Financial meltdown hits oil tanker fleets

Energy Business Tankers

648-P1050771.jpgA tanker entering Prince Rupert harbour. (Robin Rowland/Northwest Coast Energy News)

The world’s oil tanker companies are in financial meltdown, a crisis little noted outside the industry itself and the financial media, a crisis caused, experts say, by combination of the weakening world economy and an over abundance of the giant vessels that ply the world’s oceans filled with crude .  

 Although oil prices are generally on the rise, this has not helped the tanker fleets, because overall demand for oil is down and  there is a  “glut” on the tanker  market, with too many vessels, so chartering and transportation fees are dropping. ( One ship broker reports that “day rates for leasing tankers” have dropped 47 percent since the start of 2010.  Rates for tankers were $229,000-a-day  at the peak of the market in  2007. By mid-November that had dropped to  $28,829).

The crisis in the tanker industry first hit the financial news in mid-November.

649-TORM_Logo.jpg On November 16, 2011, Torm, a Danish tanker company warned investors that it was revising expectations and stated that the company expected to lose $175-$195 million US (pdf) for 2011, because freight rates  in the second half of 2011 for tankers, especially the large tankers, had  been “lower than expected.”

650-gmc.jpgOn November 17, 2011, General Maritime Corp., a New York based major American crude transportation company that describes itself “one of the world’s largest and most diverse fleets of tankers, filed for Chapter 11 bankruptcy.  GMC is said to be the second largest American flagged crude carrier.

According to Reuters,the same day, Torm told the markets it was  in talks with creditors. Three days later, on Nov. 20, Torm (pdf) cancelled an order for a new tanker that would have been delivered in 2013.

651-frontlinelogo.jpgOn Nov. 22, Frontline Ltd, based in Bermuda, reported that the company could run out of money in early 2012.  Frontline has one of the world’s largest tanker fleets, including Very Large Crude Carriers. The company has $1 billion in bonds and loans due in the coming decade, and is looking for new cash.

 652-acmlogo.jpgOn Nov.  23, ACM Shipping, a  British company, told The Financial Times  that company was taking a £6.85 million write-off largely due to poor market conditions. The paper added that ACM had strong cash reserves and ACM CEO Johnny Plumbe was confident about ACM’s  medium to long-term prospects.

The Financial Times says the oil tanker industry is facing “the worst market conditions in 25 years.” The FT adds that the oversupply of ships has pushed earnings for most tankers to well below the level required to cover operating costs   The paper also noted that ACM is “one of a handful” of tanker companies publicly listed on stock exchanges, raising questions about the state of the books of privately held tanker companies, which do not report.

Both the Reuters report and  the financial website The Street quoted analysts as saying that more tanker company bankruptcies were expected.  The analysts say at least in the near future, the tanker companies will probably have trouble getting bank financing. The reports also say that the Eurozone crisis could make things worse, but if the economy rebounds, the industry could recover in late 2012, or 2013.

General Maritime Corp listed total assets of $1.72 billion and liabilities of $1.41 billion as of September. The private equity company  Oaktree Capital Management will provide it with $175 million in equity.  Creditors will defer cash payments of about $140 million to June 2014. GMC.

 ACM said its revenue decreased by 9% to £13.2 million mainly due to adverse currency movements and the company still made a before tax and amortization of  £2.3 million. It said it had a strong cash position of £4.9 million at 30 September 2011 and no debt (£5.0 million as at 31 March 2011)

Frontline’s third quarter report said it had a net loss $44.7 million in the third quarter of 2011. The company’s long term outlook says world oil consumption is rising but American imports (at least by tanker) will continue to decline unless that country’s economy recovers.
 
According to Bloomberg, John Fredriksen, the Norwegian-born billionaire who controls a 34 percent stake in Frontline and serves as its chairman, “has the funds available and he is prepared to go in and try to find solutions” if creditors go along, says Tor Olav Troim, one of his aides.

The Financial Times notes that the shipbrokers – who arrange the buying, selling and chartering of ships – suffer earnings declines as their commission is dependent on earnings by the shipowner.

The financial crisis in the tanker industry is going to add new factors to the debate over current and proposed tanker traffic along the west coast of  British Columbia, especially with the energy industry and the government of Prime Minister Stephen Harper pushing for greatly increased tanker traffic along the coast on the assumption that the Enbridge Northern Gateway pipeline is approved.

