KMI - Kinder Morgan

[Zorrofan]

While they are worried about dilbit spills in double-hull vessels, see what our Vancouverites are up to:

 

https://georgiastrait.org/2013/12/the-greenest-city-or-the-biggest-coal-exporter-in-north-america/

 

Coal country baby!!! They must love Trump over there.

 

Hmm, so your argument is essentially, "environmentalists lost the fight against coal, therefore they shouldn't fight Kinder Morgan."  No wait, that doesn't make sense.  "Environmentalists lost the fight against coal, so they're hypocrites." No, that doesn't makes sense either. "Environmentalists lost the fight against coal, and dilbit isn't as bad as...."  No, that's not right....

 

I'm pretty confused about what your argument is here. Are you just suggesting that we should lower coal exports? Because if that's your point, I'm good with that.

 

Why are environmentalists opposed to oil sands production in Alberta, with some of the highest environmental standards in the world, but silent on the issue of oil being imported into Canada from developing countries with environmental standards that are much lower or even non-existent?  Why don't they protest about China and India continuing their coal plant build-out?

[Cardboard]

Anyone up for a swim this summer at Kitsilano beach?

 

https://www.thestar.com/vancouver/2018/04/11/untreated-sewage-pollutes-water-across-the-country.html

 

Cardboard

[RichardGibbons]

Why are environmentalists opposed to oil sands production in Alberta, with some of the highest environmental standards in the world, but silent on the issue of oil being imported into Canada from developing countries with environmental standards that are much lower or even non-existent?  Why don't they protest about China and India continuing their coal plant build-out?

 

One issues with the tar sands is that they're intrinsically bad for CO2--the highest CO2 emissions in North America. The number I've seen tossed about is that oil sands are 20% higher in emissions than traditional oil. I'm not sure how the math on emissions works on dilbit shipped east from Alberta compared to lighter oil shipped from the Middle East or Africa, but if you find the calculations, I'd be interested.

 

That said, the likely reason the environmentalists don't protest these other things you're talking about is because they want their protests to have an effect. Canadians protesting Chinese coal plants and oil imports is unlikely to have any effect. (And really, at this point, China seems to understand the problem with pollution better than the USA.)

[RichardGibbons]

My favorite bit of hypocrisy in this pipeline dispute is Notley banning BC wines because she considered it illegal for provinces to ban shipment of other province's products.

 

My second favorite bit of hypocrisy in this is Horgan saying, "We want to see if what we want to do is legal", while Notley and Trudeau loudly proclaim that it's illegal but then try really hard not to actually argue their case in front of the Supreme Court. If it's so obvious, they should be delighted that Horgan wants to put the question before the courts and do what they can to clear the way.

 

(I imagine that Notley and Trudeau are kind of creeped out by this decision that says that not only can BC have special environmental requirements, but also that it must take them into account when reviewing pipelines and not defer environmental issues to the federal government. It's not the exact same issue, but it is similar.)

[Cardboard]

Following the law?

 

When a project has been approved by a government, both provincial and federal, and that the company has already spent $1 billion on it then it seems that we have breach of contract.

 

What it means IMO is that Kinder Morgan Canada should sue B.C. for all its costs and lost future revenues/profits. Moreover, the Canadian government and Alberta should also sue B.C. for all its costs and future lost taxes/royalty revenues.

 

The Canadian government should also pass a new law declaring illegal any existing and future coalition government. After all, we are a democratic society. It should not be permitted for independent parties to unite and form an illegitimate government after voters have cast their vote.

 

Cardboard

[RichardGibbons]

Following the law?

 

When a project has been approved by a government, both provincial and federal, and that the company has already spent $1 billion on it then it seems that we have breach of contract.

 

You do know that the only thing stopping Kinder Morgan from building the pipeline now is Kinder Morgan, right?  (Well, there are protesters, but the ones who are protesting illegally are being arrested, which seems reasonable.)

 

The Canadian government should also pass a new law declaring illegal any existing and future coalition government. After all, we are a democratic society. It should not be permitted for independent parties to unite and form an illegitimate government after voters have cast their vote.

 

LOL, yeah OK.  We should get rid of democracy--stop the MLAs who received the majority of the both votes and the seats from forming government--because Cardboard doesn't like the results.

 

[jeffmori7]

Hey Cardboard, I don't know how is your French, but here is a paper I pretty much agree with: http://mi.lapresse.ca/screens/a12d1969-dd02-4953-b002-6540401f1697__7C___0.html?utm_medium=Facebook&utm_campaign=Microsite+Share&utm_content=Screen

 

We have had those discussions in the past about environmentalists blocking pipelines. While I am not pro-pipelines, I do agree that it is much better to work toward reducing our petrol consumption, making them obsolete, than fighting ad nauseam to block them. What I am afraid though is that we are not doing enough and that IMO should be part of the governement job to accelerate the transition toward a zero carbon world. Seeing the PLC wanting to invest in pipelines is quite weird. I can understand them not wanting to be at war with Alberta, but there are some limits. And when Trudeau says that we don't have to compromise between environment and economy, he forget to say that's what we've been doing for a many decades already.

