In other news…"Ten Reasons Why Fracking is (not) Doomed"

Guest Post by David Middleton

I ran across a really funny story on Real Clear Energy last Friday…

Once you get past all of the nonsense about fracking polluting groundwater and global warming hysteria, the article really gets “interesting.”

Ten Reasons Why Fracking is isn’t Doomed

1. Scientists have found that solar photovoltaic cells could be producing electricity at less 50 cents a watt by 2016, four years earlier than other projections.

The source of reason #1 is this blog post…

Brave new world as solar PV heads to 50c/watt

By Giles Parkinson on 20 July 2012

US Energy Secretary Stephen Chu earlier this year suggested that solar PV without subsidies will be cheaper than both coal and gas if it could get its costs down to around $1/watt by the end of the decade – an event that would trigger a total re-examination of the way electricity was produced in the world’s largest economy.

[…]

The report includes a few notable graphs. The first is the cost path for module – now estimated at around 75c/W and heading down to 50c/W at a rate of knots. GTM, and most others in the industry, believe it will get to the 50c/W mark by 2016 at the latest, most likely 2015

[…]

http://reneweconomy.com.au/2012/brav…-50cwatt-29404

The chart implies that solar PV power plants currently cost ~$1.45/W and will soon fall to ~$0.50/W. However, the chart only covers the CapEx for the solar modules. Even if the module costs are accurate, the CapEx for solar PV power plants currently ranges from $6-7/W ($6-7 million per MW), costing 6-7 times as much as and requiring 8 times as much land area per MW as a natural gas-fired plant.

Even if you factor in fuel,solar PV is still projected to cost 3 times as much per kWh as gas-fired electricity (combined cycle).

Even if the module costs did drop from $1.45 to $0.50 per Watt, that would only lower the full cost from $6-7 million per MW to $5-6 million per MW. Land isn’t free and construction isn’t done by volunteers.

2. Germany is on the verge of producing more solar energy than wind energy, the first major industrialized country to reach that milestone. Germany wants to produce 35 percent of its electricity from renewables by 2020, only 8 years from now.

I didn’t think the second reason could be dumber than the first reason. I was wrong…

3. Researchers at UCLA have created a solar-power-generating window. If all those glass box skyscrapers in southern California could be put to work generating electricity, it would probably power the whole state.

Words escape me… Even if mythical solar windows could power the entire State…

How much would it cost per MW of installed capacity?

How would California keep the lights on when “the Sun don’t shine”?

4. The British government has given the go-ahead for two huge offshore wind farms off the coast of Norfolk (the eastern coast). Together, they will have the capacity to produce over a gigawatt of power (roughly one nuclear power plant’s worth). Britain is the leader in offshore wind energy generation.

“Over a gigawatt of power”! That’s just 1,000 MW and, as can be seen in the previously posted levelized generation cost chart, offshore wind is even more expensive than solar PV.

5. With Japan’s nuclear energy plants being phased out because of public fury over the Fukushima disaster, the country is trying to move quickly to renewables. It is placing a big bet on offshore floating wind platforms.

Maybe I’m missing something here… But I don’t see how Japan’s lack of cheap energy sources dooms fracking.

6. Scientists have concluded that it is perfectly practical to provide 2/3s of US electricity from solar over the next decades. The main problem is not electricity generation or having enough land to put the cells on, it is the poor electrical grid of the US, which will have to be redone.

Reason number 6 seems to be that there is enough surface area on the planet for solar PV (I wonder if there’s enough Windex on the planet). Good to know that there’s enough space. Since natural gas-fired plants take up 1/8 as much space per MW, “space” isn’t likely to doom fracking before it dooms solar PV.

7. Algeria wants to go solar, aiming for 650 megawatts of solar energy by 2015 and a massive 22 gigawatts by 2030. The Desertec Foundation has big projects in Egypt and Morocco, and Algeria, an oil producer, has decided to join in.

It’s been a bit more than a year since I ran the numbers on Desertec; but I doubt they’ve improved. The ultimate goal is 100 GW installed capacity (100,000 MW) at an estimated total cost of $550 billion (~$5.5 million per MW)… Only about 6 times as expensive as coal and natural gas and 2-3 times as expensive as nuclear and wind.

