With academics and everyone but the Tories themselves realizing that the government is too dependent on energy royalties, it was obvious Saturday's economic summit was little more than a feel-good exercise. Even the government itself said the meeting was a conversation about the direction Alberta needs to take moving forward and wasn't likely to shape next month's budget.
But of all that was said at the meeting, the best wisdom was expressed by the president of the Alberta Federation of Labour.
"Albertans are willing to make tough sacrifices when necessary. We're prepared to take it on the chin when we've been convinced it's the right thing to do," said Gil McGowan. "But allowing yourself to get punched in the face when it's not necessary is not brave and it's not noble. It's stupid."
McGowan's remarks appear to be in response to comments made by Tom Flanagan, who pointed out that the across-the-board cuts of Ralph Klein in the early 1990s balanced the province's books and set the stage for Alberta's economic boom.
Conservatives should heed what McGowan has to say, but instead, agree we shouldn't take tax increases on the chin while the budget has all but doubled in the past decade and a University of Calgary report found that 95 per cent of the increases in revenues during the same period were swallowed up by the public sector.
McGowan is right: we'll make sacrifices when necessary. But the fact the government can't do its job is no reflection on ordinary Albertans, who provide the highest tax contributions per capita in the country.
The Calgary Herald, Sunday, Feb. 10, 2013
CALGARY - Alberta Premier Alison Redford says a sales tax isn't on the agenda, even though many of the panellists at an economic summit that her government convened Saturday said it could be one solution to the province's fiscal woes.
"Oh, I don't think we're anywhere near that at all. I think the fact that people are beginning to talk about it as an idea is a really important thing," Redford told reporters after the day-long event.
"Ideas are important, but no need to jump the gun on that."
By law, Albertans would need to vote on a provincial sales tax through a referendum.
Alberta has prided itself for decades on being the only province not to have a sales tax and Albertans were amongst the most angry when the Conservative government of Brian Mulroney brought in a federal sales tax in the 1990's; two Tory MPs from Alberta left the Conservative caucus in protest.
Redford's government has said it faces a $6-billion oil and gas revenue shortfall, mainly due to the inability for Alberta crude to access markets that will pay the best price.
Among the business people, economists and academics in favour of bringing a sales tax to Alberta were George Gosbee, CEO of investment firm AltaCorp Capital, and University of Calgary tax expert Jack Mintz.
"It's my view that we don't have a cost problem, we have a revenue problem," Gosbee, who said spending cuts would be "draconian."
Gosbee said he's also in favour of bringing back health care premiums.
Mintz said Alberta's challenge has more to do with spending than it does revenue, but that it has a "tax mix problem" as well.
He said the province relies too much on "harmful and volatile" sources of revenue.
Mintz advocates switching from income to consumption-based taxes, whether that's through user fees, excise taxes or a sales tax.
"Many Albertans believe that having no sales tax is a tax advantage. It is the opposite. Not having a sales tax is a disadvantage in today's global economy," he said.
He added U.S. state governments that have low income taxes but have a sales tax, such as Texas, are seeing stronger economic growth.
Danielle Smith, leader of the right-wing opposition Wildrose Party, said she was disappointed to see how much revenues dominated the day's discussion, whether it was through taxes or debt. Some panellists said low interests rates make borrowing money a good option.
"I'm very worried that what we're going to see is laying the table to try to soften the ground for tax increases in future years. I don't think that's what Albertans want," she said.
"I don't think that's what they voted for in the last election."
NDP Leader Brian Mason said the economic summit did little to address the underlying issues plaguing the province.
"We didn't learn what it was that created the dependence on royalty revenue in the first place, which was of course cuts to income tax for the wealthy and for corporations. That never really came up. We were just into a sales tax all of a sudden," he said.
"My sense from that was that those panels were stacked with people who wanted to have a sales tax. It was not unanimous but pretty close and nobody talked about a progressive income tax, nobody talked about making sure that the wealthiest in our society pay their fair share."
Derek Fildebrandt, Alberta director of the Canadian Taxpayers Federation, said spending has increased 25 per cent over the last decade, adjusted for inflation and population growth, even though revenues have increased 21 per cent over that same time period.
