Pipeline Expansions? Say What? Enbridge Pipeline 3 Is Long Pole In The Tent -- May 24, 2021

 I thought pipelines were being shut down. Then this from ArgusMedia today: 

Heavy Canadian crude shipments to the US are set to rise as more pipeline expansions come on stream and oil sands output climbs above pre-Covid levels.

Pipeline capacity to ship heavy crude from Canada to the US is scheduled to rise by at least 420,000 b/d this year. The expansions are expected to increase Canadian heavy crude's market share in the US Gulf coast refining hub and could lead to higher heavy sour crude exports.

Canadian crude accounted for close to 56pc of all US imports in March.

Line 3:

The largest boost to export capacity will come from Enbridge's Line 3 replacement project, which will increase capacity from western Canada to the US midcontinent by 370,000 b/d. 

Enbridge has completed about 60pc of the work in Minnesota and the line is on track to start up in the fourth quarter. 

The project will expand Line 3 capacity from Alberta to Wisconsin to 760,000 b/d from 390,000 b/d and will enable Enbridge to capitalise on growing heavy crude demand amid a declining global heavy supply outlook. 

The nearly 700km Minnesota segment is the last section needed to complete the project, but regulatory and legal issues have delayed progress. Opponents are suing to stop the expansion and the Minnesota Court of Appeals heard arguments in March on a challenge to the state's approval. 

Producers expect the expansion to provide substantial relief to pipeline congestion. 

Enbridge needed to reject 52pc of requests for space on its two largest heavy crude lines for June, representing just over half of its near 3mn b/d Mainline system. 

Enbridge has had to reject on average 47pc of all nominations for capacity on the lines in the first six months of this year. The rejections should drop to 10pc once Line 3 comes into service.

Enbridge Express, Hardisty, Alberta, to Casper, WY:

• boosting capacity on its 280,000 b/d
• plans to complete the second phase of the 50,000 b/d expansion in the second quarter.
• the line connects to the Platte system, which moves crude from Casper to Wood River, Illinois.
  

Enbridge's Mainline system:

• increased by 100,000 b/d in 2019 and may see further increases;
• option to increase Mainline capacity by another 200,000 b/d
  

Enbridge's Southern Lights:

• Enbridge weighing a plan to reverse its 180,000 b/d Southern Lights pipeline from Illinois to Alberta to add more southbound capacity. 

Keystone:

• TC Energy was planning a 50,000 b/d expansion of its Keystone pipeline system from Hardisty to Patoka, but says it does "not have a timeline to share" on any increase in capacity. 

Much more at the link.

NDIC: The Bakken Is Dead -- June 12, 2020

The daily activity report:

Active rigs:

$36.26	6/12/2020	06/12/2019	06/12/2018	06/12/2017	06/12/2016
Active Rigs	12	61	62	53	28

Featured link: Will America’s Pipeline Operators Survive The Oil Crisis?

Update On TransMountain Pipeline -- September 11, 2019

Many, many stories. One link. Buzz:

Bottom line: PM Trudeau threading the needle. Indigenous peoples will get their day in court; arguments narrowed; most expect final decision to be positive for the pipeline; pipeline remains under construction. At least that's my take.

The "number one" argument to stop the pipeline appears dead. The number one argument: the pipeline will add to many more oil tankers to the port, near whale lanes. Right now there are 23,000 ships moving through that port every year. The pipeline is estimated to add another 700 ships. My hunch: free market capitalism and government mandating no increase in amount of ship traffic would solve the problem overnight.

Turning Dirt For The TransMountain Pipeline -- August 26, 2019

Milestone:

Amarjeet Sohi is an Indo-Canadian politician, currently serving as the Member of Parliament for Edmonton Mill Woods, and the federal Minister of Natural Resources. Link here.

This is quite amazing. Folks said that if the Trans Mountain Pipeline was approved during the summer of 2019 it would still be too late to get started this season -- due to weather. Well, guess what, it looks like they are getting started ... at least at some level ... time will tell ... but as far as I know the legal and political debate is over as far as getting the pipeline built. Sure, the political debate will continue, but the work will go ahead ...

Enbridge Line 3: Dead -- June 3, 2019

This is not an unimportant pipeline.

But it is what it is: another "blow" for Canada.

From oilprice:

Enbridge’s Line 3 pipeline replacement project ran into another unsurprising roadblock on Monday after a Minnesota State Court of Appeals ruled that its environmental assessment just wasn’t good enough. The ruling is a reversal of Minnesota Public Utilities Commission’s decision that approved the environmental impact statement for the pipeline replacement.

The project plans to replace Enbridge’s existing 282 miles of 34-inch pipeline with 337 miles of 36-inch pipe. The appellate court found today that the Commission erred when it approved the plan, and found that Enbridge’s environmental impact statement lacked in specificity, specifically where it deals with oil spills in relation to Lake Superior.

The new Line 3 would have the capacity to move 370,000 barrels of oil per day, alleviating the takeaway capacity constraints that Canada is facing. Line 3 is one of two pipeline projects in the works that are—in their unfinished state—keeping Canada’s oil industry from reaching its potential.

At least Enbridge knows what it needs to do: improve its emergency response to any oil spills "in relation" to Lake Superior.

One would think if the emergency response plan is lacking for a new pipeline, the same response plan is inadequate for an aging pipeline. Perhaps the state needs to shut down Line 3 altogether. 

Short term great news for Enbridge investors. No money being spent on an expensive replacement project.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

Enbridge pipelines are tracked here.

