Pipelines, energy and natural resources

[Kirkhill]

Also missed the Blueberry decision in NE BC affecting Treaty 8 lands.

And then the ass kicking of fires in the north. Areas I used to work in have lost so much timber...and frankly it's the lower cost timber used to offset the remaining expensive long haul deliveries...that its no surprise many mills have shut down.

If your average haul cycle for a truck load of wood is 7 hours (3.5 hours each way + half hour to load + half hour to unload) that's roughly $28/m3 hauled. More than your logging costs. Plus stumpage. Plus increased road maintenaince costs (not included). Plus reforestation...

Vs. US mills in the SE states where it's a 30 min drive to many mills, direct payment to landowner, no reforestation liability. And your end market is hours away from the mill instead of days of driving.

Reality is that market economics make only producing 2x4's and only clear cutting further and further from mills a long term loosing proposition. Concepts like commercial thinning on prime lands closer to mills don't really exist here in Canada (as clear cuts are easier to plan and lower cost) but I believe are part of the solution better utilize the lands closer to the mills and generate more volume at lower haul costs (note this is much more expensive logging short term). Long term this provides a higher quality sawlog (as the thinning removed poor form/smaller trees), reduces some of fuel loading in natural stands (due to removing the natural mortality stems that build up inside a forest), and provides a better overall recovery of the forest. It's due to concepts like this Scandinavia is growing 2-3x the same volume per hectare than we do in Canada.

To be fair to the BC government though some of those policies have also been beneficial and cleaned up what used to be huge red tape confusion. Some of the wood pellet industry now is fed through slash piles that used to be unavailable due to red tape/liability confusion and it's now about 4% of the BC harvested volume recovered...to put that in perspective it's also about the same volume as 2 medium sized sawmills consume or a very large super mill.

But other policies and the confusion they raised...ouch. And I'm not really sure what the solutions are as there are so many different rules for the province vs. interior vs. coastal. And then all the regional rules that a person needs to know ranging from species at risk to salmon drainages. And then local zoning/weight issues on infrastructure. A messy problem that needs many changes not just one silver bullet.

You seem to be revisiting the tragedy of the commons.

In the use the owner of the land is incentivized to keep the land producing trees and trees of good quality.

Isn't that also the model in Eastern Canada?

The woodlot owner doesn't want to see his investment go up in flames, nor does he want to experience 50 years with no income while waiging for the trees to grow back.

Sweden's smaller forests sustain Ikea and Tetrapak.

 

[lenaitch]

Also missed the Blueberry decision in NE BC affecting Treaty 8 lands.

And then the ass kicking of fires in the north. Areas I used to work in have lost so much timber...and frankly it's the lower cost timber used to offset the remaining expensive long haul deliveries...that its no surprise many mills have shut down.

If your average haul cycle for a truck load of wood is 7 hours (3.5 hours each way + half hour to load + half hour to unload) that's roughly $28/m3 hauled. More than your logging costs. Plus stumpage. Plus increased road maintenaince costs (not included). Plus reforestation...

Vs. US mills in the SE states where it's a 30 min drive to many mills, direct payment to landowner, no reforestation liability. And your end market is hours away from the mill instead of days of driving.

Reality is that market economics make only producing 2x4's and only clear cutting further and further from mills a long term loosing proposition. Concepts like commercial thinning on prime lands closer to mills don't really exist here in Canada (as clear cuts are easier to plan and lower cost) but I believe are part of the solution better utilize the lands closer to the mills and generate more volume at lower haul costs (note this is much more expensive logging short term). Long term this provides a higher quality sawlog (as the thinning removed poor form/smaller trees), reduces some of fuel loading in natural stands (due to removing the natural mortality stems that build up inside a forest), and provides a better overall recovery of the forest. It's due to concepts like this Scandinavia is growing 2-3x the same volume per hectare than we do in Canada.

To be fair to the BC government though some of those policies have also been beneficial and cleaned up what used to be huge red tape confusion. Some of the wood pellet industry now is fed through slash piles that used to be unavailable due to red tape/liability confusion and it's now about 4% of the BC harvested volume recovered...to put that in perspective it's also about the same volume as 2 medium sized sawmills consume or a very large super mill.

