Income Trusts; Predatory Capitalism

Predatory capitalism comes to the oil patch through this Income Trust merger. Another consequence of the Harpocrites Halloween surprise last year. And clearly farmer Ed's Royalty compromise has not impacted these guys.

Merger creates oil patch giant
Canada's newest energy powerhouse, forged yesterday by the proposed merger of Penn West Energy Trust and Canetic Resources Trust, is poised to challenge the oil patch's biggest players as it seeks even more aggressive expansion through acquisitions and new projects.

The new entity will be comfortably the country's largest oil and gas trust, with market value of around $15-billion and production of more than 200,000 barrels of oil equivalent a day. It will have the size to compete with some of the oil patch's biggest names, said executives of both companies.

The new company will not only be a leader in Canadian conventional light oil production, but its larger size will make it easier to access debt markets to fund significant developments in unconventional gas, enhanced oil recovery and even Alberta's oil sands, a region in which major projects have been the preserve of only the largest and most well-financed firms.

In addition, the company - which will operate under the Penn West banner for now, but may be rebranded in the future - is now buttressed against any potential foreign takeover and positioned to expand aggressively by taking over other trusts in Canada as well as assets in the U.S., said Penn West chief executive officer Bill Andrew. Last year's federal decision to make income trusts pay corporate tax from 2011 is perceived as having left such firms as more susceptible to domestic or foreign buyouts.

The friendly $3.6-billion cash and paper deal, which came together in a series of confidential meetings held in motels outside of Calgary over a three-week period, was facilitated in part by Calgary-based lawyer John Brussa, one of the original architects of Canada's income tax structure.

Income Trusts generate vast pools of capital which they can use to buy up other companies while retaining their ability to pay out dividends to coupon cutters.Income Trusts began in the oil patch in Alberta before becoming popular across Canada.

They are a product of the Alberta stock exchange lack of regulation and the Klein governments deregulation revolution. They avoid paying taxes thus allowing for higher returns to investors. They are a tax avoidance scheme for owners. And they still will generate value for their owners despite Flaherty's tax scheme which only comes into effect in 2011.

That will impact the coupon cutters far more than the companies real owners, the Class A shareholders and company investment managers. And by then the majority of Flaherty's corporate tax cuts will be in place enabling this trust to transform itself into a corporation again if it is a fiscal advantage.

In practical life we find not only competition, monopoly and the antagonism between them, but also the synthesis of the two, which is not a formula, but a movement. Monopoly produces competition, competition produces monopoly. Monopolists are made from competition; competitors become monopolists. If the monopolists restrict their mutual competition by means of partial associations, competition increases among the workers; and the more the mass of the proletarians grows as against the monopolists of one nation, the more desperate competition becomes between the monopolists of different nations. The synthesis is of such a character that monopoly can only maintain itself by continually entering into the struggle of competition.

Karl Marx
The Poverty of Philosophy
Chapter Two: The Metaphysics of Political Economy

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Flaherty Saves Oil Patch

See the sky is not falling. Instead the boys in the Petro Towers in Calgary are hearing the sounds of pennies from heaven falling into their laps.

Oilsands stocks rallied yesterday on a US$4.15 jump in crude prices and optimism that Ottawa's surprise corporate tax cut could rescue producers from Alberta's oil and gas royalty increases.

Oilsands companies with long-term oilsands plans will be among the biggest beneficiaries of corporate tax changes proposed by Jim Flaherty, the Federal Finance Minister, on Tuesday, Andrew Potter, oil-and-gas analyst at UBS Securities Canada Inc., said in a research note.

The three most influential movers on the TSX were oilsands companies. EnCana Inc. jumped $2.96 to close at $66.10, Canadian Natural Resources Ltd. rose $3.46 to close at $78.56, and Suncor Energy Inc. was up $3.79 to close at $103.45. Crude prices jumped as high as US$94.74 a barrel, a record price when not adjusting for inflation, on a report showing that inventories in the United States are at a two-year low. Crude for December delivery closed at US$94.53, up US$4.15.

As the old adage goes what the government taketh away the government gives to them that has.

Personal income taxes are being positively impacted in two ways -- by cutting the lowest rate by a half-percentage point, and by raising the "basic personal amount" that someone can earn without paying any tax.

The two measures together will produce an average saving of about $275 a year for most working Canadians.

Better than nothing, but still less that the price of a Tim's coffee per day.

