Archives for August 2015

Canadian Natural posts $405-million net loss on higher tax rate, lower revenue

August 10, 2015 By

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By The Canadian Press on August 6, 2015.

CALGARY – Canadian Natural Resources Ltd. (TSX:CNQ) had a $405-million net loss in the second quarter but the company says it would have been profitable without a 20 per cent increase in Alberta’s corporate tax rate.

The Calgary-based oil and gas producer says the higher tax rate – which rose to 12 per cent as of July 1 – increased Canadian Natural’s deferred income tax liability by $579 million.

Excluding that item, Canadian Natural says it had $178 million of adjusted earnings from operations.

The results were weak compared with the same period last year, when Canadian Natural had $1.07 billion of net earnings and $1.15 billion of adjusted net earnings.

Canadian Natural’s revenue fell 36 per cent or nearly $2 billion compared with the second quarter of 2014, when global oil and gas prices were much higher.

It says total revenue the second quarter was $3.42 billion, down from $5.37 billion a year earlier.

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Canadian Natural blames Alta. tax rate for loss

August 10, 2015 By

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By Lauren Krugel, The Canadian Press on August 6, 2015.

CALGARY – Canadian Natural Resources is warning that Alberta’s corporate tax hike will hit employment, though both company executives and Premier Rachel Notley agree the steep drop in crude prices is a much bigger challenge.

The Calgary-based oil and gas giant posted a net loss of $405 million during the second quarter, mostly because of a $579-million charge related to the higher tax rate.

All things being equal, the higher tax tab means $579 million less will be invested over the lifespan of Canadian Natural’s assets, chief financial officer Corey Bieber said in an interview.

That figure translates into 4,100 fewer “position years” of direct, indirect and induced employment in that time span, he said, citing a study by a third-party consultant.

The study wasn’t undertaken specifically to look into the impact of the tax changes, but is part of work the company routinely does as part of the regulatory process for its projects, said president Steve Laut.

Unlike many of its peers, Canadian Natural has not announced staff layoffs since crude prices began their sharp decline from above US$100 a barrel a year ago to around US$44 on Thursday. Rather, top brass are taking a pay cut and company-wide pay increases have been scrubbed.

Notley, speaking to reporters in Edmonton, said Albertans accept that higher corporate taxes are going to hit the bottom lines of companies.

“Albertans clearly considered that issue very thoroughly in the last election,” she said. Given the province’s fiscal challenges, Albertans realize it’s necessary to “pull up our socks and tighten our belts” and “everybody needs to chip in.”

She said the tumbling price of crude is having a much bigger impact on employment than the tax increase to 12 per cent from 10 per cent, which came into effect on July 1.

Bieber agrees with that assessment.

Between the first six months of 2014 and the first six months of 2015, Bieber figures the price drop had around a $2.3-billion impact on cash flow.

“The bottom line is, reduced cash flow leads to less ability to reinvest in the business and ultimately that’s what drives growth of the economy,” he said.

Canadian Natural is one of a number of major Calgary oil company to take a tax charge against its second-quarter results.

Last week Canadian Oil Sands (TSX:COS) said its deferred tax expense was $120 million during the quarter, while Imperial Oil (TSX:IMO) took a $320-million charge. A $315-million tax expense at Cenovus Energy (TSX:CVE) was mainly due to the Alberta tax hike, as well.

Without the tax expense and other items in the mix, Canadian Natural said its adjusted earnings from operations were $178 million, compared to $1.15 billion a year earlier.

The Alberta government is setting up expert panels to look into the province’s royalty rates and climate change policy. Notley said more details will be coming out next week.

Laut said until there’s clarity on what kind of additional costs may arise from both reviews, it can’t pin down 2016 spending plans.

He sees work on the Horizon oilsands expansion continuing and more drilling off the shores of Cote d’Ivoire in West Africa.

“But other than that we have to wait and see how the world shakes out.”

Follow @LaurenKrugel on Twitter.

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Abandoned wells remain Alta. concern

August 5, 2015 By
  • 4 Aug 2015
  • Lethbridge Herald
  • Ian Bickis
  • THE CANADIAN PRESS — CALGARY

ALBERTA NEEDS TO STRENGTHEN PROGRAM TO DEAL WITH DORMANT OIL WELLS: CRITICS

A program in Alberta to deal with thousands of dormant oil and gas wells that don’t meet safety and monitoring standards needs to be strengthened, critics say as falling crude prices could see their numbers swell.

