Deal will provide yet another avenue for employers to choose foreign workers over Canadians
EDMONTON – The Comprehensive Economic and Trade Agreement (CETA) signed between Canada and the European Union will disrupt the Canadian labour market by allowing European firms to bypass Canadian workers when doing business here.
“This deal will essentially create another stream of the Temporary Foreign Worker Program,” Alberta Federation of Labour president Gil McGowan said. “Documents made available today by the European Union show that the CETA will allow European companies to bring staff along with them when they set up shop in Canada. The documents also show that the deal will liberalize the Canadian energy market.”
The European Union’s announcement of the CETA shows that it will “make it easier for firms to move staff temporarily between the EU and Canada. This will make it easier for European companies to run their operations in Canada.” [Click here to link to CETA document] It also shows the CETA will allow European firms to access the Canadian market in “key sectors” such as energy. The Harper government’s announcement on the deal makes no mention of the effect on Canadian workers other than to say states the “rights of workers will be respected.”
“The Harper government’s announcement of the deal has no details whatsoever, but, judging from the European Union’s information, we can only conclude that this deal allows European firms – especially those operating in Alberta’s oil sands – to bring their own workers from overseas instead of hiring Canadians first.
And we’re not just talking about trade’s people here. We’re also talking about engineers, managers and other professional workers,” McGowan said. “It’s strange, though not unexpected, that the Harper government’s announcement heralding the deal is silent on the fact that the CETA will allow European firms to bring their own labour when doing business in Canada.”
In light of the Harper Government’s track record with guest worker programs, labour activists say that Canadians should be concerned about the labour mobility clauses in the CETA.
“The Harper government simply cannot be trusted when it comes to workers rights,” McGowan said. “They’ve fumbled the Temporary Foreign Worker Program file by only listening to the interests of businesses, not those of the workers on job sites earning a living working with their hands and backs.”
“Canadian workers should brace themselves for further displacement by workers from overseas, especially in the oil sands.”-30-
Olav Rokne, Communications Director, Alberta Federation of Labour at 780.289.6528 (cell) or via e-mail [email protected]
When Peter Julian visited his in-laws in Shandong province in 2011, he was struck by skies which, depending on weather, either were grey, or grey and wet.
The New Democratic Party MP for Burnaby-New Westminster recalls, on sunny days, blue skies were absent with the sun appearing only faintly as a faint yellow blob behind thick haze.
As NDP energy and natural resources critic, Julian lately has been thinking a lot about greenhouse gas emissions.
He's a crusader against both the Northern Gateway pipeline and a tanker port on B.C.'s north coast.
Further, he and his party want the energy debate in this country shifted - away from how Canada can export oil-sands bitumen to China from a west coast port - to how this country can generate wealth by augmenting green energy investments and refining more of its petroleum.
Julian says the Harper government is too focused on maximizing profit from the oilsands, missing the boat on green job creation.
International tallies suggest he has a point. Conservatives have not enthusiastically embraced what many consider to be the next generation of jobs.
Those jobs include manufacturing, installing and operating renewable energy technologies like wind and solar power; running public transit systems; designing and constructing green buildings and retrofitting older structures.
Indeed, Conservatives in 2011 cancelled a popular eco-Energy Retrofit program that provided grants for making homes more energy efficient.
According to the Vienna-based International Energy Agency, the world relies on renewable sources for around 13 per cent of its total primary energy supply.
Canada's renewable energy sector generates 17 per cent of the country's primary energy supply, according to a federal website. But, of course, that figure is skewed upward by a domestic bounty of hydro power.
In a global list of top-10 renewable energy investors, Canada is absent, with China, the U.S. and Germany ranking as the world's green energy big shots.
The list was part of a European study that, even so, categorized Canada as "a significant investor," with $5 billion invested in 2011, ahead of Australia and New Zealand.
But in a report, titled Falling Behind, the Toronto-based Blue Green Canada environmental group reports, if Canada did no more than match U.S. per capita investment, "an additional $11 billion would have been earmarked by the Canadian government for clean energy."
The Alberta-based Pembina Institute says Canada's green entrepreneurs are being thwarted both by a lack of stable government policy and difficulty accessing cash.
While the renewable energy sector still has a fair share of detractors - folks turned off by giant wind turbines and companies that have gone belly up after gobbling government grants - Julian believes that renewables are an unstoppable and wholly viable trend for a world that badly needs to wean itself off fossil fuels.
The NDP, joined by Liberals and Greens, also wants more refining of oil within our borders.
The Alberta Federation of Labour asserts only half of bitumen harvested in the province is now being upgraded. In a report, titled The Bitumen Glut Has A Silver Lining, the federation argues, instead of exporting raw bitumen, it makes sense to capture greater value and jobs by refining and upgrading the product. A single upgrader, it says, employs 2,000 people.
