Canada imposes new sanctions against Iran

On Monday, Foreign Affairs Minister Lawrence Cannon announced that the federal government was toughening sanctions against Iran. The announcement, which was co-ordinated with other countries, came as a response to Iran’s continuing refusal to stop uranium enrichment activities.

The Special Economic Measures (Iran) Regulations are effective immediately and are designed to curb the progress of Iran’s nuclear programs.

In addition to prohibitions against dealing in nuclear, chemical, biological and missile technology,  new investments in Iran’s oil and gas sector and the export of items and technology for refining oil and gas have also been banned.

Alberta decision highlights the need for caution in drafting royalty clauses

Katie Slipp

In Canpar Holdings Ltd v. Petrobank Energy and Resources Ltd. and Gentry Resources Ltd., the Alberta Court of Queen's Bench considered a claim by a corporate petroleum and natural gas lessor against a lessee for failure to comply with a prescribed royalty schedule. The lease expressly provided that royalties were to be calculated at a given percentage of either the sale price or market value, whichever was greater, and "all without deductions", except transportation expenses. The lessee took the position that the use of fuel gas was a permitted deduction pursuant to the definition of "operations" in the lease. The lessor argued that this deduction was beyond that authorized by the royalty clause and issued a notice of default. The lessee continued production after the notice of default was given.

The Alberta Court of Queen's Bench, in an oral decision issued by Justice Miller, considered (1) the correct interpretation of the lease with respect to the price of gas, and (2) whether fuel gas was a permitted deduction.

The Court relied on a strict interpretation of the terminated petroleum and gas lease to determine damages with respect to royalty pricing and payments. The Court found that in calculating royalties, only two options were available as provided in the royalty clause: the greater of sale price or market value. Contrary to prior decisions, which considered the conduct of the parties and common industry practice when interpreting such clauses, the Court applied a strict, rather than purposive interpretation to the phrase "all without deductions" in the royalty clause. Using this approach, the Court found that fuel gas was not included in the definition of "operations" and was, therefore, not an allowable deduction under the exemption provision.

570495 Alberta Ltd. v. Hamilton Brothers, a 2008 Alberta Court of Queen's Bench decision, provides similar guidance in that a royalty owner is only required to pay a share of processing expenses where it is expressly accounted for in the lease. On the other hand, although addressing a shut-in well provision, the 2008 Alberta Court of Appeal case of Kensington Energy Ltd. v. B&G Energy Ltd. gave direction on the interpretation of oil and gas lease agreements, suggesting that courts should examine the subtle meaning of language and give effect to the parties' intentions.

In determining the damages payable in the Canpar case, the Court concluded that a lessee's continuation of production after termination of a lease amounts to the tort of trespass or conversion, but does not warrant punitive or exemplary damages unless the lessee's conduct is high-handed, abusive or egregious. In this case, the Court held that the lessee's conduct after termination of the lease did not meet these criteria. The lessee was therefore only required to provide an accounting of profits, less any associated costs actually incurred. The primary focus was to restore the lessor to its original position had the tort not occurred.

This case is significant in that the Court gives full effect to the express language of the royalty clause prohibiting deductions. That said, the fact that royalties in this case were to be calculated based on the greater of sale price or market value may distinguish it from other cases where the royalty is calculated at the wellhead, where a more convincing argument may be made that deductions ought to be made for expenses that were incurred up to the time of sale.

This decision demonstrates that petroleum and natural gas leases, and specifically royalty clauses, must be drafted with care. Given the Court's reliance on the plain language of the agreement, future leases should expressly outline the percentage of production on which the royalty is payable, specific allowable deductions (i.e. operating expenses of the property, other overriding royalties, transportation and gathering, cleaning, processing, enhanced recovery, etc.) and any right of the lessee to use substances consistent with the royalty (for example, fuel gas for enhanced recovery to extend production), and whether the lessor is to bear a portion of that expense.  

