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CAE Alliance

Bill Gwozd: Canada Must Act Now Or Face A Painful Gas Pinch

Canada's natural gas production capacity is shrinking while North American demand continues to escalate. A supply crunch is inevitable, warns Bill Gwozd, vice-president of gas services for Ziff Energy Group, unless governments and industries react aggressively. "Politicians should create intelligent incentives for higher-risk gas activity as well as favorable policies toward clean coal and nuclear power," Gwozd says. "These issues are bound to be controversial. In fact, our biggest risk is political paralysis."

The gas specialist has coined a term - NIMTO, Not In My Term of Office - in reference to politicians who avoid difficulties rather than seriously seek solutions. In the case of the gaspatch, according to Gwozd (shown here), the national interest is at stake. "Many industries depend on ample, affordably priced energy," he says. As the gas supply tightens between now and 2015, he adds, different types of gas customers will respond in different ways:

* Given Canada's climate, residential and commercial gas consumption cannot diminish by a large percentage with current technologies although marginal improvements are possible.

* Most gas-fired electricity generation, which continues to grow on this continent, cannot switch fuels. Unfortunately, large generating plants which consume uranium or coal take five to ten years to bring on line.

Gas leakage and other "parasitical" factors in production and transportation account for eight percent of gas production. These losses cannot be decreased dramatically without new technology.

* Gas demand can be most readily curtailed by energy-intensive industries. One possibility is new efficiency-enhancing technology. But the most easily applied solution is shifting operations to foreign jurisdictions where energy remains available and less expensive.

"We're already seeing fertilizer plants moving offshore and that trend could deepen a great deal in other industries," Gwozd says. "Improving our energy efficiency and developing new sources of energy will require long lead times. If Canada allows itself to simply drift into a deepening energy squeeze, we could run out of time to adapt and we'll forfeit a lot of jobs from coast to coast."

No Canadian is more deeply versed in natural gas than Bill Gwozd. A professional engineer, he attended university in Calgary. He joined Amoco Canada for eight years, then moved to the ATCO Group just before the federal government deregulated gas marketing in 1986. His work focused consistently on gas supply, marketing, storage and processing, including managing flows into and out of ATCO's pipeline network. In 1992, he recalls, gas prices suddenly lurched upward to $3 per thousand cubic feet from $1, creating pandemonium among buyers. "By the time I joined Ziff in 1998, I understood how the continental gas system works under all sorts of conditions," the specialist comments.

Historically, Western Canada has enjoyed an abundance of natural gas, with producers often suffering from surpluses and virtually never from shortfalls. So what has changed?

The removal of federal gas export restrictions in 1986 prompted construction of more pipeline capacity to the gas-hungry markets of the United States and Central Canada. Producers, responding to strong demand, escalated their drilling. Between 1990 and 2005, the annual count of new wells in Canada moved from 6,000 to 27,000. And an increasing percentage of that drilling targeted gas, in part because Canada's crude oil production from conventional wells has been in steady decline since 1973.

In Ziff's outlook, natural gas production will now decline as well. In a study released last week, the consulting group forecast that annual output from conventional and unconventional sources will decrease from 16.6 billion cubic feet per day in 2006 to 13.1 bcf in 2015. "The best prospects have been drilled," Gwozd says. "Our discoveries are now grape-sized, not apples and oranges. The average successful well produces 0.2 mmcf per day, whereas it was 0.75 mmcf/d just a decade ago. The best news in our report is that the decline will slow down, to 0.17 mmcf /d per well by 2015. The bad news is that Canada's gas production overall will go down."

Ziff will soon release a North American natural gas demand study which forecasts rising consumption in both Canada and the U.S. through to 2015. "In Canada, demand will increase by over three percent per year on average. A good deal of that demand will be for oilsands production but Ontario will also need more," Gwozd says. "By 2015, Canadian production will be down by at least three bcf per day while demand will be up by three bcf per day." Further, the North American Free Trade Agreement does not permit Canada to discriminate against gas buyers in the U.S. and Mexico. If the Ziff scenario proves accurate, Canadians will find themselves competing for gas in a much tighter continental market with little or no protection from governments.

Ziff has been forecasting an impending gas deliverability decline for several years. In its recently released short-term gas outlook, the National Energy Board reinforced that message, shifting from a flat supply forecast to a decline.

Alberta Energy Minister Mel Knight, on the other hand, remains much more upbeat. Last week, he told a conference in Calgary that 100 trillion cubic feet of conventional gas remains untapped in Alberta (while 125 tcf has already been produced). "That's a different number than the one you'll see generally... I'm optimistic," the minister said. Beyond the conventional resource, there are vast unconventional gas deposits locked in coalbeds, shales and tight rock. "Is Alberta losing its role as a North American leader in natural gas?" Knight queried. "The answer for me... is absolutely and unequivocally 'no.'"

The energy minister has spent a working lifetime in the oilpatch himself (see this article) and he shares the industry's characteristic optimism. Also, his government is in a position to act in ways that might well alter the NEB and Ziff forecasts. Virtually everyone agrees Alberta's unconventional gas potential is enormous while its remaining conventional resource is far from negligible. The challenge is deliverability. How quickly can the gas resource be transformed into actual production at affordable prices?

To compile its annual production forecast, Ziff combs through historical well outputs from seven individual regions in Western Canada plus coalbed methane and tight gas. Ziff analysts also weigh technological and economic factors. All regional and technical data is then merged to form total estimates. On the demand side, every province and state is assessed with reference to five consuming sectors, and continental totals are compiled. "Our figures are not macro guesswork based on general assumptions. We do our homework thoroughly and we believe Canadian production will decline unless significant policy changes are introduced promptly," Gwozd says.