Unquestionably, the oilsands are a giant asset for this country. They'll create 905,000 jobs across Canada by 2035, says the Canadian Association of Petroleum Producers.
But, as the push for a greener world grows ever more intense, Canadians will want their governments to get creative. China's polluted skies are a potent harbinger.
The Windsor Star, Thursday, Feb. 21, 2013
Byline: Barbara Yaffe
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
VANCOUVER - The nationwide Idle No More movement merged with ongoing protests against oil pipeline projects proposed for British Columbia, to bring more than a thousand protesters out to greet the federal review panel conducting hearings in Vancouver.
The community hearings by the federal panel on the Northern Gateway project are scheduled to resume this morning, after a noisy start on Monday night.
First Nations from as far as the Haisla Nation on the North Coast, near the would-be tanker port of Kitimat, B.C., and from the Interior took part in a march to the downtown hotel where the hearings are being held.
"The Harper government has one of the most aggressive, high-carbon strategies in the world," Eddie Gardner, of the Sto:lo Nation, told the crowd as they mobilized ahead of the march.
He blasted the federal Conservatives for changes they've made to environmental laws that will affect oversight of the Northern Gateway proposed by Enbridge (TSX:ENB) and other projects.
"He implemented that legislation, it has become law, and he did it with crass and ruthless disregard for the environment," Gardner told the protesters.
"Stephen Harper is hell bent to expand the tar sands.
"Canada is coming alive to Harper's real agenda ... he is one of the biggest enemies of the environment."
Protesters were met by Vancouver police, who kept them from entering the building. They remained outside the Sheraton Wall Centre for a short time, drumming and chanting "No Pipelines" before moving on.
Kiera Corrigan, 25, said she is originally from Bella Coola, a small community on the central coast.
"I think it's really important that we don't put in this pipeline. My home town is right south of Kitimat, so it hits really close to home if we ever have an oil spill, which there will be," she said.
Protesters also took aim at a proposed expansion of the existing TransMountain pipeline operated by Kinder Morgan.
The pipeline moves oil from the oil sands to port in Vancouver, and a proposed $4.3-billion expansion would more than double the capacity of the 1,100-kilometre line.
The joint review panel, which is weighing the Northern Gateway, has scheduled eight days of hearings in Vancouver.
They're hearing public comment on the controversial plan to deliver oil from the Alberta oil sands to a tanker port on the North Coast of B.C.
Community hearings were held previously in Victoria, and a one-day hearing is scheduled in Kelowna later this month.
The panel limited access to the hearings room to participants.
"Given the large urban nature of Victoria and Vancouver and previous protests held in both locations regarding the proposed Enbridge Northern Gateway project (the project), the panel has decided that it will limit access to the hearing room," stated the directive.
Members of the public are able to listen to submissions in another location. The hearings are also being streamed live on the panel website.
Access to the hearings remained closed off after the protesters dispersed.
Inside, the three-person panel heard from a range of interested members of the public, from First Nations and environmentalists, to a scientist who lamented telling her children and grandchildren about what she did about climate change.
"What will you tell your grandchildren?" the woman asked the panel.
Eric Doherty, a former Canadian Coast Guard marine engineer turned environmental planner, chided the panel for failing to consider emissions from the Alberta oil sands in its assessment.
"It's no longer controversial that global warming is killing people," he said. "It's no longer controversial that global warming is THE threat to our society."
The pipeline project has been incredibly divisive in British Columbia and as the end of the long regulatory process nears, both sides are trying their utmost to rally support.
The United Association of Plumbers and Pipefitters decided to weigh in Monday, with a statement from Canadian director John Telford stating that the project "will provide jobs to members in Eastern Canada as well as the West."
"The regulation of the oil and gas industry as a whole ensures that the impact to the environment and native peoples will be minimal and the benefits should far exceed any possible drawbacks," the union said in the statement.
And Enbridge has been on a charm offensive in the province for months, with full-page newspaper ads and radio ads extolling the benefits of the project and assuring B.C. residents they will employ world-leading safety measures.
The panel held final hearings earlier in Edmonton, Prince George and Prince Rupert, where company experts and interveners answered questions under oath.
Those hearings will resume in Prince Rupert next month, and the panel must submit its recommendations to the Environment Minister by the end of this year.
Huffpost BC, Tuesday, Jan. 15, 2013
Byline: Dene Moore, The Canadian Press
During the last month of 2012, Christian Paradis, Canada's minister of industry, announced on behalf of the Canadian government the approval of the $15.1 billion acquisition of Nexen Inc. by China state-owned enterprise (SOE) China National Offshore Oil Company (CNOOC).
