What do the NAFTA Negotiations Mean for Alberta Oil and Gas Industry?
The North American Free Trade Agreement (NAFTA) is a trade agreement between Canada, the United States and Mexico signed in 1992 that gradually eliminated tariffs and trade barriers between the three countries
The terms of the agreement are on the table in hopes of modernizing the deal for the current time.
The NAFTA negotiations commenced upon the election of US President Donald Trump. Reopening NAFTA was part of his election campaign in order to put “America First”.
Canadian Prime Minister, Justin Trudeau, stated he is looking forward to the modernization of NAFTA although he doesn’t now agree with president Trump’s reasoning to reopen the deal.
So, what does the NAFTA negotiations means for Alberta Oil and Gas Industry?
The current 23-year old trade deal has driven North American oil and gas renaissance and paved the way for $34 billion worth of energy exports to Canada and Mexico last year.
It is likely that the deal will expand to cover new technology and intellectual property, showing modernization of the 23-year old trade deal.
Alberta has a huge stake in NAFTA. Alberta has become an important part of U.S. energy imports due to energy trade liberalization under NAFTA. Alberta is the US’ largest supplier of natural gas at the moment, averaging nearly $90 billion a year over the past five years.
The US is also Alberta’s largest trading partner for food and agriculture products. Alberta also does billions of dollars in trades in plastics, machinery and organic chemicals.
If the US withdraws from NAFTA, trading to the US will not stop, but it will get more expensive. Changes to NAFTA can reduce investment protection or revert to high tariffs and trade barriers that preceded NAFTA. This could put at risk the tens of millions of jobs in Western Canada because Alberta has the largest number of jobs tied to exports to the US.
Reverting to the old Canada-US Free Trade Agreement would mean that trade between the countries would be governed by higher World Trade Organization tariff schedules. This would also give opportunity for President Trump to impose tariffs that may inflict damage in certain sectors.
For Alberta, a World Trade Organization tariff schedule would see tariffs applied on petroleum liquids crossing the border. Heavy oil from the Athabasca oil sands would face a higher fee than light oil.
Ultimately, the NAFTA negotiations could be a deal breaker for Canada. The current NAFTA agreement creates efficiency and clarity. But without NAFTA, there wouldn’t be any dispute mechanisms in place, and Canada would have to go through the US courts with every trade dispute.
US Lifts Keystone Oil Pipeline Pressure Restrictions
In November of 2017, TransCanada had to shut down the Keystone pipeline after a spill in South Dakota. They were ordered to operate at a reduced pressure later that month. The restriction was only limited to a small part of the pipeline that links Alberta’s oil sands to US refineries.
As of December 1, pressure restrictions were in place from the pipeline’s Luverne pump station to Ludden pump station and on the segment that had the leak. Reduce flows on the Keystone pipeline helped drawn down inventories in the Cushing, Oklahoma storage hub.
On April 3rd, 2018 TransCanada requested that the remaining pressure restrictions on the Keystone pipeline be lifted and the PHMSA approved the request.
In early May 2018, pressure restrictions on TransCanada Keystone pipeline were lifted by the US pipeline safety regulators.
Returning to full capacity on the pipeline is expected to help relieve a bottleneck in Alberta caused by an increased in production with a shortage of pipeline and rail capacity.
A glut of oil has overwhelmed pipeline access markets and contributed to big differences between bitumen-blend Western Canadian Select oil and West Texas Intermediate oil. The price of Western Canadian Select oil went from highs of about US$30 to US$17 per barrel and has caused a series of maintenance shutdowns at oil sand producing facilities that had to reduce production.
The lower prices have led some companies to produce less heavy oil in the first quarter, while companies such as Husky Energy Inc. started buying heavy oil for use in its refineries because it was cheaper than producing its own oil.
Paul Miller, TransCanada’s head of liquids, said in a conference that there wouldn’t be a big increase in their throughput once the ban is lifted based on some changes they have already made. This means that the lift would be a minor input on TransCanada’s throughput.