Arctic gas cannot save the day, at least initially. In the first place, Gwozd says, the volume of delta gas shipped on the proposed Mackenzie pipeline would only amount to 1.5% of Canadian daily production. Secondly, delta gas would cost twice as much as imported LNG (liquid natural gas) on the basis of current costs. "That's a huge differential," the Ziff vice-president comments. Even so, he personally would endorse federal support for the pipeline's construction. A transport link to market, in his judgment, would spark exploration and development along the vast Mackenzie River valley as well as further north in the Beaufort Sea and High Arctic.

Beyond Arctic development, what other policies should governments initiate to ensure that Canada remains well-supplied with energy? Gwozd advocates a range of solutions:

* Provincial incentives should encourage high-risk exploration in the Rocky Mountain foothills, where wells capable of 30 million cu. ft. per day can still be found.

* Producers willing to experiment with substitutes for natural gas demand in bitumen production and upgrading should receive tax or royalty incentives for taking on that risk.

Gas-fired power generation should be avoided in favour of nuclear and clean coal technologies which reduce or eliminate greenhouse gas emissions.

* On the demand side, the federal ban on energy-wasting light bulbs and similar efficiency-enhancing measures should be imposed to the degree that voters and consumers will accept them.

* In general, governments should improve their financial support for research and development that targets improved energy efficiency and minimizes the environmental footprint.

"Canadians idealistically want energy that's clean, green and cheap," Gwozd counsels. "Those solutions won't appear automatically. We need to get started as soon as possible."


Apr 11, 2006 Print Article
Coal's big chance

Ontario is facing critical electricity policy choices with important implications for the province, for its future and for generations to come.


If we make the right choices, we can have our cake and eat it too. We can demand and meet the highest environmental standards. We can achieve stable and predictable prices. And we can build an electricity system that drives economic growth and increases the wealth and well-being of Ontarians.


The Ontario government has promised "to create a modern electricity system that is safe, clean, reliable and affordable." The Association of Major Power Consumers in Ontario (AMPCO) endorses that goal. From an electricity customer point of view, the single most important policy choice is the future supply mix in Ontario. Energy Minister Donna Cansfield told a Toronto Board of Trade audience last week that she expects to issue a directive to the Ontario Power Authority (OPA) later this month.


For many consumers -- from the broad business sector to farm and residential -- the policy choices made in the next few weeks could mean the difference between continued growth and prosperity and economic failure. This is why we were disappointed that last December's OPA report contained no assessment of electricity price impacts. Even more, the OPA did no analysis of the economic impacts of higher prices resulting from its recommendations.


To offer constructive input in this regard, AMPCO commissioned a series of economic studies to assess the impact of electricity-policy choices on customers and on the provincial economy, and to raise awareness of the need to stress consumer interests in making these important policy choices. The studies involved comparing industrial electricity rates in Ontario over several years and against other jurisdictions in Canada and the United States in which AMPCO members and Ontario's industries operate and compete. Ontario's economy -- like it or not -- is still primarily a resource-based, energy-intensive manufacturing economy.


We also looked at the relative differences over time of two potential electricity supply mix scenarios. The research predicts electricity prices by modeling a least-cost combination of electricity-supply fuels and technologies within Ontario and the inter-connected electricity grid in which Ontario operates.


In addition, we looked at the impact on the Ontario economy of the OPA supply mix advice compared to an alternative that meets the government's policy objectives of a safe, clean, affordable and reliable electricity supply.


The research shows that Ontario has gone from being "in the pack" for most of the 1990s, in comparison with other Canadian provinces, to being the most expensive. The story is worse when we look at U.S. jurisdictions. In states where Ontario's industrial competitors operate, the province's industry is now at a price disadvantage.


The OPA recommends replacing coal with other forms of generation. Our alternative plan would replace existing coal plants with state-of-the-art high-efficiency coal-combustion technology, combined with best available pollution controls. This combination of technology is with us now -- it is proven and commercially viable in use in Germany, Denmark, Japan, the United States and even in Canada.


Our analysis of these two plans reveals several important insights. First, the OPA plan would make Ontario increasingly reliant on imports to meet its needs, since the province operates within a regionally interconnected electricity market. If Ontario replaces its low-cost generation capacity with high-cost production, the Independent Electricity System Operator (IESO) will dispatch low-cost generation from outside Ontario to meet the province's needs. U.S. imports means increased emissions from marginal generation units in these upwind jurisdictions. And Ontario becomes a net exporter of dollars -- an average of more than $600-million per year through the study period.


Under our alternative plan, the opposite happens: Ontario exports electricity and imports dollars -- almost $700-million a year, rising to $1.3-billion per year by 2025. Cumulatively to 2025, the difference between the plans adds up to almost $36 billion -- a huge wealth transfer from Ontario electricity consumers.


The environment benefits, too. Replacing existing low-efficiency, high-emissions coal plants with best available technology achieves a superior result than closing the coal plants altogether.


Ultimately, the policy goal should always be to seek the largest possible reductions at the lowest possible costs. Our research shows that annual consumer expenditures on electricity under the OPA Plan increase from about $7.5-billion per year to $14.5-billion a year -- an increase of 90% by 2020.


Under the alternative plan, total expenditures increase from about $7.5-billion to $10.5-billion -- an increase of 37% by 2020. The cumulative difference between the two scenarios totals more than $32-billion. This is above and beyond all the capital, fuel and other costs needed to renew generation facilities.


Adding the costs of imports (or revenues from exports) to these expenditures in the two scenarios increases the difference between the two scenarios to $41-billion. We also calculated consumer expenditures by including the cost of CO2 emission offsets. In this case, the net expenditure is reduced from $41-billion to $35-billion. This means that we can completely offset any increased CO2 emissions from coal-fired generation for about $6-billion more than if we were not to do it, but for $35-billion less than the cost of removing coal altogether.


The bottom line is that the Ontario Power Authority plan will cause Ontarians to pay more and get less. Ontario can achieve "safe, clean, reliable and affordable" power without putting ourselves out of business.


Adam White is president of the Association of Major Power Consumers in Ontario.