That’s because Enbridge has acknowledged that company is no longer legally responsible for the bitumen crude once it has been loaded on a tanker for shipment to a customer.  Enbridge, has however, filed thousands of pages of contingency plans for handling any oil spill that may occur in Kitimat harbour, along Douglas Channel or the British Columbia coast.

Under Canadian and international law, the tanker owners are legally responsible for any damage caused by a wreck or spill along the coast.  Under plans filed by Enbridge with the Joint Review Panel, the tanker companies are also supposed to  have to have special training for officers and crew, not only to ply the waters of British Columbia but what do in the case of an accident at sea, in the Douglas Channel and the Kitimat terminal.

Many of the tankers that will call at the proposed Enbridge terminal will be the Very Large Crude Carriers.  Frontline, one of the companies’ in financial difficulty, owns many of the world’s VLCC (see list)

While there are international contingency funds marked to handle spills, one question has to be whether or not a bankrupt company, now or, if in the future if still in bankruptcy protection, be able to able or willing to pay compensation for a spill.

It is highly unlikely that tanker rates will return to the highs seen in 2007.  Operating costs are likely to be a problem for tanker companies in the future, even if the economy comes back to life.

As has been seen in other industries, financial problems, even if a company is not bankrupt, usually leads to cutbacks in areas such as maintenance and training.
        

See also Huffington Post Frontline Shares Down On Dismal Earnings, Oil Tanker Company Needs Cash, Debt Restructuring

    

Feds recorded 53 tanker spills on Canadian coasts: Postmedia

Environment Link

Postmedia News is reporting

Feds recorded 53 tanker spills over past decade on Canadian coasts

The Canadian Coast Guard has recorded 53 oil tanker spills that
required a cleanup on the country’s shorelines over the past 10 years,
the federal government has revealed in a document tabled in Parliament.

In
total, the government reported 169 “pollution incidents” in Canadian
waters involving oil tankers since 2001. But it said that in the “vast
majority of cases,” there were no pollutants found in the water.

“Call the Americans.” Canadian Coast Guard cutbacks now an issue in the US Senate

The Coast

The controversy over the Harper government’s cutbacks to Canadian Coast Guard resources on both west and east coasts  has now become an issue in the United States Senate.

While most of the media attention last week was on Newfoundland, where there are fears not only of moving the search coordination centre from the island to Trenton, and the possible privatization of the entire search and rescue service, the cutbacks on the northern coast of British Columbia have yet to become a national story, even though the conservative government is increasing its promotion of tanker traffic from Pacific ports.

Now the issue has come to attention of  Senator Maria Cantwell, a Washington Democrat, who is raising alarm bells in the Senate about the dangers of tanker traffic, the possibility of a spill and  the probable inadequacy of the Canadian response to any major shipping accident along the coast.

 


Cantwell’s main concern is upgrading the ability of the United States Coast Guard to respond to such an accident, “This is a major threat to our region,” Cantwell said at hearing on July 20 of the Senate  Oceans, Atmosphere, Fisheries, and Coast Guard Subcommittee. “It seems that Canada’s oil spill response plan in the Pacific Northwest is to call the Americans.  …Obviously any such spill in the narrow and heavily populated waters of the Puget Sound or Strait of Juan de Fuca would cause tens of billions of dollars in damage and impact millions of my constituents. … I think it deserves a very robust oil spill response plan.”

Cantwell  says she secured a commitment  from  Rear Admiral Paul F. Zukunft, Assistant Commandant for Marine Safety, Security and Stewardship for the United States Coast Guard, to have the U.S. Coast Guard perform an extensive analysis of cross-border readiness and ability to respond to potential spills given the potentially dramatic increase in oil tanker traffic along the U.S.-Canada maritime border off Washington state.

After the BP spill in the Gulf of Mexico, Cantwell pushed a bill through the U.S. Congress  that, strengthens oil spill protections for Puget Sound and other U.S. coastal waters. The bill, which was signed into law by President Barack Obama on October 15, 2010, includes  provisions that significantly enhance oil spill response and prevention to protect valuable coastal communities and their economies.

Cantwell’s news release  says

The legislation expands the oil spill response safety net from Puget Sound out to the entrance of the Strait of Juan de Fuca, ensuring that Puget Sound and the Strait of Juan de Fuca have spill response teams and equipment in place. The bill further reduces ship and tanker traffic in the Olympic Coast National Marine Sanctuary; enhances spill prevention efforts on vessels transporting oil; and establishes a stronger role for tribes.