1 TW (Terrawatt) = 1 billion kW (Kilowatts)

At 15 cents per kWh, Desertec will generate an annual gross revenue of $105 billion if it really delivers 700 TWh per year. That’s enough to cover the construction cost principle (pay out) in 35-46 years (30-40 years to build and 5-6 years of operation).

If Desertec really had to compete with nuclear, natural gas and coal, it could only charge 3 to 7 cents per kWh. This would push “pay out” up to about 70 years.

In either case, it’s still an example of multinational mental deficiency.

On top of all of that. These solar arrays would be built across North Africa and the Middle East. I always thought one of selling points for solar was that it would make us less energy-dependent on regions like North Africa and the Middle East…

8. Some 750,000 Australian homes have solar panels on the roof, heading toward 10% of the 8 million households in the sun-drenched country.

Not likely to doom fracking in the USA… We’re a bit less sun-drenched than Oz. And I doubt it will doom fracking in Oz either….

Australian LNG Exports to Triple

11 July 2012

National exports of liquefied natural gas (LNG) could more than triple to 63 million tonnes per annum by 2016-17 as Australia plays a greater role in satisfying global energy demand.

This is the forecast of the inaugural Bureau of Resources and Energy Economics (BREE) Gas Market Report released today by Minister for Resources and Energy, Martin Ferguson AM MP.

[…]

http://minister.ret.gov.au/mediacent…rtstriple.aspx

9. China is going to make a major push for solar energy after 2015, aiming for a mind-bogging (Sic) 50 gigawatts worth by 2020.

I think the author may have meant “mind-boggling,” However, the author’s mind clearly is “bogged.” 50 GW would be less than 5% of China’s generation capacity.

China leads the world in the manufacturing and sales of solar PV cells, but they are in no hurry to build out solar PV infrastructure for themselves…

They manufacture solar cells to sell them to Germany.

China’s push to build 50 GW of solar PV won’t even doom fracking in China, much less in the USA…

July 4, 2012,

Can China Follow U.S. Shift from Coal to Gas?

By ANDREW C. REVKIN

[…]

Second, several years ago, I heard that teams of Chinese engineers were spending months in Oklahoma to learn about hydraulic fracturing, or fracking, as a method for liberating gas and oil from previously untappable shale deposits. More recently, reports showed that China — which was once considered gas poor — now has estimated volumes greater than those of the United States (which are, as you know, enormous). This week China signaled that it may indeed be gearing up for an ambitious gas push. An article in China Daily, “Will China embrace a shale gas boom?,” essentially answers its headline question with a resounding yes.

[…]

http://dotearth.blogs.nytimes.com/20…m-coal-to-gas/

Reason number 10: Blame Israel…

10. The Egyptian gas pipeline through the Sinai to Jordan and Israel has been blown up 15 times since the Jan. 25 revolution. Egyptians are angry that the government of deposed dictator Hosni Mubarak had sold the gas at substantially below-market prices to Israel. Because of the interruptions, Jordan’s government is more eager than ever to move to solar and wind power. A sign of increased international interest in the nascent Jordanian renewables sector is that a Chinese company wants to invest $200 million in a solar project. Jordan has a goal of getting 10% of its electricity from renewables by 2020, though that may be an ambitious timeline. If its government were smart, it would go all out and double that goal, and try to meet it.

I have no doubt that China is eager to sell solar cells to another gullible customer… In the meantime Israel is open for business to natural gas drilling…

Noble Energy has been operating in the Mediterranean Sea, offshore Israel, since 1998. Our 47 percent interest in the Mari-B field, the first offshore natural gas production facility in Israel, is one of our core international assets. Production from Mari-B began in 2004 and sales volumes have increased as Israel’s natural gas infrastructure has developed. Additional pipeline construction and power plant conversion is contributing to the growing natural gas demand in Israel. Significant new exploration discoveries at Tamar and Dalit will help meet Israel’s energy needs and drive new uses for natural gas in the future.

In early 2010, the Company commenced drilling two additional development wells at Mari-B. Combined with additional compression work, these new wells will support near-term gas deliverability and serve as injection wells for storage in the future.