National Post 2006


BBS News-To Cut Carbon Emissions

AES Submits Bids to NYPA to Construct Clean Coal and Biomass Facility

Investing to Reduce Greenhouse Gas

Life Cycle Greenhouse Gas Emissions of Liquefied Natural Gas


National Energy Board approves new TransCanada services for gas-fired power generators

wind variability

Barrett backs Clean and Affordable Energy Alliance

Clean Air technology adds fuel to coal-fire debate

November 16, 2006


Queen’s Park – A Queens Park media conference put on by the CAE (Clean and Affordable Energy) Alliance echoed MPP Toby Barrett’s sentiments on the potential for clean and affordable energy from coal.


Representatives from both the Lambton and Haldimand-Norfolk arms of the CAE Alliance pointed out that the McGuinty government decision to close coal-fired power plants is not based on science and economics, but on a misrepresentation of information.


After years of fighting in the Legislature against the Liberal coal closure plans, Barrett commended the Alliance members for stepping forward to speak out against government misdirection on the energy file.


“The CAE Alliance has done a great job in poking holes in the McGuinty anti-coal stance – including raising issues of affordability, reliability and proven supply of coal, as well as exploding myths regarding coal impacts and pointing to the potential for clean air technology at Ontario coal plants,” Barrett said. “The question is, if a grassroots group can come to these conclusions, and I can argue these points year after year in the Legislature, why isn’t Mr. McGuinty able to figure this out for himself.”


During their media conference the CAE Alliance presented a series of charts detailing the facts surrounding the coal debate. The Alliance members indicated that not only is coal cheaper, more available and reliable than other electricity producing fuel sources, but through the use of existing technology, often exaggerated pollution rates attributed to coal burning can be dropped to a minimum.


“The McGuinty Liberals have had three years to implement clean air technology at our coal plants to live up to their commitment to protect the environment - instead they’ve buried their heads in the sand, announcing a series of ever extending coal closure dates they would never be able to keep,” exclaimed Barrett. “Given the recent OPA report recommending government maintain current coal power plants until 2014 – and the lack of ability for this regime to understand the energy file – I was dismayed, but not surprised,  to see that not one Liberal member made it out to hear what the CAE Alliance had to say.”

Dec 8, 2005 Print Article
Ontario electricity supply tight without coal, observers warn ahead of report

By Steve Erwin - TORONTO (CP) Ontario's decision to close all of its coal plants will leave electricity supply so tight that every new generation project must be completed on time in the next two years to avoid power shortages, sources said Thursday.


A day before the Ontario Power Authority releases a crucial report outlining the province's future electricity supply needs, industry insiders were expecting the report to reveal a supply crunch that leaves little wiggle room to avoid shortages as coal plants close.

The Ontario government has promised to close its four remaining coal-fired plants in a move to reduce air pollution. The Thunder Bay, Atikokan and Lambton stations are scheduled to close by the end of 2007, while Nanticoke -- often dubbed Ontario's worst polluter -- won't be fully shut down until early 2009.


Over the next 18 months, eight of 10 renewable generation projects are expected to become available, including 300 MW of wind generation. Also, 117 MW of gas-fired generation and 100 MW from nuclear unit improvements are expected to become available. If these and other projects avoid delays, they should fill the gap from lost coal plants until about 2013. However, sources say the report will warn that the projects must be completed on time if the government wants to stick to its decision to close coal plants that currently make up 17 per cent of Ontario's electricity supply, and avoid supply shortages at the same time. In particular, the coal closures will make it "urgent" that Ontario come up with 600 MW of power before the summer of 2007 for the Greater Toronto Area, the region at most risk of brownouts and blackouts, observers say.


Sources told The Canadian Press that the report will support nuclear power projects and back the province's move to close coal facilities, despite the efforts of business groups lobbying the province to reconsider due to concerns about shortages. Various business groups argue that the Dalton McGuinty government -- which has already taken heat for delaying the closure of its last coal plant by a year -- has ruled out coal even though other jurisdictions are considering clean coal technology as a strong and affordable supply option.


“They should never have backed themselves into a corner with this issue,'' one source said of McGuinty's election promise to close coal plants.  “We're talking about one-fifth of the province's power. Did they even study this?''


According to Thursday's Wall Street Journal, the U.S. Department of Energy has signed a deal to build a $950-million US prototype for a new generation of coal-fired power plants that would remove pollutants and produce both hydrogen and electricity. And a report in the Regina Leader-Post suggests SaskPower is considering construction of a $1.5-billion clean-coal plant, dubbed the first of its kind in Canada. It's expected the OPA's report will include 10 and 20-year scenarios that recommend expansion of nuclear power, which currently accounts for nearly half of Ontario's power supply. The province has already given Bruce Power the go-ahead to refurbish units at its Kincardine nuclear station and sources say an expansion of the Darlington nuclear facility east of Toronto is in the works.


The province is also looking at increasing reliance on natural gas -- an expensive commodity for consumers, warns the Association of Major Power Consumers in Ontario. AMPCO predicted Thursday that the province will be so reliant on natural gas, and forced to import so much electricity by 2008 to avoid shortages, that consumers will have to pay $3 billion more a year starting in 2009 to cover the costs.  “All we're asking is that any future supply decisions be open to all potential sources of electricity supply,'' said AMPCO president Adam White in calling for the province to reconsider its position on coal. “If any source can meet environmental standards, then it should be considered. The stakes are too high to be limiting our options.''

Press Release

Source: SaskPower

Partnership for SaskPower's Clean Coal Project announced
Monday October 30, 12:00 pm ET

REGINA, Oct. 30 /PRNewswire/ - SaskPower, Babcock & Wilcox Canada (B&W) and Air Liquide have come to an agreement to jointly develop carbon dioxide (CO2) separation technology as the core process for SaskPower's Clean Coal Project.

The technology, called Oxyfuel, nearly eliminates emissions of combustion by-products, including greenhouse gas emissions.