 

And I do agree that it is quite hypocritical from BC (or Quebec) on that matter to be heavily against pipelines while not putting all efforts to reduce our needs for oil. Still, it is legitimate to ask questions about assets that are riky, particularly when you are just a way of passage and that it doesn't provide a lot of benefit to you, as would have been the case for Energy East in Quebec for example.

[scorpioncapital]

It's funny even Russian assets are outperforming Canadian, both very resource dependent economies. I find it ironic that people think Canada has less political and economic risk than so called emerging markets where holding up a project like this has virtually zero chance of ever happening. So much for the conventional wisdom :)

 

 

 

 

 

 

[Cardboard]

Jeffmori7,

 

That is a good article and quite balanced. I am surprised that you pretty much agree with it.

 

As the article states, oil demand worldwide and even in NA keeps on growing. It will be close to 2 million barrels/day this year.

 

So Canada as a nation has to ask itself: Should we keep our resources in the ground while everybody else including Norway keep on expanding their production and make large profits for their population?

 

And for Canada another very specific question needs to be asked: Should we continue to accept a very significant discount (20-30%) for all our actual exported production while everyone else is obtaining Brent pricing?

 

Considering that Canada is only producing around 4% of global production, it will not impact pricing nor reduce supply much (as someone else will pick it up) if we keep on restricting our supply to hold some higher moral ground on CO2 emissions than other countries.

 

So yes, the long term solution is about transitioning power generation and transportation to non-fossil fuels. However, this will not happen overnight as it will require new technologies to be developed.

 

Also, something wonderful that has happened with ICE vehicles over the last 10 years is a significant reduction in consumption. A car that used to consume 12 litres/100 km is now at 8. However, the trend that we are seeing is that consumers are now buying the larger vehicles since consumption is less! How do you fight this? More taxes on larger vehicles?

 

Regarding Energy East you are quite wrong in your conclusion. This would have essentially stopped imports of oil into Quebec, Ontario and the Maritimes. Pretty large savings for consumers considering that even if less "trapped", pricing to Eastern refineries of WCSB oil would have been quite a bit lower than Brent. This would have had major benefits for Canada and Quebec.

 

Finally, Quebec receives around $13 billion/year from Alberta and Saskatchewan in equalization payments since they collect royalties from oil production. If Quebec did not receive these amounts, $7/day/child daycare could become a thing of the past and a myriad of other services could also disappear. So I believe that Quebec is addicted to this money and it comes from oil... In a way, the more oil is produced, the more Quebec benefits.

 

Then ask yourself this question: In a few decades from now when fossil fuels is no longer burned. Do you believe that Quebec will send equalization payments to Alberta each year since it is blessed with a geography proper to hydro-electric power?

 

Cardboard

[Cardboard]

Since B.C. wants to act like its own country, it is time for the Prairies to unite and form their own union.

 

https://www.bnn.ca/saskatchewan-threatens-to-cut-off-oil-to-b-c-amid-pipeline-fight-1.1059468

 

Put a pipeline from Edmonton to Churchill, Manitoba, get nuclear powered ice breakers like the Russians and ship oil to Europe year around.

 

Then they can keep their equalization payments and provide more to their own folks.

 

Cardboard

[John Hjorth]

That's actually an interesting idea, Cardboard. Where there is will there is always a way.

 

In fact, you actually don't need an ice breaker to do this. If a ship is heavy enough [deplacement empty], and with enough output [power] from the propulsion engine, that ship can be designed with ice breaking capabilities. It would be yummy for every very skilled naval achitect and structural ship design engineer to design such an enormous nuclear powered sucker. It's all about hull shape [primary the bow] and stregth of hull structure [dimensions of applied materials and choise of structural design].

 

- - - o 0 o - - -

 

Right now, a row of six AOPS [Arctic and Offshore Patrol ship] are under construction at Halifax Shipyard [a sub of J.D. Irving Inc.] in Halifax, NS. Those six thingies are about 100 metres of length [so basically rowing boats compared to a tanker], purpose: To maintain Candian sovereignty in the waters surrounding Canada, to be equipped basically with a sling gun in the bow, only. With ice breaking capabilities.

 

Video on Vimeo: https://vimeo.com/227461019 .

[rb]

Yep, ice breaking supertankers. What could possibly go wrong?

[John Hjorth]

Yep, ice breaking supertankers. What could possibly go wrong?

