PIPELINE NEWS NORTH
Serving the Oil and Gas Industry in Northern B.C. and Alberta VOL. 14 • ISSUE 01 • DIST: 17,500
trans mountain photos
Recent photos from Trans Mountain show the progress of construction on its expansion project through British Columbia. Trans Mountain says its business case for the expansion remains strong, with total system nominations for the Trans Mountain Pipeline system apportioned by 30% for January 2022. Apportionment describes the amount of demand shippers place on the pipeline in excess of its available capacity. If shipper nominations are less than pipeline capacity, the apportionment percentage to that destination is “zero” and all the product volumes nominated by shippers are accepted to be transported that month. If shipper nominations exceed pipeline capacity, the apportionment is a percentage greater than zero.
January 2022
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PNN MISSION STATEMENT Pipeline News North provides current, interesting, and relevant news and information about the oil and gas industry in Northeast B.C. and Northwest Alberta. Have an interesting story to share or a news lead? Email us at editor@ahnfsj.ca.
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First Nation energy projects funded Three First Nation energy projects in Northeast B.C. are receiving $400,000 in provincial funding. The Doig and Saulteau First Nation are each receiving $150,000 to install 25 to 35 small-scale residential solar photovoltaic systems on their reserve lands, the Ministry of Indigenous Relations and Reconciliation announced. The ministry says the projects will prioritize vulnerable and low-income community members, advance energy self-sufficiency, and reduce energy bills. “We at Doig River First Nation are grateful for the announcement of funding for our community’s solar expansion project. This will allow us to take the next steps toward an ultimate goal of power independence,” said Davide Loro, manager of integrated services for Doig River. The Clarke Lake geothermal project is also receiving $100,000
to continue repurposing the Clarke Lake gas field near Fort Nelson into commercially viable geothermal electricity and heat production facilities, the ministry said. Funding will cover a portion of the total cost of the sub-surface resource and surface facilities engineer design work, the ministry said. “Our people’s future depends on our ability to transform into a renewable-energy economy that can also support food security in our territory. We are proud of the sustainable future we are building for generations to come,” FNFN Chief Sharleen Gale said in a statement. The funding is coming from the First Nations Clean Energy Business Fund. The ministry says a key goal of the fund is to increase the participation of Indigenous communities in the province’s cleanenergy sector.
RYAN WALLACE ADVERTISING MANAGER FORT ST. JOHN 250-785-5631 C: 250-261-1143 rwallace@ahnfsj.ca
Canadian oil getting cleaner
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A new report from the Canadian Energy Centre says the overall GHG emissions intensity per barrel of Canadian oil has shot down by more than 10% over the last two decades. Since 2000, the CEC says oil sands GHG emissions intensity is also down by nearly 23%, while conventional GHG emissions intensity is down by more than 32%. Using federal government data for Environment and Climate Change Canada, the CEC reported that overall GHG emissions intensity of Canadian oil production rose from just under 59 kilograms of CO2e per barrel in 1990 to just over 72 kilograms of CO2e per barrel in 2000, an increase nearly 23%. Then, between 2000 and 2019, the GHG emissions intensity of oil from the Canadian upstream sector fell to just under 65 kilograms of CO2e per barrel in 2019, an overall reduction in those two decades of more than 10%. “The data shows that progress in lowering emissions intensity occurred despite the fact Canada’s oil production more than doubled between 2000 and 2019, with oil sands production growing from 30% of total upstream oil production to 70% over that period,” a release from the CEC stated. According to the CEC, GHG emissions intensity in the oil sands subsector rose from just over 116
kilograms of CO2e per barrel in 1990 to just over 117 kilograms of CO2e per barrel in 1992. After 1992, the oil sands subsector GHG emissions intensity fell to just under 104 kilograms of CO2e per barrel by 2000 (a decline of over 1%) and then fell again to just under 80 kg of CO2e per barrel by 2019, an overall decline of nearly 23% from 2000 levels. According to the CEC, GHG emissions intensity in the conventional oil subsector grew from just under 44 kilograms of CO2e per barrel in 1990 to just under 59 kilograms of CO2e per barrel in 2000, an increase nearly 35%. However, since then, the GHG emissions intensity in the conventional oil sector has fallen—to just under 40 kilograms of CO2e per barrel in 2019, a decrease of over 32% in those two decades. “As GHG emissions intensity in the Canadian upstream oil sector continues to decline, along with Canada’s highly rated ESG performance, Canadian oil has the potential to become the barrel of choice on the world stage,” the CEC stated. A summary of the CEC’s research can be found online at canadianenergycentre.ca/research. — With files from Lennie Kaplan/ Canadian Energy Centre
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Will TMX be finished by end of 2022?
