Chevron made waves in the business world when it announced its October 6 sale of 30-percent of its holdings in the Alberta-based Duvernay Shale basin to Kuwait Foreign Petroleum Exploration Company (KUFPEC) for $1.5 billion.

It marked the first North American purchase for the Kuwaiti state-owned oil company and yields KUFPEC 330,000 acres of Duvernay shale gas. Company CEO and the country's Crown Prince, Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah, called it an "anchor project" that could spawn Kuwait's expansion into North America at-large. 

Kuwait's investment in the Duvernay, at face-value buying into Canada's hydraulic fracturing ("fracking") revolution, was actually also an all-in bet on Alberta's tar sands. As explained in an October 7 article in Platts, the Duvernay serves as a key feedstock for condensate, a petroleum product made from gas used to dilute tar sands, allowing the product to move through pipelines. 

And while Kuwait — the small Gulf state sandwiched between Iraq and Saudi Arabia — has made a wager on Alberta's shale and tar sands, Big Oil may also soon make a big bet on Kuwait's homegrown tar sands resources.

"Kuwait has invited Britain’s BP, France’s Total, Royal Dutch Shell, ExxonMobil and Chevron, to bid for a so-called enhanced technical service agreement for the northern Ratqa heavy oilfield," explained an October 2 article in Reuters. "It is the first time KOC will develop such a big heavy oil reservoir and the plan is to produce 60,000 bpd from Ratqa, which lies close to the Iraqi border [in northern Kuwait]…and then ramp it up to 120,000 bpd by 2025."

In the past, Kuwait has said it hopes to learn how to extract tar sands from Alberta's petroleum engineers.

Canadian Tutelage

Back in 2007, Kuwait had much more ambitious plans for the Ratqa oil field.

Though the current goal is to suck 120,000 barrels per day of heavy oil out of the field, back in 2007 the goal was 900,000 barrels per day by 2020. And Alberta's petroleum engineers would lend their expertise to the cause, or at least that was the plan for Kuwait Oil Company at the time. 

"Unless we seek the experience of the industry here, we will not be able to reach our target," Ali al-Shammari, at the time the deputy managing director for finance for the Kuwait Oil Company, told the Calgary Herald. "We will need [international oil companies'] help in developing the reservoirs and may also consider the options of signing enhanced technical services agreements."

Kuwait's entrance into Canada depicts how important Alberta's tar sands have become for the global geopolitical landscape. And Kuwait opening its doors to the oil majors depicts the country as an emerging player in the global oil market.

Geopolitics At Play 

The Islamic State — formerly known as the Islamic State in the Levant (ISIL)— has established what it calls a Caliphate in both northern Iraq and large swaths of Syria.

Fueled by $25 to $60 per barrel oil sold on the black market, Kuwait has largely escaped from the day-to-day newscycle. But as the famous Mark Twain quip goes, "History doesn't repeat itself, but it does rhyme."

The Ratqa oil field is the same geological formation as the Rumaila oil field, which sits in southern Iraq. Iraq and Kuwait fought a war over the field in early-1990s, in which the United States led the call to arms against former President Saddam Hussein: Operation Desert Storm, the first Gulf War. 

In 2010, Iraq and Kuwait signed an agreement — an armistice really — to share the border oilfield. 

Further, Wikileaks U.S. Department of State diplomatic cables made public by whistleblower Chelsea Manning show that the U.S. government has kept a close eye on the Ratqa oil field, as well as on which U.S.-based oil companies stood to win and lose if developed. 

Though almost two and a half decades have gone by since Operation Desert Storm and Saddam Hussein is no longer even alive, one thing remains constant: oil still runs the show in the Persian Gulf region. And this time around, it's tar sands oil — the same oil running the show in Alberta.

Photo Credit: esfera | ShutterStock

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A Canadian National (CN) tanker train carrying liquefied petroleum gas and crude oil derailed early Saturday in the community of Gainford, Alberta, about 80 km from Edmonton. The derailment caused a massive explosion and started a fire, prompting the evacuation of about 100 people from the community.

CBC News reports that "13 cars — four carrying petroleum crude oil and nine pressurized containers carrying liquefied petroleum gas (LPG) — left the tracks along Highway 16 and Range Road 61" at around 1 am Saturday, according to the Transportation Safety Board.

Parkland County spokesman Carson Mills said that there was a "significant explosion" at the time of the derailment, followed by a "smaller one." No injuries have been reported.

CN spokesman Louis-Antoine Paquin said three of the tanker cars, all containing liquid petroleum gas, were on fire and leaking, reports the Guardian. The community, and all residences within 1.6 km of the derailment, were evacuated in case of another explosion.

"It's still a risky situation so we need to contain as much as possible and keep people far away," said Mills. Parkland County has declared a state of emergency for the area surrounding Gainford. Residents have been told to keep out of the evacuation zone until further notice.

Jim Phelan, Parkland County fire chief, said they were "better off to allow [the fire] to vent and burn," adding that it was "unsafe to start fire-suppression activities," reports the Calgary Herald. Phelan told the news conference that residents saw a "large fireball" at the time of the derailment, and said that the cause of the explosion is "yet to be determined."

CBC reports that "55 Evansburg RCMP officers and emergency personnel are on hand and are working with CN and the Transportation Safety Board of Canada to manage the situation," as well as fire crews from Parkland County and Yellowhead County, and a HAZMAT team from Edmonton.

Alberta Environment spokeswoman Robyn Cochrane said it was too early to assess the damage done by the derailment. "We just won't know the extent, from an environmental point of view, until it's all said and done," Cochrane said. "We'll work with the company on containment and then also remediation."  

Parkland County Mayor Rod Shaigec said that "this could have been worse, given the recent incident in Lac-Mégantic — that certainly does illustrate the threats to residents living along rail tracks. So we're thankful it wasn't of that magnitude."

The July 6 derailment of a Montreal, Maine & Atlantic Company tanker train carrying crude oil in Lac-Megantic, Quebec, caused 47 deaths, with about 5.5 million litres of oil burned or contaminating the environment. The tragic incident has put the increasing transport of crude by rail in North America under close scrutiny.

On October 16, just three days before the Gainford derailment, another CN train carrying fertilizer derailed near Sexsmith, Alberta, causing an evacuation of the town.

Greenpeace has spoken out against the Harper government for putting the needs of the oil industry over the safety of Canadians.

"This kind of disaster will become the new normal unless the federal government takes much more effective measures to improve oil transportation safety," said Greenpeace spokesman Mike Hudema.

"The truth is that the Harper government has become such a cheerleader for the petroleum industry that it is failing in its duty to protect our communities and the environment," said Hudema. "This is the third major derailment in Alberta in the last few months. How many more will it take before Ottawa implements transportation safety regulations that were recommended more than a decade ago?"

Documents obtained by Greenpeace recently revealed that CN and Natural Resources Canada were considering a plan last March to move oil by rail from Alberta to BC for export to overseas markets, in capacities matching that proposed for the Northern Gateway pipeline.

The train that derailed in Gainford was travelling from Edmonton to Vancouver, BC, said CN spokesman Paquin.

Whether the Harper government continues to push for the transport of oil by rail despite the numerous safety concerns and growing number of derailments remains to be seen.

Image Credit: Parkland County / Facebook

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