British Columbia adopts new GHG emission limits - WCI Partners release details of cap-and-trade program

On July 27, British Columbia, along with four other Canadian provinces and seven U.S. states that are members of the Western Climate Initiative (WCI), released details of a proposed cap-and-trade program – set to begin in January 2012 – and other strategies designed to reduce regional greenhouse gas (GHG) emissions to 15% below 2005 levels by 2020, create green jobs and stimulate development of clean-energy technologies.

Fossil fuel production and other industrial sources account for approximately 35% of British Columbia’s annual GHG emissions, but unlike the carbon “consumption tax” imposed on businesses and individuals who use or purchase fossil fuels in the province, to date industry has not been subject to a GHG emission reduction program. With the introduction of the WCI program, any industrial operation emitting more than 25,000 tonnes of GHG per year will be subject to the proposed emission limits and penalties.

Among the WCI’s Canadian partners, British Columbia, Ontario and Quebec have implemented or are in the process of developing legislation that would enable cap-and-trade systems in those provinces.

See also: “B.C. adopts new limits for greenhouse-gas emissions with new ‘cap and trade’ system”

OEB denies stay of Green Energy Act assessments

On July 26 the OEB denied a request to stay the Green Energy Act assessments issued under Regulation 66/10.  The request for a stay was made as part of a proceeding before the OEB to determine if the assessments are an unconstitutional indirect tax.  The assessments were the subject of considerable publicity last spring when the C.D. Howe Institute issued a study concluding that the assessments were unconstitutional.  The OEB stated that written reasons for the denial will follow.  A date has not yet been set for a hearing on the merits of the constitutional challenge.

ERCB Bulletin 2010-22 answers some questions regarding regulatory applications for CCS projects in alberta:

The Energy Resources and Conservation Board (“ERCB”) is responsible for the safe, responsible, and efficient development of energy resources in Alberta, including oil, natural gas, oil sands and coal. As part of this jurisdiction, the ERCB regulates approvals for the development and operation of carbon capture and storage (“CCS”) projects. The ERCB has answered some of the questions about how it will treat CCS project applications in Bulletin 2010-22, ERCB Processes Related to Carbon Capture and Storage (CCS) Projects

Bulletin 2010-22 clarifies that the ERCB will use existing instruments to process applications for approval to develop and operate a CCS project, including the following (among others):

The ERCB’s reliance on its existing instruments likely means that its past decisions with respect to acid gas disposal schemes will serve as a useful source for guidance on how the CCS project applications will be treated. For a recent example of such a decision, see Decision 2009‑073 + Errata, AltaGas Ltd. Applications for Two Pipeline Licences, an Amendment to a Facility Licence, and Approval for an Acid Gas Disposal Scheme, Pouce Coupe Field.

U.S. Senate ceases to pursue comprehensive climate change bill

Harry Reid, the U.S. Senate majority leader, announced on Thursday that the Senate Democrats would cease to pursue passing a comprehensive climate change bill.

Citing a lack of support from Republican Senators, Senator Reid stated that the majority would seek a more modest bill targeting offshore oil and gas drilling regulation, home energy-efficiency programs and incentives for natural gas vehicles.

The bill, planned for debate next week, also seeks to raise the $75 million liability cap for companies that are responsible for oil spills.

In June 2009, the U.S. House of Representatives passed the American Clean Energy and Security Act, also known as the Waxman-Markey bill, which mandated the cap on greenhouse gas emissions from most sectors of the economy, and would establish a national carbon market.  

Over the last year, Senate Committees discussed reducing the scope of the cap-and-trade system to the utilities industry. However, with only 59 Senators supporting the legislation, Senate Democrats lacked the 60 Senators necessary to overcome procedural hurdles that they expected would be launched by Senate Republicans. 

Senator Reid discussed the possibility reviving cap-and-trade legislation in September, or after the November Senate elections.