Trans Mountain Photo
Construction is progressing at Trans Mountain’s Edmonton Termina,l which is now more than 50% complete.
Nelson Bennett nbennett@biv.com Trans Mountain Corporation has a lot of work to do in 2022 if it hopes to meet the target in-service date for its expanded pipeline and its capital budget of $12.6 billion. Trans Mountain can only pray Mother Nature does not throw more wildfires, floods, or plagues at it this year. According to recent third quarter financial reports, the project is only half built and 71% of the $12.6 billion capital budget spent. That’s not surprising, given all the setbacks the project has faced, from legal, political and regulatory ones, to the COVID-19 pandemic and, more recently, flooding in November that shut down the existing pipeline for three weeks. According to the 2021 third quarter financial reports of Canada Development Investment Corp. (CDEV) — the Crown corporation responsible for the publicly owned Trans Mountain Corporation — the
project was somewhere between 37% and 55% complete, depending on which yardstick is used. While actual physical construction was approximately only 37% complete, the project overall, including “upfront costs of permitting, regulatory approval, advance purchase of materials and financial carrying costs” puts the project at 55% complete, the CDEV report notes. As of the first nine months of 2021, Trans Mountain spent $3.5 billion on the expansion project. In total, $9 billion has been spent on the expansion, with $4.3 billion spent in 2020 and $1.2 billion spent in 2018 and 2019. As for operating revenues, in the first nine months of 2021, the existing pipeline generated $349 million in revenue and $164 million in earnings before interest, taxes, and depreciation (EBITDA). That’s up slightly from the same period of 2020 — $333 million in revenue and $155 million in EBITDA. In December 2020, the
Parliamentary Budget Officer issued a report that warned the project could face more delays and cost escalations. That report noted that the pipeline expansion project – a twinning project that will increase its capacity from 300,000 to 890,000 barrels per day – was estimated in 2013 to have a capital cost of $5.4 billion and in-service date of December 2019. That was when the pipeline was still owned by Kinder Morgan. The estimated capital cost was increased twice, first to $6.8 billion then $7.4 billion, and its in-service date was moved to December 2020. Endless legal, political, and regulatory obstacles delayed the project to the point where Kinder Morgan announced it would abandon the expansion project, resulting in the Trudeau government buying the existing pipeline and the TMX project for $4.5 billion and assuming responsibility for its completion. After the Trudeau government bought the pipeline and TMX
project, the estimated capital cost rose again to $12.6 billion and a new in-service date set at December 2022. Trans Mountain isn’t saying whether it thinks it can still meet its December 2022 in-service date on budget. “Trans Mountain has not announced an update to the project’s cost or schedule,” the company said in a emailed response to BIV News. Since the Trans Mountain pipeline is a batched pipeline that can move either crude oil or refined fuels, its expansion could provide Lower Mainlanders with some relief in the price they pay for gasoline, if the expansion results in more refined gasoline and diesel products moving from Alberta refineries to B.C. One of the reasons B.C. has comparatively high gasoline prices is the lack of local refining capacity. —Business in Vancouver
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Activists convicted for crashing pipeline meeting By Tim Petruk Three Tiny House Warriors who stormed a high-level 2018 meeting between Trans Mountain executives, government officials, and First Nations leaders, spilling red paint on attendees and damaging property, have been found guilty on multiple counts. Nicole Manuel, Chantel Manuel, and Isha Jules were charged following a Dec. 10, 2018, incident on the campus of Thompson Rivers University, where representatives from Natural Resources Canada and Trans Mountain had rented meeting space to sit down with regional First Nations leaders. The invite-only meeting was being helmed by former Supreme Court of Canada Justice Frank Iacobucci. Court heard the accused were among a group of protesters who showed up at the event, where they yelled and chanted, intentionally spilled red paint, and attempted to crash the meeting. They were charged with mischief for allegedly spilling the red paint, causing a disturbance for disrupting the meeting, and assault for trying to force their way past security and police. The trio stood trial in May and Kamloops provincial court Judge Stella Frame handed down her decision on Wednesday. Chantel Manuel, described in court as the leader of the protesters, was charged with two counts of assault and one count each of causing a disturbance and mischief. She was convicted of all but the mischief charge. Nicole Manuel was charged with one count each of mischief, assault and causing a disturbance. She was convicted on all counts. Jules was charged with two counts of assault and one count each of causing a disturbance and mischief. He was acquitted on both assault charges but found guilty of mischief and causing a disturbance. Jules was the only one of the three who made it into the meeting room. Court heard he waved a paint-soaked cloth in the room and “ranted and raved,” bringing one First Nations elder to tears. Frame said it was clear the group was there to disrupt the proceedings. “They scream, they use loud hailers and drum loudly by the doors and next to security and police,” the judge said, referencing video evidence played in court. “Their intention in this action was not to communicate a message but to disrupt a consultation meeting. That they are opposed to the pipeline is obvious. That they had no intention of engaging in a dialogue is evident in the language they used. They denied the authority of those conducting and participating in the meeting.” Frame went out of her way a number of times to make it clear the offences were “not trifling.” “This was not a minor disturbance,” she said. “It disrupted the business of the building as well as those who were tasked with conducting the meeting.” The three have yet to be sentenced and remain free on bail. —Castanet
CN won’t prosecute rail blockaders By Colin Dacre CN Rail says it does not plan on privately prosecuting three participants of a 2020 blockade in Northern B.C. after being granted that right. The BC Supreme Court ruled last month that the company was able to privately pursue criminal contempt charges against three people involved in the blockade in New Hazelton, B.C. on Feb. 24, 2020. The blockade was in violation of an injunction made two weeks prior, at the height of nationwide protests in solidarity with Wet’suwet’en hereditary chiefs fighting against the Coastal Gaslink Pipeline. The BC Prosecution Service, which typically has the final say on who gets charged with criminal offences in the province, declined an invitation of the court to press charges. Prosecutors tried to argue it was “not in the public interest” that the protesters be criminally prosecuted on the basis that they were non-violent, mostly cooperative and did not return to block the tracks after their arrest. A Supreme Court Justice, however, ruled that court injunctions must be enforced, and if the Crown didn’t want to do it, the company should have to option. In a statement on Friday, CN Rail said it will not wield the power granted to them. “CN is satisfied that this injunction was ultimately enforced and does not intend to pursue criminal contempt against the protesters,” the company said in a one-line statement to Castanet News. CN Rail’s court victory — which was guided by a similar case involving the Vancouver Fraser Port Authority — still cements the B.C. Supreme Court’s ability to enforce court injunctions and opens the door to future private criminal prosecutions involving civil disobedience. The Port Authority decision was also relied upon by a judge dealing with the injunction contempt case for the ongoing Fairy Creek blockades on Vancouver Island. But in that case, provincial prosecutors deemed it in the public interest to press criminal charges against hundreds of protesters. —Castanet
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The Pipeline News North, JANUARY 20, 2022
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$30 million to accelerate carbon capture A new $30 million funding opportunity will accelerate development of industrialscale carbon capture and transportation technology solutions in Alberta. Emissions Reduction Alberta’s (ERA) Carbon Capture Kickstart: Design and Engineering call builds on Alberta’s global leadership in this space, and will fill key knowledge gaps, drive partnerships and innovation, and accelerate project financing and deployment in Alberta. The Government of Alberta is providing $30 million to ERA from the Technology Innovation and Emissions Reduction (TIER) fund. Jason Nixon, Alberta’s Minister of Environment and Parks, and ERA CEO, Steve MacDonald, made the announcement on Friday, January 14. The Carbon Capture Kickstart funding competition supports pre-construction design and engineering. It is focused on sitespecific carbon capture, direct air capture, and carbon transportation infrastructure. Proposals can address emissions across industrial sectors: power generation, cement production, manufacturing, oil and gas, and more. All proposals must target specific large final emitter sites in Alberta.“Carbon capture is necessary to reach large-scale reduction of CO2 emissions. The Carbon Capture Kickstart investment will create shared learnings and provide valuable insights to industry, government, and other stakeholders about the economic and emissions reduction potential of this critical technology in Alberta,” said Nixon. “Alberta has played a leading role in the scale up and commercialization of CCUS technologies and has been the host of several world-first commercial projects. The Carbon Capture Kickstart competition will help establish a larger roster of investment-ready projects and position Alberta as a worldleader in developing CCUS technologies the world needs for emissions reductions, said Sonya Savage, Minister of Energy for Alberta. “On the path to net-zero emissions, carbon capture will be a key pillar of the effort to transform how we produce and use energy. By incenting collaboration and helping to build the case for investment, this funding creates momentum for further technology development and applications, said ERA CEO Steve MacDonald. ERA will contribute up to 50% of the project cost to a maximum of $7.5 million. ERA will also identify opportunities to leverage funding for this call with support from other funding agencies, such as Natural Resources Canada.
