Oil and gas industry says environmental rules cost hundreds of millions

OTTAWA — An oil and gas industry group said Wednesday that federal and provincial environmental regulations are costing producers hundreds of millions every year, repeating past claims that onerous new policies are making Canadian energy companies uncompetitive with foreign jurisdictions.

The Canadian Association of Petroleum Producers released a report estimating that various regulations could cumulatively cost between $450 million and $760 million in coming years, as oil and gas producers struggle to attract foreign capital. Investors have in recent years flocked to prolific U.S. shale basins, which tend to be leaner developments that offer quicker and better returns than large-scale projects like those in the Canadian oilsands. 

The association included in the study a wide range of policies that could cause the cost increase, particularly carbon taxes implemented federally and in Alberta.

“That is a very meaningful additional cost as well,” said Tim McMillan, the president and CEO of CAPP.

The cumulative costs are only a small portion of the roughly $200 billion in oil sales by Canadian producers in 2015.

Low commodity prices

The study comes as upstream producers around the world grapple with low commodity prices and a weak capital market. Overall capital spending in Canadian oil and gas is expected to total $44 billion in 2017, down 19 per cent from the year prior and well below its peak of $81 billion in 2014.

Differing attitudes toward carbon taxes continue to drive a wedge between the typically chummy members of Canada’s oil and gas industry, particularly between large-scale producers who have been supportive of the tax and small or mid-size companies.

Last month the Financial Post reported that several smaller oil and gas companies are no longer members of CAPP, citing a variety of reasons. 

Along with the carbon tax, Alberta’s ruling NDP have also established a hard cap on emissions from the oilsands, restricting emissions to 100 million tonnes per year from the current rate of around 70 million tonnes.

Analysts point out the carbon tax will not hit every company equally, but will instead favour those with lower emissions intensities on a per-barrel basis, theoretically encouraging companies to invest in cleaner technologies.

In total, the tax is expected to average well below $1 per barrel of oil produced for larger companies, according to some estimates.

“It’s a very small percentage of the overall cost of a barrel,” said Nick Martin, a policy analyst with the Canada West Foundation in Calgary.

Political wrangling

Of larger concern is the constant political wrangling over the incremental carbon tax, some analysts say, which could in turn scare off investors.

“Regardless of what the regulations are, the market needs certainty,” said Jihad Traya, an analyst with Solomon Associates in Calgary. “Large-scale investments like these need clarity around how these policies will be implemented — that’s it.”

CAPP said the report included a wide scope of regulations in its study, including wetland policy, liabilities around well abandonment and the monitoring of caribou populations in Canada’s northern reaches.

McMillan said another example of added costs are Canada’s recent decisions to maintain its methane emission regulations, despite vocal signals from the White House that the U.S. may scrap its own policies.

“We just are very conscious of doing this in the most cost-effective manner possible, when our largest neighbour and trading partner isn’t doing methane regulations,” he said.

The association has been supportive of the province’s carbon tax ever since senior executives of some of its largest member companies, including Suncor Energy Inc. and Canadian Natural Resources Ltd., came out in support of the policy when it was announced in November 2015.

The lobby group said the report published Wednesday was done using internal analysts, drawing from several public sources.

Satellite temperature record update closes gap with surface records

Satellites seem like an obvious technological solution to the considerable challenge of tracking changes in Earth’s climate. But Earth-observing ain’t easy. A single instrument can zoom over the locations of thousands of stationary thermometers—but that puts thousands of eggs in one instrumental basket. Measuring temperatures from space takes a lot more than some mercury in a tube, and you can’t fix your instrument if something goes wrong.

Illustrating that fact is a new update to one of the major satellite temperature datasets, which ends up changing the recent part of the record in a subtle but significant way.

As we’ve explained before, satellite measurements of atmospheric temperature are actually more dependent on adjustments than measurements done using weather stations or ships. The datasets are based on measurements of microwave radiation on a series of relatively short-lived satellite instruments going back to 1978.

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Judge denies bail to alleged kidnapper of Chinese scholar

CHICAGO (Reuters) – An Illinois man charged with abducting a missing Chinese scholar will remain in jail under a judge’s order as the FBI investigates her disappearance, a court official said on Wednesday.

Backdoor built in to widely used tax app seeded last week’s NotPetya outbreak

The third-party software updater used to seed last week’s NotPetya worm that shut down computers around the world was compromised more than a month before the outbreak. This is yet another sign the attack was carefully planned and executed.

Researchers from antivirus provider Eset, in a blog post published Tuesday, said the malware was spread through a legitimate update module of M.E.Doc, a tax-accounting application that’s widely used in Ukraine. The report echoed findings reported earlier by Microsoft, Kaspersky Lab, Cisco Systems, and Bitdefender. Eset said a “stealthy and cunning backdoor” used to spread the worm probably required access the M.E.Doc source code. What’s more, Eset said the underlying backdoored ZvitPublishedObjects.dll file was first pushed to M.E.Doc users on May 15, six weeks before the NotPetya outbreak.

“As our analysis shows, this is a thoroughly well-planned and well-executed operation,” Anton Cherepanov, senior malware researcher for Eset, wrote. “We assume that the attackers had access to the M.E.Doc application source code. They had time to learn the code and incorporate a very stealthy and cunning backdoor. The size of the full M.E.Doc installation is about 1.5GB, and we have no way at this time to verify that there are no other injected backdoors.”

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The American dream ‘can also happen in Mexico’

Israel Concha grew up in the US, but was deported after he was pulled over for speeding. Now he helps others like him reintegrate into Mexican society.