"The type of innovation displayed by all partners in this project is key to building a green and prosperous future for our province," Premier Lorne Calvert said. "This project will enhance the quality of life for all Saskatchewan residents. The environmental and economic implications of the project extend beyond our borders, to the national and international stages."

SaskPower is currently examining the feasibility of designing and implementing a 300-megawatt clean coal plant that would capture about 8,000 tonnes of CO2 a day. "This may be the world's first near zero emissions pulverized coal unit," Minister responsible for SaskPower John Nilson said. "This unit would help meet emerging regulatory requirements while adding much needed baseload generating capacity while effectively using our 300-year supply of low-cost lignite coal."

"Developing partnerships will be key to the success of our Clean Coal Project," SaskPower president and CEO Pat Youzwa said. "The agreements with B&W and Air Liquide build on the design supply partnership with B&W announced earlier, and with Marubeni Canada and Hitachi for the turbine generator set - which are considered the basic building blocks for a thermal generating station."

"We are very pleased to be working on this SaskPower-led coalition, in which collaboration, cooperation and commitment are the guiding principles," Babcock & Wilcox Company vice president and chief technology officer Don Langley said.

"Addressing climate change means preventing the release of CO2 emissions into the atmosphere by coal-fired power plants," Air Liquide Group executive vice president Pierre Dufour said. "SaskPower is to be commended for having the vision and will to show the way."

B&W serves North American electric utility and industrial markets and the global nuclear utility market, with manufacturing facilities in Mellville and Cambridge, Ontario. More information on the Babcock & Wilcox Company is available at

Present in 72 countries, Air Liquide is the world leader in industrial and medical gases and related services. The Group offers innovative solutions based on constantly enhanced technologies.

SaskPower is the principal supplier of electricity in Saskatchewan, serving more than 441,000 customers. The Corporation operates with a total available capacity of approximately 3,655 megawatts, supplying customers through more than 154,000 kilometres of transmission and distribution lines. The focus of recent additions to our system is on environmentally sustainable and renewable energy sources.

    Media Fact Sheet
                                        Clean Coal Project Technology Announcement
                                        -   During the next 20 to 30 years, SaskPower will be making major
                                            decisions concerning the refurbishment or replacement of virtually
                                            its entire generating fleet. In addition to clean coal, a variety of
                                            options are being reviewed, including: demand side management;
                                            polygeneration; renewables; purchased power; imports; cogeneration
                                            and nuclear power.
                                        -   Saskatchewan's 300-year supply of mineable lignite coal remains the
                                            most cost-efficient and stable-priced fuel for base load generation
                                            requirements. However, there are environmental concerns surrounding
                                            coal combustion.
                                        -   SaskPower is leading a pre-commitment engineering study (referred to
                                            as SaskPower's Clean Coal Project) to establish a design schedule,
                                            cost assessment and project execution plan for what may become the
                                            worlds first near zero-emissions clean coal unit.
                                        -   The approximately $1.5-billion, 300-megawatt clean coal plant would
                                            capture 90 per cent of carbon dioxide (CO(2)) emissions.
                                            Approximately 8,000 tonnes of CO(2) a day would be sequestered in
                                            underground deep saline aquifers or sold to oil companies for use in
                                            enhanced oil recovery.
                                        -   SaskPower, Babcock & Wilcox Canada (B&W) and Air Liquide have come to
                                            an agreement to jointly develop CO2 separation technology as the key
                                            process for the SaskPower Clean Coal Project.
                                        -   The technology called Oxyfuel involves removing nitrogen from all of
                                            the combustion air in order to operate the boiler in the absence of
                                        -   With this process, gasses leaving the boiler are relatively easy to
                                            purify, compress and deliver for enhanced oil recovery with ultimate
                                            geological sequestration. The technology nearly eliminates emissions
                                            of combustion by-products, including greenhouse gas emissions.
                                        -   This agreement builds upon the design supply partnership for the
                                            boiler with B&W announced earlier, and with Marubeni Canada and
                                            Hitachi for the turbine generator set. The boiler and turbine are
                                            considered the basic building blocks for a thermal generating
                                        -   As well as Air Liquide and B&W, SaskPower is assisted by Regina
                                            engineering company Neill and Gunter, Marubeni Canada, and Hitachi in
                                            the design of the unit.
                                        -   B&W serves North American electric utility and industrial markets and
                                            the global nuclear utility market, with manufacturing facilities in
                                            Cambridge, Ontario; and Melville, Saskatchewan.
                                        -   Air Liquide is a world leader in the design, construction and
                                            operation of air separation units with over (euro)10 billion in sales
                                        -   If successful, the advanced clean coal power plant will be the first
                                            of its kind in a utility scale application. This project has the
                                            potential to strategically position SaskPower in global markets where
                                            coal is a major fuel source. A decision on whether to proceed with
                                            the project will be made in mid-2007, with an in service date of

Source: SaskPower

click here to download file

McGuinty's plan to shut coal plants takes a hit

Keeping promise would put energy supply at risk, Ontario electricity manager says

TORONTO -- The Ontario government should reconsider its plan to shut down all its coal-fired power plants within the next three years, the agency that manages the province's electricity system says.

The Independent Electricity System Operator said yesterday in a report that "prudence" requires that coal stations at Lambton, near Sarnia, and at Nanticoke on Lake Erie be kept in operation beyond planned shutdown dates. It said it is worried about delays in providing replacement power by the dates the government wants to close them.

The IESO also repeated an earlier warning that the Greater Toronto Area faces rotating blackouts by the summer of 2008 unless power generation is added.

The government wants the four remaining coal plants closed between the end of 2007 and early 2009 and replaced with cleaner-burning fuel sources. The plants provide 6,500 megawatts of electricity or about 19 per cent of the province's power supply.


The IESO report adds another voice to the chorus charging that the government's coal policy is unrealistic. Its cautionary words are particularly noteworthy because it is the provincial agency mandated to maintain electricity supplies from day to day, and also assess the short-term reliability outlook.

But the IESO says this is a "challenging and complex task" that requires not only new sources of energy but a major restructuring of the entire power system.