CNRL acquires Storm Resources Canadian Natural Resources Limited announced Dec. 17 that its acquisition of Storm Resources has been completed. “Canadian Natural welcomes Storm employees to its Northeast British Columbia and Calgary head office teams,” the company said in a statement. “The acquired production, infrastructure and land complements Canadian Natural’s natural gas assets in the Northeast British Columbia area, providing the Company further opportunities to leverage synergies within our diversified portfolio.” CNRL also announced this month its budget for 2022. The company’s 2022 base capital is disciplined, targeted at approximately $3.6 billion, and
the Company targets to deploy incremental strategic growth capital of approximately $0.7 billion. Production in 2022 is targeted between 1,270 MBOE/d and 1,320 MBOE/d, resulting in year over year growth of approximately 60,000 BOE/d derived primarily from production growth in our conventional E&P operations. Planned turnarounds at our Oil Sands Mining and Upgrading assets, which are incorporated in the above 2022 production target, are expected to impact yearly production volumes by approximately 35,000 bbl/d. Product mix is targeted at approximately 46% light and synthetic crude oil, 28% heavy crude oil and 26% natural gas.
Liquids production, including synthetic crude oil, is targeted to range from 940,000 bbl/d to 982,000 bbl/d, of which long life low decline production is targeted to be approximately 78% of total liquids production. Conventional E&P liquids production is targeted between 250,000 bbl/d and 267,000 bbl/d. Natural gas production is targeted between 1,980 MMcf/d to 2,030 MMcf/d, representing significant growth of approximately 18% from targeted 2021 levels, as capital investment within the Company’s natural gas portfolio increased throughout 2021 driving strong exit production.
Imperial to market interests in Montney, Duvernay assets Imperial announced Jan. 12 its intention to market its interests in XTO Energy Canada jointly with ExxonMobil Canada. Imperial and ExxonMobil Canada each own 50 percent of XTO Energy Canada, which includes assets in the Montney and Duvernay areas of central Alberta. This decision is part of Imperial’s ongoing evaluation of its unconventional portfolio, and is consistent with its strategy to focus upstream resources on key oil sands assets. A definitive decision to sell the assets has not been made. Operations will continue as normal throughout the marketing process and should the process not result in a sale. Imperial and ExxonMobil Canada have retained RBC Capital Markets as their exclusive financial advisor in connection with this process.
The assets include 568,000 net acres in the Montney shale, 85,000 net acres in the Duvernay shale and additional acreage in other areas of Alberta. Net production from these assets is about 140 million cubic feet of natural gas per day and about 9,000 barrels of crude, condensate and natural gas liquids per day. “After more than a century, Imperial continues to be an industry leader in applying technology and innovation to responsibly develop Canada’s energy resources,” the company said in a statement. “As Canada’s largest petroleum refiner, a major producer of crude oil, a key petrochemical producer and a leading fuels marketer from coast to coast, our company remains committed to high standards across all areas of our business.”
