Search Results for: may 31, 2012

A Supreme Court ruling now forces firms to clean up abandoned wells before paying creditors. That doesn’t solve much.

By Andrew Nikiforuk
4 Feb 2019 | TheTyee.ca

How will Alberta find the billions of dollars needed to clean up its inactive pipelines, wells, plants and oilsands mines as the oil and gas industry enters its sunset years? Photo: Premier of Alberta Flickr.

A Supreme Court of Canada ruling that bankrupt oil and gas companies must clean up their abandoned wells before paying creditors might sound like good news, but it doesn’t solve a growing crisis in Western Canada’s aging oil patch.

Just how will an increasingly indebted industry, hobbled by low energy prices and rising costs, find the up to $260 billion needed to clean up its inactive pipelines, wells, plants and oilsands mines as it enters its sunset years?

To date permissive provincial regulations have created the problem by only requiring industry to set aside $1.6 billion for the job.

That potentially leaves more than $200 billion in unfunded liabilities for taxpayers.

Technically the 5-2 court decision will make it easier for provinces to prevent insolvent companies from selling assets to pay creditors while dumping the cleanup bill onto taxpayers.

That’s been a big problem in Western Canada, where lower provincial court decisions have allowed bankrupt firms to pay off banks first and ignore their cleanup obligations under provincial laws.

As a result, a number of firms in Alberta walked away from more than 1,800 inactive wells and dumped more than $110 million worth of liabilities onto the lap of the provincial regulator over the last three years.

The province’s Orphan Well Association, a non-profit supported by annual $30-million industry levies to prevent taxpayers from footing the cleanup bill, is now so overwhelmed that it was rescued with a $300-million loan from the province and federal government.

The Orphan Well Association handled 74 orphan wells (properties with no legal or financial owner) in 2012. Now it has a backlog of 3,000 wells, with each well averaging $300,000 for plugging and reclamation.

“The court decision doesn’t solve the underlying problem,” noted Regan Boychuk, an independent researcher with campaign group Reclaim Alberta who has tried to highlight the scale of the problem and advocates for an independent reclamation trust funded by security deposits and solvent oilsand companies to address the liability crisis.

“The industry is not making enough money to pay for these liabilities. Outside of the oilsands sector, companies aren’t making much profit and are losing money.”

Keith Wilson, an Edmonton property rights lawyer who represents landowners, says the court decision still leaves huge unfunded liabilities that could fall on taxpayers.

“It is a known fact that the oil and gas industry has made some of the biggest profits in commerce in history. The money was there, but the companies never put some aside to deal with their liabilities and governments allowed them to do that with their eyes wide open,” said Wilson.

Finding the money to retire aging wells and pipelines is not just an Alberta nightmare, but also a global challenge.

For example, the cost of decommissioning ocean platforms, pipelines and wells in the North Sea — an estimated $46 billion Canadian in 2017 — will exceed Britain’s remaining tax revenues from the industry.

According to the Financial Times, Wood Mackenzie, an energy research group, has forecast that the cleanup of North Sea oil infrastructure (some 250 fixed installations, 3,000 pipelines and 5,000 wells) will become a “significant annual expenditure for government rather than a provider of income.”

A recent report even charged that Britain’s Oil and Gas Authority has underestimated the cleanup cost — now pegged at $130 billion — and that the final cost will probably come in at $140 billion.

At least half of that will be borne by taxpayers, suggest critics, despite legislation saying the industry must clean up its own messes.

The scale of the problem is even greater in Alberta, as a public presentation by a senior official with the Alberta Energy Regulator revealed last year.

Robert Wadsworth, the regulator’s vice-president of closure and liability, laid out the cost of cleaning up aging oil and gas infrastructure during a talk to the Petroleum Historical Society last Feb. 28.

Wadsworth’s presentation indicated the full cost of cleaning up old gas plants, inactive wells, aging pipelines and oilsands tailing ponds wasn’t $58 billion — the official number usually cited by Alberta officials — but probably closer to $260 billion. That’s three times the provincial debt of $71 billion.

Wadsworth also said the liabilities are underfunded and the collection of security funds from industry is “insufficient.”

When news outlets revealed the contents of Wadsworth’s presentation last year, Alberta’s regulator reacted strongly.

In a public statement the regulator, which is funded solely by industry, apologized for any confusion that the $260-billion estimate may have created.

It said the estimate was based on a “hypothetical worst-case scenario” and “was created for a presentation to try and hammer home the message to industry that the current liability system needs improvement.”

“Using these estimates was an error in judgment and one we deeply regret,” added the regulator statement.

Canada’s Ecofiscal Commission, a group started by economists in 2014 to help put a price on pollution, noted that the regulator might not have endorsed the $260-billion figure but “hasn’t disavowed it either.”

“Regardless of whether the $260 billion was a good estimate of the worst-case scenario,” wrote lead researcher Jason Dion with the commission, “the [regulator] clearly believes there is a risk of costs exceeding its official estimates. Albertans deserve to know more.”

