So What If Keystone XL Pipleline Isn't Built

 Trans Canada Pipeline wants to put $7B of capital to work. Build a pipeline from Hardisty to Houston. 

Is that the best use of the capital?  From what I've read, the pipe line will end a distribution blockage at Cushing, Oklahoma, in the short-term. In the mid-term, it will create over capacity, in the  pipeline system. That will be taken up over time by more production, in Alberta. And elsewhere, if the price of oil stays high. That's a reasonable  Except, oil use for gasoline, in the US is declining. High prices are a contributing factor.

So if that was your $7B, some of it is. Your pension fund is likely  vested in Trans Canada, would up make that bet?

So what if, love the what if game, Keystone isn't built. What then?  Alberta Energy Minister, Ron Liepert, might need resuscitation. He's has quite the gift for influencing people . By the time the Keystone XL  decision is made, Alberta will have a new premier. Perhaps a new government. Who knows who will be running the provincial  energy department in January 2012.

With no KeystoneXL, oilsands oil gets to market, as it does now. Though major players including ConocoPhillips, Royal Dutch Shell PLC, Cenovus Energy Inc., Valero Energy Corp., Canadian Natural Resources Ltd., won't be too pleased.

We take a 20$/b haircut on the raw stalk because of the glut in Cushing and decreasing American demand.  That's $45M a day!

"There is enough spare pipeline capacity in markets outside the U.S. Gulf Coast and Canada’s West Coast to absorb oil sands growth, until near the end of the decade, but new capacity would have to be available after that" Greg Stringham, vice-president, oil sands and markets at the Canadian Association of Petroleum Producers.

Without Keystone XL, the pace of the oilsands development slows. Is that bad? Would it be 'better' if there was time to create extraction efficiencies.  Eighty percent of the resource is too deep for mining. SAGD needs to be better than it is now.

With more time can the industry walk its' efficiency talk. Be more efficient? Live its' social licence to operate. Use less water, less natural ga in the SAGD process. Well, use less of everything.  Doesn't that drive costs down? Create better balance sheets? 

Does no Keystone XL make local upgrading economic? Right now, apparently it isn't . The existing upgrader capacity is cheaper to run, than building a new green field operations. Wonder why it was such a good idea to build locally, a few years back, and now not so much? Perhaps we need to look beyond just the business economics and look at some social ones, as well.

Like long-term community prosperity tied to resource extraction.  Not just dig it .Extract it. Ship it. We aren't going to replace that oil. We can mitigate the extraction by creating some long-term community value, not just hedge fund and CEO bonus value. Norway seems to have captured some. We have a deficit. Norwegians have $500B in the bank!

Now my understanding is, the industry doesn't like Alberta's Bitumen in Kind program. Distorts the market the industry says. The proposed North-West Refinery gets a deal on the bitumen. Gee this guys don't like royalties. Don't like BRIK. Not much long-term community prosperity, in those positions.

If, still playing the what if game, if there is no Keystone XL, then up-grading locally may-be economic. Up-grade here, use existing pipelines.  Ship to refineries that can take the upgraded stock. Not all refineries are bitumen able.  And there are no plans, anywhere, to increase refinery capacity.

Except may-be right here, in Alberta's Industrial Heartland. Perhaps, there is value added product we can sell. Like biodiesel for the aviation industry, or the trucking industry.  The folks in Ontario seem to think that a good bet. And their stock is coming from forestry waste.  Competition coming?  Might just be a bit better for the environment too.

So no KeystoneXL won't please Trans Canada Pipeline.  However it might just create some options. Long term community value is one of them.

So if you had $7B, are you betting Keystone XL, or betting local, where's the value proposition for you?

Canadian Oil Sands - US Council on Foreign Relations

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Learn Engage & Riding a Mountain Bike