The CNOOC deal was heralded as the largest acquisition by a Chinese SOE, and the media suggested that with this transaction the Chinese communist regime indicates its intention to reduce its investment in U.S. bonds.
CNOOC pledged to abide by free market standards, including "transparency and disclosure; commercial orientation, including an adherence to Canadian laws and practices ... and employment and capital investments, which demonstrate a long-term commitment to the development of the Canadian economy," as stated in a Dec. 7, 2012, Government of Canada announcement.
It is not known if a national security review, often required under the Investment Canada Act, has been completed in the CNOOC-Nexen purchase, especially as Canadian secrecy rules prohibit anyone from discovering that such a review took place.
The CNOOC deal is not cast in stone yet, as Nexen has assets in the United States, the United Kingdom (U.K.), and the European Union (EU), and thus still needs approval from the U.S. Committee on Foreign Investment in the United States (CFIUS), Canadian regulatory agencies, and respective U.K. and EU government agencies.
"The U.S. approach is more specific, transparent, and integrated than the Investment Canada scheme. The U.S. CFIUS model also requires nine agencies to work together to carry out reviews," said Debra Steger, law professor at the University of Ottawa, in a Dec. 7, 2012, interview published by Maclean's.
Secrecy and Lack of Transparency
According to media reports, the Canadian government has not prevented the acquisition of a Canadian oil and gas company by any foreign SOE, because it could always find a net benefit for Canada. However, as of date, the government has not been transparent as to what it considers a net benefit and how it tests for the net benefit.
"There is no formal, transparent, judicial or quasi-judicial process. Rather, the process is an internal investigation conducted by Industry Canada officials in the case of a 'net benefit' review," Steger said in the interview.
There are actually two types of reviews: One is the net benefit review, and the other is the national security review. The latter could be ordered when the foreign buyer is an SOE. However, this type of review is shrouded in greater secrecy, and it is impossible to determine if such a review has taken place.
"In the case of a 'national security' review, the process is even less transparent ... and no written reasons are published. ... The national security process is shrouded in secrecy, there is no appeal, and ... no one knows what happened in a particular case or even if a national security review was conducted," Steger said.
Acquisition of Canadian Assets
The Nexen purchase isn't CNOOC's or other Chinese SOEs' first purchase of Canadian assets.
"In 2011, CNOOC made a major move into the oil sands by purchasing 100 per cent of OPTI Canada for $2.1 billion. Sinopec acquired Daylight Energy in 2011, and made a $4.65 billion investment in Syncrude in April 2010.
"China Investment Corporation (CIC), a sovereign wealth fund with an office in Toronto, made an investment of $817 million in a new oil sands joint venture with Penn West Energy Trust in May 2010; it also made a $1.5 billion investment in Canadian mining company, Teck Resources, in 2009. Petro China invested $1.9 billion in Athabasca Oil Sands Corp. in late 2009," according to Steger.
Concerning some of the above investments, Steger suggests that some of them were minority investments, and thus didn't fall under the Investment Canada Act requirement, even though some of the investments were for a large amount of money.
Chinese SOEs and the Trust Issue
The question remains, can the agreement between CNOOC and the Canadian Ministry of Industry be taken seriously?
"About two-thirds of the public (68%) say the U.S. cannot trust China too much or at all," according to a Pew Research Center Sept. 18, 2012, report.
"Unfortunately, as long as China is ruled by the communists, ... [their] words cannot be trusted," according to a commentary on the Eye Dr. DeLengocky website, a website by a Vietnamese doctor who immigrated to the United States in 1990
Quoting former president of South Vietnam Nguyen Van Thieu, Dr. Tayson DeLengocky said, "Do not listen to what the communists say, just look at their actions."
Public Relations Ploy
Concerning the takeover of Canadian assets by foreign SOEs, Stephen Harper, Canada's prime minister, announced that going forward, Canada would put in force tougher conditions, which would nix acquisitions like the CNOOC-Nexen deal.
"Prime Minister Harper's supposedly 'tough new conditions' for foreign takeovers are nothing more than a public relations ploy aimed at masking the fact that he has just allowed a foreign government to seize unprecedented control over Canada's energy resources," a Dec. 7, 2012, article on the Alberta Federation of Labour (AFL) website suggests.
The AFL doubts any sweeping overhaul is in the making, especially since the process will be outside the public eye, and the industry minister will still be in charge of the proceedings.
"CNOOC is not your typical oil company. It doesn't operate on market principles, and it isn't beholden to investors. If they [Canadian officials] had been serious about defending the interest of Canadians, they would have nixed the deal outright," according to AFL President Gil McGowan in the Dec. 7, 2012, article.
Trying to Nix the CNOOC-Nexen Deal
"The Harper Government approved the sale of Nexen to a Chinese government-owned oil company Friday in part because critics of the deal couldn't make a good case against it," a Dec. 9, 2012, article on the Calgary Beacon website suggests.