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Operator

Operator, Jim Croce

The Obama Legacy: A Shortage Of Oil; An Inconvenient Truth -- May 29, 2019

From Bloomberg vis Rigzone (let's see if the killing of the Keystone XL is mentioned in this article). Data points:

• a global shortage of heavy crude oil will create hurdles for America's key refining belts just as they ramp up gasoline production for summer driving
• Gulf Coast: dwindling heavy oil supplies have suppressed refining margins
• Midwest refiners: many not reach the high run rates seen last summer
• Gulf Coast: process requiring heavy oil already at lowest levels in a decade
• Ah, yes, here it is: blame it on Trump's sanctions on Iran and on Venezuela
• but nowhere is the Keystone XL mentioned 
• the oilmen knew what they were doing
• Canada has more than enough heavy oil to make up for any loss from Venezuela, Iran, and, Mexico

What a doofus:

Court Rules That British Columbia Cannot Interfere With Federal Crude Oil Pipeline -- May 24, 2019

It's a federal pipeline and the province does not have jurisdiction to "regulate" the pipeline.

One of many links here, from PrinceGeorgeMatters, "Five takeaways from the Court of Appeal ruling on B.C.'s pipeline law."  Takeaway #4:

4. Alberta Premier Jason Kenney and former premier, Rachel Notley, are celebrating the decision as a win for the province.

Kenney said he hopes the B.C. government will respect the rule of law and end its "campaign of obstruction," adding that the project would be a "win-win" for both B.C. and Alberta in creating jobs and increasing the flow of natural resources.

Notley, now leader of the NDP Opposition, said she used a ban on B.C. wines last year to "force" the province to take the reference case to court.

"Turns out B.C.'s toolbox was more Fisher Price than DeWalt," she said, referring to B.C. Premier John Horgan's statement that the government would use every tool in the toolbox to protect the coast from a potential spill.

What a great analogy. LOL. I'll have to remember that when talking about toolboxes. DeWalt, not Fisher Price. Snap-On Tools, not Fisher Price. Sears Craftsman, not Fisher Price.

Take Off, Eh! The TransMountain Pipeline -- February 23, 2019

This is just some housekeeping regarding the TransMountain pipeline in western Canada. Nothing new here.

One hardly needs to make any comments about the National Energy Board's recommendations.

It's actually pretty "funny" for lack of a better word. I think the Canadian NEB was able to thread the needle in such a way to piss off anyone who has a dog in this fight. From what I can tell, this is what the NEB says:

This pipeline is absolutely the worse thing we can be doing when it comes to the killer whales and then there are a few issues with the pipeline route itself, not to even mention that this doesn't help the AGW issue at all. Why don't you just build a pipeline to North Dakota? They seem friendly enough. 

But go ahead, build your damn pipeline, you've sunk this much money and time into it, why not? But if you are really serious about building this monstrosity, be prepared to answer 156 conditions.

Note: I may have written earlier that it was 165 conditions. If I did, my bad. Sorry. I hope that was not material to your thoughts on this recommendation. 

Sort of reminds me of Bob and Doug McKenzie, "Great White North" skits on Second City TV years ago.


Yesterday I posted:

TransMountain: I think I read that the Canadian national energy regulator approved the TransMountain pipeline although the agency said it was "bad" for the environment. The government will now vote whether to proceed. (It will.) And then protests and lawsuits to follow.

Today, from a reader:

Here's the recent NEB document recommending TransMountain approval:

I found it to be page 9 of a 689 page volume.  It's actually titled "i" of the attached

https://www.neb-one.gc.ca/pplctnflng/mjrpp/trnsmntnxpnsn/trnsmntnxpnsnrprt-eng.pdf

Here's a screenshot of the bottom of that page:

Disposition

After completing the Reconsideration hearing and having regard to all relevant considerations, the Board is of the view that the Project is and will be required by the present and future public convenience and necessity, and is in the Canadian public interest. Pursuant to the National Energy Board Act (NEB Act), the Board confirms the recommendation, and replaces certain conditions, that it provided to the GIC in its OH-001-2014 Report. The Board recommends that the GIC approve the Project by directing the issuance of a certificate of public convenience and necessity (CPCN) to Trans Mountain Pipeline ULC (Trans Mountain), subject to 156 conditions. Pursuant to the Canadian Environmental Assessment Act, 2012 (CEAA 2012) the Board is of the view that the designated Project is likely to cause significant adverse environmental effects. Specifically, Project-related marine shipping is likely to cause significant adverse environmental effects on the Southern resident killer whale, and on Indigenous cultural use associated with the Southern resident killer whale. This is despite the fact that effects from Project-related marine shipping will be a small fraction of the total cumulative effects, and the level of marine traffic is expected to increase regardless of whether the Project is approved. The Board also finds that greenhouse gas (or GHG) emissions from Project-related marine vessels would result in measureable increases and, taking a precautionary approach, are likely to be significant. While a credible worst-case spill from the Project or a Project-related vessel is not likely, if it were to occur, the environmental effects would be significant. While these effects weighed heavily in the Board’s reconsideration of Project-related marine shipping, the Board recommends that, in light of the considerable benefits of the Project and measures to mitigate the effects, the GIC find that they can be justified in the circumstances. The Board has identified a recommended follow-up program to be implemented with respect to the designated Project. Pursuant to the Species at Risk Act (SARA), the Board has identified the adverse effects of the Project and its related marine shipping on each SARA-listed wildlife species and its critical habitat, and has imposed (through conditions) and recommended (to the GIC) measures to avoid or lessen those effects and to monitor them.