TransCanada has been moving historical volumes with drag-reducing agents and the lift will make it easier for TransCanada to operate.
What do you think about the restriction lift? Let us know in the comments below.
THE IMPORTANCE OF EMERGENCY SHUTDOWN SERVICES IN THE OILFIELD
It is known that the oilfield industry inherently poses many hazards. Therefore, it is crucial to have and implement emergency shutdown systems that will minimize risks. These are put in place to proactively tackle an emergency and protect humans, industrial plants, and the environment.
Implementing an emergency shutdown system offers a disciplined, systematic approach for hazard identification, safety requirement specifications, and safety system designs, operations and maintenance. For optimal operational efficiency and safety, we have laid out the most important reasons as to why oilfields must have emergency shutdown systems.
- Safety: Enough protection from failure or danger. Safety controls are designed so that anything that can harm a system, does not influence the operating state of a plant, where the hazard potential is lowered. Measuring safety levels will indicate the chance of a system not performing during its specified time interval.
- Reliability: The ability of a system to fulfill its function during its operation time. To measure reliability, experts use “Mean Time Between Failure”.
- Availability: The probability that a system will function. This is calculated in percentage, by dividing the mean operating time between the mean down time of a system.
Emergencies in the oilfield typically involve:
- escape of hydrocarbons
- fire outbreaks
- pressurized gases
In short, emergency shutdown systems are so important because, in case of an emergency, not having these, can bring a series of detrimental repercussions: economically, environmentally, and operationally.
Elements in a Shutdown System:
- Emergency shutdown valve
- Valve actuator
- Emergency shutdown controller
It is crucial to conduct risk analysis that follow the high safety standards. Generally, emergency shutdown systems need a high SIL (Safety Integrity Level) of 2 or 3. This defines the level or risk-reduction given by a safety function or procedure. The chart below depicts the Emergency Shutdown levels used in the petroleum industry:
|ESD Level||Action||Magnitude of incident||Cost of Incident|
|1||Total facility shutdown||Catastrophic||Less than $10,000|
|2||Unit or plant shutdown||Severe||Up to|
|3||Equipment shutdown||Major||Up to|
|4||Equipment protective system shutdown||Slight||Less than $10,000|
|5||Non-ESD process and control alarms||Routine||Around|
The activation of an Emergency Shutdown System should be as simple as possible, and the measurements taken depend on the magnitude of the emergency. Also, inspectors and personnel should be trained and knowledgeable when assessing these kinds of protection systems. Trainings should include proper operation and maintenance procedures from start-up to shut down, as well as during operations and during an emergency such as a leak or spill.
Learn more about Plainsman’s Shutdown Systems here! http://plainsmanmfg.com/products/safety-shutdown-systems/
Shutdown by Levels examples of actions
- Shutdown parts of the system
- Isolate Hydrocarbon and/or stop hydrocarbon flow
- Isolate Electrical equipment
- Emergency ventilation control
- Close watertight doors and fire doors
Safety Shutdown Systems from Plainsman include our HiLo-Matic product line. This is a self-contained, zero emission and reliable valve shutdown system that does not require external power. Plainsman is capable of providing a complete turnkey system, assembled, tested and ready for on-site operation.
Remember there is no such thing as zero risk. Thus, it is crucial to plan ahead to minimize and prevent failures, specially in a volatile industry like Oil & Gas. It is beneficial to plant owners, staff, the operations of a plant, and the environment!
Give us a call today! Our team of experts would love to be the ones to help you, Call Toll Free 1-877-448-0586.
ALBERTA’S CARBON TAX AND WHAT IT MEANS FOR YOU
Alberta and Carbon
Albertan’s heavily rely on coal as a major source of energy, be it for transportation, heating, or gas. The burning of carbon is linked to the emission of greenhouse gases and carbon pollution. Since Alberta has the highest coal pollution out of all the provinces in Canada, the province’s government is always looking for ways to improve in a way that benefits all citizens.