Arguments that China is a communist country are a political weapon, but not a sound argument to scuttle the CNOOC-Nexen acquisition.
The communist allegation cannot be seen as a valid reason for nixing the CNOOC-Nexen deal, as proponents will ask, "Then why does Canada do business with China?" For example, why does Canada continue to do business with the Chinese state? In 2011, Canada's trade deficit with the Chinese state was CA$32 billion and CA$24 billion from January 2012 to September 2012, according to the Asia Pacific Foundation of Canada.
Concerning the argument that Canada is handing over its natural resources to China, the Calgary Beacon article disagrees.
"Under Section 92A of the Canadian constitution, the provinces own the country's natural resources and are given the responsibility for managing them," according to the article.
Many of the opponents to the CNOOC-Nexen deal point to the flagrant industrial espionage the Chinese state has been committing for years. No one doubts that the Chinese state has been known for years as a violator of intellectual property rights and has been linked to online spying.
"The counter argument is that CNOCC is state-invested, not state-managed, ... [and] has plenty of Canadian shareholders. ... CNOOC has also pledged to keep on the existing Nexen management team, which suggests that using the Canadian entity to commit espionage may be tougher than it looks," according to the Calgary Beacon article.
Epoch Times, Friday, Jan. 11, 2013
Byline: Heide B. Malhotra
The Alberta Federation of Labour (AFL) has added its voice to those worried about the ramifications of Canada's role in China's energy plans.
Following Prime Minister Stephen Harper's approval of state-run China National Offshore Oil Corporation's (CNOOC) takeover of Nexen, the AFL released China's Gas Tank, a report outlining how it believes China is moving to control all stages of its Alberta oil operations.
The report says three state-owned Chinese oil companies, CNOOC, PetroChina and Sinopec, have major investments in the oilsands. It points out these companies' U.S. tax filings admit the three companies are affiliated and sell oil to one another. Chinese state and private investment in the oilsands is unclear, but significant. For example, Chinese-owned Sunshine Oilsands "holds seven per cent of the total oilsands leases in the Athabasca region, or 1.15 million acres of oilsands leases," according to the report.
The report also points to the proposed Northern Gateway pipeline that would run from Alberta to the British Columbia coastline and is ostensibly intended to ease shipment of oil and natural gas to Asian markets. Sinopec is one of the 11 companies investing in that pipeline. Four remain unidentified.
Finally, the AFL asserts the Canadian federal government did a poor job negotiating the Foreign Investment Protection Agreement (FIPA) with China, and should renegotiate before it is officially passed.
"From our perspective the big problem is that the Chinese have interests that run counter to the interests of the Canadian public," says AFL president Gil McGowan. "It's clear that the Chinese are assembling the pieces necessary for what we would describe as a low price strategy for Canadian bitumen.
"What I've been told by people in government and in industry is that we can't be picky about what we send to those markets... we basically have to give them whatever they want.... Frankly I don't buy that argument because they need us more than we need them. But it's not challenged," he says.
Gordon Holden, director of the University of Alberta's China Institute, echoes McGowan's observations. He says China is not happy buying oil from Iran, Saudi Arabia and Sudan, and is looking for more stable sources.
"Alberta is rock solid in terms of the manner of doing business — relatively transparent, but also just without the complications," says Holden.
McGowan says the AFL, which represents 27 labour unions in Alberta, is not alone in its alarm over Canada's hasty business dealings with China. Even internationally, the public is asking Canada to slow down. U.K.-based Avaaz.org is an online campaign network with 17 million members that develops petitions and protest campaigns on social and environmental issues it believes are important to its members.
Avaaz is currently campaigning against the present form of the Canada-China FIPA. Nearly 38,000 people have pledged support to the campaign.
"As the owners of the resource, I think Albertans deserve to know what's going on and what's being lost, but they don't," says McGowan.
Fast Forward Weekly, Thursday, Dec. 27, 2012
Byline: Susy Thompson for News
The federal government's new rules around foreign investment by state-owned enterprises (SOEs) could potentially result in less investment in the Alberta oilsands and that could make it more expensive to operate those projects, the province's energy minister has warned.
"The impact of that is that it will simply increase the cost of capital, that it will add on one more slice of cost of production in this province," Ken Hughes told a conference in Calgary Monday. "We already have challenges of operating business in Alberta."
Alberta is a high-cost place to do business because of the competition between the private sector, and the oil and gas sector in particular, and all other sectors, he told the conference, Canada in the Pacific Century, hosted by the Canadian Council of Chief Executives and The School of Public Policy at the University of Calgary.