Back To Burnaby; Back To Court -- August 28, 2018

Updates

June 9, 2019: four  links sent to me by a reader with relatives in the Burnaby area --

• Supreme Court says Burnaby was "unreasonable";
• Canadian Senate passes bill on pipeline construction with 180 amendments that were welcomed by Alberta; and, 
• faux environmentalists all upset; crying crocodile tears;

Original Post

 
From The Vancouver Sun:

A long-awaited court decision coming Thursday will dictate the future of the controversial $9.3- billion Trans Mountain oil pipeline expansion.

The outcome will provide either relatively smooth sailing, at least legally speaking; or more bumpy waters; or, potentially, the project’s death knell.

It’s the biggest legal decision yet of challenges by First Nations and other critics of the approval by Justin Trudeau’s federal Liberal government and the National Energy Board.
The mega-project — supported by business groups in B.C., as well as some unions and First Nations — will triple capacity and is meant to open new markets for crude from the Alberta oilsands in energy-hungry Asia.

The Federal Court of Appeal decision has ramifications for further delays of the expansion, which the company has said has already been delayed by protest and permit challenges.

The court will decide whether several First Nations, including the Tsleil-Waututh and Squamish, were adequately consulted, as well as whether orcas have been properly protected.

Other challenges in B.C. Supreme Court have already been rejected, including by the Squamish Nation and the City of Burnaby.

George Hoberg, a professor at the University of B.C.’s School of Public Policy and Global Affairs, said Thursday’s decision is crucial.

“The City of Burnaby decision … that was small fry compared to this.”

Hoberg anticipates three possible outcomes: the project gets the general blessing of the court, validating the review and consultation process; the review process is criticized but not invalidated; or approval is quashed.

In 2016, in a similar challenge of Enbridge’s $7.9-billion Northern Gateway oil pipeline, the federal court found inadequate First Nation consultation, which all but ended that project.

Much more at the link.

In fact, the Northern Gateway was effectively killed by PM Trudeau. From an earlier post:

September 2, 2016: from The Vancouver Sun -- 

Enbridge’s proposed Northern Gateway plan is, at least for now, dead in the water after Prime Minister Justin Trudeau released a letter of instruction Friday telling his transport minister to ban oil tanker traffic on British Columbia’s north coast.

A ban would prevent hundreds of tankers each year from carrying diluted bitumen extracted from Alberta’s oilsands and piped to northern B.C. from being shipped for export overseas.

“It will mean that Northern Gateway will never happen,” said Gerald Graham, a Victoria consultant specializing in oil spills for more than 40 years.

Thursday: will be able to say, "what goes around, comes around"?

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Church Burning In Texas Carries Hefty Penalty

I was part of the jury pool on this one; not selected most likely because I was "seen" as being too harsh when it came to the punishment phase of the trial.

From the Star-Telegram:

The vandalism that ruined much of St. Stephen’s Presbyterian Church in Fort Worth was described by its pastor as “disturbingly violent.”

The century-old church near TCU was vandalized and set on fire about 4:30 a.m. on Jan. 8, 2017. The fire was put out quickly but the church was badly damaged, forcing officials to cancel Sunday morning services that week.

The man responsible, Thomas Britton, 56, was sentenced to 40 years in prison on Thursday. The jury took five minutes to reach a decision, according to a news release from the Tarrant County District Attorney’s Office.

56 years old. 40-year prison sentence. Pretty much a life sentence.

Read more here: https://www.star-telegram.com/news/local/community/fort-worth/article217239370.html#storylink=cpy

Transportation Bottlenecks Force Canada's Largest Crude Oil Producer To Curtail Heavy Oil Production -- August 3, 2018

Earlier today I posted the following:

Keystone XL: three links today --

South Dakota, over at kallanashenergy.

• TransCanada digging up section of "old" Keystone to check pipeline's coating
• ordered by US regulators
• pipeline section being investigated near previous spill; near Amherst, South Dakota

Pipeline progress, over at NPR --

• company provided update at quarterly earnings call
• some suggest it appears the Keystone XL is no longer needed

And, then, finally, at Reuters via Rigzone:

• upbeat story

After reading all three stories, I really didn't know whether the NPR was closer to the "truth" or not regarding the "need" for the Keystone XL. Considering the source (NPR) I did not put a lot of stock into their story, but it raised some questions.

Now this story over at oilprice: Canada's largest oil produced is curtailing activities in western Canada because of transportation bottlenecks. That pretty much confirms that NPR is full of crap.

Data points at the linked oilprice article:

• because of transportation bottlenecks (i.e., not enough pipeline capacity) for its heavy oil -- which the Keystone XL would exclusively carry out of Canada -- Canada Natural Resources is curtailing heavy oil production; turning to lighter oil drilling
• US Gulf Coast refineries were optimized for heavy oil -- the kind that would have been delivered from western Canada via the Keystone XL
• the benchmark price of oil from Canada's oil sands -- Western Canadian Select (WCS) -- fell again
• the WTI (Cushing) - WCS (Hardisty, Alberta) discount rose to $30.80 / bbl -- the largest differental since December, 2013
• Canada Natural Resources production has dropped about 3% yoy

Two notes from the linked article:

“Due to current market conditions the Company has exercised its capital flexibility by shifting capital from primary heavy crude oil to light crude oil in 2018, resulting in an additional 7 net light crude oil wells targeted to be drilled in the second half of the year. Primary heavy crude oil drilling was reduced by 24 net primary heavy crude oil wells in Q2/18, with an additional 35 primary heavy crude oil well reduction targeted for the second half of the year,” Canada Natural Resources said yesterday.