We have a 36 percent operated working interest at Tamar, with gross mean resources of 8.4 trillion cubic feet (Tcf) of natural gas. Tamar was the largest natural gas discovery in the world in 2009 and represents Noble Energy’s largest-ever exploration find. Initial expectations target first production from Tamar in 2012. Contracting for the sale of natural gas from Tamar is underway, and the Company has negotiated a number of multi-year letters of intent to deliver energy supply to customers. Project sanction at Tamar is expected in 2010.

In late 2009, we acquired additional 3D seismic over approximately 1,600 square miles in the region where we have identified a number of new prospects and leads on our significant acreage position offshore Israel and Cyprus. Based on the results of the seismic program, the Company has identified gross unrisked resource potential greater than 30 Tcf. Along with our partners, we are planning to spud Leviathan, a 16 Tcf gross prospect, in the fourth quarter 2010.

Noble Energy

Conclusion

All “Ten Reasons Why Fracking is Doomed” are abject nonsense.

The author of “Ten Reasons Why Fracking is Doomed” is Professor Juan Cole, a history professor at the University of Michigan.

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richardscourtney
August 3, 2012 1:44 pm

Martin Lack:
Your posts in this thread display the basic techniques of professional trolls; i.e. make false statements which are mutually contradictory, and when one of them is refuted then change the subject and pretend you were saying something else while ‘snowing’ the thread with several posts.
I cite some examples of this deplorable behaviour so your posts do not distract onlookers. And I suggest that everybody then ignore your distractions by ignoring all your posts in this thread both past and future.
Martin Lack wrote at August 3, 2012 at 4:26 am:

As a geoscientist, you know nothing as a fact; and neither do I. We both deal in probabilities; and the probability that the consensus view of climate science is correct is much greater than the probability that it is not.

This quotation is three assertions:
(a) Geoscientists know nothing as a fact.
(b) Geoscientists deal in probabilities.
(c) It is much more probable that the consensus view of climate science is correct than that it is not.
I address each of these assertions as examples, but all your posts are similar.
Assertion (a)
It is true that scientists know nothing as a fact, but at August 3, 2012 at 11:18 am you say;

I am trying hard to stick to the facts; and I am relying upon probability and logic to identify what humanity should do to avoid unnecessary damage to our environment.

So, either you are denying your previous statement that “As a geoscientist, you know nothing as a fact; and neither do I”, or you are admitting you are not arguing as a scientist. In either case, your comments are irrelevant blather.
Assertion (b)
It is true that all sensible people – including geoscientists – try to “deal in probabilities”. And you do “deal in probabilities” at August 3, 2012 at 9:35 am when you write:

As Bill McKibbin recently pointed-out, it is highly likley (sic) that we have 5 times more fossil fuel reserves than the majority of climate scientists consider it would be safe to burn.

OK if it is “highly likely” that fossil fuels are that available then it is hard to understand your assertion at August 3, 2012 at 4:36 am which says;
“Fossil fuels are destined to be history. Renewables and nuclear are the future; so I suggest you get used to them.”
Your two statements do not equate because ‘renewables’ cost more than fossil fuels so will not replace fossil fuels. Unless, of course, you only “deal in probabilities” when it suites your assertions.
Assertion (c)
Either there is a “consensus view of climate science” or there is not. And a consensus view cannot be a minority view. But when Smokey pointed out (at August 3, 2012 at 9:54 am) that an overwhelming number of credentialed scientists (i.e. 34,100) have voluntarily signed a petition which rejects AGW you replied at August 3, 2012 at 10:06 am saying;

I am not interested in opinion polls; but I am concerned with extremely high probability that you are mistaken.

(Incidentally, I add that a poll of scientists who support the view of AGW is a problem found that they total 75.)
So, you said;

the probability that the consensus view of climate science is correct is much greater than the probability that it is not.