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How will NA accelerate the development of clean hydrogen production, distribution, and market use? It is an incredibly exciting time for the hydrogen industry in North America as investment surges, and technologies evolve with rapid speed. However, there are still many questions to be asked, and obstacles to tackle: How do we scale up the technology rapidly to bring down costs? Which technologies should be invested in? What is policy’s role in creating demand for clean hydrogen? What about standardization and certification? What is the best way to produce hydrogen (the colour debate)? What is the best way to safely store and transport hydrogen? What happens with blending hydrogen in the natural gas pipeline? From 06 - 07 April 2022, we are offering you the chance to step away from your monitor, and discover how the world’s simplest, and most abundant molecule has the potential to curb greenhouse gas emissions for good. Join us, and the whole hydrogen value chain, face-to-face at World Hydrogen North America, in Houston, Texas to hear senior hydrogen executives
discuss and debate these important questions. The impressive speaker line-up from organisations leading the way includes Air Liquide, Port of Los Angeles, Hyzon Motors, Southern California Gas Company, Shell, BP, New York Power Authority, Port of Houston Authority, National Grid, Credit Suisse, EDF, EDP, NIKOLA, Port of Corpus Christi and many many more! Are you looking to demonstrate expertise and technology through prominent speaking positions in the main congress agenda? Do you want to strengthen your brand and market position in front of existing customers, creating the right impact with potential new customers as well as potential competitors? Are you ready to dust off those business cards and reach important commercial prospects through prebooked one-to-one meetings? Get in touch today to find out how you can get involved at World Hydrogen North America. Call directly via +44 (0) 203 355 4208 or oliver.sawyer@ greenpowerglobal.com
Oil in Canada: Facts The Canadian oil and gas extraction, services, and pipeline sectors accounted for approximately $132 billion, or nearly 7% of our nation’s economy in 2018 (Viewpoint Research) The oil and gas sector directly and indirectly supports roughly 530,000 jobs across the country (CAPP) It is also the largest employer of Indigenous people in the country, with about 6% of the sector’s workforce identifying as Indigenous in 2016 (PetroLMI) Crude oil, natural gas and other petroleum products accounted for approximately $113 billion, or 19% of Canada’s total value of merchandise exports in 2019 (CAPP) From 2000-2018, the Canadian oil and gas industry generated more than $490 billion in revenues for governments across the country (Canadian Energy Centre) The offshore industry accounted for roughly 25% of Newfoundland & Labrador’s economy over the past decade and directly and indirectly employs 27,000 people (NOIA) Shutting down the oil sands entirely would only reduce global emissions by 0.03%, or 3/100ths of 1% which would be replaced by other major emitters in a month or less (Viewpoint Research)
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The Pipeline News North, JANUARY 20, 2022
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Importance of oil to Canada’s economy Whether you like it or not, oil is a very important part of the Canadian economy. It’s been said revenues generated by the oil and gas industry “pay the rent” in our country, not to mention the sector provides hundreds of thousands of direct and indirect jobs from coast-to-coast. Yet, many Canadians seem unaware of the importance of oil to Canada. Such understanding seems to be lost amid the intense misinformation campaigns by special interest and environmental groups targeting the industry. The latest falsehood spread by these groups includes the suggestion that the Trans Mountain Pipeline expansion (TMX) doesn’t make economic sense. They argue there is no demand for the additional oil that would be shipped on the expansion project’s second line to the west coast for export, which is false. The demand for Canadian heavy oil is alive and well in Asia. To add, such narrative does not recognize the fact that heavy oil competes on a different market than lighter crudes. Once you sift through the misinformation regarding Canada’s world-class energy sector, however, you find the facts. And you don’t have to look too hard to learn about how important the oil and gas industry is to the Canadian economy.
According to World’s Top Exports, Canada’s total exports were valued at approximately $592.46 billion, or $15,790 per Canadian in 2019. Canada exports goods to several countries around the world, with more than three quarters (76.7%) going to the United States and Mexico. The remaining locations: • 11.7% went to Asia • 8.9% went to Europe • 1.3% went to Latin America (excluding Mexico) • 0.9% went to Africa • 0.5% went to Oceania (mostly Australia, New Zealand) Top 10 Canadian Export Products (2019) In other words, Canada is an exporting nation which benefits immensely from trade with other countries. Exports are also a huge part of our country’s overall prosperity. Last year, exports accounted for 23.5% of the nation’s total gross domestic product (GDP). Canada’s most valuable export commodity are mineral fuels, accounting for 22% of total exports in 2019. The following list also shows just how crude oil and other petroleum exports stack up to those from other sectors of the economy:
3 – Machinery including computers $46.18 billion (7.8%)
10 – Pharmaceuticals: billion (1.9%)
4 – Gems, precious metals: $28.26 billion (4.8%)
Notice the value of Canada’s total oil and gas export products considerably outweigh any other listed. Mineral fuel exports also outweigh the total value of numbers 4 through 10 combined.
5 – Electrical machinery, equipment: $17.91 billion (3%)
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59% of Canadians believe if Canada does leaves its oil in the ground, another country will simply produce theirs Trade Value of Canadian Oil & Gas Exports (2019)
1 – Mineral fuels including oil: $130.57 billion (22% of exports) 2 – Vehicles - $81.47 billion (13.8%)
6 – Plastics, plastic articles: $16.85 billion (2.8%) 7 – Wood: $15.52 billion (2.6%)
8 – Aircraft, spacecraft: $14.99 billion (2.5%)
$11.14
Even the auto industry you always hear about as a Canadian, about how important it is to our country economically, had exports worth just over half of the value of oil and gas. These export figures above are comparative to those in 2018.