A lot, as it already has in history. Just put Mr. Taleb on the design team, too. As a free gift for us all, he will - at least for some period - not have time attacking BS'ers on Twitter and some other places, i.e. FB and Medium.

 

Not more crazy than building sky scrapers in Los Angeles.

[Cardboard]

So the Prairies don't need to order ice breakers. There are already two of these 6 that belong to them once finished.

 

Cardboard

[RichardGibbons]

The really interesting thing about this thread is the way it illustrates the tragedy of the commons.  Because Cardboard's argument is right: it's in Alberta's best interest to pump and sell as much oil as they can. It's also in America's best interest, Russia's best interest, and China's best interest....  It's in the best interest of any state that produces oil.

 

I've been wondering for a long time whether individual economics would trump shared destruction. I was pretty confident that the human species is smart enough to see the threat and work together to address the issue. But to me now, it looks like that won't actually be what happens.

 

Thus, instead of this problem being solved by the world co-operating, I now think it'll be solved by a subset of the population creating the technology that makes Alberta's oil non-economic. Alberta, having spent its resources on outdated technology, will have a much higher chance of becoming the province that needs equalization payments. It reminds me of another recent tragedy of the commons, the Atlantic fisheries.

 

It's not clear to me how much damage will be done before we reach the place where the demand for oil plummets, but I think it's unlikely to be something that threatens the extinction of humanity as some environmentalist rhetoric seems to imply.

[Cardboard]

Regarding extinction of humanity don't you think that a conflict with Russia, AI taking over, a virus or a large solar mass ejection toward Earth have a much greater chance of wiping out most humans and in a much more immediate future?

 

I was left wondering recently why Elon Musk spends any time on Model 3 production issues while he appears scared to death about the threat of AI? Seems like a very poor use of his time.

 

Cardboard

[rb]

Regarding extinction of humanity don't you think that a conflict with Russia, AI taking over, a virus or a large solar mass ejection toward Earth have a much greater chance of wiping out most humans and in a much more immediate future?

 

I don't.

 

I was left wondering recently why Elon Musk spends any time on Model 3 production issues while he appears scared to death about the threat of AI? Seems like a very poor use of his time.

 

Cardboard

Elon Musk does what he does because Elon Musk is full of shit. But then he has to be in order to get people and institutions to keep giving him billions of dollars.

[Spekulatius]

Yep, ice breaking supertankers. What could possibly go wrong?

 

The cost would go wrong. They probably would cost a billion or more a piece. And you can’t decomission them at those scrap yards in India or Bangladesh either.

[RichardGibbons]

Regarding extinction of humanity don't you think that a conflict with Russia, AI taking over, a virus or a large solar mass ejection toward Earth have a much greater chance of wiping out most humans and in a much more immediate future?

 

I think it's fairly certain that hundreds of millions will die as a result of global warming.  I think more could die out from a conflict with Russia or a virus, but the probability of either one occurring is lower.  I think the solar mass ejection has a much lower chance of happening than anything else on the list.

 

I was left wondering recently why Elon Musk spends any time on Model 3 production issues while he appears scared to death about the threat of AI? Seems like a very poor use of his time.

 

I know you wrote this not because you care about insight but rather because you wanted to insult Musk, but I think there actually is a real answer to your question.

 

With the Model 3, Musk has reached the same conclusion as me (way earlier than me). The only way to resolve the tragedy of the commons for global warming is to make the oil business non-economic, and one guy with a lot of money and a lot of charisma can make a difference there. The AI issue has the same tragedy of the commons, but it isn't at all obvious how a single person can act to address that problem (aside from diversifying human life across different planets). So, he focuses on the problem he can solve.

 

[John Hjorth]

Richard,

 

I actually can't come up with any kind of energy, that does not finally ends up as heat [perhaps plus some more [Read: Pollution in some way, beside heating]]: Kinetic energy, potential energy, light energy, etc.

 

World energy consumption is just going up and up. There was a slight dip in 2009, because of lower economic activity, caused by GFC, though.

 

It's a great space to invest in, because demand is just going up and up. One just has to master taxes & subsidies in the space, combined with politics. Personally, I'm just too dumb for that.

[Cigarbutt]

The really interesting thing about this thread is the way it illustrates the tragedy of the commons. 

 

I've been wondering for a long time whether individual economics would trump shared destruction. I was pretty confident that the human species is smart enough to see the threat and work together to address the issue. But to me now, it looks like that won't actually be what happens.

 

Thus, instead of this problem being solved by the world co-operating, I now think it'll be solved by a subset of the population creating the technology ...

 

-Cooperation or disruption from smaller groups?

 

Quote from Yuval Harari (author of Sapiens):

 

Question: We’ve evolved into incredibly social beings. What’s the best explanation for that?