And when you were shown that the consensus denies your view you said you are

not interested in opinion polls

and tried to change the subject to whether Smokey is “mistaken”.
So, I repeat, I suggest everybody should ignore your distractions by ignoring all your posts in this thread both past and future. In other words, don’t feed the troll.
Richard

Bill Tuttle
August 3, 2012 1:54 pm

Martin Lack says:
August 3, 2012 at 11:18 am
With regret, Bill, I don’t recognise the need for the question. Unlike you, I am trying hard to stick to the facts…

I regret you fail to recognize that people keep asking you to back up your unsupported assertions, which you keep proclaiming are facts despite being confronted with evidence to the contrary.
Just because I refuse to get embroiled in debates about whose science is junk and whose science is sound; does not negate the fact that the vast majority of peer-reviewed research affirms the conventional view of climate science.
The fact is that the peer-review process does not confirm the veracity of the content of a paper, it only serves to insure that the author(s) have not made any egregious errors in their methodology – and there are numerous posts here at WUWT exposing just how many severely flawed papers make it through peer review.
P.S. For the record, my questions were primarily directed to my fellow geologist, David.
For the record, this is an open forum.
Also for the record, I think supercilious twits who insult people I respect deserve to be called on it.

Martin Lack
August 4, 2012 2:26 am

Smokey – The only chumps in this world are those that think 31,400 signatures validate their prejudiced opinions.
Richard – Is/was this you? If so, I am indeed flattered that you would take the time to try and find fault in my supposed trolling behahviour (actually just an appeal to reason by me). However, since you clearly do not expect a detailed response (or at least you intend to ignore it) I will not waste my time making it (unless you ask me to).
Bill – I hope you can see the beautiful irony in your saying “…I think supercilious twits who insult people…” This may well be an open forum but I was hoping to get (and got) a response from someone who might know what they are talking about – so please forgive me for ignoring you.

Martin Lack
August 4, 2012 2:56 am

Apology accepted, David. However, with respect, when you say, “if I were to choose to make an appeal to authority argument, I’d pick an actual authority.”, I think it would be more accurate if you had said “…I’d cherry-pick a study that backs-up a minority opinion”.
As with the World Climate Widget and Richard Lindzen’s misinformation campaign, the cherry-picked graph you link-to relies upon the extremely dodgy practice of distorting y-axes of overlaid graphs in order to make two things that correlate appear to not do so.
I know what Mike’s Nature Trick was, thanks. And the blade of the MBH98 Hockey Stick is a reflection of the Hockey Stick David MacKay has highlighted exists in CO2 levels plotted over the last 1000 years. At very least, you are ignoring the unprecedented speed at which current change is occurring (i.e. because the anthropogenic climate forcing is greater than any previous natural forcing).
Peter Styles probably knows more about the subjects you mention than you do – and he agrees with you – so I really do not understand why you would be so dismissive of him. However, that does not mean that either of you is correct (or even asking the right questions)… If anyone thinks fracking is the answer to our energy problems they are not asking the right question; and if anyone thinks we need shale gas they are planning to use too much non-renewable centrally-generated electricity.

richardscourtney
August 4, 2012 3:19 am

Martin Lack:
I am writing to answer your question addressed to me (at August 4, 2012 at 2:26 am) solely to demonstrate that I am not avoiding it.
Yes, that was me.
And I state that I stand by what I wrote in my previous post addressed to you so I shall not respond to anything else you address to me whether or not it applies to me personally unless and until you modify your behaviour..
Richard

Bill Tuttle
August 4, 2012 4:35 am

Martin Lack says:
August 4, 2012 at 2:26 am
Smokey – The only chumps in this world are those that think 31,400 signatures validate their prejudiced opinions.

As opposed, of course, to those who think 75 “yes” answers on a selection-biased two-question survey validate their prejudiced opinions.
Bill – I hope you can see the beautiful irony in your saying “…I think supercilious twits who insult people…” This may well be an open forum but I was hoping to get (and got) a response from someone who might know what they are talking about – so please forgive me for ignoring you.
Since you ignore anyone who asks you to justify your assertions by providing some actual proof, that puts me in some pretty good company. I hope you can see the beautiful irony of your hubris resulting in a misinterpretation of David’s request for an apology at August 3, 2012 at 12:34 pm

“Firstly, an apology for the nonsense remark… It was uncalled for.”

as an apology to you for having had the temerity to rebut your aspersion on his professional knowledge.