Alberta hosts U.S. Legislators for tour of oilsands

Delegates attending the Pacific Northwest Economic Region Summit in Calgary were invited to tour Fort McMurray and the Alberta oilsands this week in an effort to “showcase the technology and innovation surrounding [the] oilsands developments first-hand” says Gary Mar, Alberta’s Envoy in Washington, D.C. who led the tour. 

Twelve U.S. legislators were part of the delegation, including Representative Mike Schaufler, D-Oregon, who told reporters that he was “impressed by the technological advancements and the sophisticated pipeline transportation system used to transport oil to the U.S.”  He also stated that he was "more comfortable buying oil from Alberta, which shares similar environmental goals with the U.S., than from foreign sources."

Derivative reform included in financial reform package approved by U.S. Congress

On July 15, 2010 the U.S. Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act aimed at strengthening the U.S. financial system.

The legislation is intended to overhaul the financial regulatory system in the U.S. by improving the supervision and regulation of federal depository institutions, and setting out obligations regarding corporate governance and executive compensation.

Of particular interest to the energy markets, the legislation provides for the regulation of certain derivatives and derivatives markets.

The legislation is expected to be signed into law by President Obama this week and, if enacted, would introduce significant direct regulation of the market for over-the-counter derivatives and the market participants that use them.

A brief summary of the legislation is provided by the House Financial Services Committee, while the New York Times' Dealbook has also provided some perspective. 

2010 budget streamlines federal environmental assessments

On July 13, 2010 the Canadian Senate passed Bill C-9, An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures. Included in the omnibus 2010 Budget Bill were changes to the federal environmental assessment review process under the Canadian Environmental Assessment Act.

The major changes to environmental assessments included in Bill C-9 are:

This last change has been the subject of significant debate – critics have charged that the giving the Minister the power to determine the scope of projects will gut the assessment process, while advocates have suggested that the power will be used to restrict assessments to areas of federal jurisdiction and eliminate overlap with existing provincial assessments.

Addressing critics’ concerns about the changes, Environment Minister Jim Prentice has stated:

I am a strong believer in the environmental assessment process. Improving a project’s design to prevent environmental harm before construction is both prudent and cost-effective

It is clear to me that the federal environmental assessment process has not worked as well as it needs to and requires fixing. It is prone to delay. These delays have caused difficulties in harmonization with the provinces that have not benefited the environment and have harmed the economy… These amendments are about getting the federal house in order…

A more efficient and timely process is good for the economy. Strengthening the role of the Minister of the Environment and the Canadian Environmental Assessment Agency will be good for the environment.”

The Canadian Environmental Assessment Act is scheduled to undergo a statutory Five-Year Parliamentary Review in the fall.

Renewable Energy - A Hot Topic in the Heat of the Summer

Today’s Globe and Mail featured two articles profiling the renewable energy market in Ontario and internationally today – Ontario’s rate cut for solar power a blow to green energy.  See also the OPA’s Rationale for New Ground-Mount FIT Price Category

Alberta ERCB approves Nipisi and Mitsue pipelines

On Tuesday, Pembina Pipeline Corporation announced that it has received approval from the Alberta Energy Resources Conservation Board to construct and operate two pipeline projects, which will link oilfields in Slave Lake to a processing and transportation hub near Edmonton.

The Nipisi Pipeline, which is expected to carry 100,000 barrels per day (bbls/d), is set to originate north of Slave Lake and run south of Judy Creek, where it will connect to an existing pipeline delivering product to Edmonton.  The second pipeline, the Mitsue Pipeline, is designed to deliver 20,000 bbls/d of diluent from Whitecourt, Alberta to producers north of Slave Lake.

Pembina has announced that two founding customers, Canadian Natural Resources Limited and Cenovus Energy Inc., have contracted for 80% of the capacity of the Nipisi Pipeline and 50% of the capacity of the Mitsue Pipeline.  Pembina Marketing Ltd. has contracted for the remainder.