 

Answer: "The Sapiens secret of success is large-scale flexible cooperation. This has made us masters of the world. But at the same time it has made us dependent for our very survival on vast networks of cooperation. This process has accelerated over the millennia, so that today nearly all of the things we need for survival are provided by complete strangers. I don’t know how to produce the food I eat, how to sew the clothes I wear, or how to build the house in which I live. I write history books, get paid for it, and buy 99 percent of what I need from strangers."

 

And the sentence that followed: "It is no wonder that the size of the Sapiens brain has been decreasing over the last 10,000 years."

 

-On the rise of smaller groups.

 

https://phys.org/news/2016-06-cooperation-emerges-groups-small-memories.html

It's about a math model based on multi-level game theory and it looks like the authors may be "looking for" a conclusion

 

If you have no time to go through the actual papers, the message may be that incentives (carrot and stick) matter.

 

 

 

 

[RichardGibbons]

I actually can't come up with any kind of energy, that does not finally ends up as heat [perhaps plus some more [Read: Pollution in some way, beside heating]]: Kinetic energy, potential energy, light energy, etc.

 

World energy consumption is just going up and up. There was a slight dip in 2009, because of lower economic activity, caused by GFC, though.

 

Yeah, I'm not too concerned with the heat from human energy usage making any real difference to global temperatures, since the sun delivers more energy to earth in an hour than humanity consumes in a year.

 

There is exponential growth in human energy usage, but my belief today, based on the work of Hans Rosling, is that the earth's population is topping out pretty soon, so I think that'll slow down the exponential growth. Thus, I don't think the heat of human energy usage will be a problem for a while, only the emissions which result in the retention of the sun's energy.

 

[jeffmori7]

I actually can't come up with any kind of energy, that does not finally ends up as heat [perhaps plus some more [Read: Pollution in some way, beside heating]]: Kinetic energy, potential energy, light energy, etc.

 

World energy consumption is just going up and up. There was a slight dip in 2009, because of lower economic activity, caused by GFC, though.

 

Yeah, I'm not too concerned with the heat from human energy usage making any real difference to global temperatures, since the sun delivers more energy to earth in an hour than humanity consumes in a year.

 

There is exponential growth in human energy usage, but my belief today, based on the work of Hans Rosling, is that the earth's population is topping out pretty soon, so I think that'll slow down the exponential growth. Thus, I don't think the heat of human energy usage will be a problem for a while, only the emissions which result in the retention of the sun's energy.

 

In this regard, I encourage everyone to look at the Population and Energy sections from www.ourworldindata.org

 

[JRM]

Here's a letter sent to all KMI employees this morning:

 

We are very pleased to share the news that we have found a path forward on the Trans Mountain Expansion Project (TMEP) on which so many of you have been working so hard for so long.  Today, Kinder Morgan Canada Limited (KML) announced that the Government of Canada will purchase Trans Mountain and TMEP for C$4.5 billion.  KML will also work with the Government of Canada to seek a third party buyer for the Trans Mountain Pipeline system and TMEP through July 22, 2018.  We expect to close the transaction late in the third quarter or early in the fourth quarter of 2018, subject to KML shareholder and regulatory approvals.

This is great news for the people of Canada, our customers, and for KMI and KML.  Those of you who had been working on TMEP will now be able to carry on, because the Government of Canada has also agreed to fund the resumption of planning and construction work until the transaction closes. The transaction is expected to close in the fourth quarter of 2018. 

Further, one of the conditions of the sale is that KMC personnel who work on Trans Mountain, the Puget Pipeline or the TMEP will transfer to the new owner.  Other KMC employees will join a new KMI company that will manage the remaining assets: the Cochin pipeline, the Edmonton terminals, and Vancouver Wharves.  In short, we expect no reduction in force associated with this transaction.  Your supervisor and/or Human Resources will provide more information in the coming weeks on your individual situation.

As to the financial impacts, at KMI we still expect to meet or exceed our 2018 distributable cash flow (DCF) per share target, despite losing the EBITDA associated with the Trans Mountain system.  The transaction will also have a positive impact on our consolidated balance sheet.  KML will obviously forego a substantial portion of its budgeted EBITDA, but it will receive significant cash proceeds and retain a solid midstream business that we can build upon.  More details on the transaction and on its financial impacts for both companies can be found in the press releases posted at www.kindermorgancanadalimited.com and www.kindermorgan.com.

One question you may have is about future growth, given how big TMEP is.  We’ve looked hard at that and believe that both companies will be able to find attractive projects or acquisitions to drive solid growth.

Thanks to all who worked strenuously to achieve this successful outcome. 

[longlake95]

Seems like KMI got a very fair price - 3.1b USD or 9% of market cap.