Martin Lack
August 4, 2012 7:33 am

I am in some difficulty here, David. The things I would like to say or link-to would probably not be allowed by Moderators. So I will have to choose my words carefully. Despite what Richard says, I was trying to engage you in rational discussion; to get you to stop asserting your opinions as facts; and trying to avoid the junk/sound science trap. When I myself talk about “facts” – I do so in the context of historical or observable reality (if that were not the case I would not have tied myself up in knots talking about probabilities).
In a Rough Guide to Climate Change, Robert Henson suggests that there are a number of common arguments made by those that claim global warming is a false alarm: Namely that it is not happening; it is not man-made; it is not significant; it is not necessarily bad; it is not a problem; and/or that it is not worth fixing. With this in mind, I was hoping that I could get you to admit, as has Richard Muller and the BEST team, that something significant is at least happening. That is to say, that the MBH98 hockey stick is signal not noise; that CO2 levels have increased super-exponentially since the Industrial Revolution; and that this is not just a coincidence. However, given that you do not seem willing to accept even this as historical and observable fact, I can see little point in continuing this “discussion”.

Martin Lack
August 4, 2012 7:37 am

Please pay attention Bill. I do not cite opinion polls to validate my opinions. I base my decisions on most-plausible explanations for observable facts; and I pay attention to history (including that of an industry receiving 10 times the subsidy renewable energy gets and still manages to complain).

Martin Lack
August 4, 2012 7:46 am

Congratulations, Richard, yours is a completely unassailable position: You accuse me of being a “troll” and attempt to take the moral high ground. However, it seems to me that you are not only refusing to have a rational discussion; you are actively trying to prevent others from doing so as well. You have not just refused to join-in and taken the ball out of play; you have stolen my ball and attempted to walk off with it.

richardscourtney
August 4, 2012 8:01 am

Friends:
I enjoy rational discussion but deplore trolls who hijack threads as a method to evade discussion of the subjects of the threads. I remind that this thread is about the rebuttal by David Middleton of the nonsensical assertions concerning fracking by Giles Parkinson.
So, I repeat that I will not feed the troll whether or not he makes content-free personal attacks on me, and I again advise all others to ignore his posts, too.
Richard

Bill Tuttle
August 4, 2012 8:23 am

Martin Lack says:
August 4, 2012 at 7:37 am
Please pay attention Bill. I do not cite opinion polls to validate my opinions.
Do you even bother to read what you’ve written? You repeatedly cite the “consensus,” which is nothing more than an opinion poll.
I base my decisions on most-plausible explanations for observable facts
Which has nothing whatsoever to do with answering the questions about your inability to justify your assertions by actually citing facts.
(including that of an industry receiving 10 times the subsidy renewable energy gets and still manages to complain).
That’s one of the many unsupported assumptions you’ve stated as a fact. The fossil fuel industry receives tax credits for investments and equipment depreciation (which are not subsidies) and which, under the US tax code, any business entity may claim, while renewables receive direct subsidies. Since you’ve consistently demonstrated a problem with English comprehension on this and several other threads, I’ll spell it out for you —
1. The US government *allows* fossil fuel entities to keep some of the money they’ve already earned.
2. The US government directly *gives* taxpayer dollars to entities involved with renewables.

Bill Tuttle
August 4, 2012 8:42 am

Martin Lack says:
August 4, 2012 at 7:46 am
Congratulations, Richard…you are not only refusing to have a rational discussion; you are actively trying to prevent others from doing so as well.

Still another unsupported assertion, Martin — you’ve already self-assigned as the individual impeding rational discussion on this thread.

Martin Lack
August 4, 2012 10:15 am

Leaving aside the pathetic attempts of others to indulge in pedantic obfuscation, circular arguments, and tactical avoidance, I will simply state the central points I have tried to make, which are very relevant to the topic of this thread.
Fracking is a highly inefficient way of obtaining non-renewable fossil fuels. We already have the technology to substitute their use with renewables in power generation. Therefore, irrespective of whether fracking is (or is not) intrinsically dangerous, it is foolish to pursue it because… We have very good reason to believe that pumping fossilised carbon into the atmopshere is the primary cause of the radiative energy imbalance that – having been masked by a variety of factors including the heat capacity of the oceans and the cooling effect of other forms or atmospheric pollution – is now finally beginning to make its presence felt.
You may of course choose to do as suggested; and ignore my comments. However, that does not make what I say any less likely to reflect the reality of the situation that – thanks to decades in which the fossil fuel industry has sought to abdicate its responsibility for what was predicted and is now happening – we are now all in.
If, as suggested by David Middleton’s profile, you consider me and the arguments I am making to be no more than “environmental alarmism”, that is your choice. However, that does not make it any less fallacious to claim that the prevailing consensus regarding palaeoclimatology and atmospheric physics is little more than an unreliable opinion poll.