Pembina has estimated that the projects will cost a combined total of $440 million.  It also predicted that the pipelines will generate $45 million per annum in net operating income.  Project construction will commence immediately, and the pipelines are expected to be fully operational by mid-2011. 

Quality Wind Project receives Environmental Assessment Certificate

 Edmonton’s Capital Power announced this week that the British Columbia Environmental Assessment Office had granted an Environmental Assessment Certificate under the B.C. Environmental Assessment Act for its proposed Quality Wind Project, to be located northeast of Tumbler Ridge, B.C.

The $455 million project will consist of 79 wind turbines to be manufactured by Vestas and have a capacity of 142 MW. 

Capital Power expects to commence construction later this year and have the project fully operational by 2012.  An electricity purchase agreement was signed with BC Hydro in April, 2012.

Canadian Chamber of Commerce publishes report on energy prosperity

The Canadian Chamber of Commerce published a report this week on the Canadian energy sector, entitled “Powering up Canadian Prosperity:  Growing the Energy Sector Value Chain.

The report recognized the energy sector as a competitive advantage for Canada, and discussed ways that the Canadian energy industry can continue to be sustainably developed, primarily through a focus on growth in value-added areas such as renewable energy and bitumen upgrading.

The report’s recommendations included:

  • The federal government should expand access to accelerated capital cost allowances for value-added energy projects such as advanced manufacturing, carbon capture and storage, and upgrading and refining
  • All levels of government should work towards harmonization of regulation and environmental assessments
  • All levels of government should continue to provide financing and incentives for research, development and commercialization of new energy technologies
  • Invest should continue in smart electricity infrastructure and the improvement of east-west linkages across Canada
  • Governments should encourage the development of energy-sector clusters with adequate infrastructure
  • A cross-Canada agreement to recognize credentials for skilled workers should be developed
  • Governments should consider the entire energy sector value chain when developing policies, including an overall national energy strategy

New Brunswick signs letter of intent to build Canada's first light-water reactor

The Province of New Brunswick, New Brunswick Power and the France-based multinational, AREVA, have signed a Letter of Intent to develop a “clean energy park” that would feature one of AREVA’s mid-size reactors: the 1,100 megawatt ATMEA1 plant, or the 1,250 megawatt KERENA plant.  As well, the “clean energy park” would include renewable energy generation facilities, such as biomass and solar.

If constructed, the ATMEA1 or KERENA plant would be Canada’s first light-water nuclear reactor.  At present, all of Canada’s utility generating nuclear plants use the heavy water CANDU technology developed and marketed by Atomic Energy of Canada Limited.

This project would be North America’s third “clean energy park” built by AREVA.  New Brunswick Power intends to use the power generated domestically, and to export the power to the Maritime region and New England.

The announcement has been met with some controversy, particularly as it may have an effect on AECL's ongoing sale process.  

Prentice and Doer speak to Calgary Chamber of Commerce on cap and trade, protectionism

Speaking at a Calgary Chamber of Commerce event last week, Federal Environment Minister and Calgary Centre-North MP Jim Prentice once again reiterated that Canada will not go forward with a cap-and-trade system on its own.

Commenting on the fading prospects that that a cap-and-trade law will emerge from the from the US Congress Prentice stated that:

The Canadian market is not large enough, and when we harmonize climate, environment and energy policies, we do not intend to bring in a policy of cap-and-trade in circumstances where the U.S. does not.

The Minister related his belief that cap-and-trade is unlikely to be part of any energy or climate bill that might be passed before November.  He suggested that the regulatory route is increasingly the one Ottawa will take as it tries to cut greenhouse gas emissions by 17% below 2005 level by 2020 in order to meet Canada’s commitments under the Copenhagen Agreement.

The Government of Canada is clearly moving ahead with a regulatory approach, dealing with the transportation sector, which is 27% of Canada’s emissions...The electricity sector is another 19%, so, essentially, in Canada we (now) have close to 50% of our emissions in regulatory harness.