"The move to cleaner forms of generation is not simply about replacing 6,500 MW of supply," the report warns. "Given the interdependency of the system, any significant change will affect other parts of the system."

The IESO suggests that Lambton, which has a capacity of 1,975 MW, be kept open after its planned shutdown by the end of next year because the process of gaining local approval is taking longer than expected. Transmission requirements mean the 3,920-MW Nanticoke plant should be kept in operation, the report said.

The Liberals initially pledged during the 2003 election campaign to shut down all the plants by 2007. It has revised that schedule slightly, to 2009, but observers suggest the government is leery of further revisions that could be seen as breaking an election pledge.

Opposition critics said the IESO report is proof that energy policy under Liberal Premier Dalton McGuinty is unworkable and threatens the reliability of electricity supply.

"The only way the McGuinty government can keep their so-called promise by 2009 is by running the real risk that they create on brownouts and blackouts," New Democrat Leader Howard Hampton said.

The government has not done enough to create new energy supplies and transmission lines or to discourage consumption through conservation and energy efficiency to justify the pledge to shut down the plants, he said.

Progressive Conservative infrastructure critic Tim Hudak charged that the Liberal energy strategy is "misguided and dangerous."

He said the government should be investing in clean-coal technology.

Energy Minister Donna Cansfield was not available for comment but spokeswoman Erika Botond, said "our government has set aggressive targets and we're committed to our timeline, but we've always said we'll carry out our plan in a prudent and responsible manner."

Ms. Botond said the coal plants wouldn't be closed until reliable alternative supplies were assured, but the IESO warned that they would not be there for contingency purposes without proper planning to secure coal supplies, keep up maintenance and retain adequate staff.

The plants' operator, Ontario Power Generation, reported recently that it is not buying coal beyond 2007 for Lambton and beyond 2009 for Nanticoke.

Industry sources say it is also having difficulty retaining staff and planning maintenance.

The carefully worded report does not actually say the government is wrong on its phase-out schedule but it uses a number of phrases that suggest this is the case.

For example, it notes that several projects to provide replacement electricity "face a number of challenges" and notes that regulatory approvals for new power plants "can be time-consuming."

The report came the same day the government unveiled plans for a series of public forums across Ontario about the electricity industry.

Ms. Cansfield said yesterday that three days of hearings in 12 cities will be held this month to give people a chance to voice their opinions about how the province should get its energy in the future.

The hearings will focus on a report last month by the Ontario Power Authority, which recommended spending up to $40-billion to refurbish existing nuclear reactors and to build new ones.

Two Lambton coal-fired units are deemed among North America's cleanest

Sarnia Groups Fights LGS closure..Sarnia Observer

Fight to save LGS will continue...Sarnia Obser ver

Here are some articles to support our claims.....

Toronto Sun.. The lights are on here to download file

Calgary Sun..May 8,2005...All Fired Up On here to download file

Don't you think it is ironic that Calgary is laughing at Ontario?

Globe and Mail..June 30,2005...Nexon Bolts here to download file

How many company's have to leave?????

Globe and Mail...Do you like broiling in the dark? Come to Ontario...July 19/05

Air conditioned babies' keep cool...July 21/05..Globe and Mail

The problem with Natural Gas...Energy Plus...Frank Clemente..

Ontario Power Woes...Globe and mail ...July 20, here to download file

Deep in a dark age of electricity policy..Terence here to download file

Pollution death summit by: Terence Corcoran

Smog and Mirrors by: Joel Schwartz

Fueling our Future

Toronto Sun July 15...Ex-preem aide here to download file

Sarnia City council will Lobby to keep LGS here to download file

Is it time to cool off the natural gas "gold rush fever" mentality?

Publication Date: December 04, 2004
Author: Trudy Beyak
Source: Abbotsford News

Is it time to cool off the natural gas "gold rush fever" mentality?

The energy-starved U.S. will drain B.C.'s natural gas resources within
12 years if the provincial government doesn't start to protect its own
citizens, says Dale Marshall, a policy analyst with the David Suzuki
Foundation and author of the report Running on Empty, Shifting to a
Sustainable Energy Plan for B.C.

Marshall said B.C. is quickly headed for an "energy crunch" because
the province only has enough natural gas reserves to last for the next
12 years.

B.C. currently ships about 50 per cent of its natural gas to the U.S.
via the Huntingdon-Sumas pipeline hub in Abbotsford.

John Les, B.C. Minister of Small Business, however, discounts the
"doom and gloom" predictions. (See story below).

Marshall told the Abbotsford News on Tuesday that the upcoming energy
crunch does pose a serious and real problem.

He said everyone should be concerned about protecting B.C.'s domestic
supply of natural gas, and the government should maximize the economic
benefits of this limited resource.

For one thing, Marshall said the provincial government shouldn't sell
natural gas so cheaply to the U.S. For another, the B.C. Liberals
ought to start looking after the province's future supply.

"Oil and natural gas are non-renewable. When they're gone, they're
gone," he said.

Even with the possibility of discovering a new natural gas supply, the
new fields tend to be small and the fuel is becoming harder to find
and to extract, he said.

Despite that ominous fact, the B.C. government is focused on
extracting as much oil and gas from the ground as quickly as possible
and shipping these non-renewable resources to the U.S., Marshall said,
noting the energy sector is unsustainable.

He thinks the B.C. Liberals are short-sighted, but the dilemma is that
we can't just shut off the energy tap to the U.S., he said.

"The province can't decrease the amount of natural gas that is shipped
to the U.S. because the North American Free Trade Agreement (NAFTA)
guarantees the U.S. will get the same level of natural gas that was
sold on average during the past 36 months," Marshall said.

"The proportionality clause in NAFTA locks us into the amount of
natural gas we send across the border."

With that in mind, Marshall believes B.C. should immediately try to
control any increase in the flow of natural gas sold to the U.S. and
the royalties paid to the province should be bumped up to reflect the
fact that it is a finite resource and the province is running out.