And,

Canada is producing record amounts of heavy oil from the oil sands and its economic recovery is driven by the oil industry, but drillers are finding it increasingly difficult to get this oil to market because pipelines are running at capacity and new ones are finding opposition from various groups.

So many story lines in this article.

One story line: this reinforces how important the Trans Mountain Pipeline expansion project is.

Ticker symbol for Canadian Natural Resources (CNQ).

Time To Learn A Bit More About The Burn In Burnaby -- July 19, 2018 -- Vancouver Sends Its Biggest Oil Shipment To Canada Since 2015 -- Huge Story

Update

July 20, 2018: Camp Cloud, the protest camp, was given an eviction notice by the city of Burnaby yesterday. The folks have 72 hours to clear out.

Original Post 

From oilprice.com:

A tanker loaded with around 514,000 barrels of oil has set sail from Vancouver en route to China in what is the largest shipment of oil from the Canadian port to the world’s top oil importer since 2015, according to Thomson Reuters trade flow data.

The Serene Sea Aframax tanker was loaded at Kinder Morgan’s Westridge Marine Terminal in Vancouver and set sail on July 4 toward the southern Chinese province of Guangdong, where it is expected to arrive on July 26. This latest shipment would bring Canada’s oil exports to China to 16,600 bpd for the month of July, Thomson Reuters data show.

Canadian oil shipments to China and to Asia are a rare sight, also because oil-rich but landlocked Alberta doesn’t have enough pipeline capacity to the West Coast. Most of the crude oil shipped out of Vancouver is being delivered to the U.S. West Coast.
But in recent months, oil shipments out of Vancouver to Asia have picked up, and tankers have departed to China, South Korea, and Thailand, according to Thomson Reuters data.

In April, the Solomon Sea oil tanker and the Diva oil tanker departed from Vancouver for ports in Thailand and South Korea, and eastern China, respectively. Thomson Reuters flows show that the two tankers carried a combined 742,000 barrels of crude oil to Asian customers.

From TransCanada / Trans Mountain:

From google maps:

Minnesota PUC Unanimously Approves Enbridge Line 3 -- June 28, 2018

The poll, will the Minnesota PUC approve the replacement of Enbridge Line 3?

• yes: 39%
• no: 61%

I was part of the 61%.

From Park Rapids Enterprise:

The Minnesota Public Utilities Commission unanimously approved the Enbridge Line 3 replacement pipeline Thursday afternoon, June 28, in a decision certain to spark lawsuits and set off protests around the state.

Now, to the courts.

Well, This Will Give Burnaby Something To Talk About -- June 24, 2018

This was released two days ago. I missed it. An alert reader caught it. From the CBC: the Canadian National Energy Board is "on board" with Trans Mountain. The NEB approves updated/modified permits to allow Trans Mountain to begin construction of terminals at Burnaby. Regulator says the approved variance application will significantly improve safety at the terminal.

For those following the action, the judge monitoring the protesters has made it clear that he's a no-nonsense judge. We should see some great photos, some great stories coming out of Burnaby in the next few weeks.

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NASCAR

Not Much To Talk About

These are the kinds of races that "kill" NASCAR.

I don't think I've seen a more boring last 15 laps in any NASCAR race. Top two  were 23 seconds ahead of whoever was in third with six laps to go. Now, the leader is 22 seconds ahead of whoever is in 2nd.

The announcers keep hoping there is a "yellow" so that everyone starts "even" again, with five laps to go.

With three laps to go, the announcers said that the leader was "coasting."

With one lap to go, Truex, Jr, ahead by 14 seconds; Harvick, #2; then Bowyer, Elliott, Kyle Busch and Kurt Busch. The announcers said Elliott drove so well that he should consider it a "win."

The race itself looked like what I used to see on the autobahn on any given day in Germany, decades ago.

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The Fine Arts Page

My wife missed the NASCAR race. She and our middle granddaughter participated in a two-day art workshop.

This is the painting that my wife did over the weekend.

It's not for sale.

Our middle granddaughter hard at work:

The Permian Boom -- Following In The Very Footsteps Of The Bakken Boom -- June 1, 2018 -- A Reader Smells A Rat

Updates

June 2, 2018: see story below in which a writer suggested Kinder Morgan got a $7.4 billion payout for a $550,000 investment. A reader did some of his/her own analysis, after "smelling a rat." This is the reader's entire reply, which is probably a whole closer to the truth than Nick Cunningham's analysis. Remember, he has the same access to information as the rest of us. LOL.

So, there's a May 30 article by Nick Cunningham for OilPrice, which says that Kinder Morgan had only paid $550 million for the existing TransMountain pipeline back in 2007.  His theory was that Trudeau overpaid in the recent taxpayer-funded purchase.  And I'm sure that'll be widely quoted.

I double checked the DAPL numbers, and the original estimate was about $4 billion.  That's close to the price Trudeau paid.  So, then I grabbed my trusty bar room napkin -

• DAPL is longer, but the capacity is about what the increased volume in TransMountain would be ~ half a billion barrels a day total for DAPL and an increase from 300,000 to 800,000 bpd for KM
• DAPL was 99.9 % on private land
• KM had how many tribes to contend with - 50 some?  And you bet your sweet bippy, that's 50 big checks.  The City of Vancouver alone was going to get a billion $.  (Or maybe already has received part/all?)
• I seriously doubted the purchase price was that low - but regardless that was over 10 years ago.  I had a suspicion that whatever original purchase price was cited, Cunningham may have neglected to put a value on debt assumed by the acquiring company.  If I give you $100,000 for your house and assume a $1,000,000 mortgage, obviously that's a $1.1 million transaction - and I've seen that mistake/omission far too often.

