The return of the Mackenzie Pipeline.

The truly northern northern pipeline route gained some publicity this week as a report from Canatec Associates (an arctic petroleum consultant) that was commissioned by the Albertan government last year and has just been released  (I believe found here).

I had wondered about this possibility back in December (here) after Bill C-15, which grants more control over these types of decisions to the NWT, passed. My belief was that with a strong resource development supporter at the helm, NWT would be much more likely to get pipelines through then BC; all else being equal. Of course, all else isn't equal, and that hasn't changed.

Here is the Financial Post story: Arctic Route for Alberta oil could trump stalled B.C. pipeline projects.

The board is appointed by the federal minister for Northern Affairs. The result is a far more streamlined approvals system that could well usher a new pipeline through in record time.
Following the release of the report, Northwest Territories Premier Bob McLeod said he was “heartened,” and that he’ll be meeting with his counterparts in Alberta to figure out the next steps.  

“We’ve always said that there are significant resources that have been stranded for 40 years and we’re not going to leave them stranded for another 40,” Mr. McLeod told the Financial Post.

I really believe the viability of the NWT assets, particularly the canol shale potential in the Central Mackenzie Valley will be the key to getting Alberta oil to Tuktoyaktuk. No one wants to simply be a transit point. Then again, without the Canol Shale development, the NWT will be in need of revenue.

And there hasn't really been alot of news on the Canol Shale this year. MGM which had explored the north in general and the Canol more specifically, was subsumed by parent company Paramount Resources after alot of money was sunk into the region with no production to show.

Outlined here, MGM president Henry Sykes talks about the region:

“Our experience has not been a positive one. Obviously we’ve spent hundreds of millions of dollars, drilled 11 wells and have nothing really to show for it today in terms of any cash flow-generating ability,” said Sykes, who predicted similar outcomes for other companies. 

“Until there’s infrastructure in the North, until people can see a clear path to investment and return on investment, I think you’re going to find activity is going to be delayed, if not eliminated altogether,” he said.

Sykes go on to state that they were sitting on billions of barrel of oil (I'm assuming that's the play at large and not MGM's holdings). The scale of which would be pretty solid motivation. However, having helmed a failed venture Sykes might be a bit bias on the potential (if only there was access to markets MGM would be kicking ass!).

At the end of the day it's good to get another viable pipeline option. The added length and variability in operating a year round facility that far north will add significantly to cost. However, one might argue that a more favorable political climate may offset that. Hopefully, the Canol will prove viable economically.

The Oil Kings: How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East

Thoughts on a Book: The Red Market

The Red Market: On the Trail of the World's Organ Brokers, Bone Thieves, Blood Farmers, and Child Traffickers

Tiananmen Coverage

Google news popped this gem into my morning reads: "China's economic model dangerous", and I noticed it was from my local paper. I read through with a chuckle, surprised that it would make it's way onto a legitimate news site. After getting to work and opening up the print version, my annoyance at seeing it there on paper started to fester.

New Direction

It's been a long while. New city, new company, new job, new position, first time home owner, and on and on. The Peak Oil Dynamic requires more attention then I can give. With ISIS in Iraq, the EU threatening to increase sanctions (still skeptical that major NG related sanctions will be forth coming), Canadian pipelines seeming to stall, American tight oil maintaining production growth, times are very interesting on that front.

However, I'll be switching the name at some point and the URL and revert this thing to hopefully a weekly post on whatever it is I'm thinking.

Vacation Readings

So here are the books I read and what I took away from them:

China: Reform Policy vs. Optimal Policy

Reacting to New Growth Model

I had a much much longer post sketching out my concern with the Chinese hard GDP and Inflation target. My worry was that the CPC would subordinate reform progress in order to the achievement of GDP targets. I'm still wandering around the Philippines and haven't been following too closely.

My hope was for a move off of a hard target. Even if just a signal from the government to set the stage for a miss. The need for China to rebalance remains priority number one in my eyes. The reaction to a perceived miss on current GDP might lead to a policy response that would be more likely to produce sub-optimal future GDP numbers (due to failure to rebalance).