"Even now we can't even hold on to 50 per cent of our own natural gas
supplies even if we need it because NAFTA guarantees the U.S. share,"
Marshall said.

"Increasingly, we are losing our sovereignty over our own resources."
Marshall questions the rationale of B.C.'s energy planning.

The government plans to integrate B.C. into the U.S. energy market and
encourage independent companies to produce power in B.C. which can
then be sold to the U.S., Marshall said.

U.S.-based multinational corporations, such as Duke Energy and Calpine
Corporation, are starting to move in.

Duke Energy now owns the former Westcoast Pipelines in B.C. which has
donated substantial financial contributions to the B.C. Liberal Party.

Calpine is one of the largest power corporations in the U.S. and is
the operator of the Sumas Energy 1 (SE1) power plant in Sumas.

If Sumas Energy 2 (SE2) is constructed next to the Canadian-U.S.
border and the natural gas hub, Duke Energy will transport 115 million
cubic feet of natural gas a day to be burned at the controversial
power plant.

The amount of natural gas that SE2 will burn each day is equal to 55
per cent of the total residential consumption in Washington state,
according to evidence presented to the Energy Facility Site Evaluation

Marshall said the long-term goal of the B.C. government must be to
assure energy security for its own citizens.

He is also concerned that B.C. is not creating enough jobs from this

Although forestry employs 90,000 people, for example, the oil and gas
sector only employs 1,300 people, Marshall said.

In fact, employment in oil and gas decreased from 2,500 employees in
1992 to 1,300 in 2003 due to productivity efficiencies.

The provincial government, however, maintains there are actually
11,000 people employed in the drilling and exploration industry.

Marshall said B.C. has only two small refineries and most of the oil
leaves the province unrefined.

He is also disappointed with the Liberals' energy plan because it
allows for coal-fired power plants, which produce an unacceptable
amount of air pollution and greenhouse gases.

Climate change is a critical global issue, he said.

To compound B.C.'s goal of encouraging more oil and gas development,
the government has weakened the Environmental Assessment Act for new
projects, Marshall said.



by Andrew Nikiforuk

Eight wrong ways to think about the future of energy.


In 1976, Marion King Hubbert, the visionary U.S. geophysicist who once worked for Shell, warned that North Americans would soon face a bigger problem than US$50-a-barrel oil and astronomical gas prices. He defined the challenge as a "cultural" blindness to the realities of resource depletion. Because North Americans have known nothing but "exponential growth" in fossil fuels, Hubbert reasoned that we had become incapable of "reckoning with problems of non-growth."

Hubbert, who in the 1950s accurately predicted when oil production would peak in the United States (1970), also had a practical solution. He thought North Americans needed to undertake a "serious examination" of oil and gas trends, and their formidable economic implications, before shortages or price spikes made things really messy for ordinary business.

But a number of energy myths continue to smother, if not deter, the debate Hubbert envisioned. The status quo in industry and government avoids the word depletion; most argue that technology, looser regulations, more drilling or price mechanisms will keep the hydrocarbons flowing. (Statistics show Canadians are producing, consuming and exporting more energy than ever.) The oilpatch can't imagine the end of affordable fossil fuels any more than cod fishermen could imagine the end of cod.

An increasing number of geologists and gas analysts, however, believe that a fact does not cease to exist just because it is ignored. One of Canada's most serious examiners of energy trends and forecasts is Dave Hughes, a calm, deep-voiced Calgary-based geologist with Natural Resources Canada. Over the past two years, Hughes has put together (in his spare time, no less) an exhaustive open file on oil and gas supplies. His detailed presentation has surprised, alarmed and rankled bureaucrats, professional oilmen and CEOs alike. The facts not only question the country's pervasive energy myths; they warn that Canadian business will face crippling bills and shortages if the country takes a business-as-usual approach to energy supplies. "We are facing an energy crunch," says Hughes. "We can smoothly manage the transition to a more sustainable energy future, or the transition will manage us."

Hughes and many other analysts don't think we will be able to manage anything well until we reject the reigning assumptions and accept some disturbing realities. The world has lots of oil. The world may have lots of oil, but it is running out of cheap conventional crude. Since 1965, demand for oil has increased by 150% worldwide, and rapid economic growth is now driving the biggest yearly increase in world demand in more than 20 years. Given that remaining oil supplies largely lie in "volatile terrain (the Middle East, Russia and West Africa), the distribution of oil has become a massive geopolitical headache. China and India's humming economies have added to the strain.

The resource is also in a persistent, undeniable state of decline. As Hughes notes, production has exceeded discoveries since 1983. In 2004, the BP Statistical Review of World Energy, the gold standard for real numbers on oil and gas, looked at 54 producing countries and outlined the disturbing face of oil depletion. Twenty-two nations, representing a third of the world's oil production, are in decline. Another 14 countries, ccounting for 42% of the world's output, are producing on average 22% below their peak. Only 18 nations, accounting for a quarter of the world's production, have yet to experience a peak--but they will soon. Iran peaked in 1974 and Nigeria in 1979. The United Kingdom's North Sea bonanza peaked in 1999, and actually declined 9% over 2003.

Between 2008 and 2010, Hughes estimates world oil production will climb to 87 million barrels a day and then falter. Supplies will tighten and prices will continue their steady ascent. This collective peaking in deliverability simply means oil production can no longer grow to meet future demand (or even to offset depletion). As Hughes notes, the oil left "will be the hardest and most costly to extract." And much of it will require  transportation through hazardous political geography.

