12182018Tue
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Jul08

Out of the Ashes

BY KATE KUNKEL

tankersFrom the ashes of a tragedy that has seen the destruction of a tiny Quebec, Canada town, the ongoing debate about the safety of transporting crude oil has risen yet again. But this time, it’s not fish or eagles or algae that have been killed.

This past Saturday, early in the morning, a runaway freight train pulling 73 cars, 72 of them crude oil tankers, derailed, exploding into an apocalyptic fireball in downtown Lac-Mégantic, leveling the 3 square mile (5-square-kilometre) central district. Five people are confirmed dead; around 40 people are missing, most likely vaporized in the fireball that erupted into the quiet night.

Many of those left behind are now homeless; none of them will ever be able to sleep through a train whistle again.

The oil that was on this train was from Dakota’s Bakken oil region. This terrible accident could have just as easily happened on the very same land that is the focus of so much protest against the Keystone XL pipeline.

This tragedy has brought attention, in Canada, at least, to the dangers of transporting crude oil by train. Because it has been done for so long, many have become complacent about its potential for tragedy. While lawyers and activists and politicians argue about the potential environmental damage from a pipeline spill, thousands more tankers roll through the countryside on both sides of the border because pipeline or no, that oil has to get to refineries.

Recent estimates from the Canadian Railway Association estimate that up to 140,000 carloads of crude will be transported by rail in Canada this year. In 2009, only 500 carloads were transported by Canadian rail. These trains run through populated areas, across streams and through pristine wilderness. If the pipelines remain in limbo, many more trains will cross these lands.

There is no doubt that every safety procedure and system in place on the Montreal, Maine and Atlantic Railway and every other railway transporting crude will be investigated for the foreseeable future. The bottom line is, though, that much of the system is operating with antiquated equipment on aging infrastructure. At least Keystone XL and other new pipelines would have the latest safety systems including state of the art valves and controls. No, they are not failsafe, but I just don’t see how they could be as dangerous as tankers on rails.

Out of the ashes of this terrible tragedy will hopefully come an intelligent conversation about how oil is going to safely get from Point A to Point B. If that doesn’t happen, then more tragedies will occur, and more lives will be lost. Enough with the politics and postulating.

Kate Kunkel is Senior Editor of VALVE Magazine. Contact her at This email address is being protected from spambots. You need JavaScript enabled to view it.

Jun21

To Frack or to Farm: That is the Question

BY KATE KUNKEL

droughtIt’s a decision I wouldn’t want to be making. Hold on to every last drop of water in what might be a futile attempt to irrigate my crops, or sell some or all of it to an energy company in the hopes that I can hold onto the family farm. Every day, farmers from California to Arkansas are faced with this difficult choice because drought is affecting them and the companies who are attempting to frack for oil or gas in the same dry locales.

While it is true that fracking generally consumes less water than residential or farming uses, the process still uses up to 6 million gallons of water per well in Texas and somewhere between 80,000 to 300,000 gallons in California. That’s still a lot of water in areas where farmers have already had to cut back production because of drought. The counties that are already suffering from drought in Wyoming, Utah, Texas, Oklahoma, New Mexico, Colorado and Arkansas are also the counties that have been attracting the attention of fracking companies, and when water is for sale, the energy companies have much deeper pockets than farmers.

Rather than fight progress, some farmers like Charlie Smith from West Texas have decided to sell. Since the groundwater running under his fields isn’t enough to irrigate his crops, he’s going to let the land lie fallow and sell the water to drillers. His rationale: if he can’t make any money farming, might as well sell the water to the oil companies. Every little bit helps.

While more and more players in the shale extraction business are investing in high-tech water recycling systems, many producers still use fresh water from underground aquifers, or rivers, or they purchase surplus water from local utilities. Each state has its own regulations to deal with this issue, but it remains to be seen where this will all go in the long run. What if the droughts continue indefinitely?

Meantime, the quest for recovery from the recession and energy independence continues. I wonder, if there comes a battle for resources, whether food or fuel will prevail. What do you think?  

Jun03

Keystone XL: The Cost of Controversy

BY KATE KUNKEL

oil pipeline jobsA report just out from RBC Dominion Securities, which is a part of the group which also owns the Royal Bank of Canada, estimates that cancelling the Keystone XL pipeline would cost in the vicinity of $10 billion. While the losses would be felt on both sides of the border, more would be suffered by construction, engineering and project management companies in the U.S. because most of the pipeline is being constructed south of the 49th parallel.