BIG BUSINESS WINS

Big corporations, on the other hand, are in for significant tax reductions over the next five years as the federal rate drops to 15% from more than 22% today.

By 2012, the total cost to the treasury of giving corporations such a break is expected to be just over $14 billion, or almost 50% more than all of Flaherty's tax cuts for individual Canadian taxpayers over the very same period of time.

SEE:

Tax Cuts For The Rich Burden You and Me

Tax Fairness For The Rich

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Stelmach's Royalty Give Away

As I said here Stelmach's Royalty announcement is a sell out.

Alberta's bid to wring more cash from the oil sands with a controversial royalty hike wound up as little more than "smoke and mirrors", one of the province's advisers said on Monday, as it backed away from key elements of a review panel's recommendations.

Pedro van Meurs, who has consulted on royalty regimes in 70 jurisdictions, said the Alberta government left cash on the table when it announced a new royalty scheme last week.

But van Meurs said the changes are at best a minor increase and the province's has lost a once-in-a-generation chance to get what he considers a fair share of the burgeoning sector's revenues.

"It's pretty disastrous," van Meurs told Reuters. "Instead of having a simple tax, what we are now going to see is very complicated system that is more smoke and mirrors than reality."

Van Meurs was a consultant for the review panel that recommended higher rates and a per-barrel tax on oil sands production.

"It's absolutely a minor increase," he said. "The most idiotic thing is that Alberta already had 25 percent."

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The Sky Is Not Falling

After all the sturm and drang, the wailing and whining, the threats, doom-saying and warnings, from Big Oil the sky did not fall down on Friday after Alberta CEO Ed Stelmach announced his royalty compromise. Ok everyone take a Valium. Capitalism remains alive and well in the oil patch. In fact it is still booming.

Energy sector stable amid royalties hike
Market reacts calmly to royalty rules

Citigroup Investment Research energy analyst Doug Leggate has crunched the numbers, and he just doesn't see what all the fuss is about in the Alberta oil sands over the province's new royalty plans.

The negative after-market reaction to Alberta’s proposed royalty changes for the energy sector appears overdone and may present an opportunity to buy some names in the sector, says Citigroup analyst Doug Leggate.

He recommends keeping an eye on preferred names in the sector like Suncor Energy Inc. (SU/TSX) and Canadian Natural Resources Ltd. (CNQ/TSX), but admits there will likely be a strong response to any change from the industry.

“...Versus the level of oil prices we estimate are currently being discounted in the major Canadian oil sands players, the impact on valuations looks benign,” Mr. Leggate wrote.

So while he acknowledged that the new regime gives away some upside, the analyst thinks plenty of core value remains with investors.

Friday's market response to Stelmach's decision was less dramatic than some experts expected. Shares in Suncor (TSX:SU) opened down 3.4 per cent, while shares in Petro-Canada (TSX:PCA) and Imperial Oil (TSX:IMO)were down less than one per cent.

Petro-Canada's Mr. Brenneman told his conference call that the royalty decision won't delay his company's plans to continue its work at Fort Hills, its 60-per-cent-owned oil sands mine and upgrader project north of Fort McMurray. "We intend to progress this through to the sanction point," he said. He indicated that Petrocan should reach the point where it is ready to make a final decision on whether to proceed with the project in about 12 months.

Petro-Canada's third-quarter profit climbed 14 per cent as oil and gas output surged by nearly a third, the country's No. 4 oil producer and refiner said Thursday.

The company extracts 20 per cent of its cash flow from oil and gas operations in Alberta, and is currently planning the $26-billion Fort Hills oilsands development there.

In the quarter, Petro-Canada earned $776 million, or $1.59 a share, up from year-earlier $678 million, or $1.36. Including one-time gains and charges, earnings from continuing operations rose to $630 million, or $1.29 a share, from $564 million, or $1.13 a share.

And if there are market swings they are the result of other factors than the royalty compromise, ironically because of the emissions caps; the Alberta Green Tax as well as labour costs in Alberta's overheated economy.