"It is precisely our unwillingness as a province to hold spending increases to a reasonable level that has resulted in expenditures outgrowing revenues," he said.
Tom Flanagan, a University of Calgary political science professor who led the Wildrose campaign in the last election, said spending cuts are something concrete that can be done today, and that revenue is more of a long-term matter.
In order to be politically palatable, those cuts would have to take place across the board, Flanagan said when panellists were pressed on what spending they'd target.
Alberta Federation of Labour leader Gil McGowan said Albertans would be willing to make sacrifices in tough times — but he's not convinced times are all that tough and that spending cuts are necessary.
"Allowing yourself to get punched in the face when it's not necessary is not brave and it's not noble, it's stupid," he said, asking if Alberta "learned anything at all" from spending cuts during the tenure of former premier Ralph Klein.
"We've seen this movie and it's a horror story."
The economic summit, Redford said, was not meant to deal with the upcoming March 7 budget, but have a more forward-looking view.
Victoria Times Colonist and The Canadian Presss, Saturday, Feb. 9, 2013
Byline: Lauren Krugel
Alberta's current financial woes may offer a silver lining, says the Alberta Federation of Labour. Two weeks after Premier Alison Redford warned the province that resource royalties were expected to drop by $6 billion in the next fiscal year, AFL President Gil McGowan says Alberta's "bitumen bubble" could provide an opportunity for increased upgrading and refining jobs in Canada.
"The price of bitumen is low right now because we're flooding the market with bitumen," says McGowan.
"The solution they're proposing is building more pipelines to flood the market even further. That's just not how markets work," he said. "We need to refine the bitumen here, so that we're selling what the international markets want: synthetic crude."
McGowan justifies his arguments with a 2011 internal government report the labour group obtained through a Freedom of Information request. The report shows that the price difference between Alberta's heavy oil and the benchmark West Texas Intermediate grows, resource projects that both mine and upgrade bitumen locally become economically viable, while only mining becomes less economically beneficial.
"These documents paint a picture of a government that knows what needs to be done, but is afraid to act," said McGowan. "This 'bitumen bubble' has a silver lining, and the province knows it. They wrote the documents to prove it."
There are currently seven pipelines that carry oilsands crude to markets outside Alberta, with the majority heading to the U.S. Midwest.
The AFL, and several other Canadian labour groups, have argued against the proposed Keystone XL and Northern Gateway pipelines, instead favouring more domestic refining and upgrading operations. The AFL argues that building more refineries in Alberta, instead of relying on refineries in the U.S. and Asia, will create more long-term jobs and net better value for the oilsands, since the refined product garners a stronger price.
However, the day before the AFL released their documents, Suncor Energy announced its planned Voyageur upgrading project might not happen due to decreased demand for Canadian crude. A decision regarding the project will not be made until the end of March.
At the same time, North West Upgrading Inc. has partnered with Canadian Natural Resources Ltd. to build the $5.7-billion Sturgeon upgrader and refiner. The plan will provincially-owned bitumen to privately-owned refineries. The Sturgeon project will be the first refinery to be built in Alberta in approximately 30 years.
"By not requiring upgrading in Alberta, we're pumping out more of the wrong thing," McGowan said. "We're shipping good oilsands jobs elsewhere, when the economics of upgrading make a lot more sense."
Fort McMurray Today, Thursday, Feb. 7, 2013
Byline: Vincent McDermott
CALGARY - The inability to get western Canadian crude to the right markets is costing the country's economy dearly, according to a new report paid for by the Saskatchewan government.
Each stalled pipeline project means a loss to the Canadian economy of between $30 million and $70 million every day, said the report penned by the Canada West Foundation, a Calgary-based think-tank.
"The economic impact is just devastating," foundation CEO Dylan Jones said in an interview Thursday.
The Saskatchewan government paid $50,000 to commission the report.
Premier Brad Wall has been an outspoken supporter of new pipeline projects, most recently signing a letter, along with 10 U.S. governors, urging U.S. President Barack Obama to approve the Keystone XL pipeline.
Alberta's oilsands, the third-largest reserves on the planet, get most of the attention when it comes to the pipeline debate.
But Saskatchewan, which has considerable oil resources of its own, is affected by the pipeline pinch as well, Wall said in Regina.