9 – Ores, slag, ash: $11.81 billion (2%)
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20 The Pipeline News North, JANUARY 20, 2022
Suncor Energy Provides Q4 2021 Safety and Production Update Suncor has an update on recent incidents and fourth quarter 2021 production. We are deeply saddened by the fatality at our Base plant mining operations on January 6, 2022. We extend our thoughts and condolences to the family, friends and colleagues of the deceased worker. The incident occurred when one heavy haul truck rear-ended a second heavy haul truck while they were both driving up a mine haul ramp. The two workers in the moving haul truck that was struck from behind were taken to hospital and released with minor injuries. The driver of the other heavy haul truck did not survive. We continue to investigate this incident with a focus on the actions required to prevent such a devastating result from reoccurring. In the second half of December, there were two separate operational incidents: one at the Syncrude mine and the other at the Firebag in situ operation. We have completed preliminary assessments and this news release summarizes the related issues and impacts, as currently known, and outlines the corrective actions we are undertaking. The Syncrude and Firebag operational incidents negatively impacted production by approximately 195,000 barrels per day (bbls/d) during the latter half of December. As a result, 2021 annual production was 732,000 bbls/d or approximately 1% below our guidance range of 740,000 bbls/d. We have resolved the immediate operational issues and the assets
have returned to normal production levels. Syncrude Mid December, 2021 failures occurred in the chains driving the two crushers at the Mildred Lake mine. These new chains were installed in the fourth quarter of 2020 with the objective of continued performance improvement and had operated normally up until that time. During subsequent repair work, we determined that certain flaws in design and quality caused the failure. As we executed the repairs and worked to restart the facilities, repeat chain failures and sustained extreme weather conditions in the region impacted labour productivity together with freezing of oil sands ore on feed aprons, conveyor belts and internal workings. As a result, the repair, which was initially estimated to take one week, took three weeks. The team has completed work to ensure both crushers are operational, with only one crusher required to meet volume requirements. We repaired the first crusher by installing the previous version of chains and the second crusher has been repaired and is scheduled for similar chain replacement in midFebruary. Until then, measures have been taken to mitigate the potential risk of further failure. Firebag On December 16, 2021, two critical furnaces tripped, hours apart due to frozen air louvers. This led to the rapid reduction of production at Firebag when our two largest plants went offline, along with the shutdown of approximately 170 wells while approximately 100 wells remained
in production. On December 22, the facility began to ramp up operations and by January 1, 2022 production had reached 200,000 bbls/d. We have implemented further mitigation measures while the investigation continues to ensure our winterization program is sufficiently robust to withstand extended periods of cold weather. Production Impacts In Q4 2021, average production was reduced by approximately 35,000
bbls/d and annual 2021 production was reduced by approximately 8,000 bbls/d as a result of these outages at the end of the year. The fourth quarter utilization rates for Firebag and Syncrude were 93% and 90% respectively. For the full year, 2021 utilization at Firebag was 96% and the utilization at Syncrude was 83%. As of January 17, 2022 production at Syncrude and at Firebag was consistent with our 2022 annual production guidance.
The Pipeline News North, JANUARY 20, 2022
Register for free for the Canadian Trade Commissioner Service’s Hydrogen and Carbon Capture, Utilisation and Storage (CCUS) Capabilities Export Directory Under the Paris Agreement, Canada committed to reducing its GHG emissions by 30% below 2005 levels by 2030. The Government of Canada has also announced that it plans to set Canada on a path to achieve a prosperous net-zero emissions future by 2050. One part of the Government of Canada plan to achieve these goals is to promote hydrogen as an energy carrier, displacing carbonintensive hydrocarbons. A number of countries around the world are also pursuing hydrogen initiatives, for example: Australia, the EU, Japan, Norway, the UAE and the UK. Several Canadian provinces also have or are developing hydrogen plans of their own. The direction of these plans is broadly similar. Opportunities are identified to use hydrogen in commercial and residential heating, in transportation (large ships, planes and trucking fleets), to store renewable energy which is produced intermittently and as a feedstock for chemicals and petrochemicals. In the mid- to long-term, some countries aim to supply hydrogen to international markets (e.g. Australia, Saudi Arabia and the UAE). There is a need to better understand and identify Canadian hydrogen capabilities with export potential, as well as hydrogenadjacent capabilities including carbon capture, use and storage (CCUS). This will help the Trade Commissioner Service to promote Canadian capabilities in these areas abroad, leading to increased exports and a stronger economy. The Government of Canada, led by the Trade Commissioner Service’s Regional Office for Alberta and the NWT, is therefore creating a directory of Canadian organizations that are developing and delivering innovative hydrogen and CCUS solutions. Canadian companies and organizations are invited to participate in the directory if their products, services or technologies are exportable and fit into at least one of the following categories: Components Engineering FCEV Manufacturing Fuel cell electric vehicles Fuel cell model development Fuel supply & distribution services Hydrogen fueling infrastructure Hydrogen production Hydrogen storage Research & Academia Services Testing and certification Testing and manufacturing equipment Utilities Additionally, we are including a Resource Section to include organizations who conduct research, facilitate research or are in other ways enhancing Canada’s expertise in hydrogen and CCUS. EventWorx Corporation has been selected by Global Affairs Canada to produce this directory. Please register your company on their website at https://www.eventworxcorporation.com/ hydrogen-ccus. Submission Deadline: January 31, 2022.