Last week, Prime Minister Stephen Harper approved a $15.1-billion bid by CNOOC Ltd. for Nexen Inc. and a $5.3-billion takeover of Progress Energy Resources Corp. but said foreign state control of oilsands development has reached the point at which any further foreign state control would not be of net benefit to Canada (DOB, Dec. 10, 2012).
"Friday's announcement was an important inflection point in the history of this country and the oilsands that we should not underestimate how it will affect future investment in this province," said Hughes.
The federal government had an extremely difficult decision to make but it balances Canadians' interests "not badly," he said.
"The last thing the energy industry and Alberta need is for Canadians to feel really uncomfortable about any foreign investment so you have to modulate foreign investment and where it comes from and that's not a bad objective from a foreign-policy point of view and from a social licence perspective."
Alberta has always turned to foreign investment of one kind or another because it has never had enough capital or human resources to develop its own energy resources in this province, said Hughes, adding for the longest time most of that support came from the United States.
Last year the oilsands alone attracted more than $22 billion in investments and the Alberta government does not expect that to slow down, he said.
The government also fully expects there will continue to be campaigns against oilsands and pipelines and the way to address that is to perform well, to tell people what the industry is doing to perform well and to continue to fund innovation in the province, said the minister.
Michal Moore, professor at the School of Public Policy at the University of Calgary, told the conference one does not have to read very far between the lines of the federal government's new policy to see that it could have tentacles reaching out to other areas such as manufacturing and to other provinces.
He asked the energy minister about the extent the Alberta government participated in the federal government's decision. Hughes responded that while the province had been "appropriately engaged" more engagement would have been welcome.
With its takeover of Nexen, CNOOC will hold 100 per cent of the Long Lake in situ oilsands project and 7.23 per cent of the Syncrude Canada Ltd. oilsands consortium.
Gil McGowan, president of the Alberta Federation of Labour (AFL), asked if the Alberta government had considered the possibility that on the subject of oil prices the interests of CNOOC and the Chinese government run counter to Alberta's and particularly to that of the AFL.
Nexen is not only an oil producer but a marketer of 300,000 bbls of oil per day as well and possibly a shareholder in the proposed Gateway pipeline, he said.
"Our concern is that through CNOOC, Sinopec and other investments that the Chinese are pursuing their national interests by controlling the development, the pipelines and the marketing and if they control the marketing, will they be marketing for our interests or theirs, and their interest is low price, not high price," said McGowan.
Hughes said that even if Alberta were to get world prices for all its products it wouldn't be "all sweetness and light from there on in" because it will be subject to the usual vagaries of the commodities market.
Also, even with China's might and breadth and depth it can't get to the point where it can control the world market; there will always be transparent markers in the market place to indicate what the market really is, said the energy minister.
"Transparency as a result of market forces is the force that balances out any one player trying to corner the market," said Hughes, adding China's now roughly 10 per cent interest in oilsands production is "far from a dominant position."
He noted that Nexen does market on behalf of the Alberta government in a process the government opened to competition. "We're ensuring that we have access to transparent market signals."
Hal Kvisle, president and chief executive officer of Talisman Energy Inc., said Friday's announcement by the federal government provided clarity to the industry and bodes well for the future of its structure. It clearly sets the stage for joint ventures with Canadian companies thus providing an opportunity for state-owned enterprises to participate in oilsands and natural gas projects with Canadians operating them, said Kvisle.
Indicating a slide with Peters & Co. statistics saying Canada owns 59 per cent of the oilpatch leaving 41 per cent foreign-owned, Kvisle said that's a remarkable reversal in the numbers since he began his career in the 1970s.
Canada can work very well with foreign companies, he said, noting Talisman's joint venture this year with China's Sinopec International Petroleum Exploration and Production Corporation.
Talisman entered into a US$1.5 billion joint venture with Sinopec, which bought 49 per cent of the shares of Talisman's U.K. North Sea business (DOB, July 23, 2012).
Paul Evans, professor at the Institute of Asian Research and Liu Institute for Global Issues at the University of British Columbia, said in some ways Harper's decision was not just a decision about a particular commercial transaction nor even the oilsands.
"This is a broader marker in where Canada is going in the Pacific century and how we're going to come to terms with business organizations, governments [and] rules of the game that vary from what we have been accustomed to in Canada in the era of Western domination," said Evans.
On a domestic political level, Harper's decision was tactical brilliance but showed "severe ambiguity" for Canada's future as a global player in the oil industry and how the country will deal with state-owned enterprises and forms of capitalism that are "basically playing our game but not quite by our rules," said Evans, adding, "This is in some ways the most important decision made on the Pacific century by the Harper government."
While he acknowledged there is a threat from state-owned enterprises, it's very manageable, he said. "China has all of the capability, very few of the rules and all of the strategic interests in various areas that are important to Canadians, from telecommunications to energy."