"We hope that this helps get the message out, even to a greater degree than it is now, that we have a pipeline capacity issue in western North America and that's costing Saskatchewan people a lot of money," he said.
"Because of the pipeline capacity issue, we're losing up to 19 to 20 per cent return on the taxpayer's resource."
In recent months, oilsands crude has been trading at a painfully steep discount to both U.S. and global light crude benchmarks. It's a trend that has both eroded oilpatch profits and caused the Alberta government to warn of a $6 billion revenue shortfall this year.
At the heart of the problem is a lack of adequate pipeline capacity to get that crude to the markets that want it most. Proposals of eastbound, westbound and southbound pipelines are in varying stages of development, but environmental opposition and political wrangling makes their fates uncertain.
Most pipeline capacity out of Western Canada heads to the U.S. Midwest, which Jones calls "the worst place in the world to be selling oil" as booming production from areas like North Dakota floods the market.
The Canada West Foundation says new pipelines need to be built in the right directions.
A massive expansion to Trans Mountain and Enbridge's Northern Gateway proposal would enable crude to be transported to Asia via tankers from the West Coast, but they face stiff opposition within B.C. on environmental grounds.
TransCanada Corp. is awaiting final U.S. government approval for the northern leg of its Keystone XL pipeline, which would allow Canadian crude to flow to refineries on the Gulf Coast that are thirsty for heavy oil. Construction on the southern leg between Oklahoma and the Gulf is underway.
Refineries in eastern Canada and the U.S. Eastern Seaboard rely on pricey imported crude from overseas, which is hurting their economics. Both TransCanada and Enbridge have projects in the works to send western crude eastward through reconfigured pipes that are already in the ground. It's possible those lines could extend all the way to New Brunswick, home to Canada's largest refinery.
"If pipeline project proposals such as Trans Mountain, Keystone XL and Northern Gateway don't move forward, Canada will be foregoing $1.3 trillion in economic output, 7.4 million person-years of employment and $281 billion in tax revenue between now and 2035," said Michael Holden, the foundation's senior economist and author of the report.
While most of the benefits would accrue to Alberta, Holden said those three projects would add a combined $84 billion to economies elsewhere in Canada.
The report calls on provinces to work together to tackle the problem, the way Alberta Premier Alison Redford and New Brunswick Premier David Alward did earlier this week in touting an eastbound oil pipeline.
Keith Stewart, climate and energy campaign co-ordinator at Greenpeace, says the Canada West Foundation report "misses the point."
"If we want to avoid climate chaos, we have to stop building fossil fuel infrastructure like new tar sands pipelines," he said.
"Canada can, and should be a winner by building the climate-safe, green energy economy that our kids need and deserve."
The Alberta Federation of Labour also has a different view of the issue.
The group said in a report earlier this week that Alberta should require energy companies to upgrade oil in the province before they are allowed to ship it.
Federation president Gil McGowan said the Alberta government continues to approve in situ oilsands projects without requiring associated upgrading, which converts bitumen from the oilsands into light oil refineries can use. That's flooding the U.S. market and driving down the price.
Environmental opposition has been particularly strong to pipelines that would ship oilsands bitumen, the thick, tarry stuff that needs to be diluted in order to flow.
And that alone might force governments to take a hard look at upgrading and refining opportunities at home, said Wall.
"There's all manner of politics, some of it based on reality, some of it not," said Wall.
"If we can't get pipelines built because of it, we just have to start not moving bitumen, but moving a refined product."
Times Colonist, Thursday, Feb. 7, 2013
Byline: Lauren Krugel, The Canadian Press with files from Jennifer Graham in Regina
The Alberta Federation of Labour says documents obtained through Freedom of Information show that the provincial government has been told that upgrading bitumen in Alberta is a better financial option than sending it elswhere.
"The government's own experts, the government's own analysis, is showing clearly that it makes more sense to upgrade our bitumen rather than send it down the pipeline to places like the United States and China," said AFL president Gil McGowan.
However, multi-billion dollar price tags and labour shortages make upgraders challenging to build in Alberta and there are signs the industry doesn't believe they are economically viable.