But other policies and the confusion they raised...ouch. And I'm not really sure what the solutions are as there are so many different rules for the province vs. interior vs. coastal. And then all the regional rules that a person needs to know ranging from species at risk to salmon drainages. And then local zoning/weight issues on infrastructure. A messy problem that needs many changes not just one silver bullet.

Not to mention Southern Yellow Pine matures to marketable size much faster than many of our native species; particularly as you move further north.

 

[daftandbarmy]

Not to mention Southern Yellow Pine matures to marketable size much faster than many of our native species; particularly as you move further north.

They still need our strong long strand fibre, a unique feature of the northern boreal forests, for a wide variety of applications from pulp and paper to house building...

 

[Kirkhill]

A tale of earlier nation building projects of Diefenbaker... allowed to atrophy.

Rail line from Grimsby to Hay River to be discontinued because of damage and lack of use. Navigation on the Mackenzie not improved ( it sounds like a couple of rapids need the ripple rock treatment). Roads not built.

What will you do when the river becomes shallow and the roads are gone?

This is part of a new series I plan to start doing regularly.

open.substack.com

 

[daftandbarmy]

Sigh... the race to the bottom continues:

Forests Minister Parmar says workers in B.C. deserve “same treatment” as in Ontario​

Forests Minister Ravi Parmar says it is “unacceptable” that Ottawa always steps up when it comes to supporting key sectors in Ontario and Quebec, but “continues to drop the ball” when it comes to supporting B.C. forestry.

Parmar’s comments come after federal jobs minister Patty Hajdu announced Friday that Ottawa will contribute $12 million toward a $29-million package to help keep a paper mill in northern Ontario open.

Forests Minister Parmar says workers in B.C. deserve "same treatment" as in Ontario

Minister Ravi Parmar says it is "unacceptable" that Ottawa always steps up when it comes to supporting key sectors in Ontario and Quebec, but "continues to drop the ball" when it comes to supporting B.C. forestry.

vancouver.citynews.ca

 

[foresterab]

You seem to be revisiting the tragedy of the commons.

In the use the owner of the land is incentivized to keep the land producing trees and trees of good quality.

Isn't that also the model in Eastern Canada?

The woodlot owner doesn't want to see his investment go up in flames, nor does he want to experience 50 years with no income while waiging for the trees to grow back.

Sweden's smaller forests sustain Ikea and Tetrapak.

Comparing east to west is hard in some regards for me due to the different tree species involved.

Black spruce/red spruce are managed as crop trees more so in the east. In the west it's most white spruce.
I don't know anyone that wants to deal with balsam fir outside Christmas tree farms.
Jack pine vs. Lodgepole pine is a tie
Aspen vs. maple forests....big difference on possible revenue and management. Hardwood lumber markets for maple lumber and the Maple Syrup industries completely change the discussion.
Douglas fir vs. White pine. A pretty even mix if you are lucky enough to have either.

There is also a large amount of wood in the Maritimes that flows south to US mills vs. NB or NS sawmills. That option doesn't really exist in the west.

Unfortunately today's forest industry is largely driven by size...much like "family farms"...and unless you have high value products or a specialty non-mainstream product being produced it's about size and through put of a mill. And mills that were large 20 years ago are considered medium or small depending on the area of the country which means they need more land/fiber coming in and unfortunately are less resilient overall to shocks such as forest fires. A small wood lot losing 20% of it's area hurts a family. But a large mill losing 20% of it's tenure might be 10,000 woodlots in equivalent impact plus a change in economics affecting the rest of the purchases. Sweden still has the 10,000 woodlots but they don't have the forest fires we get in Canada plus they tend to be closer to ports/major rail corridors to allow for easier shipping of both raw products but more importantly refined products. Because Canada has had a surplus of resources we've never really had to learn to be as efficient as other areas such as Japan or Sweden when it comes to trees.