The downside is that this method of assessing royalties encourages more inflation in this already red-hot economy. There's little incentive to keep costs down on oilsands plants when you have a royalty holiday until construction costs are paid off. The higher the construction costs, the longer the royalty holiday. (After costs are paid off, royalties jump to 25 per cent, rising to 40 per cent when oil reaches $120 a barrel, under Stelmach's proposals.) Yet, it's precisely those rapidly rising costs in construction and labour that are being felt in all sectors of the provincial economy. As Fort McMurray Mayor Melissa Blake says, "we used to call that the Fort McMurray factor -- 30- to 40-per- cent higher price. Now it's all over the province." At this rate of economic growth, her city of 65,000 will have a population of 100,000 in another five years, Blake said in an interview. Good grief.

Suncor has also had to do mechanical upgrades this year and is looking at costs involved in upgrading its refining processes. All part of the day to day cost of doing business. However it's share prices rose despite the minor drop in third quarter earnings.

Suncor cuts targets as profit drops on oilsands output

Suncor cut its oilsands production target for the year and raised cost estimates because of shutdowns and limits on emissions. Alberta regulators capped production from Suncor's Firebag deposit at 42,000 barrels of bitumen a day until it can reduce emissions, the company said. Bitumen is a heavy crude extracted from the tar sands.

Suncor's shares rose $1.46, or 1.4 per cent, to $102.75 on the Toronto Stock Exchange. The stock has gained 12 per cent this year.
Suncor earnings slip as emission caps take toll

Suncor Energy Inc. said Thursday its third-quarter profit fell due to a drop in oilsands sales volumes, and it lowered its production outlook for this year because of maintenance at its oilsands operations near Fort McMurray.

Suncor cut its oilsands production target for the year and raised cost estimates because of shutdowns and limits on emissions. Alberta regulators capped production from Suncor's Firebag deposit at 42,000 barrels of bitumen a day until it can reduce emissions, the company said. Bitumen is a heavy crude extracted from the oilsands.

"We're taking a number of steps to address regulator concerns including accelerating the construction of emission abatement equipment," CEO Richard George said in the statement. "At the same time, we're also examining ways to increase bitumen supply from our mining operations to help offset supply restraints at Firebag."

Suncor eyes US for major oil facilities

Mr. George, the company's longtime executive, said Suncor is working towards charting growth beyond Voyageur and Suncor will most likely seek opportunities that do not stretch far from its core oilsands business.

"We're sitting on huge reserves, some of which haven't even been described publicly, and I still think the core and heart of this (company) is going to be the oilsands," he said, adding that tie-ins or joint-ventures between Suncor and companies in the Fort McMurray area looking for upgrading capacity for raw bitumen represents one opportunity.

"Just continuing to build upgraders probably isn't (our growth plan) but I don't want to preclude anything. Will you see Suncor exploring in North Africa of West Africa? Probably not."

"We have leased land outside Edmonton and that is a possibility and we will also look farther south as well," he said, adding costs to build upgraders and refineries in Fort McMurray are more than double those on the refining hub along the U.S. Gulf Coast.

And the impact of Flaherty's Income Trust Tax plays as much a role in Syncrude's profit outlook as does the Alberta Green Tax. So in balance the impact of the royalty increase is only one factor in Syncrude's future forecasting of its production output.

Alberta, Oct 26 (Reuters) - The firm with the biggest stake in the Syncrude Canada Ltd. oil sands venture said on Friday it is willing to talk to the Alberta government on changing Syncrude's royalty structure, but issued a reminder that its terms are part of a legal contract.

Canadian Oil Sands Trust (COS_u.TO: Quote, Profile, Research), which has a 37 percent stake in the sprawling oil sands mining and synthetic crude venture, said its terms have helped prompt C$8.5 billion ($8.9 billion) in Syncrude spending over the past five years and create 5,000 jobs.

Its royalty terms and those of rival Suncor Energy Inc (SU.TO: Quote, Profile, Research), do not expire until the end of 2015. Premier Ed Stelmach has said Alberta would negotiate with the two operations to agree a transition to the new royalty framework.

Canadian Oil Sands Trust units were were off 69 Canadian cents, or 2 percent, at C$32.90 on the Toronto Stock Exchange.

Meanwhile the impact of the royalty announcement has not deterred Syncrude from looking for 5000 workers to meet its current needs and those down the pike.

There's plenty of work to be had in the booming Alberta oilsands, but you've got to be serious about working there.

Fort McMurray, Alta.-based Syncrude was one of the employers on hand at Thursday's seventh annual Career and Skilled Trades Learning Experience (CASTLE) job and career fair, a first for the oil giant.

"We're looking all across the country," said Syncrude recruiter Dominic House. "We've gone from Vancouver Island to Newfoundland."