That appears to be what Wadsworth tried to do with his presentation. His analysis had everything to do with Alberta’s flawed system for dealing with liabilities in the oil patch.

Wadsworth’s presentation said taxpayers could be on the hook for $260 billion given two basic problems: the lack of a targeted program with timelines to retire inactive wells and “increasing unfunded liability.”

Unlike many U.S. jurisdictions, neither Alberta nor B.C. has any specific requirements to clean up wells in a timely fashion while companies are still solvent. (Both provinces now say they are working on regulations to impose timelines on well site cleanup after decades of regulatory inactivity.)

Alberta also requires no specific security deposits for inactive oil and gas well cleanups.

Wadsworth characterized the system for monitoring liabilities as “deeply flawed.”

Alberta’s Liability Management Rating program, for example, has kept track of growing liabilities compared to assets for about 800 companies in the oil patch for nearly two decades, but it doesn’t collect money for cleaning up liabilities until the companies are “already showing declining financial capacity,” said Wadsworth.

In 2005, for example, it calculated that more than 33,000 inactive wells and 9,322 unreclaimed facilities created a liability of $9.4 billion, with a $20-million security deposit. The same program has watched as liabilities have grown exponentially. There are now more than 80,000 inactive wells and related liabilities worth $31 billion, with a security deposit of $226 million.

“With no timelines for cleaning up inactive wells, the government has incentivized companies to do nothing,” said Wilson.

Saskatchewan has the same problem. It has 24,000 inactive wells that will cost at least $4 billion to plug and reclaim, but industry only has a $134-million fund to do it.

The Alberta Energy Regulator also has little confidence in the unaudited numbers in its program because the liabilities are reported by industry.

Fixing these flaws with bigger security deposits and timely abandonment measures should have happened decades ago under Alberta’s Conservative governments, but no politician acted on the problem.

“Historically, even though we have known these programs were flawed, there have been no proactive changes made. Why has there been no political will to make changes?” Wadsworth asked in his presentation.

“We can continue down our current path until the impacts are felt by the public… or we can start to implement the numerous changes that we now know need to be made,” he said.

In his presentation, Wadsworth also broke down Alberta’s growing liabilities.

Using data from the National Energy Board, he calculated that reclaiming 400,000 kilometres of pipelines under provincial lands represented a $30-billion liability. (Unreclaimed pipelines can contaminate groundwater with toxic compounds, cause land subsidence, lower land values and make it impossible for farmers to obtain credit.)

Cleaning up more than 400,000 wells (only about half are active and most are producing a marginal 10 barrels of oil a day) would cost $100 billion. (Inactive wells can leak methane, radon and carbon dioxide to the atmosphere or groundwater.)

The oilsands, including nearly 200 square kilometres of toxic tailing ponds and mountains of sulphur, presented the highest liability of $130 billion, according to Wadsworth’s presentation.

The total liability of $260 billion, said Wadsworth in his presentation, was a “rough estimate” and was expected to grow as more data becomes available.

Alberta’s orphan wells have become a liability crisis.

The liability nightmare for cleaning up oil and gas infrastructure extends to other provinces and states.

Just about every oil- and gas-producing state in the U.S. has reported a growing backlog of abandoned wells left by bankrupt operators with insufficient funds for cleanup.

Energy Industry Legacy: Hundreds of Abandoned Wells Leaking Methane in Alberta Communities

A recent study found that current security bond amounts are lower than the average cost of plugging orphaned wells in 11 of the 13 states analyzed.

Inadequate funding, said the researchers, meant that “the state must draw on other revenues to cover the costs of plugging, and the public must bear the environmental cost of wells that remain unplugged due to a lack of state funds.”

Unlike Alberta, most U.S. states require companies to pay a cleanup bond before they are allowed to drill. But the bond amounts, which ranged from $10,000 to $100,000, are too low to cover the cost of plugging and reclamation.

In B.C., the Oil and Gas Commission holds only $100 million for the eventual cleanup of 27,000 wells and pipelines, a job that could cost billions.

Like Alberta, B.C. uses the same Liability Management Rating program in which operators don’t pay any security monies for reclamation until their deemed liabilities exceed their deemed assets — a system that ignores the rising volatility of oil and gas prices.

To date the B.C. regulator has collected $100 million, largely in the form of letters of credit. The B.C. auditor general is currently investigating the program.

Even the program’s 2017 annual report expresses doubt about the program’s adequacy given the impact of low prices on companies.

In Alberta, the biggest obstacle to reforms remains the province’s divisive and oily politics, says Edmonton lawyer Wilson.

“The NDP and the United Conservative Party are now in competition for being the biggest cheerleaders for industry. The NDP won’t do anything because they are afraid that the UCP will use it as an example that they are against the oil and gas industry,” he said.

As a result, neither party is serving the best interests of the environment or taxpayers, said Wilson.

Last year, Alberta Premier Rachel Notley responded to Wadsworth’s calculation of a $260-billion liability by saying the situation couldn’t be addressed immediately.