Canada’s Ambassador to the U.S. and former Manitoba premier Gary Doer reflected on the situation in the U.S. and the uncertainty that it creates for Canada. He speculated that it is likely that some form of energy law will emerge from congress in the near future, and that any Environmental Protection Agency climate change regulation will likely end up before the Supreme Court.  Doer remained clear on one point however, that Canada will continue to object to the imposition of any border measures by the U.S that may affect Canada’s energy flow to the U.S., given our clear intent to harmonize climate change policies:

We're saying, don't introduce any border measures against a country like Canada that is committed to the same reduction targets that you are...Don't take border measures against Canada's energy when we have a harmonized reduction target that was agreed to in Copenhagen and signed by the prime minister and environment minister...Countries like Canada that have signed on to the same agreement should not have artificial border measures that (represent) a Trojan horse for the issue of trade and access to Canadian energy.

Ontario MNR approves revised onshore windpower policy and procedure

On July 5, 2010 the Ontario Ministry of Natural Resources has approved revisions to its Onshore Windpower Development on Crown Land policy and procedure.

The revisions apply to all onshore Crown land windpower applicants and are part of the MNR’s broader review of Ontario’s Crown land release process applicable to renewable energy projects begun in September 2009.

The aim of the new revisions for onshore wind projects is to eliminate duplication with renewable energy approval processes, provide procedural clarity to applicants currently within the site release process and to align with Ontario’s Green Energy initiative. Revised policy and procedure for offshore windpower projects will follow the government’s broader decision on draft rules regulating off-shore wind turbines proposed by the Ministry of the Environment. The window for new renewable energy applications for Crown land will remain closed until the completion of the phased review.

U.S. Department of Energy conditionally commits $1.85 billion to the solar industry

The U.S. Department of Energy recently made conditional commitments to provide $1.85 billion in loan guarantees to two firms in the solar industry.  

Abengoa Solar Inc., a Spanish-based company with offices in Denver, Colorado, received a conditional $1.45 billion loan guarantee to finance, construct and start-up the Solana Generating Station, a 280-megawatt concentrating solar power plant to be located seventy miles southwest of Phoenix, Arizona. 

The DOE also made a conditional commitment to Abound Solar, of Fort Collins, Colorado, for a $400 million, seven-year loan guarantee to expand Abound Solar’s capacity to manufacture thin-film cadmium telluride photovoltaic cells.

Funds for the Loan Guarantees come from the DOE’s Title 17 Innovative Technology Loan Guarantee Program, a creation of the U.S. Energy Policy Act of 2005.  Through the American Recovery and Reinvestment Act of 2009, the Loan Guarantee Program received an additional $6 billion specifically to fund renewable energy and electric power transmission projects,  

To participate in the Program, the DOE periodically issues technology-specific solicitations to the public.  Once a solicitation is issued, project sponsors have a defined amount of time to respond before the solicitation date closes.

The Loan Guarantees are structured as a series of loans distributed on a milestone-basis, whereby the sponsor must meet certain objectives to release funds during the duration of the project.  The Loan Guarantee involves a comprehensive application process that may include independent engineering reports and site visits.   

OPA posts updated FIT contract and rules

The Ontario Power Authority posted Version 1.3.1 of the FIT Contract, FIT Rules, and Standard Definitions on July 2, 2010. A summary of changes of the changes to the FIT Contract, FIT Rules, and Standard Definitions can be found on the OPA's website.  The Ontario Power Authority has also posted a revised Price Schedule to reflect the proposed new pricing for ground-mounted solar PV projects and an updated Program Overview.

Senate releases report on Canada's energy future

On June 29, the Senate released a 75 page interim report on Canada’s energy future. 