With the world's oil production machine now fully deployed--production is at 99% of global capacity--energy security is now walking a tightrope. A snap cold spell or a hurricane in the Gulf of Mexico (not to mention bombs in Iraq) have already sent prices flying northward and will do so again. Energy vulnerability (what the media has dubbed "the fear factor") has arrived in our living rooms for a long stay. Canada's oilsands can make up for declines in world conventional oil production No way. Like most big energy projects, Alberta's oilsands will deliver more hyperbole than oil. The Alberta government claims the prolific sands hold as much as 311 billion barrels of recoverable oil--a prize greater than all of Saudi Arabia's oil wealth. True or not, this figure conveniently masks some key limitations--namely, says Hughes, "at what rate this oil can be produced and what the capital, energy and other limits to production growth are." After the Alberta Energy and Utilities Board and the Houston-based Oil & Gas Journal reported that 175 billion barrels of the tarry goo were proven reserves in 2002, the New York Times challenged the numbers as wishful thinking. In contrast to Alberta's figures, the ever-prudent BP Statistical Review lists only 16.9 billion barrels as recoverable and under active development. As Hughes notes, the 311 billion and 175 billion barrel figures just don't reflect economic, environmental and engineering constraints. The costs present operational obstacles--and highlight that the oilsands are both an energy and a money pit. Hughes estimates that recovering 175 billion barrels over a 60-year period would require capital infrastructure costs of more than $400 billion, based on the current cost of extracting a barrel of oil from the sands. Such a gargantuan venture would yield an average of less than eight million barrels a day. (The United States consumed 20 million barrels a day in 2003, and the world is heading toward 82 million barrels a day in 2004, according to recent estimates.) Citizens might want to see that $400 billion go elsewhere.

The Rocky Mountain Institute, a Colorado non-profit agency devoted to market-based solutions for resource conservation, recently calculated that the United States could end foreign oil imports with a number of measures--including buying up gas-guzzling vehicles--that would cost about US$180 billion over 10 years.

Another brick wall for the oilsands remains natural gas. Today, the oilsands consume nearly 5% of Canada's natural gas supply. It is being burned to extract bitumen, a tarlike mixture of hydrocarbons that is cooked into synthetic crude. By 2025, given a four-to-fivefold expansion in production, that gas addiction could account for 20% of national consumption. By then, the oilsands will burn nearly two billion cubic feet of gas a day--the entire predicted output of the Mackenzie Valley pipeline. "You could just direct that pipeline into Fort McMurray," says Hughes, referring to Alberta's oilsands capital, "unless alternative fuels such as petroleum coke are substituted for gas." Just a year ago, Thomas Driscoll, an analyst with Lehman Brothers Inc. in New York, issued the same warning.

Most analysts regard the burning of gas to make oil a process akin to turning gold into lead.

The highest-value uses for natural gas are home-heating, fertilizer production and petrochemical manufacturing. Given that nearly 80% of Canadians use natural gas in their furnaces, politicians may have to decide whether the resource will be used to keep Canadians warm, exported for electrical generation to keep Americans cool or burned to cook up bitumen. No Canadian politician has sounded this alarm but, fortunately, Alan Greenspan, chairman of the U.S. Federal Reserve Board, has taken up the cause. In June 2003, he told Congress that Canada "has little capacity to significantly expand its exports [to the U.S.], in part because of the role that Canadian gas plays in supporting growing oil production from [its] tar sands."

In addition to tight gas supplies, the oilsands face critical shortages of water and condensate, a thinner derived from processing natural gas used to dilute the bitumen. It takes on average between one and two barrels of makeup water to produce a barrel of oil and, at forecast production growth, University of Alberta water ecologist David Schindler estimates the Athabasca River could be seriously compromised by 2020. As well, the National Energy Board predicts shortages of condensate needed to liquefy bitumen for pipeline transport as early as this year.

The National Energy Board's happiest scenario at the moment concludes that the oilsands could mine three million barrels of oil a day by 2025. "If this happens, Canada will produce a little more than 4% of forecast 2025 world demand," says Hughes. "It's no big thing in the world's scheme of things." But that resource will keep Canadian cars running.

The world has lots of natural gas.That's true. "The bad news is that most of it is not in North America," says Hughes. Places like the Middle East, Russia and Venezuela hold close to three-quarters of the world's remaining gas reserves and will soon become the new gas czars. North America consumes nearly one-third of the world's production (thanks in large part to industrial use, residential heating and electricity production), but the continent holds only 4% of reserves.

Canada, which boasts just 1% of global reserves, boosted production by 127% between 1986 and 2003 to feed domestic consumption growth and the expanding U.S. appetite for gas, and became the world's No. 2 gas exporter by the late 1990s, after Russia. Yet no federal or provincial government ever stopped to question the logic of rapidly disposing of a declining non-renewable resource at mostly rock-bottom prices.

Now production throughout the Western Canadian Sedimentary Basin is in a freefall (some say gas production peaked in 2001), while costly offshore drilling has come up dry.Canadian exports to the United States fell by 21% between 2001 and 2003. As a consequence, at current production rates Canada has less than a nine-year supply of discovered gas left. (Nearly 80% of Canada's estimated conventional gas endowment has yet to be discovered, according to the National Energy Board.) True, one-quarter of the world's drilling rigs are in Canada. Yet despite record drilling in 2003 (or what one analyst calls "brute force"--there were close to 14,000 successful gas wells drilled), production dropped by 3.6%. In 1997, the initial production of a typical new gas well was about 700 thousand cubic feet per day. Today, the average initial production of a new gas well is about 350 thousand cubic feet a day. That means many more wells must be drilled to offset natural production declines, which in Canada now total 21% a year. "What happens if that trend continues?" asks Hughes. "How many wells will we have to drill to keep production flat?"

Rising gas prices in the United States have already shut down one-fifth of its nitrogen fertilizer industry.

The gravity of the natural gas crisis is just beginning to hit the public radar. At a recent National Energy Board conference, even ever-optimistic industry types noted "the gas supply situation is unsettling" and "we have crossed the Rubicon." Julian Darley, the author of High Noon for Natural Gas, says the situation is so serious "that it is too late to panic. It is time to plan." If Canadian politicians were sensible, they would recognize that this is a cold country, says Darley. "They would cut production and exports and work out depletion rates."