A Bold Clean-Up Plan for Alberta’s Giant Oil Industry Pollution Liabilities

“It’s a problem that has accrued over, I guess now we’d be talking 47 years, but it’s not one that happened overnight and, unfortunately, it’s not one that we can fix overnight,” she told reporters.

Wilson said the problem is “not only monumental but complicated.”

“If the government implemented a five-year timeline for cleaning up nearly 200,000 inactive wells, a large part of the industry would go bankrupt.”

Alberta has only two options remaining, said Boychuk, who has asked the province’s auditor general to investigate the regulator for its handling of oil patch liabilities.

“We can either have a jobless, revenue-less crash into bankruptcy where industry walks away from a gargantuan mess with their pockets stuffed full of profits from our resources, or we can have a transition where insolvent producers are put out of business and remaining production funds, largely from the oilsands, are used for a necessary cleanup that could employ thousands of workers in the energy sector for decades.”

James Wood, Calgary Herald More from James Wood, Calgary Herald

Darcy Henton, Calgary Herald More from Darcy Henton, Calgary Herald

Published on: March 30, 2015
Last Updated: March 30, 2015 8:17 PM MDT

A longtime Tory barred by the party from running for a Progressive Conservative nomination says he’s hurt and disappointed and may jump to another party after the way he’s been treated by the PC brass and Premier Jim Prentice.

The party announced just after midnight Sunday that Jamie Lall had been disallowed as a candidate in Chestermere-Rocky View, leaving former Wildrose education critic Bruce McAllister to be acclaimed to represent the PCs in the riding.

No reason was given and Lall said in an interview Monday that he’s still in the dark about why he was blocked, just days before the riding’s April 1 nomination date.

“People are going to connect dots. That’s up to them. I am in a lot of ways still in shock. It’s upsetting, it’s hurtful. I think that if there was some sort of smoking gun or reason, common sense would suggest it would be brought out before that,” said Lall, who noted he was vetted twice before being appointed as the PC candidate in Calgary-Buffalo in the 2012 election.

Lall, who is also president of the PC’s Calgary-McCall riding association, said he has been a loyal Tory but hasn’t ruled out joining, or perhaps even running for, another party in the election that Prentice is expected to call this spring.

“Anything is possible. I never thought my party, the PCs, would do this to me,” he said, noting that he had been approached by multiple other parties.

McAllister is one of nine Wildrose MLAs who crossed the floor en masse to the government benches in December. Three of the defectors — Gary Bikman, Rod Fox and former party leader Danielle Smith — were defeated for PC nominations on Saturday just hours before Lall was texted at 11:27 by PC executive director Kelley Charlebois that his candidacy had been disallowed.

Some in Lall’s camp have suggested the party was motivated to stop Lall’s candidacy because of concern about losing another ex-Wildrose MLA.

Lall said he doesn’t know for sure but “the timing would probably suggest that.”

McAllister’s campaign manager, Ken Boessenkool, has said he was absolutely confident the former Wildrose MLA would have won a contested nomination.

The PC party has refused to comment on the reason for disallowing Lall’s candidacy.

Prentice also refused to disclose details Monday but defended the party’s decision.

“They made their decision in the case of Mr. Lall for good reasons,” the premier told reporters Monday in Calgary. “I’m satisfied that they made the right choice in terms of what is in the best interests of the Progressive Conservative party.”

Prentice said only “four or five” of several hundred candidates vying for nominations as PC candidates in the province’s 87 ridings were disallowed, and the party had excellent candidates nominated.

Prentice also defended the PC party’s use of a private investigator as part of the vetting process in Chestermere-Rocky View, which has raised eyebrows in some corners.

Charlebois suggested in an email on the weekend that it was not unusual, saying that “a private investigator was hired to assist with vetting in all 87 riding nominations.”

Lall said Monday that investigator Gordon Bull was “aggressive” in pressing him for phone numbers of family and friends.

Pollster and political analyst Janet Brown said Lall has been a “loyal Conservative soldier,” who appears to be well-regarded by many within the PC camp.

“The premier does have the power to step in and override a local riding association. He’s got to be careful about appearing undemocratic and, quite frankly, mean-spirited,” she said.

With files from Trevor Howell, Calgary Herald

[email protected]

[email protected]

“This move would in one stroke ensure any current or future Alberta government respects the rights of Alberta property owners by cementing those rights in the Charter – Canada’s highest law.”

“The result would be that the government could not take actions under any law to diminish the value of property without fairly compensating landowners.”

“This kind of positive constitutional change is possible and critical for advancing property rights here in Alberta and across Canada,” said Fox. He also urged PC, Liberal and NDP colleagues “to join me in unanimously supporting this motion” because doing so “should not be about partisanship, it should be about doing what is right for Alberta”.