So, I had to check to see what the original deal was.  It was 2005, not 2007 - and his numbers were way off.  It was not a stand-alone acquisition, so there's no telling how it was treated for accounting purposes.  (Especially since I know nothing about Canadian accounting).  I can easily imagine that since the existing TM pipeline was 50 years old, that it may have had a much lower depreciated book value.

Anyway - my point is that Trudeau didn't pay a much different price for TM than what DAPL was expected to cost.  KM tossed in the existing pipeline, terminal, etc. and that would increase the value compared to DAPL's barebones pipeline number.  Obviously, there's still an ongoing construction cost for TM, but my understanding is that the pipe is bought and paid for - so it'll just be labor and legal fees.  (;>)  Some of the high-dollar contracting/labor/consulting may also be prepaid - not unusual for big construction projects

The following article is old enough that the TM pipeline isn't really named as such, but it has to be the same critter, because it's the only pipe between Alberta and BC.

I don't have a horse in this race, but the bad reporting on DAPL really raised my hackles - and it looks like there's more of the same going on in Canada.

Kinder Morgan and Terasen Combine to Create a North American Energy Leader

Original Post

Can't wait to spend the money: North Dakota floats idea of spending Legacy Fund money. You know, that Fund that was put in an Algore lockbox. 

Trans Mountain Pipeline Expansion: tea leaves suggest this will not go well even now, owned by the Canadian taxpayer, but the word on the street is that Kinder Morgan did incredibly well.

Kinder Morgan bought the project for $550,000 some years ago, and although the final numbers are yet to be determined, it appears Kinder Morgan got a windfall of somewhere between $4.7 billion and $7.4 billion. Off the top of my head; can't recall for sure. Easily found for those interested. I will come back to it later. Why would Justin Trudeau pay so much for one pipeline? -- It would n't even add much to the overall Canadian economy, nor would it really do much for the Canadian sands. On paper, it makes no sense. At least that's what some are saying. If I can find the link again I will post it.

But this is why:

First it was the Keystone XL. Then Enbridge Line 3. Energy East. Then Trans Mountain Pipeline.  In an earlier post I had mentioned three of those four. I had completely forgotten "Energy East," perhaps the granddaddy of them all. 

From wiki:

The Energy East pipeline was a proposed oil pipeline in Canada. It would deliver diluted bitumen from Western Canada and North Western United States to Eastern Canada, from receipt points in Alberta, Saskatchewan and North Dakota to refineries and port terminals in New Brunswick and possibly Quebec.

The TC PipeLines project would convert about 3,000 kilometres of natural gas pipeline, which currently carries natural gas from Alberta to the Ontario-Quebec border, to diluted bitumen transportation. New pipeline, pump stations, and tank facilities would also be constructed.

The CA$12 billion pipeline would be the longest in North America when complete. The project was announced publicly on August 1, 2013, while the Keystone XL pipeline proposal was being debated. In October 2014, TransCanada Pipelines filed its formal project application with the National Energy Board.

At the same time a number of groups announced their intention to oppose the pipeline.[2] TransCanada cancelled the project on October 5, 2017.

It was obvious Trudeau was never to prevail against faux environmentalists in eastern Canada, but if he couldn't even get a win in western Canada, he could see the end of Canada's fossil fuel industry. Hyperbole? Sure. Possibility? Sure.

It looks like greenfield pipelines in Canada and the US have little chance of success unless they do not cross state lines, provincial lines, or international boundaries.

But Kinder Morgan did just fine, thank you. They get paid regardless. And yes, that's not a typo. They "get" paid, regardless. They got 30-year commitments from shippers to pay them even if the pipeline did not get built.

Disclaimer: this is all based on articles I've read over the past couple of days. It's only what I recall and there will be many factual errors. None of them on purpose. Once I find the links again, if I'm interested in doing so, I will update / correct this post.

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Back to the Bakken

Active rigs:

$66.40↓	6/1/2018	06/01/2017	06/01/2016	06/01/2015	06/01/2014
Active Rigs	61	48	27	80	189

RBN Energy: rising Permian NGL production drives the need for new pipes. I'm so glad I followed the Bakken as closely as I did starting from the very beginning. The Permian boom is following exactly what we saw in the Bakken boom. For investors, God is giving us a second chance to get it right. LOL.

With Permian production of natural gas liquids (NGLs) on the rise and available pipeline capacity shrinking, midstream companies are in advanced stages of developing projects that — if built on their current schedules — would roughly double the 1.2-MMb/d of effective NGL takeaway capacity in place today within the next 18 months or so. Much of the planned capacity is backed by long-term commitments from Permian producers anticipating continued growth in production of crude and NGL-rich associated gas, especially in the play’s Delaware Basin. Still, the pace of NGL pipeline projects in the Permian begs the question, is all that incremental capacity needed? Today, we continue our series on the NGL takeaway challenges facing producers and processors in cowboy country.

Monday Evening, The Market, Energy, And Political Page, Part 2, T+18 -- May 28, 2018

A reader sent me these two links. I was not going to post them until tomorrow, but they need to be posted tonight -- the two stories:

• Trudeau "summons" rare cabinet meeting first thing tomorrow morning
• Canada likely to "buy" full Trans Mountain Pipeline Project

From the second linked article:

Buying the pipeline outright has become increasingly likely and is now the most probable option, the person said, speaking on condition of anonymity because the discussions are private. The deal, a value for which hasn’t been publicly reported, will be announced as soon as Tuesday when Prime Minister Justin Trudeau’s cabinet is due to meet.

