Coal Trains still coming back to Vancouver Island?

Certainly looks like it.

A few months ago there were some articles online about a company looking to get the rights to and then mine coal near Courtney here on Vancouver Island. It caused quite a stir, particularly in the rail community as the company directly mentioned the close proximity to the E&N and the deep sea port at Port Alberni in its literature.

Well, even though the economy has gone in the tank, it seems as though things are still proceeding.

In February and March, Compliance Energy Corporation went through and signed a partnership in the project with I-Comox Coal Inc a subsidiary of ITOCHU Corporation and LG International Investments (Canada) Ltd. a subsidiary of LG International Corp. They also signed a deal with West Fraser Mills, the original holders of the land to purchase around 29,000 hectares near Buckley Bay and Courtney.

Below is an overview map of the area… with the “Bear” area just south of Cumberland and Comox Lake and the “Raven” area nearer Buckley Bay.


View Larger Map

The Main find that includes Metallurgic (iron/steel) grade coal is in the bottom middle of the image, near where it says “Comox Strathcona A”. This terrain view is easiest to see where the claim is as it relates to surrounding communities. The entire flat area between the water and where the mountain hills start from Fanny Bay in the South to Comox Lake in the North is the general area of the plot.

Here is a slide from a recent presentation given by CEC.

Presentation Screen Cap of VI Coal interests
You can see the various interests CEC has, with Raven being the one considered most profitable.

Their latest filings show that they are still actively pursuing the Raven project.

CEC has provided $7 Million to its Asian backers to “fund all of the activities necessary to reach a production decision on the Raven Coal Project.”

Notice that they said “production decision”, which is quite different from production itself. That said, they seem very optimistic on both the quality and marketability of the project. Other documents say they are hoping to have their first shipments in 2011 or 2012… but this little paragraph in their latest filing indicates there are financial pressures coming to bear that are not unrelated to the wider economy.

The Company will continue to require funds and as a result, will have to continue to rely on equity and debt financing. There can be no assurance that financing, whether debt or equity, will always be available to the Company in the amount required at any particular time. Management is of the opinion that sufficient working capital will be obtained from external financing sources to meet the Company’s liabilities as they come due.

So we’ll see what happens here. The partners in the project, ITOCHU and LG, are multi-billion dollar players in the asian coal and steel industry, so their financial well being is not in doubt. What is in doubt with whether this small company, lead by CEO John Tapics (out of Alberta electricity/coal sector, click for more on the Board), can make this happen, and more importantly, sell it to Island residents.

Newt Gingrich can’t Count (oil) he’s dangerous.

Today the House Energy Committee got a visit from Al Gore… and he ruffled some feathers… especially those of Mr. Gingrich.

Here’s his response

He says that Al Gore presented “misleading ascertions”.

Newt says…

[Al Gore] said for example, the rate of new discoveries, is falling for energy. That’s factually not true.

Actually, Newt, it is true. And it has been true for over 60 years… and here’s the proof Newt:

Discoveries

In 1965, 60 Billion barrels of conventional oil were discovered.

But Newt goes on:

In the last 3 years we have found (who is we?) have found 100 years of Natural Gas in the United States

That’s nice Newt. If I took only one sip out of a coke bottle every day then it might last 100 years as well. The question Newt, is not the amount, it is the rate. How much of the 20 million barrels of oil that the US consumes in a day can that “new natural gas” displace.

The answer, according to the US Energy Information Administration (PDF), is very little.

From 2004 – 2007, 46 Trillion Cubic Feet of “Proved Reserves” were added. Yet Estimated Production only grew by 0.2 Trillion cubic feet a year… the US consumed 23 Trillion Cubic Feet of Natural Gas in 2007

The picture for oil and oil substitutes like Natural Gas Liquids is even more grim:

From 2004 – 2007, 1.6 Billion Barrels of Crude Oil Equivalent were discovered of Natural Gas Liquids reserves. Yet estimated Production grew by 4 million barrels a year. That equates to 11,000 barrels of oil a day… roughly 0.06% of the daily 18 million barrel consumption in the US.

And finally, for crude oil…

From 2004 – 2007, -547 million barrels. Repeat. Negative 547 Million Barrels of crude oil were “discovered”….. in other words, we used it up faster than we discovered new stuff. Which brings us back to the graph above, the graph that matters.

Production of crude oil in the United States was 1.8 Billion barrels in 2004, and 1.7 in 2007. That’s a drop of 100 Million Barrels of oil a year or 0.5%.

……….

I hope that clarifies things for you Newt. The party is over. I know you’ll never accept it… probably not even when either your country collapses under its own debt to oil producing countries, or riots erupt from gas shortages and skyrocketing prices… but at least there are some who get it.

And by the way, from 1997 to 2007 total estimated production of Crude Oil plus Natural Gas Liquids went from 3 Billion Barrels of oil a year, to 2.5 Billion Barrels. A drop of 16%.

Brazil can’t save you Newt. Even without the current global recession, production from the new Brazilian finds wasn’t going to reach its full potential of 1.1 Million barrels a day (400 Million a year) until, wait for it, 2017.

Lets see.. in another 10 years we will likely drop another 16%… another 500 Million a year… much more than Brazil could provide, if even it all went to the US, which it won’t.

You’re dangerous Newt. You’re Dangerous!

Here we go again… Oil Price Speculation or Real?

CNBC.com this morning has an article that I wasn’t expecting until at least August this year. But here it is all the same. The topic? Oil Prices Resist the World’s Recession Trend

Their main point:

The resilience shown by the oil markets is not because of any improvement in the global economy or rise in oil consumption. Global demand remains on course for its steepest drop since the early 1980s, and oil inventories are at their highest levels in 19 years.