According to another Wildrose press release the amendment “would apply only to the government of Alberta in respect of all matters within the authority of the legislature of Alberta. The motion will act in concert with Hillyer’s Motion 520, introduced in parliament earlier this year, which asks the House of Commons to support an amendment to the Charter to enshrine property rights for Alberta”.

“Landowners are the best stewards of our beautiful landscapes and they deserve to have their rights fully protected so they can manage their property with minimal interference from government,” Wildrose Leader Danielle Smith said. “This kind of positive constitutional change is possible and critical for advancing property rights in Alberta. I hope that after Mr. Prentice’s campaign commitments this past summer, both he and his government will fully support this motion.”

Accoding to the Wildrose press release, if Motion 501 receives the support of the Alberta legislature, the passing of Motion 520 federally would successfully amend the Charter of Rights and Freedoms to enshrine property rights for Albertans.

Hillyer said that the passing of Motion 501 will send a strong signal to Ottawa and be a major victory for the cause of property rights.  “This is a fight worth fighting; but more importantly, it is a fight worth winning. I am thankful for the work of Gary Bikman and Rod Fox and my provincial colleagues who have championed this cause,” Hillyer said. “I encourage all my friends and colleagues in all parties in the legislature to step up and do what is right. With the full backing of Alberta, we will be one more step closer to cementing Alberta landowner rights in Ottawa.”

(www.aeso.ca)

Unhealthy wind turbine noise

According to a recently released Wind Turbine Noise and Health Study conducted by Health Canada with the assistance of Stats Canada, self-reported sleep disturbances, illnesses, chronic health conditions, stress, and quality of life “were not found to be associated with WTN exposure”.  However, “annoyance towards several wind turbine features (i.e. noise, shadow flicker, blinking lights, vibrations, and visual impacts)” was found ” to be statistically associated with increasing levels of WTN  (Wind Turbine Noise)”.

Random related quotes

This is an all-too-common theme of the public consultation and hearing process for construction of transmission lines in Alberta. Homeowner and landowner concerns about the negative impacts of overhead transmission lines on property values, the environment, safety, health and aesthetics are consistently ignored by AltaLink and the AUC. Many Albertans have characterized the entire power line consultation and hearing process as “theatre” – to give the public the perception that their concerns are listened to and taken into account, when in fact they are not. – retasite.wordpress.com

AltaLink’s continuing investment in new transmission facilities is delivering benefits across Alberta even before the facilities are commissioned. Communities in which AltaLink is engaged in construction activities are seeing positive economic impact from new employment opportunities, hiring of local services and contractors, and increased business for area hotels, motels, restaurants and stores. – Marketwired

Alberta currently has more than 800 megawatts (MW) connected to the grid. That is enough capacity to serve over 970,000 homes when the wind is blowing and the wind units generate at the rated capacity. However, due to wind blowing intermittently, the electricity generation from wind power varies over time. But even when considering the large variations in the wind power generation, Alberta’s wind generation is enough to provide for the electricity that over 310,000 homes use in a year. – www.energy.alberta.ca

“In Alberta, the winds of progress towards more renewable energy are still when they should be gale force.” – www.bnn.ca

In 2013, over 5 per cent of the electricity sold on Alberta’s market came from wind energy. That’s enough energy to power 1 in every 3 homes in the province. – windfacts.ca

Despite a world class wind resource, the know-how and the experience here, the growth of wind energy in Alberta is expected to slow down, in part because Alberta is one of the few places in North America that has no strategy to integrate more wind and other renewable energy in our electricity system. – windfacts.ca

There are good ways and bad ways to develop energy resources, and it is important that landowners ask the right questions, and get the right answers, to ensure they are satisfied with development. – www.pembina.org

Albertans were asked Wednesday to reduce power consumption in the wake of an unexpected power plant shutdown that has left the province’s electricity system “stressed.” – Calgary Herald

“While Alberta has developed and constructed many high quality wind energy projects, the province’s vast, enviable wind resource remains largely untapped,” says Robert Hornung, CanWEA president. – canwea.ca

I have promised Albertans twin imperatives: I will aggressively pursue responsible energy development at the same time that I will work to establish and enforce world-class regulatory and monitoring standards. I have also promised fiscal prudence and that government will not succumb to “subsidized environmentalism” — the funneling of public money to unproven schemes. Natural gas power generation is both less expensive and generates far fewer greenhouse gas emissions than coal. As they retire old power plants and replace or rehabilitate them, power generators will make the prudent choice. – Jim Prentice, Premier of Alberta (www.windconcernsontario.ca)

Related links and sources:
www.livingstonelandowners.netwww.aeso.ca
www.altalink.ca
retasite.wordpress.com
www.albertasurfacerights.com
actionsurfacerights.ca
www.pembina.org
www.calgaryherald.com
www.canadianinstitute.com
www.windconcernsontario.ca
canwea.ca
www.renewables.ca
windfacts.ca
www.energy.alberta.ca
AltaLink route selection process
AltaLink Delivers Economic Boost to Alberta Communities as Construction Grows

Energy line opponents target proposed route

Energy Watch: Alberta ‘wasting’ wind power opportunity

Health Canada Wind Turbine Noise and Health Study

Notification of AESO Regulatory Filing Addressing the Need for the Windy Point Wind Energy Connection in the Pincher Creek Area

Pincher Creek Voice

Chinook Area Land Users Association, Letters to the Editor

Enclosed are two letters written by the Chinook Area Land Users Association (CALUA), a land owner group in the M.D. of Pincher Creek, to the Alberta Electric Systems Operator regarding the proposed “Goose Lake to Etzikom Coulee” (GLEC) transmission line which would be a part of SATR. CALUA met with AESO on March 13, 2014 to discuss the possibility of re-opening the needs assessment (NID) for this line. The second letter is in response to this meeting.