Suncor has announced that it is reviewing and may consider indefinitely deferring or cancelling the Voyageur upgrader project in northern Alberta.
"If you want a canary in the mine shaft about the market incentives for upgrading, the decision by Suncor regarding Voyageur is that canary in the mine shaft," said University of Alberta business professor Mike Percy.
Percy thinks Suncor may be taking into account the effect of projects like the proposed East-West, Northern Gateway or Keystone XL pipelines.
He said that margins for upgrading may look good now, but he believes the price differential for western Canadian oil will return to historic levels over the next couple of years.
"It would make it very, very unlikely that an upgrader could be profitable," Percy said.
CBC Post, Wednesday, Feb. 6, 2013
EDMONTON - The Alberta Federation of Labour says the discounted price Alberta bitumen is fetching of the world market could provide an opportunity for more upgrading and additional jobs in the province.
About two weeks after Premier Alison Redford warned Albertans of a tough budget March 7, in which resource royalties are expected to plunge by $6-billion in the next fiscal year largely due to the lower price paid for the province's bitumen compared to other benchmark crudes, the AFL said there is a "silver lining" to the dismal fiscal projections.
Federation president Gil McGowan said a 2011 internal government report, obtained through a Freedom of Information request, shows that as the price differential between Alberta heavy oil and the benchmark West Texas Intermediate crude grows, mining projects that both extract and upgrade bitumen become more economically viable. Mines alone become less economically profitable, the data shows.
"The numbers do add up that there is a strong economic case for the type of development that Albertans want, which is upgrading and refining, and that the government knows that the economics are strong but has been telling us something else," McGowan said.
The AFL has long argued for more upgrading capacity in the province, saying it will create more long-term jobs and net better value for Alberta bitumen since the refined product garners a stronger price. However, on the same day as the AFL released its documents, Suncor Energy Inc. announced that a final decision on its planned multibillion dollar Voyageur upgrading project won't be made until the end of March due to a gush of higher quality light oil that has eroded the economic argument for the upgrader.
Alberta Energy Department spokesman Mike Deising said the private sector has the "paramount responsibility" to determine if building upgraders in the province is economically feasible.
"You don't make economic decisions on billion-dollar refineries or upgraders based on a price differential at one point in time," he said. "These are 30-year or longer assets and companies look 30 years out onto the horizon. Just because we're seeing a widening of the differential right now, that's not going to affect the business case that's going to be a 30-year asset, it's just going to be part of the decision-making process."
The differential between the two types of oil has been growing and spiked sharply in December. McGowan said it currently hovers in the range of 30 per cent. He called it an "incredible loss of value, an incredible loss of jobs and an incredible loss of opportunity" if the trend of refining less bitumen in the province continues.
The chairman of North West Upgrading Inc. spoke out this week about the benefits of refining more oil in Alberta.
The company is partnering with Canadian Natural Resources Ltd. to build the $5.7-billion Sturgeon upgrader and refiner through the province's bitumen-royalty-in-kind program. The scheme sends provincially owned bitumen to private sector refineries to be turned into higher-quality products. The Sturgeon facility is the only project that's coming to fruition through the program, which was started in 2010.
It is the first new refinery to be built in Alberta in 30 years.
McGowan said the bitumen royalty-in-kind program needs to be expanded.
Edmonton Journal, Wednesday, Feb. 6, 2013
Byline: Alexandra Zabjek with files from the Calgary Herald
CALGARY - A research paper is reinforcing the idea that Canada's resource industry is at risk of being left behind internationally if it doesn't find a way to get oil to receptive markets in the Pacific Rim.
The report from the School of Public Policy at the University of Calgary says demand for heavy oil from Alberta's oilsands lies primarily in southeast Asia, but warns the window of opportunity will begin to close.
Author Michal Moore says Canada needs to find a way to get into those markets in the next two to five years.
"If we can get our products into the market in that stream we're going to be competitive," Moore, a professor of energy economics at the school, said Wednesday when the paper was released.
"The equivalent of being late is you have to take a bigger and bigger discount on your product, or switch and start supplying a more higher valued-added product."
The Alberta government has turned up the volume in recent weeks about the hole the oilsands oil discount is eating in the province's bottom line. Premier Alison Redford has warned of a $6-billion revenue shortfall this year because oilsands crude has been fetching a significantly lower price than the U.S. and global benchmarks.