Staff at the Syncrude table had a list of 21 different permanent positions currently in demand at the company, including plant operators, boilermakers, engineers in all disciplines and information technology analysts.

"About the only thing we don't hire are plumbers and carpenters," said House. "That work is contracted out."

Not only is the oil boom in Alberta causing a labour shortage, but Syncrude faces a host of retirements, with an attrition rate of eight to nine per cent, he said.

"We're trying to get up to 5,000 employees," said House, adding the company now employs some 4,600 people.

Exciting as all this might sound, he was finding few takers at the CASTLE event.

"Housing cost is the number one deterrent," said House.

In labour-starved Fort McMurray, he said, "you can work at a Burger King and make $15 an hour.

"But in order to afford the housing, you'd better work a lot of hours," he added. "A person making $15 could not survive alone."

All in all Stelmach's royalty compromise turns out to not to have been as balanced as he claims it leaves Albertans without a real share in the wealth being created by the extraction of our resources, and it does not even begin to pay for the social costs of the expansion of the oilsands. It is in effect too little too late.

Inflation is also eroding people's earning power. That's the observation of none other than this fall's TD Bank report on the Alberta economy.

"While average incomes have been rising, the bulk of the gains have been enjoyed at the high end of the income spectrum," says the report. People earning more than $100,000 are enjoying rising incomes. That includes lots of oilpatch workers, not just head office middle managers.

While low-income earners are most at risk, "perhaps the bigger surprise" is that middle-income earners are also hard pressed to record any gains after inflation, says the bank report.

People earning $60,000 or less have remained static or slipped back in inflation- adjusted dollars, according to the bank report.

This is also the province with the regressive flat income tax, which means high-income earners pay the same ten per cent as low-income earners. So the tax system does nothing to mitigate a growing income gap.

So Martha and Henry might have a few questions for Stelmach about a royalty regime that keeps the accelerator to the floor.

They might also note that the dire predictions that investors would dump their energy stocks and flee Alberta didn't happen. On the Toronto exchange Friday, the energy sector was up 0.17.

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Outing BP

A scandal occurred this spring when the British CEO of BP, British Petroleum, the British petrol giant which branded itself as green; Beyond Petroleum 'its a start', Lord Browne was outed for being gay, and supposedly lying about it in court.

The reality is that his resignation had less to do with covering up his homosexuality then covering for BP. Which had not gone Beyond Petroleum as a result of Lord Browne's corporate decisions but had become a Bad Player in the oil business.

British Petroleum used the cover of a post-Hurricane Katrina refinery bill in Congress for a sneak attack on legal protections against supertankers in Puget Sound. Reps. Jay Inslee and Dave Reichert thwarted it.

You will remember that BP had faced a number of oil field scandals prior to the outing of Lord Browne by his Canadian lover and rent boy; Jeff Chevalier.

A long list of misfortunes has battered this venerable company, including an explosion at its Texas City, Texas, refinery that killed 15 workers and injured scores more, and protracted outages at other refineries. There was also an Alaskan oil spill resulting from a corroded pipeline, along with 2005 hurricane damage to its big Gulf of Mexico Thunder Horse production platform, which delayed that facility's production start-up.

As if that weren't enough, the company's longtime CEO Lord John Brown stepped down abruptly this spring amid allegations about his private life. And more recently, BP was pressured by Russian authorities to sell much of its stake in a big natural gas field to state-run gas company OAO Gazprom.

Lord Browne the ultimate company man was still that despite his lovers outing of him. The reality was that his corporate maneuvering of BP in the oil business had been less an economic success than a failure in protecting the environment and workers.


As they say here is the rest of the story.

Blackmail, Sex & Corporate Secrets

While much has been written in Britain about the seedier side of the scandal, the critical role that BP and its executives played in it has been largely overlooked. Company officials, for instance, reportedly encouraged the C.E.O. to out himself on one of the BBC’s most popular radio shows, a plan that fizzled when Browne lost his nerve in the studio. Before that, BP leaders were secretly enlisted to serve on the board of Chevalier’s company, which was underwritten by Browne. And in the end, the disclosure of corporate secrets was as much a concern to Browne as the revelation of his homosexuality. The threat that internal BP matters might be leaked led Browne to lie in a court statement, which in turn led to his humiliating resignation and public shaming. Among the secrets Browne wanted to protect: He was considering relocating BP overseas—a potential economic ­disaster that would have been a huge blow to Britain’s corporate psyche—and he placed a dollar value on the heads of his workers in the event that they were injured or killed in an accident. In one memo, company executives gamed out different disaster scenarios for BP, comparing them to the outcomes in The Three Little Pigs.