Editor’s note: The original letters as reproduced below were addressed to Alberta Electricity Systems Operator (AESO) Calgary Place, Attn: David Erickson, President and CEO

First letter February 5, 2014

Dear Sir:

The Chinook Area Land Users Association (CALUA) is an active organization representing over 200 individuals and more than 80% of the land owners in Division 1 and 2 in the MD of Pincher Creek.

CALUA is writing this letter to express our deep concern as land owners and Alberta tax payers to future implementation of decisions arising from AESO’s Future Demand and Energy Outlook 2009-2029, and in particular, conclusions drawn relating to the South Alberta Transmission Reinforcement (SATR) projects in Southern Alberta. Our concerns relate to the fact that changing economic trends, and projected changes in consumer patterns in oil and electrical demand call into question the conclusions in the report, which were based upon substantially different economic projections largely derived from historical, high oil prices prior to the economic crisis in 2008.

In December 2008 AESO submitted its original Needs Identification Document (NID) to seek Alberta Utilities Commission (AUC) approval for a massive increase in transmission line capacity in Southern Alberta, most notably designed to tie-in wind power generation in three phases called SATR I, II and III.

CALUA is of the opinion that a review of the needs for certain components of the SATR project is warranted due to significant recent changes in oil demand, changing forecasts for energy requirements, and a growing awareness of the unfavorable economic and ecological characteristics of wind energy. At today’s pace of economic change, virtually all current developments indicate that the principles applied in AESO’s 2009 study are no longer valid. Combined with the current cost overruns in Alberta’s expansion of transmission line network, we believe that it would be prudent and in the public’s best interests to undertake a thorough review. To not undertake the review would be negligent.

We also believe that AESO is feeling the pressures related to the new trends given the information provided in AESO’s SATR update of August 2013 informing its stakeholders of the cancellation of the Ware Junction to Langdon substation SATR III component, and the delay of three further SATR components: i) Picture Butte to Etzikom Coulee, ii) Goose Lake to Etzikom Coulee (GLEC); and iii) Etzikom Coulee to Whitla. In addition to AESO’s SATR III cancellation

CALUA believes that the Goose Lake to Etzikom Coulee (GLEC) route is also not needed and that an upgraded transmission circuit can be achieved using existing routes.

Further, it is our understanding that the intertie analysis that relates to the tie-in requirements of AESO’s transmission line projects to British Columbia, the US and Saskatchewan apparently needs to be reviewed indicating to us that AESO is re-considering the scope of the SATR projects with respect to actual costs, power demand and grid capacity.

Whilst CALUA recognizes AESO’s strategy to balance benefits and costs in the wake of significantly increased costs in the build-out of Alberta’s transmission system is partly driven by longer than expected permitting processes, and higher than forecasted construction labour costs (e.g. increased costs of $200 million for the Western Alberta Transmission Line (WATL), currently standing at $1.65 billion), we believe this only strengthens the need for a review of the 2009 study.

Understandably, it is difficult to predict long term trends, but inaccurate forecasts lead to wrong conclusions, and in particular when applied to long term investments they can do irreparable damage to an economy and its people. Lately, many fundamental trends have been emerging that were not considered in the 2009 AESO study, and CALUA believes they fundamentally affect the assumptions and conclusions made in the study.

Increase of global oil demand may be lower than predicted:

    In 2006-2008 it was impossible to predict the shale gas boom which puts an enormous downward pressure on natural gas prices, and consequently, on oil demand. The downturn is pinching provincial coffers, with royalties from gas expected to reach only $965 million this year, about one-sixth the 2006/07 levels used in the original 2009 study.

    The profitability of oil sands is increasingly coming under pressure as fracking has revolutionized oil and gas production in North America, paving the way for the U.S. to surpass Saudi Arabia as the world’s top oil producer, thereby reducing its dependence on oil imports (including from Canada), and pushing Canada to find new markets for growing oil production.

    Recent developments increasingly indicate that global oil demand may not increase as predicted due to improved automotive technology, national programs to reduce energy dependence, China’s recently imposed policies designed to “leapfrog” the country’s transport system, changing driving patterns and an emerging variety of alternatives to oil as transport fuel.