She's also referred to the buildup of crude in Alberta as customers get a cheaper product elsewhere as a "bitumen bubble."
Moore says competition is an issue for Canada.
"There's a lot of that oil out there in the market. There's plenty of capacity in the Pacific Rim/Asian markets for heavy oil like ours, but it's not infinite and it's certainly competitive."
Maya heavy oil from Mexico and Arab Heavy are very close to Alberta's product in weight and sulphur content, Moore said.
The challenge becomes getting Alberta oil to ports so it can be loaded onto ships and sent to willing customers in China, Japan or Korea. Moore said the most cost-effective way of doing that is through pipelines, but delays in the proposed Northern Gateway project to the West Coast present a problem.
Some Alberta heavy oil is already being processed at refineries in California. Moore also pointed to the possibility of shipping Alberta oil eastward to New Brunswick. And there is talk of a rail link to a port in Alaska.
New Brunswick Premier David Alward was in Alberta this week and said he'd welcome a pipeline carrying oilsands bitumen to the 300,000-barrel-per-day Irving Oil refinery in Saint John - the largest in Canada - with the possibility of exporting some of that crude by tanker.
But the Alberta Federation of Labour says Alberta should require energy companies to upgrade oil in the province before they are allowed to ship it.
Citing an Alberta Energy Department analysis obtained under freedom of information laws, the group argued Wednesday that oilsands mining projects with upgraders will become hugely profitable as the light-heavy oil price differential expands.
Federation president Gil McGowan said the Alberta government continues to approve in situ oilsands projects without requiring associated upgrading, which is flooding the U.S. market and driving down the price.
"These projects become less economically viable as the price difference between bitumen and crude expands," McGowan said in a release.
"And yet these projects have mushroomed throughout the province. We are flooding the market, and these documents show that the government knows it."
Alberta NDP Leader Brian Mason said the government's refusal to increase Alberta's upgrading capacity is part of a "bitumen bungle."
"Here we have a clear message from the market, from industry, from policy analysts and from the government's own research, yet Redford continues to bury her head in the oilsands and stubbornly insist that we can only talk about moving bitumen because that is what is in the ground," Mason said in a release.
Lethbridge Herald, Wednesday, Feb. 06, 3013
Byline: Bill Graveland, The Canadian Press
Wants province to invest in oilsands refining capacity
CALGARY - The Alberta Federation of Labour called Wednesday for the province to burst the so-called "bitumen bubble" by creating a Crown corporation that could partner with industry to invest in oilsands upgrading and refinery capacity.
At a news conference in Calgary, AFL president Gil McGowan suggested the PC government take their cues from former premier Peter Lougheed, who created the Alberta Energy Company Ltd in 1973 to boost investment in the province's oil and gas industry. With the price differential between Alberta bitumen and benchmark West Texas Intermediate crude at historic levels (and expected to take a $6 billion bite out of provincial resource revenues in 2013-14), McGowan said the province needs to develop a "value-added" oilsands strategy that would produce a more marketable commodity.
"In this case, what the provincial government should be doing is taking the advice of former premier Peter Lougheed who said over and over again — in order to get the most for our resources, we have to start thinking like owners. And owners think not only about quick sales and quick production, but about the long-term benefits like best prices and job creation," McGowan said.
McGowan said the benefits of increased refining capacity in Alberta would include better prices for the product, and long-term job creation here in the province rather than down the pipeline in another jurisdiction. Currently, less than half of Alberta's bitumen is being upgraded before it leaves the province.
"Yes, we need pipelines to get our product to market, but the first thing the government should be doing is using whatever power it has at its disposal to make sure we're upgrading here. Then we can talk about how to get the upgraded product to market," he said.
University of Alberta energy expert Richard Dixon said while it's easy to see why the low price of bitumen might lead the AFL to make the argument, there's no guarantee the current price environment will last.
"We don't know what's going to happen," said Dixon, executive director of the U of A's School of Business. "By the time you build this refinery, by the time you build this upgrader, is that (price differential) going to exist still? ... It's a huge gamble."