Ray Boisvert, president of I-Sec Integrated Strategies, a firm specializing in risk mitigation and the use of advanced analytics to combat cyber and other emerging threats, said he is comfortable with investment from China because it is needed.
Much of Canada's success as a world-class leader in the energy sector is due to its know-how -- its intellectual property - and that has to be protected, said Boisvert, former assistant director of intelligence at the Canadian Security Intelligence Service where he was responsible for the directorate that sets intelligence collection priorities as well as the service's foreign relations and academic outreach programs. He also led CSIS's counter terrorism program
"When we engage with others, especially those who don't play by rules we're used to, there could be consequences so we have to be mindful of that," he said.
Boisvert said Canada needs to be on the lookout for corruption and to verify its supply chain as it gets more engaged with China and other SOEs. "We must move forward with eyes wide open and that means being smart that others will eat your lunch," he said.
He cautioned that SOEs may want to gain access to not just resource plays but also technologies and warned producers to manage their information, communications, databases, engineering reports and sales teams.
"I can tell you honestly that a lot of countries are taking advantage of those systems, those communications, to get insights on deals," he said.
Also on the panel was John Zahary, president and chief executive officer of Sunshine Oilsands Ltd., whose shares are traded on the Hong Kong Stock Exchange as well as the Toronto Stock Exchange.
Nearly half of Sunshine's shares are owned by Asian investors.
Zahary was asked if he has any concerns that -- while Harper is being praised for his balanced decision, until the details of what constitutes a "net benefit" has been determined or what the "exceptional circumstances" are that would allow some deals to go ahead -- that decision sends a message to Beijing that the brakes have been applied to investments in Canada.
Zahary said it may be in Canada's best interest that net benefits are not precise, that it is appropriate the federal government has some discretion and generally the rules are well understood. What's important are employment, capital and transparency, he said.
Daily Oil Bulletin,
Byline: Lynda Harrison
CALGARY – Nexen Inc. began 2012 as a troubled oil and gas company struggling to meet its production targets and appease its shareholders.
It ends the year on the brink of being sold to China's CNOOC Ltd. for $15.1 billion – the Asian superpower's largest-ever overseas foray.
The transaction reverberated beyond Nexen's sleek glass office tower in downtown Calgary, past the pocketbooks of its investors, all the way to Ottawa.
It forced Prime Minister Stephen Harper to weigh whether foreign state-owned enterprises ought to own Canadian resource companies and, if so, which players are welcome and what extent of control is acceptable.
He ultimately decided that SOEs deserve more scrutiny than private ones, and that the oilsands – the third-biggest reserves on the plant – warrant greater protection than other resources.
"Harper was caught a little flat-footed in the sense that I don't think he fully understood both the political reaction to the CNOOC bid and that there might be subsequent bids from state-owned companies coming into the Canadian oilsands," said Queen's University business professor David Detomasi.
Nexen started 2012 in a rough spot. Marvin Romanow made an abrupt exit as CEO in January. The company's flagship Long Lake oilsands project had yet to come close to producing the volume of crude it was designed to, outages at a North Sea offshore platform were causing headaches and Yemen had just booted it out of a major oil project.
Investors' patience was wearing thin.
It would later be revealed that negotiations to sell Nexen to CNOOC began in earnest once Romanow was out the door.
CNOOC was rebuffed twice before Nexen (TSX:NXY), under the leadership of interim CEO Kevin Reinhart, accepted its offer.
But winning over Nexen's board of directors and shareholders would be the least of CNOOC's challenges.
Gordon Houlden, the head of the University of Alberta's China Institute, said the subject would not have been so prickly if it had been France or Norway bidding for Nexen, and not China.
"Certain state enterprises, certain countries, come with more baggage and China is that because of its size, because of its internal complexities, its history, its profile," said Houlden, a former diplomat with postings in China.
On Dec. 7, the CNOOC-Nexen deal was given Ottawa's blessing.
So, too, was the $6-billion acquisition of Progress Energy Resources Corp. (TSX:PRQ) by Malaysia's state oil and gas company. That deal would have been relatively uncontroversial under ordinary circumstances, but it had the misfortune of being announced right before CNOOC and Nexen dropped their bombshell this summer.
The approvals came with a key caveat for future deals – that state control in the oilsands will only be allowed in "exceptional" cases from now on.
The Harper government's handling of the Nexen-CNOOC file was "reactive in nature," said Wenran Jiang, a senior fellow at the Asia Pacific Foundation of Canada.
It's a stance Jiang found curious, given that the Conservatives had for years been actively courting Chinese investment – not the other way around.
CNOOC, having been burned by its unsuccessful bid for U.S. energy company Unocal seven years earlier, was getting the signal that perhaps the conditions were right to try again.