Canada's forestry history is full of tales of logging an area and then moving to the next best option afterwards. Whether it's the square trade white pine, the pulpwood tales of the east, the coastal logging in BC or in more recent years the interior forests capital has moved around in response to markets and fiber quality options for highest return, lowest investment operations. Heck lodgepole pine - the dominant tree of the western mountains - was only certified as lumber and pulp species post WW2. Prior to that it was only really used for poles or railway ties. Spruce and Douglas Fir were logged instead.

 

[Kirkhill]

Back to oil...

Prices are going down because there is a glut. Not necessarily a bad thing. Cheap energy is good.

But looking at the technical side of things for a bit and how it might impact on a Churchill point of export, assuming that the rest of Canada continues its blockade of the west.

Alberta produces 4 million (blue) barrels of oil per day.
It wants to increase that to 8 million per day.

TMX is shipping 0.8 million per day.
One aframax tanker of the type loading at Burnaby holds 0.8 million barrels.
TMX has the potential to ship 1 million per day.
Keystone XL had a target capacity of 0.83 million per day.

Alberta wants to ship another 1 million per day out of Prince Rupert.

Let's assume that the target capacity for Churchill-Nelson is also 1 million barrels per day.

Over a year that would mean 365 million barrels flowing into Churchill.
That would be the equivalent of 450 aframax tankers sailing at the rate of 1 every 20 hours or 8 a week.

This obviously assumes that shipping is not impacted by ice. The ice is there and it will be there.

If we use conventional shipping then we assume that the shipping season is only 1/3 of a year or 4 months long, 120 days.

That means two things.

In the shipping season the sailing rate will have to increase by a factor of 4, three ships to clear the backlog in storage and one to keep up with inflow. That means one aframax sailing every 5 hours. A significant port management challenge.

It also means the need to store 240 million barrels of oil, the amount produced between freeze up and thaw.

....

240 milion barrels of stored crude oil...

Geopolitical Risk in Oil Has All But Evaporated | OilPrice.com

A growing glut of oil and fear of a global economic slowdown have pushed U.S. crude prices to their lowest point in five years.

oilprice.com

424 million bbl - total US holdings on 10/10/25

East Coast - 8
Cushing - 22
Rocky Mountain - 23
West Coast - 46
Midwest - 102
Gulf Coast - 245

We would have to replicate the holding capacity of the gulf coast between Edmonton and Churchill.

Currently western Canada has a holding capacity of about 90 million barrels per day.
So we need to find at least another 150 million barrels of storage, either in surface tanks or underground in salt caverns as on the Gulf Coast and at Hardisty.

That would put us on par with the Gulf Coast as a reservoir with concomittent impact on the international market.

...

Now, we can influence the storage demand by seasonally adjusting the flow to Churchill. This would necessitate increasing flow to other markets in the off season.

Or we could increase the shipping season by using ice-strengthened Aframax tankers, with or without icebreakers. These tankers exist but we would need more of them.

I think we would be better served with our own fleet.

A single tanker costs about as much as 50 km of pipeline.

With a tanker you can load up your oil and send it on a 25,000 mile round trip to any port in the world. But the trip will take about 100 days at 10 knots. And we want to sail 1 to 4 ships a day.

That is a massive fleet.

....

Plan B

A smaller fleet a shorter distance.

Take the oil out if the ice and park it in ice free waters, a place like Come by Chance or Saint John (or Belledune).

The sea distance from Port of Churchill to Come by Chance is 2700 miles. At 10 knots that is 270 hours or a bit more than 11 days. Call it 21 days for the round trip. The fleet size has shrunk from the 100 to 400 range to the range of 20 to 80, depending on the length of the shipping season.

From Churchill to Belledune the distance is a day or two longer.

Then build 150 million barrels of storage on the east coast that could be used to sell overseas or supply industry in the maritimes or shipped up river, as foreign oil is today, to refineries in Montreal and Sarnia, or sold into New England.


....

Again, this is a blockade runners strategy.

Life would be much simpler if we could just build pipelines to Rupert and Saint John and call it good. We could still build a low flow pipeline to Churchill with seasonal surge capacity.

After all, We are Canadians. Elbows up!