Now the company is trying to right ­itself under a new C.E.O., Tony Hayward, who has taken over amid a growing outcry over BP’s shoddy environmental and safety record, which Browne managed to keep as secret as his private life.
Throughout the 1990s, he made a series of acquisitions that won him enormous praise in Britain and heralded the consolidation of the major oil companies. It seemed novel then that British ­Petroleum grew not by increasing its oil exploration and development but by taking over American oil companies such as Standard Oil of Ohio and Amoco. The BP-Amoco merger was the largest of its kind and launched the company into the big leagues overnight. When Exxon bought Mobil the next year, Browne quickly retaliated by purchasing Atlantic Richfield for $32 billion.

Browne was also, like any great C.E.O., a P.R. genius. In 1997, to the horror of many of his oil-industry peers, Browne admitted in a speech that he ­believed global warming was real. He then hired a San Francisco firm to ­rebrand British Petroleum and come up with a new corporate slogan. The old BP logo was replaced with a green-and-yellow sunburst, and ads suggested that BP now stood for . . . Beyond Petroleum. It was a masterstroke: BP had only $100 million invested in solar power at the time of the renaming, compared with at least $10 billion invested in conventional energy. But thanks to BP’s green logo and green C.E.O., its reputation as a green company flourished.

Browne was not quite so popular in the U.S., where experience on the ground is more important than a taste for fine art. “They pounded their chests a lot, but they didn’t know how to run refineries,” a former Amoco employee says of the BP executives. Because refineries are among the most intricate and dangerous workplaces on the planet, the old-timers feared that the BP ­executives’ ignorance would compromise safety, especially as BP cut jobs and budgets to reduce redundancy and raise profits for shareholders. (Similar allegations would later take center stage in the Texas refinery explosion lawsuits.) Other executives were skeptical of the hierarchical management structure at BP; they particularly complained about the handpicked “turtles” (named after the mutant ninja variety), who served as interns to Browne and were supposedly fast-tracked to replace other executives. There was also something known internally as the promise: a written business plan that could be used against employees who didn’t meet their projected goals. “They would use it to cut your throat if you failed,” a former engineer explains. Gradually, the company’s culture became less about innovation than intimidation. Fearful of losing their jobs, few spoke up about deteriorating conditions at some of the refineries. Behind Browne’s back, employees nicknamed him the “elf,” an acronym for “evil little fucker.”

Browne had his critics outside the oil industry too. The company was accused of committing human rights violations while building a pipeline in Colombia, and concerns were expressed about North Sea pollution. Greenpeace selected Browne for its Best Impression of an Environmentalist award. Matt Simmons, whose Houston-based Simmons & Co. is one of the largest investment-banking businesses serving the energy sector, was deeply skeptical of Browne’s 1999 prediction that, because of a worldwide market glut, oil prices would never reach $40 a barrel. “There was a vision of unreality in John Browne’s business plan,” Simmons says. “That generally works until you slip up.”

No one would dispute that Texas City, Texas, is a very long way from St. James’s Square. It is a rough-and-tumble blue-collar town on the Gulf Coast, where people know all too well that refinery work is often life threatening but just as often the only work available. On March 23, 2005, something went very wrong at BP’s Texas City refinery, the third largest in the U.S. An aging tank used to separate gas and fluid overflowed, filling the air with flammable vapor. A driver unwittingly left his truck running, igniting a fireball that by the end of the day had killed 15 people and injured more than 200. Not surprisingly, the blast led to the launch of hundreds of multimillion-dollar lawsuits and several investigations, including one by a commission that former secretary of state James Baker headed. A probe by the U.S. Chemical Safety and Hazard Investigation Board specifically blamed BP’s closed culture for the explosion. In 2006, the U.S. Occupational Safety and Health Administration fined the company $21.3 million, the largest penalty of its kind ever issued.