Dixon pointed out that Suncor Energy Inc. is currently reviewing the cost effectiveness of its proposed Voyageur upgrader. A decision on whether it will go ahead with the project is expected by the end of March. And the North West Upgrading project — which will be the first new refinery to be built in the province in 30 years — is being encouraged along by the government's "Bitumen Royalty in Kind" (BRIK) program, where the province receives oil for its share of the royalty from producers and aims to stimulate value-added activities like refining and upgrading. He said if industry isn't rushing to build refineries right now, it's because it doesn't make economic sense.
Michael Moore, senior fellow with the University of Calgary's school of public policy, agreed.
"Whether it's a crown corporation to build roads or a crown corporation to build rocket ships, you've still got to cover costs. So why would a crown corporation be more efficient at this than Nexen or Shell?" he said.
Moore said Alberta is better off continuing down the path it's on now — working to improve access to markets that are already set up to handle oilsands product.
The AFL proposal was met favourably by Alberta Liberal Leader Raj Sherman, who only last week also proposed the establishment of a Crown corporation aimed at giving Albertans an equity stake in their natural resources. He said again Wednesday that it's time for the province to have that conversation.
"Premier Lougheed did it ... we need to revisit the policies of Premier Lougheed," Sherman said. "Let's have a shared partnership with these (energy) corporations. If they're going to succeed, let's succeed with them and let's let Albertans have a share of the profits."
Mike Deising — spokesperson for Alberta Energy Minister Ken Hughes — said the discussion around value-added activities in the oilsands is nothing new. He said the government has no interest in creating a new Crown corporation, but is very interested in continuing with its BRIK program.
"Minister Hughes has been quite clear in his public comments that if there are companies out there that have economically viable proposals that could be of benefit to the province, he's fully open to sitting down with industry and having conversations on those projects," Deising said.
Wildrose Leader Danielle Smith said the creation of a new crown corporation would be a "horrendous" idea.
NDP Leader Brian Mason said his party is open to multiple ideas on ways to enhance value-added aspects of Alberta's energy industry, but is not currently advocating the creation of a Crown corporation.
The Calgary Herald, Thursday, Jan. 31, 2013
Byline: Amanda Stephenson
with files files from James Wood, Calgary Herald
An Alberta judge has ordered the Canadian arm of a Chinese state-owned oil company to pay the biggest workplace safety fine in the province's history after the death of two foreign workers at a massive construction project about five years ago.
"The fine is good, but no amount of money can make up for what they did wrong in the first place," said Wayne Prins, Alberta director of the Christian Labour Association of Canada (CLAC).
"In our view, the fine sends the right message to contractors and people in the industry that you must follow the procedures and rules in place."
Alberta Provincial Judge John Maher ordered Sinopec Shanghai Engineering Company (SSEC) to pay a $1.5 million fine in a St. Albert court room on Jan. 24.
The fine is related to the deaths of a welder named Ge Genbao, 27, and an electrical engineer named Lui Hongliang, 33, at the Canadian Natural Resources Ltd. (CNRL) Horizon oilsands project.
They were killed on April 27, 2007 at the facility located north of Fort McMurray.
The Chinese temporary foreign workers were welding the wall structure inside a massive storage tank when the roof support structure collapsed onto them.
Two other foreign workers were seriously injured.
Under Alberta's Occupational Health and Safety Act, 53 charges were laid against three companies in the deaths of Genbao and Hongliang and the injuries of the other workers.
CNRL, who was in charge of the construction site at the Horizon oilsands project, hired SSEC to build the storage tanks.
SSEC is the Canadian subsidiary of Chinese state –owned oil company Sinopec.
Sinopec hired more than 100 temporary foreign workers in China and began work on the construction of two oil storage tanks in late 2006.
SSEC pled guilty to three charges in September 2012 of failing to ensure the health and safety of workers.
The company was given the maximum $500,000 fine for each charge. Despite this fact, some people believe the fine will do nothing to deter them from practices that endanger workers.
"Sinopec didn't just import workers from the third world, they also imported third-world health and safety standards," said Alberta Federation of Labour President Gil McGowan.
"Alberta missed its chance to send a message that Chinese companies working in the oilsands need to play by Canadian rules."