Cantwell also fought to include a provision that requires tug escorts for double-hulled tankers in Prince William Sound. Approximately 600 oil tankers and 3,000 oil barges travel through Puget Sound’s fragile ecosystem annually, carrying about 15 billion gallons of oil to Washington’s five refineries. The Strait of Juan de Fuca also has significant outbound tanker traffic originating in Vancouver and carrying Canadian oil. Prior to the 2010 Coast Guard Reauthorization Bill, American industry only had to position oil spill response equipment in Puget Sound, leaving the busy shipping lane in the Strait of Juan de Fuca unprotected.

Cantwell’s provision extended the “high volume port area” designation west to Cape Flattery. As a result, oil spill response equipment, such as booms and barriers, are now prepositioned along the Strait, supplementing the response equipment already in place in Puget Sound.

An oil spill in waters in Washington state interior waterways could be devastating. According to the Washington State Department of Ecology, a major spill would have a significant impact on Washington state’s coastal economy, which employs 165,000 people and generates $10.8 billion. A spill would also severely hurt our export dependent economy because international shipping would likely be severely restricted. Washington state’s waters support a huge variety of animals and plants, including a number of endangered species, all which would be harmed by a spill.

Cantwell says she was successful in protecting a tanker ban in Puget Sound.  Former  Alaskan Repuiblican Senator Ted Stevens attempted to overturn the then 28-year-old protections authored by former Senator Warren Magnuson limiting oil tanker traffic in the Puget Sound. In 1977, Senator Warren Magnuson had the foresight to recognize the great risk that oil supertankers would have on the waters of Puget Sound. He put his findings into law and essentially banned supertankers in the Puget Sound by prohibiting the expansion of oil terminals in Puget Sound.

Enbridge, environmentalists agree

The inadequate Canadian Coast Guard resources in the Pacific region bring rare agreement between Enbridge which wants to build the controversial Northern Gateway pipeline and the project’s environmental opponents.

While Enbridge maintains that safety systems it plans would make a tanker accident a rare event, when officials were questioned at last September’s public meeting in Kitimat, they said Enbridge was worried about Coast Guard resources on the west coast.   They said that Enbridge’s emergency planning scenarios call for it to take 72 hours for the Canadian Coast Guard to respond with its meagre equipment from Victoria and Vancouver to a tanker accident in Douglas Channel.  The Enbridge team admitted under questioning from the audience that the company would urge to Canadian government to call on US Coast Guard resources from Alaska and as far away as California in the event of a major spill, confirming Sen. Cantwell’s statement to the subcommittee that Canada would “Call the Americans.”

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Loss of Coast Guard cutters brings supertankers to the forefront: Courier-Islander

Courier-Islander

The imminent loss of the Coast Guard cutters Point Henry and Point Race is solidifying opposition to proposed super tanker traffic on the coast, says NDP MP Nathan Cullen and the Living Oceans Society.

 But Vancouver Island North MP John Duncan, who referred to the replacement boats as “less capable” in the past, continues to support replacement of the Point Race and Point Henry this week. 

 The 47-foot motor lifeboat CCGS Cape Palmerston is to be officially named and dedicated to service in Campbell River next Thursday, replacing the 70-foot Point Race. Ceremonies to replace Prince Rupert’s Point Henry with the CCGS Cape Dauphin are slated for July 26.

Canadian oil boom may bring many more tankers to Northwest waters: Seattle Times

Seattle Times

Canadian oil boom may bring many more tankers to Northwest waters

[F]ights over Canada’s oil sands could have an impact much closer to home. One company is hoping to boost oil-sands shipments to Asia through Northwest waters — plans that would quadruple tanker traffic through Vancouver, B.C., and dramatically increase the amount of oil traveling through the Strait of Juan de Fuca.

Some of the tankers the company hopes to accommodate could carry four times more crude than the Exxon Valdez, the supertanker that spilled 11 million gallons of crude into Prince William Sound….

“That’s definitely a lot more crude carriers,” said Chip Booth, a manager with the Washington state Department of Ecology’s spills program. “It certainly represents a bit of a higher risk.”

But it’s far too soon to say how much more.

NEB adjourns KM LNG hearings as partnership talks to coastal First Nation

 The National Energy Board adjourned the KM LNG hearings early on Friday pending negotiations between the energy partnership and the Gitxaala, a small coastal  First Nation, based in Kitkatla on the northern BC coast.  