That wasn’t all that would befall BP. The next several months brought a cascade of problems, almost all blamed on lax oversight and poor management. In March, 200,000 gallons of crude leaked out of a BP pipeline at Prudhoe Bay, Alaska, forcing the company to partially shut down a major field. The pipe, it turned out, hadn’t been cleaned in years. In April, the U.S. Department of Labor fined BP for unsafe operations in an Ohio refinery. Also during this time, the company was unable to capitalize on its Thunder Horse offshore oil platform—the world’s largest—which was damaged during Hurricane Dennis in 2005. And in June, the government charged some of BP’s traders in Houston with trying to manipulate the price of propane in the Midwest and Northeast.

All these incidents inevitably prompted this question: How could a company that was supposed to be a model of corporate citizenship have gone so wrong? The answer that emerged was simple, and the weakness of Browne’s highly praised policy of acquiring big companies and instituting massive cost cuts was suddenly, fatally exposed. Instead of putting excess cash into maintenance and safety, the executives in London had ordered the company to “bank the savings.” But as plaintiffs’ attorneys have alleged, a rubber band can be stretched only so far before it breaks. BP led the industry in refinery deaths from 1995 to 2005. For 10 years, there was a fire a week at the Texas City plant, and many were afraid to work there, fearing that disaster was imminent. As an employee explained in a survey, “No one here in management cares. . . . We have been very lucky so far with this.” At the same time, the arrogance of BP executives was easily recognizable. One memo, prepared for a meeting held before the Texas City explosion, insisted on cost cuts, a familiar refrain at the plant: “Which bit of 25 percent don’t you understand??? We are going to be wasting our time on Monday unless you come prepared to commit to a 25 percent cut.”

In the end, Browne lied less to save his image than to save the image of his company. It’s notable, for instance, that there was no talk of resignation when word first emerged that the press had its hands on Chevalier’s story. Only after Browne learned that the corporate secrets could leak did he finally decide to step down.

Browne’s early departure will not prevent continued legal battles for BP, but it is perhaps as close to a sacrificial act of love as Browne is capable of, and it has allowed the company to start fresh. Though Browne also resigned from the board of Goldman Sachs, he still works for Apax Partners, a global private equity firm, and goes to his office when it suits him.

And as usual in the corporate world despite his fall from grace Lord Browne has landed on his feet.

FORMER BP boss Lord Browne has walked away with a pension worth just over £1million a year.The disgraced peer tops the list of 100 leading execs who look forward to pensions of £200,000 a year or more.

The former chief executive of BP PLC Lord Browne of Madingley has resigned as non-executive chairman of the advisory board of private equity firm Apax Partners to join energy and power private equity specialists Riverstone Holdings LLC.

His appointment at Riverstone Holdings, which specialises in the energy sector, comes almost four months after he quit oil giant BP when it emerged he lied to the High Court during a battle to block stories about his private life.

Lord Browne takes on the post of managing director and managing partner of Riverstone’s European business and will be based in London, where the group is soon to open an office.

Tags:

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Albertans Left Blown' In The Wind

You Don't Need A Weatherman To Know Which Way the Wind Blows. Not in Alberta home of the free market. No rent controls here says our Premier. No changes in Building Codes till 2010. No need to revise our pork barrel health boards.

But Steady Eddie will keep a cap on wind energy.

Wind power advocates are unhappy with the Alberta government for suggesting that the current cap on wind energy in the province might be raised, rather than eliminated completely.

And not let Albertans develop their own home based energy to reduce their energy bills and produce locally based micro green energy whose excess can be put into the provinces utility grid. So much for his much lauded free market politics.

The Stelmach government foresees nearly doubling the amount of wind-power generation allowed in Alberta, even as the province remains the only jurisdiction in Canada to cap the production of wind energy.

Alberta's Electric System Operator introduced last year a limit of 900 megawatts of wind-energy generation, saying it was uncertain about whether wind conditions and patterns could be properly forecast -- something needed to produce a reliable stream of power.

The decision enraged wind-energy producers, which have thousands of megawatts in the queue. The rules made Alberta the only jurisdiction in Canada to impose such a cap.

"Replacing it with a higher cap is not a preferred option," said Robert Hornung, president of the Canadian Wind Energy Association. "A cap sends a signal that a door is closed, and for investors in the industry, that sends a negative signal."

NDP environment critic David Eggen, who's long been lobbying the government to axe the cap, said more wind power will help slash greenhouse gas emissions spewed by coal-fired electricity plants.

The Tory government's priority for building transmission lines has gone to the carbon-based energy suppliers, he argued, which has further hindered wind-energy generation.