It's always a good day when you learn something. Today  is a good day.  Had  planned to do some mountain biking in Canmore. Plans can go a rye.Sure had s lot of rides though. Made s middle of the night visit to Emergency, at the Canmore Hospital . Of course didn't know exactly where it was. Bumped into 3 RCMP constables during my search.   Advised to park my car and got my first ride. Even got an offer for a pick up, if my visit proved to be short. Alas the burning sensation in the middle of my chest was to dictate otherwise. Of course self diagnosis was asthma or bronchitis. Figured in and out in an hour or two . Uh no!.  Emergency crew in Canmore , deliberate , professional empathetic and much more knowledgeable than the would not be patient. Several tests coupled with symptoms revealed my ticker was toking as well as ticking. In combination that's not necessarily a good thing. So it was a good  thing I was where I was.   Thanks Canmore RCMP! So it was determined  the mountain bike ride was off. And now the good folks in Canmore had ample evidence s higher level of care was needed. First thought Calgary of course.  Nope Calgary didn't 't want me.  No offense. preferred  home, in YEG, in this circumstance. So in s heart beat, a plan hatched to Medic- Vac  to YEG.  Second ride up coming.  But belongings in hotel room and rental car parked in down town Canmore.     Quick call and folks at  Rocky Mountain Ski Lodge pack up my room and  delver my belongings.  Thanks Rocky Mountain Ski Lodge. Quick call to Budget and they say we'll pick up vehicle and deliver your stuff. Thanks Budget! And thanks nurse Sue and docs Anita  and Mansur  ( sic)  And  Canmore EMS Chris and her partner for ride two , to Medi - Vac  at YYC.. Not sure how long that ride took, was a little engaged in how the ticker was toking. And it was doing ok. So now ride three with Lang ,Chris ,and Byron Cslgary EMS and the medi-vac pilots.Forty nine minutes and TD  at YEG muni. and transport to Sturgeon Valley. Hospital Don't ask. Yes several closer, suspect  vacancy rate might have s lot to do with the locale.  Now under watchful eye of SVH nursing staff, snd Dr  Fadi  Khaour. Angiogram is  slated for Monday, as  long as the ticking and toking remain in synch, which they are at this writing. O and  the learning, a whole gaggle of Alberts Health  Services  people made my day today. and likely a whole bunch more. Thanks! 

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Albert - Power Politics and the Grid

It's getting a tad nasty in Tory ville. Calgary's power brokers are fired up on power.  It started with Calgary Herald calling out Tory leadership candidate, Ted Morton, on transmission lines.

                                                                                                                                                    Morton pushed back.

Tory Leadership game on!

 

All prompted by Wikileaks suggesting exporting power is  the rationale for the new  transmission lines.

The government says power export is not the reason for the upgrade. 

Follow the link. You decide.

Nothing overly sinister about exporting power.  It's imported and exported all the time.  That's the essence of a grid system. Power is consumed on demand. Moves to where it's needed. 

It's good there's a modicum of discussion, now. Not so good there wasn't much, over the last two years.The issue is complex. Curious to me how myopic the focus is.  Disclosure, I worked as consultant for the Heartland Transmission Project, the capital region sector of the proposed transmission line up grade. 

How did transmission capacity become the key solution to our power needs. Why limited discussion on intrinsically related issues? Our power comes from coal. How does generation impact our GHG emissions? How does our 'dirty' power system impact our reputation? 

Dirty oil, dirty power, dirty Alberta, I'm tired of being called dirty, you? What's the value of our reputation?  How does that translate into the cost of our power? Should it? 

With a singular focus on transmission, we missed an opportunity to consider an array of options. Conservation and managing demand. Making the grid smarter. Decentralizing distribution. Integrating alternative sources, wind, geothermal, solar, and natural gas.  Crucial elements to creating a thorough solution to our power needs. 

We squandered an opportunity to derive value from our grid. Manage our reputation.  There's lots of value for wire line companies, AtlaLink, Epcor, and Atco.  We pay for the up grade, they own the lines. Reap the value from export sales. Does that work for you?

 

 

 

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Eskimos Way is Done-Good!

Just read Curtis Stock's take on Dan Kepley's resignation. It's insightful, contextual and passionate, as I expect from one of his berg's premier play pen scribblers.  I wish he surfaced more often, in the paper and on line.  

I don't agree with Stock's take. The organization owed Kepley some thing for his distinguished service. I  agree the Eskimos Way is done. That's a good thing.  It isn't working. There's a glut of nostalgia selling by our pro sports teams. It needs to end. Kepley's resignation did that with the thundering resonance of one of his shuddering tackles. 

                                                                        

I know Danny, too, not as well as Curtis. Well enough to know his resignation, though dramatic is exactly what the organization needs. The "Eskimos Way" a legacy left by his coach, Hugh Campbell, is tired forlorn navel gazing, backwards. It's not Dan Kepley's way. It's a legacy the organization has taken too long to jettison. 

There's only conjecture, speculation and innuendo, as to the real reason why he resigned. When he tells us, we'll know. Curtis,  when one is not happy in their employ, for whatever reason, and tells the boss, the situation is untenable. I resign. The door slams hard and fast. It caught my butt, in a couple of sports gigs in this town. One thing about the boss, right or wrong, he is.

                                                            

Kepley's resignation is a catalyst, the neutron dressing room clearing bomb to move the Eskimos forward.  Kepley, as he has always, puts the team ahead of himself. There's a message for those left behind. Lead. Do the right thing, when it is hard to do. As the saying goes, it doesn't matter what happens. What matters is what you do.  

So Curtis, when you tee it up with #42 next week. Ask him if he believes the organization owes him one. My bet, he says no.

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Not All Business...

Just good business. Wise words from an old friend. An apt description of the announcement of the 189 room. CourtYard Marriott to be in business, at Edmonton International Airport, by 2012. Just when the terminal expansion is completed.