Energy operators have brought about 3,600 wells in line with regulations as part of a compliance program the province launched in April. The Alberta Energy Regulator’s goal for the 2015-16 fiscal year is just under 5,500 wells.

While that shows that the organization is two-thirds of its way to meeting its goal, that still leaves more than 22,100 wells that aren’t complying with rules that govern fencing, and testing for leaks, among other measures, said Carrie Rose, a spokeswoman for the regulator.

Rose said the program is meant to bring them into compliance over the next five years.

But Barry Robinson, the national program director for regions at Ecojustice, said in the meantime those wells could still contaminate the environment.

“In the worst-case scenario you can have a well that is venting something or leaking something and not being aware of it because you’ve never done the pressure testing that was required,” said Robinson.

Jason Unger, staff counsel at the Environmental Law Centre, said the regulator should explain why operators were allowed to have so many wells not complying with regulations in the first place.

A bigger problem is that the program doesn’t set deadlines for well closures, Unger added.

He said unreclaimed wells continue to impact the land and could affect property values, while an increase in the number of inactive wells means an overhang of liabilities for companies that may not be able to pay reclamation costs.

“It’s reliant on the operator to determine when to abandon them,” said Unger.

Concerns over inactive wells comes as the number of orphaned wells has swelled from 162 in March to more than 700.

Wells are orphaned when the company that owns them goes bankrupt or can’t be found. The wells then become the responsibility of the Orphaned Well Association, an industry-funded group that was set up to deal with them.

Brad Herald, a director of the association, says low oil prices have contributed to an increase in orphaned wells.

“We know that given the economic times, there’s probably more coming,” said Herald.

Despite an increase in the number of orphaned wells, Herald doesn’t think Alberta needs to set timelines for reclaiming old wells.

He said wells can be inactive for a variety of reasons, from waiting for the construction of a pipeline to holding on until prices recover.

But Robinson says the province should consider firm timelines for well reclamation like many U.S. states have, because many wells in Alberta have been sitting idle for years.

According to the Alberta Energy Regulator, of the roughly 77,000 inactive wells in the province, 18,000 haven’t been active for more than a decade.

“If there’s some good reason why the well’s been inactive for five years and needs to be inactive longer, well then the company should have to justify that,” said Robinson.

Last year, the Progressive Conservative government committed to reviewing well closure timelines.

A spokeswoman for Environment Minister and Lethbridge West MLA Shannon Phillips said in an email that the current NDP government will look at strengthening existing programs to address inactive and orphaned wells.

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Watchdog welcomes findings against TransAlta

August 5, 2015 By
  • 29 Jul 2015
  • Lethbridge Herald
  • Ian Bickis
  • THE CANADIAN PRESS — CALGARY

HEAD OF UTILITY WATCHDOG PLEASED WITH ALBERTA COMMISSION DECISION

The Alberta Utility Commission’s conclusion that TransAlta triggered outages at power plants to raise electricity rates is a welcome step towards fair markets, the head of the province’s utility watchdog said Tuesday.

“It’s a huge win for Albertans, who deserve to benefit from a fair, efficient, openly competitive market,” said Harry Chandler, administrator of the Market Surveillance Administrator. Chandler accused TransAlta of deliberately timing outages at coalfired power plants in Alberta at peak times in late 2010 and early 2011 in order to drive up electricity prices.

In a report released Monday, Alberta’s Utility Commission agreed.

During hearings held by the commission, TransAlta argued that it believed it was allowed to do that based in part on discussions with the Market Surveillance Administrator. But the commission found that TransAlta should have made further consultations before going ahead with its plan.

TransAlta has said it is reviewing the ruling, and a further response could include the possibility of an appeal to the province’s highest court.

Chandler said the decision provides more clarity for Alberta’s utility market going forward.

“This is a watershed decision that all market participants, and even outside of Alberta, are going to pay a great deal of attention to because it gives very clear guidance on appropriate behaviour in the electricity market.”

The commission said it will resume proceedings later to determine how much TransAlta benefited from the closures and what penalties to impose against the company.

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Not-so-smart meters in Lethbridge

August 5, 2015 By
  • 4 Aug 2015
  • Lethbridge Herald
  • Anthony James Hall UNIVERSITY OF LETHBRIDGE

In 2011 the Union of B.C. Municipalities voted in its annual convention to ask the B.C. provincial government to put a “moratorium” on its plan to revamp the province’s power grid. The core of this plan involved the installation of smart meters.

In B.C. and many other jurisdictions in the world there is growing resistance to installing smart meters. Smart meters are a high-tech wireless device designed for two-way broadcasting through the medium of high-frequency microwave radiation.