"If these guys (the government) are free marketers, get out of the way and let the renewable energy groups into the market," Eggen said. "There are so many delaying tactics to prevent renewable energy from getting a foothold in this province."

Of course there never was a free market in utilities in Alberta. They are either private monopolies like ATCO Frontenac, or TransAlta, or they are publicly owned like EPCOR and Enmax.

The former being influential supporters of the Tory government and their boards are retirement homes for former PC cabinet ministers.

Deregulation was done for their bottom line not for expansion of alternative utility services such as wind energy or home based green energy production.


Wind energy companies are all private small entrepreneurs.

Cowley Ridge in southwestern Alberta is the site of Canada's first commercial wind farm. The turbines generate enough electricity to power 7,000 homes. When it was launched in 1998, 3,000 households were signed up. Now, it has more than doubled with each home paying an extra $7.50 on average for using wind power.

While big utility monopolies like TransAlta are a dumping ground for ex Tory cabinet ministers their coal and gas powered hydro monopolies must be protected by their pals like Eddie.

The provincial government wants to insure those who control the grid, do not face competition from independent johnny come lately's promoting green energy nor from home based micro energy production.



H/T to Pierre Trudeau Is My Home Boy


SEE:

Power Failure

Heat Not Light

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Leduc #1

You would expect that for the millions we spent on having an Alberta Embassy in Washington, they could hire someone to fact check the speeches.

Leduc #1 was discovered in 1947. This bit of historical revisionism would credit the discovery to the PC government rather than the Socreds.

"This set of circumstances has created a unique mutually beneficial relationship that has delivered safe, secure, reliable supplies of oil and gas to the U.S. since Leduc Number One drilled in 1974 by Imperial Oil – the Canadian sub of Exxon."

Murray Smith

Rocky Mountain Natural Gas Strategy Conference and Investment Forum

Topic: "Energy Supply: Quantities and Qualities"

Denver, Colorado - August 1, 2005

This is not the only controversy to entangle Mr. Smith.

I hope he bones up on his oil industry history now that he has moved on to join the Washington circle at the TD Bank.

Investment bank TD Securities Inc. has created a new advisory board that will include Alberta political heavyweights Jim Dinning, Anne McLellan and Murray Smith, as it seeks an extra edge in the ultracompetitive energy sector.

The formation of the board, which will support TD Securities' energy practice, is intended to provide opinions on public policy, give insight on market conditions and open more industry doors, said Frank McKenna, deputy chairman of Toronto-Dominion Bank and leader of the new advisory board.

David MacInnis, president of the Canadian Energy Pipeline Association, said government and politics have always been important in energy, but there has been a reluctance in the past to admit that fully.

Say it ain't so.

And MacInnis lets the cat out of the bag, big oil admits the need for a planned energy economy.

"The reality is that it's not just regulatory issues that are confounding energy development in this country," he said. "There is a significant lack of co-ordinated, coherent thinking on the policy side. So if a group like this can contribute to the quality of the dialogue, that is a good thing."

Planning is usually associated with socialism but in this case it is more like cartelization if not outright corporatism.

And the TD has created an investment bank of political bagmen and woman for big oil.


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CPC Bright Idea

Before the Conservative Party of Canada declared incandescent light bulbs illegal in Canada the Communist Party of Cuba beat them to it. And Castro like the Harper Government is promoting Bio-Fuels, though not the way they are.....

Under the headline "It is time for an energy revolution right now," Castro, 80, addressed US-Brazilian cooperation on biofuels, and urged that the issue be discussed on International Workers' Day.

"Insatiable in its demand, the empire has called on the world to produce biofuels to free the United States from dependence on imported oil," Castro wrote in the Communist Party newspaper Granma.

"Nothing is stopping US and European capital from financing biofuels. They could even give the funds to Brazil and Latin America.

"And the United States, Europe and other industrialized countries would save more than 140 billion dollars every year, with no concern whatsoever for the fallout in terms of climate change and hunger, which will affect developing countries the most.

"They will always have enough money left over for biofuels and buying at any price whatever food is available in the global market."

Among other things, Castro called for a wholesale replacement of incandescent lights with fluorescent bulbs, and massive replacement of domestic and commercial systems using older technologies that require two to three times more energy than new systems.

SEE:

The New Cuban Revolution

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Economist Trashes Made In Alberta Green Plan

Ouch!