Canada first offered to indemnify the expansion project but is now likely to instead buy it in full. The Canadian government plans to sell the project -- the existing line and its expansion -- as soon as is reasonable once it’s guaranteed that it will be built, the person said. It’s unclear if other Kinder Morgan assets will be included in any sale.

My reply to the reader follows. The reply is not ready for prime time, but I think it adequately reflects my initial thoughts:

This -- Canada paying for, buying, whatever one wants to call it -- is really, really bizarre. I don't know what you think about it, but it seems pretty pathetic when one province can shut down a critical project like this that affects the entire country.

This is not similar to the Keystone XL. The US has such a huge economy and is so diversified, that one pipeline did not have a huge effect on US GDP. However, Canada has little except its natural resources -- such as oil. This action by Trudeau -- an environmentalist -- shows just how important he thinks his project is.

Can one imagine the following?

• Pennsylvania stopping Abraham from waging war "to save the Union"
• Texas stopping FDR from entering WWII
• Massachusetts stopping the "Manhattan Project"  
• Illinois stopping JFK's plan to "land a man on the moon, and safely back again"
• Hillary banning fracking

Actually I can imagine the last one. LOL. 

Pending -- Enbridge Line 3 -- April 23, 2018

Updates

Later, 5:35 p.m. Minnesota time:

https://mobile.nytimes.com/aponline/2018/04/23/us/ap-us-enbridge-energy-line-3-the-latest.html

MINNEAPOLIS — The Latest on Enbridge Energy's proposed Line 3 replacement (all times local): 5:15 p.m.

An administrative law judge says Minnesota regulators should approve Enbridge Energy's proposal for replacing its aging Line 3 crude oil pipeline only if it follows the existing route rather than the company's preferred route.  

Administrative Law Judge Ann O'Reilly recommended Monday that the Public Utilities Commission choose the existing route, which avoids sensitive areas in the Mississippi River headwaters region where American Indians harvest wild rice and hold treaty rights. The proposal has drawn opposition because the line would carry Canadian tar sands crude.  

The commission is expected to make its final decision in June. 

The graphic at this post appears to show the existing route and Enbridge's preferred route. 

Later, 5:07 p.m. Minnesota time: the ruling has still not been released as far as I can tell (google: today's news on enbridge line 3).

Later, 3:39 p.m. Minnesota time: the ruling has still not been released as far as I can tell (google: today's news on enbridge line 3).

Original Post 

Link here.

With the future of the Trans Mountain pipeline expansion project still in limbo, another major pipeline project is awaiting a do-or-die decision by regulators in Minnesota, with a key report on the future of Enbridge's Line 3 expected today.

The federal cabinet gave the green light to both Trans Mountain and Line 3 — the largest project in the history of Enbridge — on the same day in November 2016. And while work on Line 3 has already started on the Canadian side of the border, the regulatory agency tasked with approving construction through Minnesota has so far held off granting necessary permissions amid intense local opposition.

If Enbridge fails to secure a state permit and route approval, Line 3 could join the list of other major natural resources projects approved by Prime Minister Justin Trudeau that have failed to launch.

Enbridge hopes to replace the entire span of the aging pipeline, which carries oil from a terminal near Hardisty, Alberta, through northern Minnesota to Superior, WI, where it travels on to U.S. refineries for upgrading.

My hunch: the court will find that more "information" is needed from one party or the other, or that some agency failed to consider all aspects. I'm sure there is at least one indigenous group in Florida that was not consulted.

With so much "intense opposition," there's no way any judge could approve this request. Especially since it does not benefit Minnesota, as far as I can tell. 

Idle Chatter (Again): The KMI Trans Mountain Pipeline -- April 19, 2018

Updates

April 20, 2018: in the original post, I noted that I might be misreading KMI/CEO's comments regarding the Trans Mountain pipeline. It appears that I had it pegged exactly right. From Irina Slav at oilprice.com --

Asked about whether funding from the government would ensure the Trans Mountain expansion, Kean said “They’re really two separate things. Most of the investment is in British Columbia, where the government is in opposition to the project ... That is an issue that, in our view, needs to be resolved.”

Alberta, by the way, is ready to buy the project and take it off Kinder Morgan’s hands. This option may have sounded far-fetched a week ago but now it is beginning to look increasingly like a legitimate solution to the problem the pipeline maker is facing.

Link.
Original Post

 I think the KMI Trans Mountain pipeline story is fascinating. I'm learning a lot about geography and the permitting process.

Again, can you imagine? Twelve hundred (1,200) provincial permits needed for this project; and 600 permits are yet to be submitted. Of those submitted, about half have been reviewed/approved. Twelve hundred permits -- that's absolutely ludicrous. Preposterous. Ridiculous.

A reader writes:

Yesterday's announcement by CEO of KMI at conference call that Alberta pipeline probably won't be built has set off an enlarging, volatile firestorm of statements (see headlines in graphic below).

Saskatchewan is planning on joining any future sanctioning targeting British Columbia.  

Oil/gasoline restrictions are discussed.

National politics in turmoil. 

All this could be a tipping point in the decades-long anti-fossil-fuel drama.