The report, entitled “Attention Canada: Preparing for Our Energy Future” is based on nine months of testimony collected by the Senate’s Standing Committee on Energy, the Environment and Natural Resources.The Committee heard from witnesses from the energy sector, think tanks, and other stakeholders. 

In the interim report, the Committee looked at the country’s major energy issues, including the potential for reduction of greenhouse gas emissions through a national carbon tax. The report states that the majority of witnesses appearing before the Committee presented a carbon tax as the most efficient way of reducing emissions. 

The committee found near unanimity among witnesses –from the petroleum industry to environmental organizations –that supported pricing carbon as the most efficient way to reduce emissions. Given the choice, most witnesses favoured carbon taxes over cap-and-trade but both are market-based approaches for pricing carbon and both can be levied at different stages along the fossil fuel supply chain.

Generally, witnesses stated that a carbon tax would be more economically efficient and less complex to administer than a cap-and-trade system. For either method, it was stressed that carbon pricing should be applied broadly and uniformly throughout the economy and across Canada.

The report reviews the debate surrounding carbon capture and storage (CCS). The Committee heard from some witnesses who were advocates of CCS technology and its ability to decrease emissions on a large scale, and from other witnesses who argued that the effectiveness of CCS is unknown and that the technology remains costly. 

The report further addressed the future of fossil fuels, and the prospects of nuclear and other renewable energy sources.

The Committee is currently asking all Canadians to contribute to its final report on Canada’s energy strategy, which is set to be released in June 2011.

OPA proposes new pricing for ground-mounted solar PV projects

Lanette Wilkinson

On July 2, 2010, the Ontario Power Authority proposed a new pricing category of 58.8 cents per kilowatt-hour for ground-mounted solar PV projects under its microFIT Program

The new price category will apply to new applicants or those applicants who have submitted an application, but have not yet received a contract or conditional contract offer. Applicants who have already executed a contract or have received a conditional contract offer from the OPA will continue to be eligible for the original price of 80.2 cents per kilowatt-hour.

The OPA will be hosting webinars on July 6 and July 8 to provide additional information on the update and will be accepting written comments on the proposal until August 3, 2010.

Ontario releases draft rules for offshore wind turbines

Alison Forbes

The Ontario Ministry of the Environment  (the “MOE”) released draft rules clarifying the regulation of off-shore wind turbines on June 25, 2010 under the Renewable Energy Approvals regulation under the Environmental Protection Act.

The draft rules, as well as a discussion paper, are available for review and public comment until August 14, 2010 on the Environmental Registry.

The proposal includes a five kilometre “shoreline exclusion zone” for all off-shore wind facilities. Areas within five kilometres from the shoreline of the Great Lakes, other inland lakes and major islands would not be considered for off-shore wind turbines. The exclusion zone is intended to create separation between wind facilities and drinking water intakes and near shore activities and to ensure acceptable noise levels. Additional exclusion zones are proposed to ensure that shipping on the Great Lakes is not affected.

Under the proposed rules, off-shore facilities will also be subjected to a “stringent and comprehensive application process,” including meeting requirements that minimize negative impacts to threatened species and their habitat, assessing and addressing any potential negative environmental effects, noise assessments and public consultation requirements, among other things.

These draft rules have been released in the middle of the Ministry of Natural Resources review of Ontario’s Crown land release process applicable to renewable energy projects. Begun in September 2009, the first phase focused on procedural elements, like ensuring clarity between site release and other provincial approval processes, while the second phase focuses on longer-term policy direction for renewable energy developments on Crown land. Results from the first phase are now available for comment on the Environmental Registry and results from the second phase are expected in 2010.

Congress to consider changes to offshore drilling regime

U.S. offshore operators may soon face expanded liabilities, more stringent rig and well design requirements, vigorous and frequent inspections, and greater civil and criminal penalties in the event of an oil spill. 

On June 30, two Senate Committees separately approved, and advanced to the full Senate, bills that would tighten offshore drilling regulations.