While the Canadian and Alberta governments have been staunchly supporting the project since its inception, the Obama administration has not yet made its decision on whether or not to allow the pipeline in its current iteration to cross the international border. This is holding up the more than 700,000 barrels of oilsands crude which would be pumped daily from Hardisty, Alberta to the Texas coast.

Environmental groups have protested it every inch of the way, citing the possible catastrophic consequences of a spill. Recent spills from other (mostly much older) pipelines have not helped the case for building the conduit, but I have to ask – what are the catastrophic consequences of not allowing the pipeline?

Surely there are economic considerations, not the least of which is the possibility of good paying jobs during construction and ongoing refining jobs once the oil is flowing.

Environmental Costs

But what about the environmental consequences of NOT building the pipeline? While there is much talk of the fact that oil sands production creates more greenhouse gasses, (GHG) than other crude, I think it’s prudent to put the numbers out for analysis. In 2010, oil sands GHG emissions were 48 Mt (1 Mt = 1 million tonnes) in 2010. That equals less than 0.15 % of global emissions.

According to the government of Alberta, the oil sands industry has reduced GHG emissions per barrel of oil produced by an average of 26% since 1990, with some facilities achieving reductions as high as 50%. However, production is increasing so overall emissions are growing.

That is one of the arguments against the Keystone XL pipeline. But to truly compare oil sands oil with other sources, you have to follow the oil through the complete stage of their development, something called “well-to-wheels”. These lifecycle emissions are what should be discussed when considering this question.

oil tankerAs for imported oil, according to the Fraser Institute, “while oil produced in Saudi Arabia has fewer GHG emissions than that produced from heavy oil sands in Canada’s north, one must take into account that the emissions expelled from transporting Saudi oil to market by tankers adds to the overall GHG emissions.”

So there really isn’t much difference wells-to-wheels in emissions. Scratch that off the protesters’ list.

Renewables

There is much talk of ethanol and other plant based fuels as well. Do they burn cleaner? Maybe. But what is the carbon footprint of the machinery used to plant, harvest, and transport the feedstock? Is that considered by the environmentalists when rejecting Keystone because of Alberta’s GHG emissions?

For the sake of the environment, of course we should be looking at renewable energy sources like solar and maybe wind for powering electric vehicles. But judging by the terrible consequences to birds and bats of wind farms, they don’t seem to be a particularly environmentally sound option, either.

So with respect to environmental costs: yes, there are many, but is power from Alberta oil more environmentally unsound than that from any other source?

Intangible Costs

oil obama saudiAnd what about the intangible costs? What about human rights? According to the International Energy Agency, global demand for oil will rise from 89.2 million bpd to 99 million bpd in 2035. Where is this going to come from? Would you rather get your oil from Canada which is one of only two oil-producing countries classified as “free” according to Freedom House, (the other one is Norway) or from Saudi Arabia, Venezuela or Nigeria where human rights are routinely ignored and gender equality is an obscure notion?

The costs of building the pipeline continue to rise with every obstruction. Yes, it will be expensive. But what is the real cost of not building Keystone XL?

Kate Kunkel is Senior Editor of VALVE Magazine. Reach her at This email address is being protected from spambots. You need JavaScript enabled to view it..

May02

Drag Queens and Rig Pigs

BY KATE KUNKEL

Oil sands rigA unique opportunity to discuss the pros and cons of the oil sands is currently being featured in, of all things, a documentary about the karaoke subculture of Fort McMurray. The film, set in what has been called “the controversial northern Alberta oil-patch town”, is turning a spotlight on not just the town, but the product and the ongoing arguments on both sides of the 49th parallel about the pipeline that would bring its product to the United States.

According to the promotional material on the producer’s website, the film crew “initially met with a wee bit of mistrust up in Ft. Mac.” That comes as no surprise since often film crews to the area are funded by environmentalist groups from down south who are doing their level best to show how terrible extracting and shipping oil sands bitumen is for the environment.

But the take on this film is different. Despite the fact that Charles Wilkinson’s previous film was called “Peace Out”, definitely an anti-war film, his take on Fort McMurray is refreshing because it works on the premise that the people who do the work in the oil sands are just like all the rest of us. They want to work, they want a better life, and of course, like so many of us, they want to sing.