Instead, analysts said, oil is once again being sought by investors as a refuge against a slumping dollar and rising inflation.

Lets stop right there. Slumping Dollar? The US Dollar has gained over 20% over the Canadian dollar since July and the same can be said for the Euro and Yen. INFLATION? Last month, the US officially experienced DEFLATION (negative inflation)… so I’m really not sure what planet CNBC is on!

But then, the very next sentence, they take a different tone:

Stabilization of the oil price is also a victory for the OPEC cartel, which has succeeded in cutting output sharply to match lower demand.

and so, once again, it’s all evil OPECs fault. Because, you know, it has nothing to do with plummeting oil production in Mexico (World #3 Super Giant field Cantarell is now producing less than other Mexican fields).

Oh.. but wait…

The perception remains well ingrained in the market that oil supplies, while plentiful today, may prove insufficient once demand picks up again.

Huh. So you mean investors don’t buy the “drill drill drill” mantra? You mean investors have looked abroad and seen conventional production in Mexico, Canada, the UK, Russia and Norway declining even while prices skyrocketed over the past 5 years? You mean investors have seen Saudi Arabia hit a wall, unable to pump more oil without damaging it’s fields.

Investors know this.

The OECD knows this.

So why the “speculation” talk? We have been given a great opportunity during this recession… depression, the first shrinking of the world economy since WWII (OECD), demand is knocked down. The pressure is off… people are LOOKING for work. We need to put them to work creating a new economy… low energy, high efficiency, low carbon.

If we wait until “recovery” happens, then we are doomed to be right back here within 2 years.

The NDP should Axe the Tobacco Tax.

Carole James

Yes, they should. It adds $37 to a carton of cigarettes. Canadians have pumped $138 Billion into government coffers since Louis St. Laurent levied the first tobacco tax in 1950.

And where has that gotten us? Censorship. Certain companies can’t advertise in certain places… or at all? Discrimination. Folks, stuck outside, 5 metres from everything, trying to lite up in the cold Canadian wind.

Is this the Canada we want to live in? Where habit is treated like a threat rather than a comfort? Where businesses are sued instead of embraced? Where hospitals are filled with the sick and needy… rather than the terminally happy?

In 1965, 60% of Canadians were loving life in Marlboro country, now only 25% enjoy that priviledge.

Carole James, thousands of British Columbians are counting on you to keep fighting against these repressive regimes. Not since “Colonel” Drew stood in the House against another giant taxgrab in 1950 has there been someone to fight against these grave injustices. Good Luck.

George Alexander Drew

***THE PRECEDING POST WAS EXTREMELY SARCASTIC —- I DON”T EVEN SMOKE —- THE CARBON TAX IS THE FIRST STEP TO ENDING OUR ADDICTION TO OIL —- OPPOSING IT TO SCORE POLITICAL POINTS ONLY ENDANGERS MORE LIVES DUE TO CLIMATE CHANGE AND RELIANCE ON INCREASINGLY PRECIOUS CRUDE OIL AND NATURAL GAS***

Peak Oil and Gas biting hard in Alberta – Have-Not soon.

While both the Liberals and Conservatives in Parliament talk up the potential of the Tar Sands to keep votes in Alberta… the reality on the ground is starting to really hurt the revenues of Canadas’ richest province.

As far back as August last year, at the apex of the oil price shock, there have been major warning signs that peak oil and gas production was starting to hurt Albertas revenue/royalty stream.

From the article last year:

Natural gas provides about $6 billion of the province’s $10 billion oil and gas resource revenue and accounts for most of the roughly $27 billion spent each year to explore for conventional hydrocarbons – which, incidentally, dwarfs high-profile oilsands spending.

In 2008, Canada’s natural gas output and drilling have both been in decline, while south of the border the natural gas drilling business is going flat out and gas output is up. Provincially, gas production is up markedly in British Columbia – but given Alberta’s 90 per cent weight in Canadian production, Wild Rose Country’s performance is pulling Canada’s national figures sharply lower.

This is the definition of Peak Oil my friends… pouring more and more money into exploration/wells just to offset the production lost due to a peaked resource… and because Natural Gas tends to decline much more sharply than Oil, the reliance on Gas royalties puts Alberta in an even worse position.

And now that oil prices are “low” at $50, oil companies don’t want to invest in a futile effort… here is yesterdays article:

Natural gas makes up two-thirds of all activity in the oilpatch and production has fallen almost 15 per cent over the past two years, taking the biggest contributor to the government’s revenue stream down with it. From a peak of about 14 billion cubic feet a day in 2001, Alberta’s gas production has steadily slid to a little more than 12 billion cubic feet at present.

So what? you might say… we have the Tar Sands. Well, without Natural Gas, you have no tar sands as it is required to melt or steam the oil out of the sand.

The implications of Peak Oil and Gas in Alberta?

  • Alberta will likely be a “have-not” province within 5 years, and stay that way indefinitely, much like the maritime provinces
  • Natural Gas prices in North America will rise sharply over the next few years as US production starts to fall and increased demand from a recovering economy and rejection of foreign oil takes hold.
  • A nuclear energy plant will be built somewhere near Fort Mac in order to replace the energy lost to declining Natural Gas.
  • LNG imports into North America will increase putting more upward momentum on Natural Gas prices.
  • NAFTA will be center stage once more, as the clause requiring Canada to export its fossil fuels to the US starts to worry citizens and politicians alike.