Instead, Ottawa found itself having to navigate around negative public sentiment toward Chinese investment that Jiang sees as largely "misinformed."
"Somehow we're the boy scout and the Chinese are just coming to invite themselves for dinner and then they're ready to roll us over," he said.
"It's not the case at all. We invited them for dinner. We invited them to come and they bought a big dinner ticket and that's why they thought they were coming – for a good party."
By contrast, Jiang praised Liberal leadership candidate Justin Trudeau for arguing in a newspaper column that foreign investment is good for Canada and that the Nexen takeover must go ahead.
It's an approach Jiang would have liked to have seen from Harper.
"You need to make a passionate, positive and proactive case for China needing energy. There's nothing sinister about it."
China is no stranger to Canada's oilpatch. For the past two decades its companies have been gradually building up their presence through joint-venture deals and small-ish acquisitions.
Jiang said it's hard to argue that their track record has been anything but good, but fears that China is up to something nefarious have nonetheless dominated the conversation.
Still, there are concerns that CNOOC's chain of command does ultimately end with communist government in Beijing.
While an ordinary corporation driven by commercial considerations alone would want to sell its oil for the highest price possible, the Alberta Federation of Labour says CNOOC and other Chinese-state-owned outfits are more interested in getting a lower price, so that the Chinese economy benefits.
AFL leader Gil McGowan brought that concern up during a question-and-answer session at a conference on Asian oilpatch investment, held in Calgary on the Monday after the Nexen-CNOOC verdict.
He bristled at the suggestion that anyone who raises those alarms just doesn't understand the issue.
"People who raise these concerns are not immature, we're not jingoistic, we're not xenophobic," he said.
"We're raising legitimate concerns about business ventures which are not business ventures in the way that we understand them."
One of the conference's speakers, the University of British Columbia's Paul Evans, said a more nuanced discussion needs to take place on the matter of what "state-owned" means.
"There's a view that to do business with China means that you are dealing with the Chinese state, and that when you're dealing with the Chinese state, you're dealing with the Chinese Communist Party," he said.
"When you're dealing with the Chinese communist party, you're dealing with a regime and an approach that is repressive on human rights, on espionage, a whole frame of things."
Evans, with UBC's Institute of Asian Research and Liu Institute for Global Issues, asked: "They're state owned but are they state controlled? What does control mean? What are the actual mechanisms for intersections with the Chinese Communist Party?"
There's been minimal hand-wringing within Alberta's oilpatch over what the government's decision will mean for investment going forward.
Provincial Energy Minister Ken Hughes did warn that "there is the potential for less investment coming into oilsands in Alberta and the impact of that is it will simply increase the cost of capital."
But John Zahary, CEO of early-stage oilsands company Sunshine Oilsands Ltd. said that while it's good to have all options on the table, his company will be able to fund growth through equity, debt and joint-ventures.
"We don't need a takeover, and so we don't feel exposed with respect to this decision."
Hal Kvisle, CEO of Talisman Energy Inc. (TSX:TLM), said foreign dollars will continue to flow into Canada through joint-venture partnerships, which he sees as a less disruptive way to do business than building a company only to sell it all to the highest bidder.
And so what if the oilsands have been singled out? There's "all sorts of good stuff going on there" even if all-out takeovers are mostly off the table, Kvisle said.
It's the natural gas players that are hurting right now, and there's no reason to believe they'll stop attracting Asian partners to help build liquefied natural gas facilities, like the one Petronas will be pressing ahead with now that its deal with Progress has closed.
"I think the government has played this brilliantly, actually," said Kvisle. "I think the Harper government deserves full marks for what they've done here."
Global Edmonton, Wednesday, Dec. 12, 2012
Byline: Lauren Krugel, The Canadian Press
The technical hearings on economic issues raised by the Northern Gateway pipeline recently concluded in Edmonton. In these quasi-judicial hearings, Enbridge and intervenors (labour organizations, First Nations, environmental NGOs and the provinces of BC and Alberta) presented expert testimony and cross examined the experts of other parties. The Northwest Institute summarized the 15 days of hearings. Here are some highlights.
Cross examination of Enbridge Experts
Labour: refine the dilbit in Canada and create jobs
The Alberta Federation of Labour (AFL) questioned the export of raw dilbit (diluted bitumen, the tar sands' crude oil) rather than refining it in Canada. Enbridge responded that markets aren't looking for refined oil. They are looking for feedstock for their own refineries. No one could make money doing it, according to Enbridge, so there would be no benefit to Canada. Ninety percent of the claimed benefit to Canada is the "price uplift" that Enbridge claims will raise the selling price for all Canadian oil producers.