Yet Canada has had no debate about the crisis. Replacing low-cost conventional gas with high-cost unconventional sources will be "an extreme challenge," according to Hughes.

If current production declines continue and growth in demand forecast by the U.S. Energy Information Administration is realized, a continental shortfall equivalent to 13 trillion cubic feet per year (about 42% of demand) could occur by 2025. Hughes predicts the crunch will arrive much sooner than that, unless as-yet-unproven windfalls result from unconventional gas sources. Banking on such things as gas hydrates or liquefied natural gas to offset declines in conventional production, says Hughes, "is akin to planning your finances on the assumption you will win the lotto in 12 or 15 years' time."

Coal-bed methane will avert a natural gas crisis.Don't bet on it. In the United States, the practice of removing methane from ancient coal seams has proven to be a controversial and emotion-laden issue, given aquifer depletion, contamination and other problems. To date, Canada's coal-bed methane industry has drilled nearly 3,000 wells, but its political and economic future remains uncertain amid heavy public and government consultation. Despite 20 years of conflict-laden pumping, the United States has yet to coax more than 8.5% of its natural gas from coal seams. Yet the National Energy Board predicts the industry could somehow milk between 13% and 23% of Canada's supply from coal-bed methane by 2025. Right now, about 0.5% of our gas comes from coal-bed methane seams in farm country northeast of Calgary.

According to a recent paper by the National Energy Board, coal-bed methane production can grow only with mind-boggling feats of intensive drilling. Projects in central Alberta between Calgary and Edmonton could further industrialize the landscape with up to 50,000 wells, and turn rolling prairie into "a manufacturing process," says the report.

Coal-bed methane production is already proceeding at a rapid pace in the West, but few analysts expect it to make up for conventional declines. "If we are going to meet the NEB prediction," says Hughes, "we have a lot of work to do."

Liquefied natural gas is a knight in shining armour It might be in Camelot, but not in the real world. Taking gas from the Middle East, cooling it, pumping it onto a tanker and shipping it around the world to terminals where it can be unthawed into a gaseous state is already a major business. In fact, the world's 150 liquefied natural gas (LNG) tankers can now move enough gas to satisfy 6% of world consumption (more than five trillion cubic feet per year).

But LNG has powerful drawbacks. It requires costly infrastructure that takes about five years to build. An entire production and delivery system costs anywhere between $3 billion and $10 billion. The process of cooling, transporting and warming up the gas is energy-intensive, consuming 15% to 30% of the resource transported. And not many communities want an LNG terminal in their backyards. An accidental conflagration at one in Skikda, Algeria, in January 2004, killed 27 people and injured another 74. Terrorists have also targeted the highly flammable facilities. Public opposition has already killed eight North American proposals for LNG terminals over the past two years.

As president of WestPac Terminals Inc., a Calgary-based LNG company, Rob Woronuk has proposed a terminal for an island 11 kilometres off the coast near Prince Rupert, B.C. Unlike many projects, it would run on a quasi-utility model, so consumers wouldn't end up paying inflated prices. "Producers will get their share, but there will be a balance," says oronuk.

"LNG is going to be crucial." Still, everyone agrees it is no silver bullet.

Coal can't help us. Not true. Coal is already experiencing a resurrection for the simple reason that it is the one hydrocarbon resource the world still has in abundance. In fact, 90% of North America's remaining hydrocarbons are coal, which is one resource the Middle East does not possess.

Coal boasts a much lower heat cost than gas or oil, is easier to transport, and provides the lowest electricity costs on the planet. But coal also comes with toxic side effects: it produces twice the greenhouse gas emissions of natural gas. "The key to coal is better and cleaner technology," says Hughes. The best technologies now on the market can reduce greenhouse gas emissions and other pollutants by 30%. Even without expensive new technology, coal has became the world's fastest-growing hydrocarbon fuel source in 2002 and 2003.

With better technologies we will squeeze more fuel out of our fossil heritage.We can hope, but technology's track record is not inspiring. In the 1970s, fusion was going to solve our woes, and Richard Nixon even promised "hydrogen-fueled vehicles." But North Americans are still waiting for any meaningful application of either innovation. In fact, hydrogen looks more and more unlikely. It makes little sense from an efficiency perspective-- the energy needed to crack the hydrogen for a fuel cell is greater than the energy produced-- and many analysts conclude that simple conservation measures would be cheaper than any transition to hydrogen.

The promise of better technology often becomes nothing more than the delivery of greater force. Right now, more technology means more drilling rigs in the field. "That's not a technological innovation," says Woronuk. "That's just high prices and brute force." Nor is anyone really investing in the future. According to Statistics Canada, R&D related to energy fell to about $900 million in 2001 from $1.3 billion in 1983.

It is also instructive to note that the Ford Model T got better fuel mileage than most of its modern counterparts. Don't worry, the market will take care of things The National Energy Board believes higher prices will solve our natural gas woes by encouraging fuel switching and conservation. Yet as Houston-based Matt Simmons, the world's foremost private energy banker, has noted, "free markets and energy security do not mix." Deregulation in the 1980s did not expand supply options and only temporarily reduced costs. With no long-term guidelines and no surplus capacity, the only thing the market can deliver is "volatility," argues Simmons. Longtime gas analyst Woronuk agrees that volatility and price shocks don't make a plan. "Economics 101 will solve the mess, but the trouble is it will do so with a machete," he says. "It will hurt."

In November 2003, a number of energy specialists wrote in the British science magazine Nature that almost all forecasts on oil prices have a dismal track record for accuracy--yet decision makers still believe the market will yield enlightened policy. "We view this as recipe for disaster and it is enhanced by the failure of science to be used as fully as it should be," concluded the authors. Hughes draws similar conclusions. He notes business as usual is "not a sustainable option," and argues "a longer view is required than the lifespan of a typical government."

Given Hughes's forecasts, Canadian businesses have three choices: they can demand an energy plan from our political leaders, pray for a technological fix or a world depression--or prepare for a wild ride with energy supplies.


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