So what makes this good business. And it's not all about the money. The money, the profits come as a result of good business.

" We can't afford to have our brand fail" said Michael Beckley, Senior VP of Lodging for Marriott Canada. 

Download now or watch on posterous

Beckley.mov (3432 KB)

When the brand does $6 Billion worth of business worth of business throughout it's website. That's an a significant order of magnitude. A major vote of confidence in Edmonton's  present and future.  Nice partners to have.

"We build and operate hotels that's the core of what we do", said Ali Meghji, Principal at Platinum Investments. Been doing it for 35 years in Edmonton. 

Download now or watch on posterous

Meghi.mov (2980 KB)

For Edmonton Airports the project delvers a long term lease, cash flow. Provides capacity to keep costs to airlines down, which effects the price you pay for a ticket. 

For travellers  there's  a recognized facility that will make for easier travel. Moving you in comfort, with a dash of style. 

Good business, you tell me.

Here's a glimpse of what you can expect at the Court Yard Marriott,at Edmonton Airports.

Download now or watch on posterous

EIA-Marriot_HD-2.mov (2655 KB)

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Small Planes FLY EIA too!

Toured EIA last week. Got a look at the General Aviation area. 

Here's what  I learned.

There's lots of hanger space available.

Inside Refurbished Ward Air Hanger  120,000 Sq Feet of maintenance and parking space. 

Sufficient space to accommodate a 747, or a  'fleet' of small aircraft.

                                     General Aviation Tarmac

Suncor is major user of EIA's General Aviation facility.

Private Air Charter companies like  Calgary based Air Sprint   and SunWest use the facility. 

Kevin Costner  flew in, and out this weekend, on his was to Big Valley Jamboree.

Passenger & Cargo operations like  Canadian North links the North through EIA.

Six NHL teams, including the Oilers, use this facility . Eskimos use it too.

Nice tidy business.

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4 Take Aways from Arena Day

PR & Communications

Mayor open preceding thanking Darryl for coming and acknowledging his parents and family were in attendance.--- reaching out . In his opening remarks Katz said ''we haven't made it easy", in reference to the process." I'm apologize for that."--- reaching out. 

Suggest he do more of that. Take the lead. Talk more. We need and expect him to talk more, not at us, with us. He was the best performer, in his entourage. We'd like to know him better.

When he linked the Heritage Classic, as the catalyst for the lucrative NHL Outdoor Classic, he touched a nerve that resonates in Edmonton. We take risk. We expect a reasonable return. We share. Katz's NHL partners are the beneficiaries of Edmonton's expertise. We relate to that. Build on it. 

Transparency

Now, apparently, the Katz Group will go all in, with a $400M investment, $200M to buy the Oilers, $100M for complimentary investment.  He did commit, again I think, the $100M for the arena.“If that’s what it takes to move this project forward, I will do that,” Katz said.

When asked if the $100M for the arena included the land, equivocation. Legal Council John Karvellas  said that was part of the negotiation. At that point, Mr Katz could have said, land is in or land is out. He said nothing. So though the headlines say he's in, I'm not so sure that part of the $100M for the arena is the land. 

Accountability 

Financial questions were stone walled. "As a private company we are not obliged to divulge our financial statements" said several times by Paul Marcaccio, the chief financial officer of the Katz Group.  True and beside the point. We need to verify the numbers. Partners do that. 

Apparently the Oilers have lost money 7 of the last 10 years. If true, is that a company 'we' want to partner with? They argue the rink is too small, needs more seats. And of course all that ancillary revenue that now goes to Northlands. 

It can be argued current business practices by NHL teams, Oilers included, do not warrant subsidization. Subsidizing reckless and irresponsible business practices, makes one poorer. Is reckless behaviour, signing players to inflated contracts, enabled by public subsidy? 

Community Awareness

Edmonton is a small town. The Katz group have not grasped the significance of Edmonton Northlands. They dismissed it. "We tried to negotiate with Northlands and we couldn't reach an agreement. We've moved on", said John Karvellas.

The city hasn't and neither has Northlands. Maybe KS&E sailed too soon. Northlands could be the bank, here. Northlands has access to federal funds. Same taxpayer just a different pocket. 

Katz Sports& Entertainment is grasping for Edmonton's Concert business. Northlands hosted 42 of them last year.  The Katz Group thinks it can do better. AEG may be able to bring in the acts. However, if all the revenue, goes to the private operator,what's the civic benefit?  Good for the operator, may be not so good for the city.  

I've not heard AEG outline the order of magnitude of the concert and  large show business, in Edmonton. Seem lots of video about what's doable in LA, London, and Berlin. Nice but not relevant to this market. 

The glitz business depends on disposable income. In small town, one trick, oil can, Edmonton, can we support more than a concert, or large show a week?  Key questions when you propose funding a $400M entertainment complex.  It's managing the risk. 

Your thoughts?

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