    Alberta oil will be landlocked for years to come (e.g. debate over Keystone XL, Northern Gateway, Energy East), and the recent rail accidents in Quebec, North Dakota and New Brunswick have brought additional public pressure on the industry. In the EU, resistance against Alberta oil has been building steadily, which is reflected in the EU’s Fuel Quality Directive fueled by pressure from environmental activists, which is also growing.

The above mentioned effects caused discounts on Canadian heavy oil opening up a provincial government budget deficit. The lack of export pipeline capacity was repeatedly cited in price differentials that ranged from $10 to $40 a barrel during the year and reportedly costs Canada’s economy $18 billion annually. In 2013 alone, these effects are expected to result in about 6 billion dollars less in provincial revenue.

The need for grid based electricity systems may be lower than expected

    Worldwide public pressure against subsidized grid-based renewable energy and the required massive transmission systems is increasing. Examples are i) Australia’s push to fully abandon subsidized power generation and ii) Germany, once the poster child of renewable energy has become the cautionary tale for Europe, an example of where the wrong energy policies are damaging, perhaps mortally wounding, its economy, punishing consumers while undermining the green objectives, of reduced CO2 emissions, it set out to achieve.

    In 2014 German consumers will be forced to pay $30 billion to subsidize electricity with a real market price of $4 billion. Two thirds of the electricity price increase is due to new government surcharges and taxes to sustain renewable energy (prices per kWh, transmission fees, etc.). Per-household costs have tripled in the last five years and are likely to continue rising. Compounding problems, when the wind stops blowing the electricity supply needed to power the national grid is becoming scarce pushing Germany into an increased use of fossil fuels leading to higher carbon dioxide emissions proving that wind energy is not “green”, when seen in context of permanent availability.

    Public perception of wind energy’s inefficiency is growing. Based on AESO’s NID and its 2012 Market Stats an efficiency of 25% is a realistic assumption. CALUA is concerned that Alberta tax payers are being misled by AESO’s strategy to only advertise “nominal” wind energy production capacity whilst effectively only 25% can be realized. For example, compared to AESO’s statement that “at the end of 2012, generating capacity from wind power facilities totaled 1,087 MW which constituted 7.5 % of Alberta’s total installed generating capacity” the actual (real) wind generation was less than 300 MW which is equivalent to only 2% of Alberta’s generating capacity.

    There is an increasing trend to develop decentralized energy production (e.g. gas fired power generation, such as the Shepard plant) and smaller, community based distribution concepts eliminating the need for large transmission networks with the associated line losses.

From all we can see, the current trend seems to be that natural gas will be the fuel of choice for the foreseeable future. Natural gas will help achieve climate goals and reduce CO2 emissions. It offers plenty of room for future development until decentralized, diverse energy generation based on renewable resources will take over. The power grid as proposed by AESO may be no longer be a sound technical option based upon the emerging global trends and the inherent inefficiencies in wind power and long distance electrical transmission.

Alberta as a province is in the same dilemma as any business owner. In times of uncertainty, spending money on potentially non-revenue generating infrastructure projects is very risky as it generates permanent fixed costs, uses up consumers’ disposable income, and reduces liquidity in times of need; all of which increase costs to consumers ultimately. The expansion of the transmission grid will cost billions at a time when royalty revenues are dwindling and its ultimate need will be subject to significant uncertainties over the coming years. In times of limited liquidity, expenses for questionable wind energy projects must be avoided.

The NID estimate for all three stages of the SATR project, which includes allowance for funds used during construction (or carrying costs) and escalation of $1.16 billion, was $3.44 billion. Given the province’s budget deficit of $6 billion in 2013 alone, and the cost overruns for lines already under construction, AESO should cut costs by eliminating non-essential components of the originally proposed transmission network.

As stated before, the current effective wind capacity installed in Southern Alberta is less than 300 MW. This power generation capacity can be handled by the existing grid. All of the existing wind farms are tied-in through existing substations. Between 2008 and 2017 the NID which is the basis for all SATR stages assumes only 320 MW effectively coming from wind (nominal 1,600 MW). In the same document AESO lists a number of not further substantiated wind interests with an overall effective capacity of nearly1,900 MW (nominal 7,500 MW). From this list at least one sizable wind project, the Wild Steer Butte project with an effective capacity of close to 200 MW (nominal 790 MW), has been abandoned by Shell due to unfavourable economics.

In the extreme South only two wind interests are shown with a combined effective capacity of less than 100 MW (nominal 470 MW). The southern leg of SATR II, the GLEC expansion is a 220 km transmission line designed to tie-in these 100 MW. AESO is seemingly aware that this line is over-designed as it is planned as a double circuit 240 kV single-strung transmission line. The cost for just this line is expected to be around $400-500 million.

Beside the fact that this transmission line is planned to run through the most pristine land of the Waterton Prairie-to-the-Mountain corridor the costs of $500 million are not justifiable to tie-in 100 MW of wind power.