NEB panel chair Lynn Mercier ruled that the board would not decide  on KM LNG’s request for an export licence before Sept. 15, 2011.  The panel could reconvene earlier if there is agreement between KM LNG and the Gitxaala.
The Gitxaala, like all coastal First Nations and many other BC coast residents, are worried about increased tanker traffic, whether natural gas or oil, along the BC coast.  That worry lead to heated exchanges Wednesday between Robert Janes who represents the Gitxaala and Gordon Nettleton who is lead counsel for KM LNG.
On Thursday,  testimony showed that KM LNG has been more successful than Enbridge in reaching agreement with First Nations along the pipeline route.   KM LNG has reached agreements with the Haisla, on whose traditional territory the Bish Cove LNG terminal will be built and 14 other inland First Nations, with an agreement with a fifteenth under negotiation.
It appears that KM LNG failed, as late as Tuesday, when the hearings began, to realize the concerns of First Nations along the coast.  Corridor talk Thursday indicated that the some sort of deal was being discussed. The NEB hearings were scheduled to begin at  9 am and go all day Friday. Instead  the opening was delayed until just after 10:30 when Mercier announced the panel’s decision.
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Cullen renews calls for tanker ban on west coast: CFJW

CFJW 

Skeena Bulkley Valley MP Nathan Cullen is using World Ocean’s Day to call on Prime Minister Stephan Harper to immediately legislate an oil tanker ban off the north coast.

 The Federal Natural Resources Critic says the the voices of BC First nations, municipal leaders and residents are incredibly strong and united on the urgent need for a legislated tanker ban.”

The ghost of Enbridge haunts the second day of Kitimat LNG hearings

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Lawyer Robert Janes, representing the Gitxaala First Nation, cross-examines consultant Roland Priddle at the second day of the KM LNG hearings before a National Energy Board panel in Kitimat, June 8, 2011.  (Robin Rowland/Northwest Coast Energy News)
The ghost of  the Enbridge  Northern Gateway proposal is always  behind the scenes in the stuffy meeting room at the Riverlodge Community Centre as the National Energy Board considers KM LNG’s application for a liquified natural gas export licence through the port of Kitimat.
Officially, in the view of the board and the lawyers in the room, the Enbridge proposal is neither,  legally nor practically, part of the proceedings. 
The two hearings are quite different.  The KM LNG is,  in the view of the National Energy Board, nothing more an application for an export licence.  The Joint Review is considering the Northern Gateway “facility.” That is much wider.
   Today, one of the key issues about the Northern Gateway proposal came to the forefront: the question of responsibility for tankers, whether those tankers carry bitumen or cryogenic cooled natural gas.
Wednesday was a hot summer day, the meeting room at  Riverlodge  even hotter, with no air conditioning, just a few lazy ceiling fans.  In the opening moments of the hearings,  one of the lawyers joked about not wearing his tie, reminiscent  the opening courtroom scene in the play and movie, Inherit the Wind, based on the Scopes Monkey Trial, where Clarence Darrow (played by Spencer Tracy as Henry Drummond) confronted William Jennings Bryan (played by Frederic March as Matthew Brady)
The subject of Wednesday’s proceedings was, on the surface, dull and purely economic, charts and graphs, “Export Assessment,” guaranteed to make most of the people in the warm room to nod off.
The main witness  on the panel of export experts was Roland Priddle, an Ottawa-based  “consultant in energy economics.”
The initial questions were routine, about imports and exports of natural gas in Canada. The experts said the use of shale natural gas is expected to increase from two per cent of the Canadian market to 34 per cent over the next 25 years.  The panel estimated that there are more than 40 shale gas “plays” are under  development or planned in Canada.
For the public, the NEB hearings are a bit opaque. Unlike a public inquiry or a court hearing, the direct testimony has already occurred, in the documents the companies, consultants and experts  have  filed.  The lawyers then ask questions on those filings.
Robert Janes, of  the Janes Freedman Kyle law firm, specializing in aboriginal law cases,  based in Vancouver and Victoria, represents the Gitxaala, a small coastal  First Nation, based in Kitkatla on the northern BC coast.
Janes began his cross-examination of  Priddle, asking about the supply chain and later  at what geographic point the natural gas was officially “exported.”
Priddle hesitated for a moment,  said he was unsure about natural gas, then replied that years before, when he had worked for the oil industry that the “title” to the oil changed at the “joint flange” where the pipe connected with the manifold on the oil tanker.
Priddle’s  apparently innocuous statement made the few Kitimat residents left at the hearing sit up and pay attention. 
The previous September, if there was a moment when you could actually see in a room at Riverlodge that a community’s attitude toward Enbridge changed, it was on Sept. 22, 2010, when the Enbridge outreach group told the audience that the company had no legal responsibility for the bitumen it would pipe from Alberta once it was loaded on the tankers.
Under further questioning from Janes,  Priddle said that the fact that title to the oil changed at the “flange connection” had been traditional in the oil industry for decades.   
Janes then furthered his cross-examination by asking Priddle and also other members of the export panel, about where “export” actually occurred, at the “flange connection” or at the 12-mile international ocean limit.
That question set the stage for an almost day long clash between Janes and  Gordon Nettleton, of Osler, Hoskin & Harcourt‘s Calgary office, representing KM LNG. Nettleton bears a superficial resemblance to Frederic March’s Matthew Brady and while the next hours were not really the epic struggle between Darrow and Bryan, it was two good lawyers sparring over the somewhat restrictive rules of evidence that govern National Energy Board hearings, while the real question was  the future of the western coast of Canada.
Nettleton tried to keep Janes’ questions narrow, just to the material in Priddle’s written submission to the NEB.  Nettleton told NEB panel chair, Lynn Mercier, that Janes should ask about the “capital intensity of the LNG  chain” and not “how cryogenic shipping relates to shipping and export points.”   
Janes responded that “If you look at the report, Priddle talks about the chain in general aspects, all parts of the chain including government approvals.” Janes then told the NEB panel that  “cross-examination can bring out knowledge of the witness  as whole.”  Perhaps that is true in court or at a public inquiry, but not necessarily before the National Energy Board.
Nettleton replied that Janes should have asked those questions either of Monday’s policy panel, a rather dull affair,  where there few questions from any of  the lawyers at the hearing or at later panel on “terminal approvals” scheduled for Thursday or Friday. Nettleton told Mercier  he didn’t want Janes to have a “blank cheque” to cross-examine based on one sentence in Priddle’s report.
The problem is that the NEB practice of using narrowly focused “expert” panels, while  perhaps routine in the towers of the Alberta oil patch, doesn’t always coincide with the controversies over tankers on the BC coast, especially in the case of KM LNG where the NEB hearing for the export licence is what policy calls a “market-based procedure,” focusing solely on the facts and figures of the economy of natural gas.
Somewhat stymied by the narrowness of the hearings, Janes  proceeded to ask questions about how the natural gas market had changed over the past few years. Again Nettleton objected to some of Janes’ questions that were beyond the scope of Priddle’s original written report.
Janes was trying to establish that the northeastern British Columbia shale gas deposits would eventually be developed whether or not the Kitimat LNG terminal was given NEB approval.