August 4, 2012 11:33 am

To add to what Dave Middleton wrote, this chart shows coming electric rates. These are contractually agreed rates, not projections. The steep rise is directly due to government interference in the markets. In the coming years your electric rates will skyrocket by at least 500%.
These electric rates will decimate the economy. Everything in the economy is tied to the cost of electricity. And the entire blame must be laid at the feet of the enviro-lobby and their puppet, the currrent Administration.

Bill Tuttle
August 4, 2012 11:34 am

Martin Lack says:
August 4, 2012 at 10:15 am
Leaving aside the pathetic attempts of others to indulge in pedantic obfuscation, circular arguments, and tactical avoidance…

Translation: “I got nuthin’, so I’ll feign regal aloofness.”
I will simply state the central points I have tried to make, which are very relevant to the topic of this thread.
That’s the crux of the matter. You keep making statements that you can’t support with facts.

Bill Tuttle
August 4, 2012 11:55 am

Back on topic: “3. Researchers at UCLA have created a solar-power-generating window. If all those glass box skyscrapers in southern California could be put to work generating electricity, it would probably power the whole state.”
From the link:

“Another breakthrough is the transparent conductor made of a mixture of silver nanowire and titanium dioxide nanoparticles, which was able to replace the opaque metal electrode used in the past. This composite electrode also allows the solar cells to be fabricated economically by solution processing. With this combination, 4% power-conversion efficiency for solution-processed and visibly transparent polymer solar cells has been achieved.”

Four. Percent. Conversion. Efficiency.
Ha! hold my Brain; be still my beating Heart!

August 4, 2012 7:39 pm

This truly has been an enlightening thread of comments. I am glad I found it.

Martin Lack
August 5, 2012 4:02 am

Thanks for all of that information, David. All entirely factual and beyond reproach I am sure. However, with respect, I think you are dodging the issue: I don’t care about ‘magic windows’; technology alone will not solve our energy crisis. Therefore, I care about sustainable energy policies – and perpetual reliance upon non-renewable fossil fuels is, by definition, unsustainable.
Ultimately, the solution to our energy crisis may well lie in as many people and/or businesses as possible generating their own electricity and/or ambient temperature control. However, the fossil fuel industry appears to have decided to pick a fight with the Laws of Physics – and insist that it can disrupt the Carbon Cycle with impunity – rather than re-invent itself as the energy business of the future; but that does not make it any less foolish and short-sighted. Anthropogenic climate disruption is the ultimate ‘Tragedy of the Commons’ outcome (about which Garrett Hardin warned in 1968). As such, our problem is that the Earth has five times more fossil fuel than it would be safe to burn; and we do not seem to have the self-control to choose not to burn it.
Therefore, to dismiss (as I suspect many if not all on this site will do) stuff like James Hansen’s piece in the Washington Post yesterday (‘Climate change is here — and worse than we thought’) as “environmental alarmism” is itself wishful thinking. I don’t need to present any evidence to justify this assertion because the evidence is all around you; you just seem determined to ignore it.