With regard to the Saskatchewan position:

• BC "out of step"
• Saskatchewan issues own threats to BC

From the transcript, words from the CEO:

Now we're going to switch to KML. Last week, we announced that the KML had a decision point on the Trans Mountain expansion project. We announced the suspension of non-essential spending and that under current conditions we would not put additional KML capital at risk.

We also said there's no readthrough from this in terms of our willingness to invest in Canada. We have invested in Canada, British Columbia, as well as Alberta, and we expect to continue investing. But as we said then, it's become clear this particular investment may be untenable [ph] for a private party to undertake.

The events of the last 10 days have confirmed those views. We pointed out there are significant differences between governments, those differences are outside of our ability to resolve. We are continuing our stakeholder discussions between now and May 31 and we're looking for a way forward on this project.

All of that is the same as what we said on the call last week, nothing new there.

However, discussions are underway and as the Prime Minister said on Sunday, we're not going to undertake those discussions in public and we do not intend to provide additional updates on the status of those until we reached a sufficiently definitive agreement or the discussions have terminated. So again, not much update, but discussions have commenced.

I may have misread the transcript, but it appears the CEO has two concerns with regard to the pipeline. One concern is the "tangible": process, permitting, financial, building, etc." The other concern is the "intangible." 

If I read the transcript correctly, the CEO is concerned that even if the pipeline is built (the "tangible"), that is not the end of the story. If the people and the government of BC do not "buy into" the benefits of this pipeline, the "tangible" is at risk. Once built, the people and the government can "incrementally shut down this project" even after it's built. The "buy in" is the "intangible."

Here's the part of the transcript in which "two issues" are mentioned:

Yes, there are really two separate things. I mean, there needs to be a way, most of the project and most of the investment is in British Columbia where the government is in opposition to the project and has look for and found ways to incrementally regulate it. And that is an issue that, in our view needs to be resolved or addressed in order to be able to successfully construct in the province. And so we think of this two separate or related things. 

I wrote back to the reader regarding my thoughts, again, not ready for prime time:

Another reader suggested I might be misreading previous comments/decisions by KMI, suggesting that the pipeline would not be built. That reader suggested that "payoffs" would be made to BC and after the province gets their "ransom," the province would okay the pipeline.

I see this as an ideological struggle -- that is partly why this is so fascinating. In my mind, this has become a "religion." It's not about money.

I wouldn't bet one way or the other that the pipeline will be bet, but I bet it's going to be a dirtier and nastier fight than folks realize. I think BC will dig in their heels even more.

I wish I could write better, articulate better how I see the world dividing up along ideological lines when it comes to fossil fuel. But as the reader says above -- this may be a real tipping point in the decades-long anti-fossil fuel drama -- at least for western Canada, and maybe Canada as a whole.

We will also see it in California. As long as gasoline stays below $4.50/gallon in California, residents there will "put up with it." But if gasoline were to hit, on a regular and long-lasting basis, $6 / gallon, I think that the "silent majority" might actually say "enough is enough."

Absolutely fascinating.

Update On The Brouhaha Between British Columbia And Alberta -- April 17, 2018

There are several stories that fascinate me: ObamaCare (pretty much "New Diet Coke"); Netflix; Apple, Inc; and, now, the brouhaha between Alberta and British Columbia. Is "brouhaha" the best word to use in this context? Whatever.

Apparently the word on the street is that Ms Notley will be defeated in the next election. The next election will take place on or before May 31, 2019.

She has said "the pipeline" will be built. She has threatened British Columbia with economic repercussions if the pipeline is further delayed or "killed."

Apparently things are starting to happen.

Apparently there are already some pipelines that run from Alberta to the west coast of British Columbia. These pipelines carry refined products (such as gasoline and diesel fuel) which customers in British Columbia purchase and consume. The pipelines also carry crude oil that is refined in a Burnaby, British Columbia, refinery. The pipelines also carry crude oil (and refined products?) for export, mostly to Asia.

Apparently, right now, the pipeline moves product based on a free market, capitalistic system.

According to Irina Slav at oilprice.com, a bill to change this "system" has been introduced into the Alberta legislature.

If passed, the bill will give the Alberta provincial government the authority to license fuel traders. The Alberta government will be able to control what products and how much product will go through those pipelines.

Facts:

• Alberta supplies 50% of total fuel imported by British Columbia
• the only refinery in British Columbia is the Burnaby (Vancouver) refinery
• this refinery produces 25% of BC's fuels
• without the "right" kind of fuel the refinery cannot operate properly
• British Columbia has other options: fuel and crude oil from west coast of the United States; problem:
• more expensive
• would also likely raise cost/prices of oil and refined products for consumers on the US west coast

It will be interesting to see how this plays out.

But, also think about this: there are likely political folks in the US who are watching this closely. Could the US federal government or could individual states get into the pipeline licensing business (licensing, and thereby controlling pipelines more than they are already controlled?). After all, the federal government, through RINS, has greatly affected production in US refineries.

Regardless, the bill introduced into the Alberta legislature is certainly very interesting.

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The Apple Page

From Macrumors:

The iPhone X accounted for 35 percent of total worldwide handset profits in the fourth quarter of 2017.

The device generated 5x more profit than the combined profit of more than 600 Android OEMs during the quarter, despite the fact that it was only available for purchase during the final two months of the year and in spite of reports pointing towards lackluster sales of the device. 

KMI Trans Mountain Pipeline -- Previously Posted -- April 16, 2018

Previously posted:

Kinder Morgan (technically Kinder Morgan Canada Limited, I guess): Canadian pipeline, Trans Mountain pipeline -- I find this story most interesting on so many levels -- PM Justin Trudeau says the pipeline will be built.