385-priddle.jpg

Priddle replied by giving Janes a lecture in economics,  saying  that while the advantages or disadvantages for First Nations were beyond his expertise, as an economist he felt that if  Janes that  had an interest in the welfare of his First Nations clients and their social development, it also should extend to other First Nations groups in both British Columbia and Alberta. “As an economist,” Priddle said,   “I tend  to follow the ‘present value princple,’  he said, explaining that it is best if a person gets a job now,  “the person who is not employed in 2012 and 2013 but will get some employment in the future… that native looses the five years” and “so there is  much less economic  value”  for that individual person.
“What is the benefit taking the project now, taking the development now?” Janes asked. “If we do this rigorously, what are the costs imposted on the aboriginal person? I suggest that proper economic analysis requires both sides of the equation.”
Priddle avoided that question, saying to Janes. “you are moving away from my evidence.”
With that, Janes had finished his questioning and the hearings broke for lunch.
Most of the afternoon was concerned with questions over the future of an integrated North American natural gas market and how, in the future, Canadian natural gas might be exported not just to the United States but through the US to Asia, while at the same time American natural gas could be imported into Canada to service some markets.
As the day closed, in the heat of the afternoon, and as many were anxiously looking at their watches as the clock neared the time for the puck drop for the fourth game of the Stanley Cup finals between the Vancouver Canucks and the Boston Bruins in Boston,  Mercier called on Nettleton to ask any redirect questions to Priddle and the rest of the panel.
Nettleton seized on the scenario that it was possible that Alberta natural gas could be exported to Asia through a port on the US west coast. 
“If KM was not allowed to proceed, and the potential outlet was in the United States, how do see that as advantageous to  [BC] First Nations?” Nettleton asked Priddle.”Objection!”  Janes was on his feet to protest: during the cross-examination, Priddle had indicated that the advantages and disadvantages had moved beyond the evidence in his written submissions.
“What’s good for the goose, is good for the gander,” Janes told Nettleton. “This is completely out of bounds,”  because Janes had not been able to examine Priddle on the question, it was not proper rexamination, it was outside of the evidence.
“I have asked if Mr Priddle to comment,I have not asked for an opinion whether there would be costs or benefits for First Nations that would  be affected by Kitimat LNG,” Nettleton said.
“That is the question I am objecting to,” Janes replied.  
After some more arguments, Mercier concluded that a comment and an opinion were pretty much the same thing and the hearing adjourned. The participants fled to watch the Bruins trounce the Canucks 4-0 and the stage was sit for more clashes on Thursday as the more substantial expert panels face the lawyers.