Why a Carbon Tax and How Will it Work?
Considering that Alberta produces the most pollution in Canada, the government has implemented the carbon tax with the goal of reducing emissions. Ultimately, the tax will encourage Alberta’s families to minimize carbon pollution. The carbon tax will be applied to transportation and heating systems which includes diesel, gasoline, natural gas and propane (it does not apply to electricity).
Carbon Levy Rates
You may be asking yourself, how much will I be charged? and how is this calculated?
Well, at the beginning of 2017, a carbon tax was implemented at $20 per tonne on carbon dioxide emission. As of January 1, 2018, it increased to $30 per tonne.
- Gasoline: Increase from $4.49 per litre to $6.73 per litre
total increase: $2.24/L
- Diesel: Increase from $5.35 to $8.03
total increase: $2.68/L
- Natural Gas: Increase from $1.01/GJ to $1.57/GJ
total increase: $0.50 per gigajoule (GJ)
- Propane: Increase from $3.08 to $4.62
total increase: $1.54/L
Where is My Money Going?
The revenue collected from initiatives to reduce emissions will be going to pay investments that support the transition to this new, fuel efficient, low emission economy. This includes rebates that protect low and middle-income families. It has been projected that 60% of households will get a full or partial rebate. Other places where your money will go to:
- Renewable energy projects and electricity transition projects
- Industrial and consumer energy efficiency programs
- Indigenous climate leadership initiatives
- Environmentally efficient transit and infrastructure projects
What a Carbon Tax Means for the Oil & Gas Industry
Plainsman is committed to improving production and becoming as efficient and waste free as possible. What the carbon tax implies for industries like the Oil and Gas production is that companies who use best practices and invest in energy efficient facilities will be rewarded. On the other hand, companies who do not follow best practices will face higher charges due to the fees implemented. For instance, if a company exceeds the set amount of emissions will have to pay $30/ tonne of emission over the limit.
In this sense, Alberta will be looking to being more competitive and encouraging its companies to follow in these practices. This restructuring is called the Carbon Competitiveness Incentive and will replace the regulations currently set under the Specified Gas Emitters Regulation.
At Plainsman we are committed to becoming sustainable and as waste free as possible. These new regulations will contribute to big oil companies like us, by creating the investment and structure needed for us to move towards these efforts.
Learn more about our products today http://plainsmanmfg.com/products/.
What is Natural Gas?
Natural gas is a combination of gases naturally found below the surface and in Earth’s atmosphere that are rich in hydrocarbons. The colorless and odorless gas is mostly comprised of methane, one of the major organic compounds on Earth, which consists of one carbon and four hydrogen atoms. In addition to methane, there are also small traces of combustible hydrocarbon gas liquids and nonhydrocarbon gases. Humans mainly utilize natural gas as a source of energy for heating methods like cooking and electricity generation.
Natural gas is often referred to as ‘fossil fuel’ because it was formed hundreds of millions of years ago from organic matter, like plankton, and other life forms. The gas is usually found in rock formations below the surface of the Earth, with Petroleum. Natural gas reserves are buried deep inside the Earth, close to other hydrocarbons beds like coal and crude oil.
Millions of year ago, plant and animal remain decayed and built up in thick layers, in some cases, mixed with sand and silt. With the help of pressure and heat, some of the organic material turned into coal, while some turned into Petroleum and others into natural gas. In certain places, however, the natural gas transferred into large cracks and spaces between layers of rock.
Natural Gas Extraction
To extract the natural gas, large drills will pierce the Earth and unlock the natural gas from its underground reserves. Then, pipelines will take the weightless natural gas and transfer it to the end user.
It is important to note that natural gas is never used in its pure purest form, it instead goes through processing and is converted into cleaner fuel for consumption. By-products like propane and ethane are also extracted during the processing of natural gas.
