Coastal GasLink fined again for sediment, erosion in pipeline work
Victoria – The company that is building a natural gas pipeline across northern British Columbia has been fined for a third time as a result of failure to comply with the requirements of its environmental assessment certificate.
The B.C. government issued a bulletin saying Coastal GasLink has been fined $213,600 for “continued deficiencies with erosion and sediment control measures.”
The bulletin issued Wednesday says recurring issues with erosion and sediment control have resulted in ongoing compliance and enforcement action, though more recent inspections have shown improvement.
The Environmental Assessment Office says more than 50 inspections have been done along the pipeline construction route since the project started in 2019, resulting in 37 warnings and two other financial penalties imposed last year: $72,500 in February and $170,100 in May.
The office says it entered into a compliance agreement with Coastal GasLink last July that takes a more proactive approach to erosion for about 100 kilometres of the 670-kilometre pipeline route where ground had yet to be broken.
The pipeline, which is in its final scheduled year of construction, is to connect natural gas facilities in northeastern B.C. to the LNG Canada terminal in Kitimat, on the northern coast.
Coastal GasLink says the penalty reflects concerns about erosion and sediment control from inspections by the Environmental Assessment Office in February 2022, and the determination is “a reminder of how far we’ve come in a year.”
“We continue to work closely with our regulators to look for ways where we can do better across our project, especially with erosion and sediment control,” the company said in a statement.
This report by The Canadian Press was first published Jan. 25, 2023.
Budget measures unlikely enough to spur major carbon capture investments: Experts
Deputy Prime Minister and Minister of Finance Chrystia Freeland delivers the federal budget in the House of Commons on Parliament Hill in Ottawa, Tuesday, March 28, 2023. Industry watchers say Tuesday’s federal budget likely won’t be enough to convince Canadian oil and gas companies to pull the trigger on expensive, emissions-reducing carbon capture and storage projects. THE CANADIAN PRESS/Sean Kilpatrick
By Amanda Stephenson in Calgary
A question mark continues to hang over the future of carbon capture and storage projects in Canada, in spite of a pledge in Tuesday’s federal budget to deliver more investment certainty for major emissions-reducing projects.
“Look, we have set some very aggressive climate targets in Canada. You can’t kick the can down the road,” said carbon capture advocate James Millar, arguing that’s exactly what the federal government did Tuesday when it provided no additional details around its previously stated intention to reduce the risk of investing in pricey emissions-reduction projects by essentially guaranteeing the future price of carbon.
“The difference comes down to investment certainty in the U.S., versus the promise of investment certainty in Canada.”
As president and CEO of the International CCS (carbon capture and storage) Knowledge Centre, a non-profit organization based in Regina, Millar had been closely watching Tuesday’s budget in hopes of obtaining more federal support for the expensive technology that can be used to trap harmful greenhouse gas emissions from industrial processes and store them safely underground.
Heavy emitters — in particular, the oil and gas sector — have identified carbon capture and storage technology as key to helping the sector meet its emissions reduction targets and have been looking for government incentives akin to what is being offered south of the border, where the U.S. Inflation Reduction Act promises to pay companies a guaranteed US$85 price for each tonne of injected carbon.
While Canada has already announced an investment tax credit that will help to offset some of the up-front capital costs of carbon capture projects, companies have so far been hesitant to pull the trigger and go ahead with proposed large-scale projects.
The Pathways Alliance, for example, a consortium of oilsands companies, has proposed building a $16.5-billion carbon capture and storage transportation line to combat emissions from existing oilsands infrastructure in northern Alberta.
But the group has not yet made a final investment decision, saying it needs to know its project will be competitive with those in the U.S. before proceeding.
One thing the oil and gas sector has said will help with that is some kind of mechanism that would reduce the risk to companies that the federal price on carbon could be lowered or eliminated. If a new government were to be elected and remove or change Canada’s carbon pricing system, investing in expensive carbon-reducing technology could suddenly become uneconomical.
On Tuesday, the federal government reiterated that it intends to create such a mechanism through a so-called carbon contracts for difference system — but disappointed many who were hoping for details. Instead, the government announced it plans to begin consultations around the development of such a program.
Millar said while he doesn’t doubt the government’s good intentions, companies that have proposed large-scale projects need to get moving now if they have any hope of meeting Canada’s goal to reduce this country’s overall emissions by 40 per cent below 2005 levels by 2030 looms.
“We’re already in 2023, we’re seven years out. The consultations that were announced yesterday will take months,” he said. “I think it will take at least a year because it’s going to take time to set up the process.”
The Pathways Alliance itself took a diplomatic tone Tuesday, issuing a statement after the tabling of the budget saying it was “encouraged” by the signal that more policy certainty is coming, and adding it looks forward to a “better understanding” of the government’s intentions.
But Greg Pardy of RBC Capital said in a research note that in spite of some enhancements to the previously announced investment tax credit, budgetary support for carbon capture and storage was “somewhat limited — perhaps even disappointing.”
“In our view, Canada’s federal government needs to shift into much higher gear when it comes to incentivizing decarbonization investment if it is to achieve its bold climate change ambitions,” Pardy said.