Jeffrey Rubin, chief economist with CIBC World Markets, said Tuesday that governments in Ottawa and Alberta are pursuing a minimalist policy that will actually lead to significantly higher greenhouse gas emissions. Eventually, he said, Canada will have to get tougher, prodded by a growing movement in the United States to combat global warming.

Of course he is a Bay Street Banker part of the Kyoto Conspiracy.

See:

Environment

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What's That Smell?

A new task force funded by the Canadian government and the province of Alberta will study ways to capture and store greenhouse gases emitted by the province's massive oil sands projects, Prime Minister Stephen Harper said on Thursday. The task force will be headed by Steven Snyder, chief executive of TransAlta Corp., a Calgary-based power company that operates coal-fired plants in Alberta and elsewhere.

TransAlta the historical retirement home for ex Cabinet Ministers from the Alberta Government. Like Jim Dinning.

What's that smell? Nepotism? Nope just good old Alberta politics.

After all Steve Snyder knows how important the environment is, and how crucial CO2 sequestration is cause he told folks in Seattle about it five years ago!!! Just waiting for the government to tell them to do it. And to fund it.

Environmental issues today are greater than they've been in probably the history of the industry, and particularly in the Canadian context, with Kyoto at the forefront, but regardless of the CO2 issue, knocks, socks, water issues, in this industry are out there and bigger than ever. This is -- you know, the whole Kyoto argument has become a proxy for the environment, so it's raised environmental issues on everyone's mind. So whether, you know, the U.S., whether they sign Kyoto or not, I don't think it's the point. The point is, people are more conscious of the environment than they were, you know, asking for more action, and our industry's at the forefront of that. I mean, raising capital today, we all know that is more difficult than it was three years ago, so for a capital intensive business, that's pretty -- a pretty tough equation to be in. TransAlta Corporation Investors’ Days Presentation Seattle Seattle, Washington November 25, 2002

So If Steve and the boys at TransAlta were 'at the forefront five years ago how come we are only seeing them act now on CO2 sequestration and other environmental solutions. Just waiting with their hands out. Ottawa spends $155.9M to make Alberta oil industry more green

TransAlta is Alberta's first P3.

With ties to the provincial and federal governments and the Conservative party historically. During the Socred era and later with PC's a position on the Board was practically guaranteed if you were a well connected Calgary Cabinet Minister.

The forerunner of TransAlta Utilities, Calgary Power Company, was founded by banker W. Max Aitken in 1903. Aitken, who later became Lord Beaverbrook, reorganized a number of utilities as a subsidiary of his Royal Securities Company. He was joined in this venture by his friend and mentor R. B. Bennett, who served as Canadian Prime Minister from 1930 until 1935. Some business leaders felt that Aitken and Bennett were an unlikely team, since Bennett was known as an upstanding young man, while Aitken had earned a reputation as something of a renegade. Nonetheless, the pair joined several other prominent Canadian businessmen on Calgary Power's initial board of directors. Among these board members were: A. E. Cross, one of the founders of the Calgary Exhibition and Stampede; Herbert S. Holt, a Montrealer who was later knighted; and C. B. Smith, president of Calgary Power's forerunner, Calgary Power and Transmission Company Limited. Aitken soon became Calgary Power's first president.

In 1947, two years after the war ended, Calgary Power moved its head office from Montreal--then the nation's largest city and prime business center--to Calgary, reorganized, and incorporated as Calgary Power Ltd. At that time, Calgary Power supplied the province of Alberta with 99 percent of its hydroelectric power. Also in 1947, Calgary Power built its Barrier Hydro Plant and used it to test the use of a newly developed remote-control operation system. The automation efforts worked well enough that Calgary Power soon converted all of its plants to the Barrier Plant system. A control center that could operate the company's entire system was built in Seebe in 1951. The company continued its string of innovations by testing 'mobile radio' communications in its line patrol trucks.

Although electricity had begun to spread to rural areas in the 1940s, only 5 percent of farmers in the province had electricity of any kind. The majority of farmers were hesitant to adapt until it became obvious that electric service could increase farm production as well as provide modern conveniences. The main problem for utilities in supplying farms was a financial one: at the time, it was estimated that it would cost $200 million--or twice the provincial debt--to expand service and supply all of the farms with electricity. This dilemma led to an unprecedented cooperative effort between Calgary Power, farmers, and the provincial government.

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