McGowan argued that the fines are too small to make a difference to the massive corporation.
"One and a half million dollars doesn't even amount to a rounding error in the annual budget of a monstrous global corporation like Sinopec," he said.
"This fine does nothing to dissuade them from playing fast and loose with the safety of their workforce."
The original plan was to build the tank walls first, then use them to support the roof while it was under construction.
That plan changed when the project fell behind schedule.
CNRL approved the construction change, but SSEC did not prepare any formal written procedures that should have been certified by a professional engineer.
As a result, other charges in this case include failing to ensure that a professional engineer prepared and certified drawings and procedures; failing to ensure the roof support structure inside the tank was stable during assembly; failing to ensure that U-bolt type clips used for fastening rope wire were installed properly; and failing to ensure that wire rope being used was safe.
"We shouldn't forget the circumstances that led to the deaths of Genbao and Hongliang," McGowan added.
"The company did not get the construction plans certified by an engineer. The wires weren't strong enough to hold up against the wind. It was a complete abdication of responsibility on the part of the employer."
Crown prosecutors and SSEC lawyers came up with an agreement, which allocates $1.3 million of the fine to create an education program to train temporary foreign workers about their legal rights, as well as workplace health and safety.
The program aims to hire 45 instructors to train about 5,500 workers in a three year period.
Journal of Commerce, Wednesday, Jan. 30, 2013
Byline: Richard Gilbert
When Premier Alison Redford talks about "a bitumen bubble," she's referring to the record amount of Alberta bitumen for sale, and the low price it's fetching in the U.S. these days.
That is partly because of competition from new supplies of higher quality crude oil from the U.S.
The price of bitumen dropped another $20 a barrel this month, so Redford's treasury will be short $6 billion by the end of next fiscal year.
Is this price gap between conventional oil and bitumen normal?
The fact is there has always been a gap between the North American price of conventional oil (West Texas International) and a barrel of sticky, thick bitumen, known as Western Canadian Select. (The world price, known as the Brent price, is another benchmark set by North Sea oil).
WTI is hovering around $95 a barrel, Brent slightly higher around $110, while bitumen, usually about $20-a-barrel less, dropped to $50 last month.
Bitumen fetches a lower price partly because it needs more upgrading before it can be turned into gasoline, says Michael Moore, energy expert in the University of Calgary's School of Public Policy. That costs money, so refineries won't pay as much for bitumen.
Usually the gap has hovers around 20-25 per cent, and in the last few months it went higher. But the gap has been higher in the past.
The lack of pipeline capacity makes it more difficult to get bitumen to market and using rail is expensive, says Moore. But there are other challenges, he adds.
The new supplies of lighter, easier-to-use oil from North Dakota are more attractive to refiners.
Then, not all U.S. refineries can handle bitumen, says Moore. Alberta bitumen has to get to specially adapted refineries on the U.S. Gulf coast.
But there's competition at those special refineries too - from heavy oil from Venezuela and Mexico which can get there cheaper, says Moore.
"So the refiners call the shots and they establish the discount. Our oil always had to go a long way and takes more processing."
So will more pipelines help?
Yes, the Keystone pipeline to the U.S. Gulf coast will be a big help, says Moore - "though we will still be trading in competition with other heavy oil like ours from Mexico. Right now, there's a lot of competition."
Gil McGowan of the Alberta Federation of Labour says there's no doubt Alberta is facing a glut in the oil market and that puts downward pressure on the price of bitumen.
The low price is a sign the market doesn't want to buy more Alberta bitumen, he says. The better solution is to upgrade the bitumen into synthetic crude in Alberta, "so we can sell a product the market wants."
"For Redford to suggest the only solution is to build more pipelines is not only simplistic, it is misleading. There are many other options," McGowan said.
Synthetic crude (upgraded bitumen), produced by a handful of oilsands companies, can be used in any refinery to make jet fuel or gasoline and it has occasionally fetched higher than the WTI price of oil, he noted.
U of C economist Ron Kneebone said the government has created its own problems by continuing to rely on volatile oil and gas revenues - despite frequent warnings from economists and its own advisers.
Calgary Herald, Wednesday, Jan. 30, 2013
Byline: Sheila Pratt, Edmonton Journal