August 5, 2012 5:28 am

David Fogg says: August 2, 2012 at 11:30 am
MacRae: Athabasca is a mess, and a big one at that. The indigenous people down stream have problems with fish and sickness. Nothing I’ve heard as ridiculous as two jawed fish. Red spots, illnesses, population declines. Sure, it was never tar-free, but it’s gotten worse by most accounts. Regardless, you could remove Athabasca from m(gov’t/energy) to give me any point, and my point is still valid. Our government GIVES away our resources to the Energy industry, claiming very little in the way of revenue for it… and then doesn’t even do its job of regulation and oversight. As a result, there is NOTHING trustworthy or inherently safe about energy development. I’m not against gas development… or possibly even fracking. But currently I can’t trust anyone involved to give real honest answers. Look at all the BS they gave us when the Macondo blew out. It’s the same colluded garbage we get from gov’t/climate science.
__________
David, you are speaking in an area of my expertise. I was directly involved as a manager in the Canadian oilsands from 1984 to 1992. That is why I started studying “global warming” (CAGW) science in about 1985. It was my responsibility to understand what we were doing in the oilsands, and it became an interesting hobby.
Like any other cantankerous old fart, I think I could have done a better job in the oilsands than the kids that took over. 🙂
Nevertheless, I must be objective and fair in my assessment.
First, on fiscal terms (royalties and taxes). The Athabasca oilsands are an economically marginal resource – among the highest-cost sources of oil in the world. IF we want to develop them (and we should – they are THE economic backbone of the Canadian economy), we need fiscal terms that make them sufficiently economic to attract investment.
The new fiscal terms adopted by the Klein government in 1996-97 were , in my opinion, well-suited to the oilsands. They allowed the investor to get his capital back quickly, to enhance the otherwise-marginal rate of return, and then the government took a larger share. The total income split was about 50:50 between government and industry.
The Stelmach government revised these terms in ~2008 to remove these investment incentives, and this will ultimately prove to be a mistake, in my opinion. When costs and oil prices finally re-align, new oilsands projects will probably be rendered uneconomic by the Stelmach fiscal terms.
By way of credentials, I personally initiated the move to the Klein tax terms in 1985, and the move to the new royalty terms in 1988. It took about a decade for experts to establish these new terms, and less than a year for neophytes to destroy them.
As far as “giving the resource away” to industry, the fact is that the revenues from the Athabasca oilsands carry the entire Canadian economy. The reason Canada is the strongest economy in the G8 is entirely due to the oilsands – Canada’s manufacturing sector is no better than that of the USA.
Regarding the people who live downstream from the oilsands, there has been so much falsehood written about this – one doctor from Nova Scotia established himself in Fort Chip and was found to be fabricating scary stories about the health of the native peoples there – he was formally censored by the Alberta Medical Association. Excerpt below – sorry I’ve lost the full link.
Sure, there are lots of liars in industry – look at Enron and all the financial scams on Wall Street. However, senior executives caught lying are swiftly dealt with industry – they are fired. Boards of Directors do not like to be lied to, and are deeply embarrassed by these events. Most Directors of large companies are independently wealthy and have good reputations – they do not want to be associated with lies.
The CAGW scam is a much more serous deception. The truth is what we wrote in 2002: “The alleged global warming crisis does not exist.” More evidence since then? There has been NO net global warming since we wrote this article.
Nevertheless, certain climate scientists continue to lie about the global warming crisis, and most politicians continue to repeat these lies. Industry leaders are dragged along, most of them lacking the courage to speak out against this nonsense and be pilloried by radical warmists for doing so.
Like investing, one has to be cautious about who you believe. The remarkable change now is that, with the internet and a good basic education, one can develop one’s own informed decisions. Good luck!
__________
Excerpt:
http://www.smalldeadanimals.com/archives/012649.html
After two years of repeated requests from authorities, he finally agreed to turn over his files. They showed no evidence to support his shocking claims. The investigator discovered, instead, that Dr. O’Connor’s public statements about the health of Fort Chipewyan’s residents contained ““mistruths, inaccuracies and unconfirmed information.”
He had reported five cases of a rare bile duct cancer called cholangiocarcinoma in the community of 1,200. There were two. The doctor had told reporters of a man who had died of colon cancer at the young age of 33. It was fiction. ““No patient died at age 33 from colon cancer as reported by Dr. O’Connor,” says the report.
“These weren’t misdiagnoses; they were diagnoses that never occurred,”” says Hakique Virani, one of the three Health Canada physicians who lodged the original complaint with the college. ““Our concern was, this is a guy who is saying there are a huge number — five in a community that small is a huge number — of rare cancers and there were outward associations being drawn between environmental concerns and cancers.”
“Basically you’re telling a group of people that you’re likely to get these rare cancers and there’s nothing you can do about it because of the place you live, the water that you drink and the food that you eat. If it’s true, you’re darnstraight to advocate. If not, you’re really abusing the trust of an entire community.”