At the B.C. municipal union “some of the concerns brought up by the delegates included health impacts, privacy issues, and potential rate hikes.” Sharon Noble, spokesperson for the Coalition to Stop Smart Meters, warned that if the B.C. Energy Ministry “chose to ignore what people have said through their councillors, through their mayors, then I think the government is making a big mistake.” She anticipated “plans to take the government to court over human rights complaints.”

In Lethbridge, our city government is not in a position to respond like municipal governments did in B.C. to growing public concerns. Because of the differences in our provincial histories, our city government is the primary custodian and renovator of our local power grid and metering system.

Unbeknownst to most Lethbridge residents, the city is rapidly pushing ahead with the installation of wifi communication devices that it refuses to identify as smart meters. At a recent community meeting at the University of Lethbridge, Mayor Chris Spearman commented that 19,000 meters have been installed with 26,000 yet to go.

At this gathering organized by the U of L’s New Media instructor, Lance Chong, there was a specific focus on a City of Lethbridge web page entitled “Electric Meter Replacement — Frequently Asked Questions.” One of the statements was that “the meters being installed in the city are not smart meters.” It also stated “the meters are safe.”

At this public meeting, our mayor repeatedly emphasized the safety of the electric meters. As on his own Facebook page, Mayor Spearman justified his claim by directing people to Health Canada’s Smart Meters information packages. He specifically pointed out that “Health Canada has issued limits of human exposure to RF (radio frequency) radiation in Safety Code 6.”

While city officials insist that the installed devices are not smart meters, they concurrently direct citizens’ public safety concerns to Health Canada’s assessment of “smart meters.”

The deceptiveness of this communications strategy raises important issues about consent. Indeed, the only document announcing the changeover in technologies calls into question the city government’s understanding of our collective and individual right to give informed consent to this controversial technology.

An official letter from the City of Lethbridge placed into the mailbox of every “resident/homeowner” states that “Electric Operations is replacing residential electric meters in the city, and your meter will be replaced within the next four-week period.”

The recipients are told they can call a city line during business hours if they have any questions. The letter also indicates, “As the meters are on the exterior of most homes, we will complete the work if no one is at home… The replacement process will take approximately five minutes.” The experience of litigation in other jurisdictions suggests that the City of Lethbridge is acting as if the failure to phone the assigned number for whatever reason constitutes “implied consent.”

The debate in B.C. demonstrates the breadth of concerns about the changeover to smart meters, or “Smart Grids” as an Alberta government report referred to the new technology in 2011. Done at the behest of the Alberta government, the publication is entitled Alberta Smart Grid Inquiry: Final Report.

The authors of the “final report” explain that “Smart Grid” is a “broad concept that describes the integration of hardware, software, computer monitoring, control technologies and modern communications strategies in the electricity grid.” The report underlines that smart meters are a part of Alberta’s Smart Grid plan. It refers to the City of Lethbridge’s relationship to the project along with that of Atco, Enmax, Epcor, Direct Energy and Fortis.

A special section is devoted to privacy issues. This topic is clearly connected to warnings that smart meters provide public utilities along with their attending corporations and governments with vast new surveillance capabilities and potentials. The Smart Grid Report notes that the then-privacy commissioner of Alberta, Frank Work, QC, cautioned that many privacy issues remain unaddressed.

Specifically, Work pointed out that the engineering of the Smart Grid could not advance until Alberta’s privacy laws were taken into account. These statutes include the Alberta’s Personal Information Act, the Freedom of Information and Privacy Act, and the Health Information Act.

These observations indicate that the City of Lethbridge is withholding important information from its constituents that we need to make informed, democratically-based decisions about our new Smart Meter and Smart Grid technology. The city’s haste of installation together with its eclipsing of the true nature of smart meters indicates that serious investigation is required. Could this haste have anything to do with the recent change in the provincial government from PC to NDP control?

The smart meter project is more consequential than a simple “replacement” of electric meters. It’s part of a far-reaching international reengineering of our power infrastructure. Smart meters, smart grids, and ubiquitous two-way microwave communications are impacting our lives in many ways.

Mayor Spearman owes his constituents open-minded consideration of our concerns as well as full disclosure about the true nature of the project. It would be a conflict of interest for him to act exclusively as a proponent of smart meters. An immediate halt to the project would enable the community and individuals to become collectively informed about our options. We do have a choice.

Anthony Hall is a professor of Globalization Studies in the Liberal Education Program at the University of Lethbridge.

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