In other areas, natural gas will usually appear in the tiny spaces within some formations of sedimentary rock, often referred to as ‘shale gas.’ When natural gas appears in the form of coal deposits, it is referred to as ‘coalbed methane.’
Getting Natural Gas in Canada
To locate natural gases, geologists will first begin to study earth’s structure and behavioral processes. Then, they will locate the types or rock that they feel are likely to contain natural gas deposits. Most times, some of these areas are on land while others are offshore and deep below the ocean floor.
In regard to the delivery process, natural gas is usually transported in pipelines and it is particularly used for heating methods like fueling hot water and appliances.
Canada is the fifth-largest natural gas producer in the world and has recommended natural gas reserves to continue meeting the demand for 300 years, according to the Canadian Association of Petroleum Producers. In addition, roughly one-third of Canada’s energy needs are actually met by natural gas. One thing that’s great about natural gas is that it burns cleaner than other fuels, it is more transportable, and there is a large abundance of it in Canada, with deposits in almost every province and territory.
WHAT IS HEAVY OIL?
What is Heavy Oil?
Simply defined, heavy oil is liquid petroleum of less than 20° API gravity. It has a high viscosity which keeps it from easily flowing. Its difficult transportation is also due to the lower ratio of hydrogen to carbon as well as the presence of other minerals.
- The main difference between light and heavy oil is the density and hence, its ability to flow.
Heavy oil is asphaltic, dense, and contains very large molecules of sulfur, resins, and metals found within oil, adding to its heavy density. Also, it can sometimes contain waxes and carbon residues which should be removed before refining oil. It is crucial to understand heavy oil’s properties to develop and operate efficient processes to extract oil from the ground.
Canada is one of the leading countries in the production of heavy oil. Therefore, there are different methods implemented across the country for the extraction of heavy oil.
The most common methods are:
- Cold heavy oil production with sand
- Steam assisted gravity drainage
- Steam injection
- Vapor extraction
- Toe-to-Heel air injection
- Open-pit mining
- In-SITU Operations
At Plainsman, we manufacture and distribute products for oilfield production, pipeline maintenance, construction and gas and water distribution. Check our products & services or learn more by calling our experts today 1-877-448-0586
Where does heavy oil come from?
Like most forms of petroleum, heavy oil originated from plant life millions of years ago. Formation of oil occurs when plants and organisms die and decompose. Their sediments are buried and compressed onto the bottom of the sea. Throughout time, weather conditions, the pressure of rocks as well as heat will take the carbohydrates and turn them into hydrocarbons. Then, these reservoirs of oil are most likely found in porous rocks like sandstone and limestone due to these rock’s characteristic permeability.
Canada holds the most extensive areas where oil can be found in the sand and rock commonly referred to as the Oil Sands. Oil sands are a kind of heavy oil and play a big role in our everyday Canadian economy. They contain mixtures of sand, water, and clay known as bitumen.
Heavy Oil Pros and Cons
Currently, heavy oil plays a big role as a large contributor to the world’s energy, specially as new methods for renewable energy are being sought. However, new technologies are looking to replace our existing energy sources. For instance, ethanol, and hydrogen will more easily replace oil, similarly to how oil replaced coal. You can read more about coal and carbon in our blog about the end to Alberta’s carbon taxes by following this link: http://plainsmanmfg.com/blog/albertas-carbon-tax-and-what-it-means-for-you/
Furthermore, Canada’s economy heavily relies on the production of heavy oils, seeing as the region, along with Venezuela, has the largest oil sand reserves in the world.
- Advantage: The energy density that creates an alternative source for transportation fuel and other products like plastics.
- Disadvantage: These processes pose environmental obstacles such as greenhouse gas emissions.
At Plainsman manufacturing we are committed to finding the best ways to produce energy and reduce harmful gas emissions. We deliver superior quality products that meet our customers expectations in a timely, waste-free manner.