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Canadian resource companies reap profit bonanza Check the stock of almost any major Western Canadian energy or resource producer and you’ll see a familiar trajectory: up.
However, one inflation driver – high oil prices – could last well into 2022 and possibly 2023.
Since the beginning of 2021, the stocks of these companies have been rising, along with the price of the commodities they produce, resulting in strong and even record-breaking profits.
It’s estimated that the U.S. is short by more than one million barrels of oil compared with pre-pandemic levels. Some oil companies appear to be choosing to reward shareholders first with dividends, rather spending profits to drill new wells.
High commodity prices are more of a driver of inflation than a result of it. All basic industrial inputs are in high demand, thanks to global economic recovery and underinvestment in production, leading to what some predict is the start of a commodities supercycle – although the impacts of the Omicron variant could stall recovering economies and take the wind of commodities’ sails.
“The oil producers and the shale producers in the states have learned their lesson from 2014, when the crash started,” said Adam Pankratz, a professor of business economics at the University of British Columbia’s Sauder School of Business. “So they’re not drilling as much, and they’re focusing more on capital discipline and returning money to shareholders.”
Oil prices in particular are fuelling consumer goods inflation, while high lumber prices are inflating new home construction costs.
West Texas Intermediate (WTI) was more than US$80 per barrel as of January 11, and Western Canadian Select (WCS) was at US$65 per barrel compared with US$40.86 per barrel one year ago.
North American natural gas prices have spiked from US$2.75 per gigajoule one year ago to as high as US$5.86 and are currently around US$4.24 per gigajoule. Canadian natural gas prices have generally followed a similar price trend. As a result, the BC Utilities Commission recently approved FortisBC’s application to hike natural gas rates by 3.46%, effective January 1, which comes atop a 9% increase in October 2021. In Canada, gasoline prices accounted for more than 1% of Canada’s 4.7% rise in the consumer price index (CPI) in November. When gasoline is excluded, the CPI was 3.6%. Gasoline prices are up 43.6%, year over year, compared with food, which is up 4.4%, and furniture, which is up 8.7%. The current high inflation rates in Canada, the U.S., Europe and elsewhere are the result of a global pandemic, which shocked supply chains and flooded economies with cash through low interest rates, quantitative easing and government aid to consumers and businesses. Once kinks in supply chains have been worked out and central banks raise interest rates, inflation should, theoretically, begin to cool. Bryan Yu, chief economist for Central 1 Credit Union, expects inflation should ease by 2022’s second half and move closer to 2.5%.”