A report from BMO Capital Markets published just before the release of Tuesday’s budget said Canada’s policy framework for large-scale deployment of carbon capture and storage disadvantages producers here compared to the U.S., “despite claims to the contrary from some proponents of the environmental lobby.”
Environmentalists have been critical of any additional federal support for carbon capture, calling it akin to a subsidy for oil and gas companies that enables them to increase production when the world should be scaling down fossil fuel usage.
But the BMO report said carbon capture is an essential part of the energy transition, and without offering improved incentives to keep up with the U.S., Canada risks not meeting its 2030 emissions reduction targets.
“Canada’s market-based carbon price systems are much too uncertain to act as ‘incentive’ for industry to invest in major decarbonization projects,” the BMO report stated.
“Emitters need financial supports that are tangible and recognized by financial institutions to underwrite bank financing.”
This report by The Canadian Press was first published March 29, 2023.
US to auction Gulf of Mexico oil under climate compromise
The Centenario deep-water drilling platform off the coast of Veracruz, Mexico, in the Gulf of Mexico, is pictured on Nov. 22, 2013. The Biden administration will auction oil and gas leases across more than 114,000 square miles of public waters in the Gulf of Mexico on Wednesday, March 29, 2023, in a sale mandated by last year’s climate bill compromise. (AP Photo/Dario Lopez-Mills, File)
By Kevin Mcgill And Matthew Brown in New Orleans
NEW ORLEANS (AP) — Companies have offered bids on more than 2,600 square miles (6,700 square kilometers) of federal oil and gas leases in the Gulf of Mexico in a sale mandated by last year’s climate bill compromise.
Wednesday’s auction is the first in more than a year and is expected to draw interest from major oil companies such as ExxonMobil and Chevron. It could further test the loyalty of environmentalists and young voters who backed President Joe Biden in 2020 but were frustrated by this month’s approval of the huge Willow drilling project in northern Alaska.
Developing the leases for sale in public waters in the Gulf of Mexico could produce more than 1 billion barrels of oil and more than 4 trillion cubic feet (113 billion cubic meters) of natural gas over 50 years, according to a government analysis. Burning that oil would increase planet-warming carbon dioxide emissions by tens of millions of tons, the analysis found.
Oil prices fell sharply over the past year and it’s uncertain how much companies will be willing to invest in new leases. There’s one more sale scheduled in September, but it’s unknown how many more the administration could conduct, which could hinder companies’ expansion plans.
Yet analyst Sami Yahya said approval of the ConocoPhillips Willow project in the National Petroleum Reserve-Alaska bodes well for the industry and prospects for future leasing.
“It showed that the Biden administration is likely trying to strike a balance between energy transition and energy security,” said Yahya with S&P Global.
The Department of Interior sale comes two days before a deadline set in last year’s climate bill that Biden signed into law. The measure prohibited leasing public lands for renewable power unless tens of millions of acres are first offered for fossil fuels. That was a concession to get support from West Virginia Democrat Joe Manchin, a fossil fuels industry supporter.
The undersea parcels that were up for auction Wednesday covered 114,000 square miles (295,000 square kilometers) an area larger than Arizona. But similar to past auctions of similar magnitude, only a fraction of the available acreage sold.
Bids from companies were due Tuesday and were being opened Wednesday in New Orleans.
The sale is taking place in a state that is economically dependent on the oil and gas industry but also especially vulnerable to climate change.
Since it takes years to develop offshore parcels before crude is pumped, the leases could produce oil and gas long past 2030, when scientists say the world needs to have drastically cut greenhouse gas emissions to stave off catastrophic climate change.
Sea level rise is a factor in Louisiana’s steady loss of coastal wetlands, which in addition to harboring a variety of fisheries and wildlife, provide a buffer between inland population areas and hurricanes that scientists say are growing stronger as the world warms.
Louisiana’s complicated relationship with the industry also is illustrated by lawsuits filed by coastal parishes over decades of alleged damage to wetlands from dredging canals to service oil and gas drilling.
A lawsuit against Wednesday’s sale is pending before a U.S. District judge in Louisiana. It takes 90 days for the government to evaluate any bids, which means they still could be blocked before being issued.
“There’s been a lot of talk from the administration about taking climate change seriously and moving our economy away from fossil fuels, and yet we continue to see massive oil and gas projects, both onshore with Willow and offshore in the Gulf of Mexico,” said George Torgun, an attorney with Earthjustice representing environmental groups in the case.
Chevron said in a Monday court filing that it could lose millions of dollars from future production if the leases are blocked. The company’s Gulf of Mexico operations produce the equivalent of almost 200,000 barrels a day from hundreds of leases it has bought since 2001, a representative of the Houston-based company said in an affidavit.
“Chevron plans to produce from its Gulf of Mexico leases for decades into the future,” said Trent Webre, a Chevron manager in the region.
At the prior Gulf of Mexico auction in 2021, companies offered a combined $192 million for tracts totaling nearly 2,700 square miles (6,993 square kilometers). That sale was subsequently blocked by a federal judge, then reinstated under last year’s climate bill.
Over several months beginning in May the administration plans to auction more than 500 square miles (1,400 square kilometers) of onshore oil and gas leases in Wyoming, New Mexico, Montana, Nevada and other states.
Brown reported from Billings, Montana.
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