The Senate Energy and Natural Resources Committee’s Bill, S.3516 would separate the Bureau of Ocean Energy Management, Regulation, and Enforcement into two agencies: one responsible for offshore revenue and royalty collection, and the other for licensing, safety and environmental regulation.  

Bill, S.3516 would also include tougher civil and criminal penalties that increase over time with inflation, and would place a levy on operators to fund the hiring and improved training of federal inspectors.

The same day, the Senate Environment and Public Works Committee approved  Bill S.3305 to eliminate the $75 million cap on liability found in the Oil Pollution Act of 1990.  As well, operators would need to submit extensive spill response plans before new drilling applications are approved.

Meanwhile, three Committees in the House of Representatives are working on similar legislation.  The U.S. House Transportation and Infrastructure Committee approved Bill H.R. 5629 that would, with retroactive effect, remove the above mentioned $75 million liability cap, and raise to $1.5 billion the minimum amount of insurance that offshore facilities must hold.  Further, under federal law, operators would be liable for health-related claims associated with oil spills, claims that are currently pursued in State courts.

The U.S. House Energy and Commerce Committee’s proposed Blowout Prevention Act of 2010 would require operators who drill “high-risk wells” (wells located within 200 nautical miles of the U.S., or those onshore where a blowout “could lead to substantial harm to public health and safety or the environment”) to install blowout preventers and obtain independent technical inspection of new rigs before they begin operating.  Rigs would have to be reviewed every six months by third party inspectors, with the possibility of surprise inspections by federal authorities.

The U.S. House Natural Resources Committee will consider its own bill on July 14, written with the intent to improve the transparency and accountability in federal energy regulation. 

Congress’s focus on offshore reform may result in a broad, merged legislation by the end of the Second Session.  Despite support for increased regulation by both parties, Republican critics argue that with open-ended liability and tougher drilling requirements, only the largest offshore operators will be able to shoulder these new costs.

Deliveries start on TransCanada's Keystone pipeline

Mike Styczen

TransCanada announced on July 30 that it had completed line fill on the first phase of the Keystone Pipeline and that deliveries from Hardisty, Alberta to Wood River and Patoka, Illinois had commenced.

The construction of the first phase of Keystone, which will have a capacity of 435,000 barrels per day, involved the conversion of 864 kilometers of existing gas pipeline to oil service, the construction of 2177 kilometers of new 30” pipeline, and the construction of 39 new pump stations. 

Construction of the second phase of Keystone, a 480 kilometer expansion to Cushing, Oklahoma, will increase the capacity of the pipeline to 591,000 barrels per day and is expected to be in service in 2011. 

TransCanada has  already announced plans for the final phase of Keystone expansion (Keystone XL), which will take an additional 500,000 barrels per day to the U.S. Gulf Coast.  

G-20 declaration deals with energy matters

At the recently concluded G-20 summit, world leaders confirmed their ongoing commitment to phasing out subsidies for inefficient fossil fuels.

This commitment, which originated at the 2009 Pittsburgh G-20 Summit, is designed to combat wasteful consumption and greenhouse gas emissions. 

At the request of the G-20, a special report on energy subsidies was prepared by the International Energy Agency (IEA), the OECD, OPEC and the World Bank. 

Leaders at the Summit “note[d] [the report] with appreciation” and further demonstrated their support by calling on Finance and Energy officials to develop timeframes and strategies for phasing out the subsidies. Nevertheless, the Declaration acknowledged that certain countries remain dependent on fossil fuels. Consequently, the G-20 promised that plans to phase out subsidies would be tailored to every country’s specific needs.

The Declaration also addressed the ongoing oil spill in the Gulf of Mexico. Leaders of the G-20 agreed that countries must begin sharing best practices with each other to protect the marine environment and to prevent future offshore drilling accidents. The Declaration, however, does not outline any specific steps that the G-20 will take to achieve this greater level of cooperation.