All may not go smoothly. Europe’s shale gas industry is not as developed as that of the United States, so finding the right drilling equipment and qualified work force could limit production.


Public perception may prove a problem, too. This year, Bulgaria canceled drilling permits for Chevron, and banned the controversial drilling technology known as hydraulic fracturing, or fracking, which some environmental advocates have linked to the contamination of drinking water. France also prohibited the technique last year.

Shale gas has the potential to be an enormous economic benefit.

The emerging fossil fuel renaissance, however, has not been good news for every energy company. In the alternative sector, wind farms and solar panels now find it that much harder to compete against fossil fuels, given the new oil and gas discoveries. Analysts say electricity from wind farms located off the coasts of Britain and Germany, for example, may cost six times as much compared with power plants that burn coal or natural gas.

Cutbacks in government subsidies for renewable energy, particularly in European countries struggling from the Continent’s sovereign debt crisis, also are taking a toll. Western companies, including Vestas of Denmark and Q.Cells of Germany, already face tough competition from Asian rivals. Now, cash-poor countries are paring back price guarantees and canceling tax credits for green energy projects.

The changing economics are forcing green energy companies to adapt. Faced with falling global prices for wind turbines and solar panels, analysts expect the industry’s largest manufacturers to buy, or merge with, rivals, as they look to strengthen their market positions. Deals are already taking place. Last year, takeovers in the world’s renewables industry totaled $53.5 billion, a 40 percent increase over 2010, according to PricewaterhouseCoopers.

Others are looking for cash-rich investors. In a bizarre twist, traditional oil and gas companies may come to the rescue of many green energy projects. With decades of experience developing resources out at sea, traditional energy companies are focusing their attention on multibillion-dollar plans to build wind farms off the coast of Europe and North America. Over the last 18 months, for example, the Spanish oil company Repsol and its Norwegian rival Statoil have announced investments in offshore wind projects across Northern Europe.

Interest in nuclear power also has waned after last year’s disaster involving the Fukushima Daiichi nuclear power plant in Japan. Before the accident, there were 440 reactors in operation worldwide, with a further 558 plants either under construction or on the drawing board, according to the consultant Capgemini.

Now Japan has shut almost all of its nuclear reactors, and countries like Germany and Italy have either announced plans to close their remaining plants or canceled efforts to build new facilities. Asian countries are building the largest number of new nuclear power plants, though analysts say the pace of construction has slowed by almost a quarter in the last 12 months.

The development of new plants has slowed down, but India and China remain committed to building new nuclear capacity.

With the outlook dimming for low-carbon energy sources like nuclear power and renewables, there are growing concerns that efforts to curb global greenhouse gas emissions will fail as countries look to exploit new sources of fossil fuels.

Levels of carbon dioxide, for example, rose 5.9 percent in 2010, the latest figures available, according to the Global Carbon Project, an international collaboration of scientists that tracks the numbers. The increase came despite a slowdown in global manufacturing, as many of the world’s largest economies struggled because of the financial crisis.

With many countries expected to return to growth, the use of fossil fuels — and the resulting emissions — are expected to rise.

Finding new deposits doesn’t change the climate constraints facing the world.


For more national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For law related news, visit the Nation of Law blog.
For real estate and home related news, visit the  Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.