There is probably no ideogram among the thousands of Mandarin characters for a ‘pig in a poke.’ It is more likely that the Chinese language has its own derogatory term for really dumb purchases. A case in point is the offer to purchase Calgary-based Nexen Inc. by the state-owned Chinese oil company CNOOC Ltd. for some US$15 billion.
Canadians should be delighted to see that Stephen Harper is really sticking it to the Chinese government. We figured he must be selling something to them but we never figured he would get such a hefty premium. There is more than US$4 billion in that deal that is pure profit for the Nexen shareholders.
Nexen has energy assets around the world that the Chinese want. What they might not have bargained for are the problems surrounding Nexen’s Long Lake tarsands operations in Northern Alberta. While part of Canada’s vast tarsands oil reserves that all countries are eying, Nexen has had constant problems getting into production.
Nexen has been using the solution of processing the tarsands bitumen into synthetic crude oil before shipping it. The company has been struggling with its refining processes and with production targets.
Other companies are counting on shipping unprocessed bitumen through the Northern Gateway pipeline across British Columbia. As designed, this Enbridge solution is really two pipelines. A smaller diameter pipe running parallel is designed to carry light crude oil to the Alberta terminus where it will be mixed with the tarsands bitumen to, in effect, grease the way, for the combination to be shipped at higher temperature and higher pressure to the terminus at Kitimat, B.C.
It was the same type of bitumen and crude oil slurry that was spilled in Michigan two years ago by Enbridge. What the company proved for all to see was that its inept disaster planning was inadequate, careless and irresponsible.
The recent demands of the British Columbia Liberal government seem to ignore the dual pipeline aspect of the Northern Gateway proposal. While it is hard to envisage all the conditions being met, it would appear that the demand for a better share of the profits from the pipeline shows us from where the provincial government is coming.
The Chinese might not be too pleased with their purchase if the only way they can ship their new tarsands production is through the American Midwest via TransCanada Pipeline’s XL pipeline to the Texas ports on the Gulf of Mexico.
Canadians will be puzzled to hear that Stephen Harper, super salesman, is now wearing the mantle of Stephen Harper, protector of Canadian ownership. We wonder how long he will take to approve his own deal?
Copyright 2012 © Peter Lowry
Complaints, comments, criticisms and compliments can be sent to [email protected]