We believe that it is a waste of tax payers’ money to tie-in a handful of wind farms with questionable economic features (low efficiency, low cost-to-benefit ratio, need for subsidies and huge footprint expressed in MW/acre (almost 2,000 times higher than the Shepard plant). In today’s world of cheap gas the installation of new wind energy farms is no longer an attractive alternative.

In a diverse world with a fast-paced, ever changing economic environment long term forecasts that support large infrastructure projects (e.g. transmission line grids) are increasingly becoming a concept of the past.

Clearly, the majority of the assumptions that drove the conclusions in the 2009 Demand and Outlook report are no longer valid, and as such, the conclusions in the report are also no longer valid. CALUA hereby strongly urges AESO to review the original Needs Identification Document based on the trends that have arisen since the original data was collected in the mid-2000’s and eliminate unnecessary components of its transmission line network to prevent irreversible, permanent financial liabilities to all Albertans. Some sober second thought now could save Albertans from a costly white elephant that they will have to pay for through their utility bills for generations to come.

Sincerely

The Board and Executive

Chinook Area Land Users Association

Second letter March 31, 2014

Dear Sir,

The Chinook Area Land Users Association (CALUA) greatly appreciates AESO meeting with us in order to better understand our concerns, as expressed in our letter to AESO dated 05 February 2014. We met with five AESO representatives on March 13, 2014 in the Twin Butte community hall to exchange our views of the matter. The discussion revolved around technical, procedural and, at times, the emotional aspects of AESO’s proposed power corridors in the Chinook area.

In the following paragraphs we want to summarize the results of the meeting:

CALUA presented its case that the need for the “Goose Lake to Etzikom Coulee (GLEC) transmission line faces significant uncertainty due to doubts about the viability of wind power in the region and the reduction in wind interests along the planned route. During the process AESO was also presented with a map showing strong opposition to wind and transmission line developments by a large majority of constituents in Divisions 1 and 2 of the MD of Pincher Creek (the “Waterton Corridor”)

During the meeting, AESO confirmed that the wind efficiency factor is only 25-30%, meaning that wind farms can only deliver 25-30% of their “nameplate” capacity. In other words a wind farm rated at 100 MW will in average only produce 25-30 MW. This is fundamentally different to gas fired power plants which are designed to continuously run at nameplate capacity. Transmission lines for gas plants must therefore be designed for nameplate capacity and that means transmission lines dedicated to wind power generation are 3-4 times oversized.

AESO acknowledged the “per-MegaWatt” foot print (land used) of wind based power generation is about 1,800 times higher than for natural gas based power generation, which means that the projected wind farms would use up roughly 100,000 acres of land for an energy equivalent which can be achieved with a 60 acre area gas production foot print.

It was also mentioned that wind power, due to its unreliability and the continuous need for fossil back-up does not provide any real CO2 benefits.

AESO acknowledged that wind interests have declined drastically since the 2008 Needs Identification Document (NID) but stated that the “need” for the GLEC line was re-confirmed in its latest “AESO 2013 Long-Term Transmission Plan”. A copy of this document was provided to CALUA.

CALUA conducted a review of this document and has the following comments:

    The 2014 overall energy consumption for the entire province of Alberta in 2013 is roughly 70,000 GWh. On page 60, the study states that at the end of 2012, total generation capacity in the province was 14,404 MW. Industrial installations in average operate about 340 days per year (8,160 hours/year), and the 14,404 MW generating capacity would be able to produce 118,000 GWh per year. This indicates that Alberta’s existing energy generation supply already exceeds the demand by 75%. This begs the question: Where is the need to add more generating and transmission capacity?

    Based on the same document, Alberta’s overall energy consumption for 2032 is projected to be about 115,000 GWh. Based on our reading this means that the current power generation is sufficient for at least the next 20 years. Based on page 60 the installed generation capacity is expected to grow to approximately 23,600 MW by 2032, which would provide 193,000 GWh – almost 3 times of the current demand and almost twice the projected demand in 2032. Again, we would ask, where is the need for the additional generation and transmission capacity?

    AESO’s 2013 Long-Term Transmission Plan document does not appear to take into account changing realities. The original NID mentioned a wind queue of 7,500 MW nameplate capacity for southern Alberta. At our 13 March 2014 meeting and on page 88/89 AESO indicated that the current queue has been reduced by 75% to a nameplate capacity of only about 1,875 MW by 2032 a portion of which is located mainly on the eastern leg of the GLEC line. This significant reduction would further call into question the need for additional transmission lines in the Chinook area.

    In its 2013 study, AESO frequently mentions the risks and uncertainties of inaccurate predictions. The precision range of the study is described as being accurate within ± 30%. Given the information in the above points, ±30% really doesn’t alter any of the conclusions reached by CALUA in reviewing the document. Further, ±30 percent is really only feasibility level analysis and is hardly the confidence level a government should be spending large sums of public dollars on.

    Page 29 states that “in recognition of this uncertainty, the 2003 Transmission Development Policy provides direction to AESO to be proactive in its planning and build transmission lines in advance of need”. As a policy, it does not have the force of law and potentially puts AESO in the position of doing too much development, too far in advance.