Prime Minister Justin Trudeau is pledging financial backing and legislation to ensure that the Trans Mountain pipeline expansion is completed, after B.C. Premier John Horgan gave no ground at a hastily called meeting in Ottawa on Sunday.

Emerging from a two-hour session on Parliament Hill, Mr. Trudeau and Alberta Premier Rachel Notley made it clear that their respective governments are determined to see construction proceed this summer, despite legal and political challenges from B.C. and protests on the ground.

Read this closely:

On Sunday, Mr. Horgan continued to insist that he has an obligation to protect B.C. coasts from oil spills and said his government will pursue a reference in federal court to clarify his government’s authority to regulate transportation of oil-sands bitumen through the province.

“We continue to disagree on the question of moving diluted bitumen from Alberta to the port of Vancouver,” he said.

He added, however, that he will stand down if the court rules against his government. The B.C. Premier said the tone of the meeting was cordial, noting that Mr. Trudeau assured him Ottawa would not pursue measures to punish B.C. over its pipeline position.

Something tells me this story is not going to end well for Alberta.  As soon as I read that the BC Premiere John Horgan will take this to court tells me this is not going to end any time soon -- unless Canadian judicial system works a whole lot faster than the US court system.

Also, note, PM Trudeau says legislation will be passed -- think about this -- I can't believe the legislative process is going to happen overnight on this project, and then, according to the provincial premier, he will take that legislation to court. 

Remember: there are almost 1,200 BC provincial permits required -- almost 1,200 -- these are not simply one-postcard-size permit applications. These applications are probably an inch thick (or more) of supporting data. Six hundred have not even been submitted yet.

• of the 587 permits the company has submitted:
• 201 have been approved
• 386 are under review

I've been told by a reader much smarter than I am regarding these judicial / political issues, that the pipeline will be built. "Arrangements" will be made to ensure the pipeline will be built.

Right now, this is where I see the process:

• Kinder Morgan: no change; will not start work now that the BC premier says he wants the courts to rule on the legality of the federal government; Kinder Morgan will wait to see how the court rules, or if the BC premier "changes his mind"
• British Columbia: it sounds like "they" have dug in their heels on this issue
• if the Canadian Supreme Court rules in favor for Premier Trudeau, the next question will be whether those 1,187 permits all need to be approved
• my understanding is that many (most?) of the provincial permits are "indigenous-native-based" issues and that the federal government would have supported these issues in the past
• Horgan originally said he/his province was not against / not delaying the pipeline -- he/his province simply wanted to make sure the environment was protected, and that all i's and t's were dotted and crossed before the pipeline would move forward; but having said that, they are fully supportive of the pipeline and can't wait to see it finished 

And finally this: the Business Insider article says the meeting was cordial. Of course the meeting was cordial. This is Canada, not New York City.

The Market And Energy Page, Part 2, T+ 46 -- Making America Great Again -- April 15, 2018

I was going to post a number of stories at this post, but this one story is so incredibly important, it will be the only one posted.  A huge "thank you" to a reader for sending me this article.

Making America Great Again: from the Houston Chronicle -- global petrochemicals growth shifts from Middle East to Gulf Coast. This is quite a story:

For the first decade of this century, U.S. petrochemical producers, such as LyondellBasell of Houston and Chevron Phillips Chemical of The Woodlands, flocked to the Middle East, spending years developing partnerships and building massive facilities to tap cheap natural gas feedstocks to make plastics and other materials.

But now, the U.S. Gulf Coast has become the locus of global petrochemical growth, outpacing the Middle East in a shift that’s only expected to accelerate as North American shale producers siphon more natural gas from vast reserves in West Texas and elsewhere. Even Saudi Arabian companies, including the government-owned Saudi Basic Industries Corp. and Saudi Aramco, are making the shift, with plans to invest billions of dollars to expand chemical operations here and develop new partnerships with Houston and other U.S. firms.

The migration of petrochemicals manufacturing is more evidence that the Gulf Coast is becoming an energy hub rivaling the Middle East, which for a half century has played an outsized role in the global economy and geopolitics. It shows that the so-called shale revolution pioneered by Houston and Texas producers is continuing to reshape global markets, transform trading relations and lift the region’s economy, which so far has attracted more than $60 billion in petrochemical investments - an influx of capital, according to the Greater Houston Partnership, that will support tens of thousands of jobs for years to come.

The shift from the Middle East to the Gulf Coast is driven by two simple facts: Supplies of natural gas liquids such as ethane, a feedstock for petrochemicals and plastics, are dwindling to the point of shortage in Saudi Arabia and elsewhere, but growing rapidly here as drilling in the Permian Basin in West Texas and other shale plays floods the market with cheap, abundant raw materials for chemicals. U.S .ethane production is projected to increase nearly 60 percent to 2 million barrels a day by 2021, up from 1.26 million barrels a day in 2016.

And more:

That dynamic is pushing some of the Middle East’s premier energy companies to expand along the U.S. Gulf Coast with multibillion dollar projects that underscore the industry’s faith in the longevity of the shale boom. Coinciding with the recent visit of Saudi Crown Prince Mohammed bin Salman, who is leading a drive to diversify an economy long centered on oil production, Saudi Aramco announced that its Houston-based refining subsidiary, Motiva Enterprises, will make its first major foray into petrochemicals through two separate agreements with Illinois-based Honeywell UOP and TechnipFMC, which has headquarters in Houston, Paris and London.