Kinder Morgan proposes second Kitimat bitumen pipeline

In a story broken early Thursday, June 2, by the Vancouver website Tyee and confirmed by Northwest Coast Energy news,  another major energy player, Kinder  Morgan is proposing a second pipeline to carry bitumen from the Alberta oil sands to the port of Kitimat.

The proposal was part of a presentation to industry analysts  during a conference on March 24, 2011, with a PDF of the Power Point presentation posted on the Kinder Morgan Website.

The  likely controversial proposal was not picked up by the media until Tyee broke the story.

The presentation says the proposed pipeline is one of several alternatives proposed for the expansion of the existing Kinder Morgan Transmountain Pipeline.  In this scenario the pipeline to Kitimat would branch off from the Transmountain Pipeline go through Prince George and then apparently follow existing pipeline routes to Kitimat and not follow the proposed Enbridge Northern Gateway route.

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The Kinder Morgan presentation says the Transmountain pipeline branch to Kitimat would cost $4 billion, compared to the $5,5 billion that Enbridge has budgeted for the Northern Gateway project.  The Transmountain pipeline would have a capacity of  450 million  barrels a day compared  to the Northern Gateway capacity  of 550 million barrels a day.

Tyee says:

A power point presentation
for investors by Ian Anderson, president of Kinder Morgan Canada Group,
provides a wealth of information that has not been widely shared with
the general public or local governments:

Tyee says Kinder Morgan is also asking the National Energy Board for a immediate jump in the bitumen going through the port of Vancouver

They are also requesting to divert more Alberta crude and bitumen capacity to the Westbridge tanker terminal in Burrard Inlet and away from existing land-based refineries in B.C. and Washington. If approved, this would immediately expand crude capacity through Vancouver from 52,000 bpd to 79,000 bpd — an increase of more than 50 per cent

.

According to the documents seen by Tyee, the Vancouver end of the project would require the dredging of Second Narrows to allow large supertankers to visit the port. Tanker traffic in Vancouver would increase, Tyee says

Tanker transits through Vancouver will increase to 216 per year in 2016, up from 71 in 2010 and 22 in 2005.

All this is being propelled by increasing energy demand from China. It also appears that Kinder Morgan wants to increase the Vancouver capacity because of the delays in the Enbridge Northern Gateway project, which means that Alberta oil patch is seeking new ways to get the raw bitumen to China.

Links
Kinder Morgan Canada presentation on the Kitimat pipeline and the Vancouver port expansion (PDF)

Kinder Morgan application to the National Energy Board (PDF))

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BP, ConocoPhillips Halt Proposed $35 Billion Alaska Gas-Pipeline Project: Bloomberg

Bloomberg

BP, ConocoPhillips Halt Proposed $35 Billion Alaska Gas-Pipeline Project

BP Plc  and ConocoPhillips dropped plans for a $35 billion Alaska natural-gas pipeline, once proposed to be the largest private construction project in U.S. history, because they didn’t get enough customer interest.

The companies will withdraw an application seeking federal approval to build a pipeline to bring gas from Alaska’s North Slope to U.S. and Canadian markets, according to a statement today…

Halting Denali leaves one competing pipeline proposal, backed by TransCanada Corp. (TRP) and Exxon Mobil Corp. (XOM), to bring 4.5 billion cubic feet of gas a day from Alaska’s North Slope… 

The two pipeline projects are not the only ways to sell North Slope gas, said Steve Rinehart, a spokesman for BP Alaska. Other options include liquefying the gas for transport to other markets by tanker, he said.

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