At a karaoke bar called “Bailey’s Pub”, Wilkinson met the workers who by day are valve engineers or rig operators and by night dream of professional singing careers. They are as diverse as the country from which they come. Many are from the eastern Canadian provinces which have been hit by the global recession. Others hail from the wilds of Alberta or Saskatchewan. Others come from abroad including the U.S. and Saudi Arabia. While it is still a small town, Fort McMurray has the cultural mix of a cosmopolitan city.

The documentary reflects that mix. It features a gay man who dresses flamboyantly, as his alter ego Iceis Rain, when he performs. Another performer is a petite young woman who drives an enormous rig during the day and belts out songs like a diva at night. In an interview during the film, she says, “It would be awesome if everyone would unite on the planet could work together and really make this place a better place. But a lot of what they do say about Fort McMurray is bull****.”

chained grandmotherWhile the recent pipeline spill in Arkansas has ignited another round of protests, including one in which an Oklahoma grandmother chained herself to a piece of heavy equipment to stop construction of Keystone XL, the timing of “Oil Sands Karaoke” couldn’t be better. Perhaps it can inspire a way of opening a line of dialogue that so far has been “you’re wrong, I’m right”.

As Wilkinson says, “It’s clear that we seem to have reached an impasse where the 2 opposing camps just don’t communicate. So in watching the ‘hard hats & hippies’ getting along on the karaoke stage, sharing what seemed a genuine closeness we thought maybe there was a window here. We can’t talk to each other, but it might be a start if we try & sing together.”

“Kumbaya”, anyone?

Kate Kunkel is senior/web editor of VALVE Magazine. Contact her at This email address is being protected from spambots. You need JavaScript enabled to view it.

Apr10

Where Has All the Money Gone?

BY KATE KUNKEL

cashIn Canada, corporate income tax makes up a falling share of all government revenues thanks to tax breaks given when the recession hit. The general federal corporate income tax rate stood at 28% in 2000. Since then it has been whittled down, from 21% to the most recent cut from 16.5% to 15%, effective January 1, 2012. The corporate tax rate remains the same in 2013, at 15%.

In the U.S., in the final quarter of fiscal year 2012, corporate income taxes amounted to 1.7 percent of GDP. The effective tax rate, which is defined as the share of corporate profits actually paid in taxes, averaged 19% over the previous three decades, much lower than the top corporate statutory rate, currently 35%, because of the various deductions and exclusions that corporations claim.

However, over the past few years, this effective tax rate has plunged. It was only 13% in the final quarter of fiscal year 2012. The argument to cut corporate income tax has been that increased, after-tax, corporate profits would be re-invested in company operations, boosting economic growth, productivity, and jobs.

Studies have shown that rising corporate after-tax profits have not resulted in increased investment. Instead, corporate cut backs in hiring and investment, added to cuts in corporate income tax, have contributed to a significant increase in cash reserves held by corporations. The largest companies have not used that money to invest in the economic recovery. Instead, they are holding onto the cash, claiming that growth has not justified spending.

The biggest companies seem to be the worst – holding onto much more of their profits than small and medium sized companies, who are doing more to invest in the economy. This dead money is not at work increasing productivity, creating more jobs or opportunities. This exacerbates the uncertainty in the economy.

David Seaton, chief executive of Fluor Corp., a large engineering and construction firm, said that, if uncertainty isn't removed, "People will sit on their war chests of cash and return it to shareholders. You'll have a retarded growth trajectory."

This is not a tenable situation. As long as huge amounts of money are being kept out of circulation, the economy will continue to be stagnant … or worse. We could be plunged back into a recession, which would result in more cash hoarding, which would … well, you get the picture. It’s a vicious cycle.

A friend of mine had this suggestion to spur investment and spending “Tell these corporations that, unless they start spending, they lose their tax savings. See how soon they’ll start investing if their tax rate goes back to where it should be, on par with our personal rate.”

That idea is probably not going to gain many fans in the Fortune 500 boardrooms, but there has to be some way out of this hole.

From where will meaningful investment to spur the economy come, if not from the biggest corporations? Have you seen any effects of this in your business? What might cash hoarding mean to the valve industry?

Please feel free to post your thoughts here, on our Facebook page, or write to me at This email address is being protected from spambots. You need JavaScript enabled to view it..  

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