    1,875 MW of nameplate capacity are equivalent to an actual capacity of only 470-625 MW within the next 20 years. Arguing that under the circumstances described above a C$ 500 million – 250 km single-strung transmission line to capture 470-625 MW of wind power which by design has to be 3-4 times oversized is necessary does not seem credible to the Alberta tax payer. The amount of power from all projected wind farms along the GLEC line could be provided by one (1) gas fired power station of the size of the Shepard plant.

From the meeting we understand that AESO is reviewing the NID on an ongoing basis and now, more than before, we feel strengthened in our belief that at least portions of the GLEC line are not needed. CALUA believes that it is unconscionable for AESO to continue on its proposed development path in the Chinook area and to forever compromise the majesty of the Waterton corridor by running massive 240 KV transmission lines through one of Alberta’s most scenic landscapes for two minor wind development when other alternatives exist. By its own statements AESO’s models are not designed to consider scenery. Since CALUA’s concerns are not part of the development considerations, we feel completely ignored by AESO, Altalink and the Alberta Government. With the vast majority of local land owners signed on and opposed to this development, we believe Government needs to step in and provide some balance to the discussion.

Once built, this majestic region will be forever compromised. CALUA recommends:

    A moratorium on power transmission development in the Chinook area until such time as a current needs assessment has been done that accurately reflects the changing realities of wind power generation, Alberta’s power requirements and the broader desires of the population of Alberta to have some unspoiled vistas; and

    A mechanism whereby taxpayers interests are recognized before significant amounts of tax payer’s dollars are spent unnecessarily and in the absence of a compelling need.

Projects like this often have a significant momentum due to time and resources invested and frequently get done despite changing circumstances. It takes courage and leadership to back out of such projects and we encourage AESO, the AUC and the Alberta Government to demonstrate that leadership and courage, and do the right thing.

Sincerely

The Board and Executive

Chinook Area Land Users Association

The Pincher Creek Voice

Chris Davis

As reported here on January 8, 2014, a number of dead ducks were found underneath AltaLink electricity transmission lines adjacent to Highway 785 south of the Oldman River Dam (click here for that story).

AltaLink spokesman Scott Schreiner says the company has completed their investigation of situation. Schreiner confirmed 345 dead birds were found, 244 mallards and 1 grey partridge. “We believe it was a combination of high winds and lowered visibility that caused them to hit the lines  where bird diverters were in place, and where they weren’t,” said Schreiner.

To attempt to mitigate the situation Schreiner said AltLink was at the site yesterday installing new wind diverters on new lines and on lines that already had diverters. He also said AltaLink would be increasing patrols “from an environmental persepective” in the area to monitor the situation. Bird diverters are devices that attach to power lines. They flap in the wind to warn the birds that the hard to see lines are there.

Schreiner said that AltaLink’s Avian Protection Plan was the first of its kind by a utility company in Canada. “One of the things we do is identify high risk areas,” he said, adding that AltaLink installs diverters and patrols such areas to monitor environmental impact.

Schreiner said the power line was strung in spring of 2012 and has been powered since later that same year “and this is the first incident of this type that we’re aware of”.

“It’s certainly unique in terms of our entire system.  We take it seriously, which is why we launched the investigation the day after we heard about it.”

Retired scientist and area environmentalist David McIntyre took pictures of the site on December 31, 2013 one of which is republished at the top of this article. He’s long made known his opposition to the positioning of the power lines in question and also acts as an informal spokesman for some of those concerned about the situation. McIntrye said he had an informal meeting with biologists from AltaLink and Stantec last Monday to discuss their findings, which McIntrye said mirrored his own observations.

“I didn’t go to the site with the biologists, but we were on site-separated by several hundred meters, one day at the same time, and concurred that within one half-hour period, more than 2,000 ducks flew overhead, and directly over the problematic, currently strung, transmission line, under which hundreds of dead ducks were found.”

According to McIntyre there are approximately 5,000 mallards and 5,000 Canadian geese below the dam on any given day in the winter months. Problematic for him is that the transmission line west of 785 and the one under construction roughly eastward which parallels the river valley is in the direct line of flight for fowl flying to and from adjacent grain fields. “You didn’t have to be a biologist to see we have a tremendous number of birds wintering this area and that’s going to be a big problem for them. I find it amazing that AltaLink would build lines there if they had done any kind of environmental assessment. The red blinkers should be going.”

Mcintrye believes this was not an isolated incident. “It’s crystal clear to me it was multiple collisions. There may have been many incidents. Unless it lands on someone’s doorstep, we may never hear about it.” He also voiced his concern about the effect the situation could have on eagle migrations in spring, when “thousands of Golden Eagles migrate up the crest of the Livingstone Range”.  He worries they will be attracted to dead ducks as a source of food, “And now it’s more than a dead duck issue.”

Eyewitness accounts

Ducks found dead under transmission lines near Oldman dam