In later questioning, the AFL asked an expert for the Government of Alberta about the $8 per barrel "discount" for tar sands crude. The Alberta expert explained that tar sands crude fetches its highest price in the limited number of refineries capable of refining it for optimal value. When those refiners reach capacity, the price for tar sands crude drops $8. The $8 discount would be avoided by the Northern Gateway during its first year. Any pipeline (Northern Gateway, Keystone, Trans Mountain) would have the same "up lift" but, after the first few years, more heavy crude than refining capacity will trigger the discount and things will be back to where they are. Still, the Alberta expert concurred with Enbridge that, in his government's view, building upgraders in Alberta would not be commercially viable.
BC: an underinsured pipeline
The Province of BC questioned Enbridge about its insurance coverage. Enbridge stated that it was looking at exposure of $60 million for the cleanup cost of a spill once every 250 years. BC noted that works out to $280 million for a 20,000 barrel spill. That's the size of the spill in Kalamazoo which has already cost more than $767 million. BC also questioned whether the proposed separate corporate structure for the pipeline was intended to limit the liability of the corporate giant. Enbridge denied this. It stated that it would not consider a commitment to guarantee 100% of the clean up.
eNGO Coalition: National benefit from a pipeline that is half foreign owned?
A coalition of environmental NGOs (Forest Ethics Advocacy, Living Oceans ad Raincoast Conservation Foundation) established that Enbridge has ten potential funding participants who may each acquire a 4.9% interest and suggested that foreign ownership of the pipeline would impact the purported national benefit. Enbridge responded that the corporate structure would be modified for Enbridge to retain a controlling interest.
Later, the Coastal First Nations noted that, given 47% foreign ownership of Canada's oil and gas industry, that same percentage of the asserted $17 billion of benefit to private interest presumably would leave the country.
Chris Peters: Externalized cost of greenhouse gas emissions
Chris Peters, a Prince George engineer, calculated that the "well to wheels" greenhouse gas emissions would be 37 million tons (2/3 of BC's total emissions in 2010) and suggested this social cost should be entered into the equation. Enbridge responded that Canada is not responsible for emissions it exports to other countries, underscoring Peters' point that the social costs of the emissions enabled by the proposed pipeline are not accounted for anywhere.
Haisla First Nation: An undersized study
The Haisla First Nation's traditional territory will have more impacts than other First Nations because it is affected by all three aspects of the proposal: the pipeline, the terminal and the super tankers. The Haisla established that Enbridge gave different financial forecasts to different audiences – higher to the public, which inflates the claimed public benefit of a "price lift," - and lower to investors.[xii] Enbridge responded that the different forecasts were insignificant to the project's viability. The Haisla also raised concerns that the condensate costs and risks were not adequately addressed. Enbridge responded that this was the responsibility of the shippers. The Haisla noted that Mark Anielski's "natural capital and ecological goods and services" study included no impacts beyond the right of way, no river or salmon impacts and less land than the pipeline would actually occupy.
Coastal First Nations: Enbridge admits that a spill is 93% likely
The CFN noted that neither the provincial nor federal governments have exclusive jurisdiction to decide whether the project will proceed given that the First Nations have never ceded their traditional territories. The CFN couldn't evaluate impacts to salmon because they hadn't been provided the necessary information. "Whose responsibility is that?" CFN council asked. Enbridge responded that they had tabled sufficient information for a determination by the JRP.
Enbridge agreed that there is a 93% chance of a tanker spill, terminal spill, or full bore pipeline rupture happening within 50 years. In a heated exchange, CFN pointed out that there was no accounting of the social costs of the conflict that the pipeline would cause if the project goes forward.
Economist Robyn Allen: risks from tanker traffic increases are exponential
Enbridge's questions to the Alberta Federation of Labour panelist economist Robyn Allen allowed her to point out that if the pipeline were to increase from its stated capacity (525,000 barrels per day) to its potential capacity (850,000 barrels per day), this would increase tanker traffic by over 50 percent as well as activity in the marine terminal. "Risk is not additive," she said. "It is exponential."
JRP panelist Kenneth Bateman asked Allen about the value of Enbridge giving a "parental guarantee" that it would backstop all costs of a major oil spill. When Allen stated Enbridge won't entertain that, Bateman implied that it could be required by the federal government.
The technical hearings will continue through December. Beginning October 9, the JRP will convene in Prince George to hear expert evidence regarding the construction and impacts of the pipeline. Beginning November 22, the JRP will travel to Prince Rupert to hear expert testimony on marine and First Nations issues. Community hearings in southern BC are scheduled to begin in January 2012. The final arguments on technical evidence will be in April, 2013. The 2012 Federal Budget and Bill C-38 require the JRP to submit its report by the end of 2013. The federal cabinet will make the final decision.
Earth Matters, Oct 05 2012
Byline: Carrie Saxifraze