Gasoline prices have consequently been rising everywhere – particularly in B.C. and could continue rising well into 2022. Goldman Sachs in December predicted Brent Crude, a global benchmark, would hit US$85 per barrel in 2022’s first quarter , and as of January 11, it was already nearly US$84 per barrel. Goldman Sachs also said Brent Crude could hit US$100 per barrel in 2023, depending on a host of geopolitical factors. Dan McTeague, president of Canadians for Affordable Energy, predicts gasoline prices could hit $1.85 per litre in Vancouver by the May long weekend, due to rising oil prices. That’s bad news for consumers and businesses, because all the products they buy move by truck, plane, ship or rail and are therefore affected by gasoline, diesel and jet fuel prices. But it’s good news for Canada’s beleaguered oil and gas producers and their shareholders. According to Statistics Canada, the value of Canadian oil exports has soared from a five-year low of $1.6 billion in May 2020 to $8.5 billion in December 2021. Parkland Corp. (TSX:PKI), which owns the refinery in Burnaby, reported “the strongest quarterly and year-to-date results in Parkland’s
history” – with earnings of $1 billion in 2021’s first nine months. Tourmaline Oil (TSX:TOU), a major natural gas producer and a big player in the B.C. Montney formation, reported income of $1 billion for 2021’s first nine months compared with a $12.5 million loss in the same period of 2020. Alberta oil producer Canadian Natural Resources Ltd. (TSX:CNQ) reported $5 billion in net earnings for the first nine months of 2021 compared with a $1 billion loss in 2020. B.C.’s miners are also benefiting from high commodity prices. “Clearly, strong global commodity prices and the rise we’ve seen are obviously a good thing for mines in B.C.,” Michael Goehring, CEO of the Mining Association of BC. Copper, metallurgical coal, gold and silver are the chief commodities produced by B.C.’s mining sector. Teck Resources (TSX:TECK.B) produces copper, zinc, metallurgical coal and oil (bitumen from its 21% share of the Fort Hills oilsands project). The company reported a record $2.1 billion in earnings in its thirdquarter financials, based on strong commodity prices, and profits of $1 billion – a seven-fold increase over Q3 2020. Compared with the same period in 2020, copper prices were up 44% (to US$4.25 per pound from US$2.96), zinc was up 28% (to US$1.36 per pound from US$1.06), oil up 85% (to US$61.10 per barrel from US$33.10) and steel-making coal was up 132% (to US$237 per tonne from US$102).
As for lumber producers, despite prices dropping from record highs set in the summer of 2021 and the major challenges facing the industry in B.C., forestry majors reported healthy profits in 2021. Canfor (TSX:CFP) reported net income of $1.4 billion for 2021’s first nine months compared with $234 million in the same period of 2020. “Despite a number of challenges, the third quarter of 2021 was one of West Fraser’s strongest quarters ever,” said Ray Ferris, CEO of West Fraser Timber (TSX:WFG). West Fraser reported earnings of $3.5 billion for the first nine months of 2021 compared with $436 million for the same period of 2020. It should be noted that companies like Canfor and West Fraser are now geographically diversified, so even if their B.C. operations are becoming less profitable, their operations elsewhere may still be providing strong returns. If there is an upside to inflation, it’s that governments will enjoy tax and royalty windfalls from Canadian miners, forestry companies and oil and gas producers. “A provincial economy will benefit from the higher revenue that’s being generated through taxes and royalties and the like,” Yu said. “That doesn’t necessarily drive investment in the economy. In an area like … the lumber sector, the longer term impacts of the pine beetle and availability of timber, those are going to be the dominant drivers of whether investment’s coming.”
The Pipeline News North, JANUARY 20, 2022
21
Investor certainty a recurring theme at BC Natural Resources Forum and it just takes too much effort. International investors have an eye on British Columbia, and one of their key concerns is permitting risk.” While First Nations are becoming increasingly important to resource industries as partners, there are still uncertainties over land use in B.C., Johnston said. “There’s a lot of conversation still to be had specifically around land use planning -- an understanding of which pieces of land are sacred, which pieces of land are high potential for development,” she said.
With an abundance of forests, minerals, metallurgical coal, natural gas and clean hydro electricity, B.C. has an embarrassment of natural resource riches.
take it back without compensating you for it,” Susan Yurkovich, president of the Council of Forest Industries (COFI) said during a session on resource industries working together.
And a global energy transition and decarbonisation presents more opportunities than it does challenges for forestry, mining and energy sectors. Natural resource industries also present some of the best opportunities for economic reconciliation with First Nations.
“So we really need to create some certainty so that people can make further investments in British Columbia.”
“I think, really, our competitive advantage is what has always been our competitive advantage here in B.C. and that is the sheer wealth of the natural resources of this province has,” Kendra Johnston, president of the Association for Mineral Exploration, said Tuesday at the first day of the three-day BC Natural Resources Forum. But investors, foreign or domestic, need only read the headlines to have second thoughts about sinking money into B.C. Whether it is the phasing out of fish farms, protests over pipelines and logging, or radical changes to forestry policies, it’s clear that B.C. has a bit of an attitude problem, when it comes to natural resource industries. “You wouldn’t buy a house if somebody could
She was referring to the NDP government’s new tenure reforms and old growth logging moratoria being implemented in B.C. that could see forestry majors lose timber tenure. There is a fear they will not be adequately compensated for loss of cutting rights. And in other sectors, like mineral exploration and mining, there are ongoing concerns about regulatory inertia and uncertainty over land use. “We have so much potential here,” said Michael Goehring, president of the Mineral Association of BC. “We have very strong environmental, social and governance, performance, and it’s only getting better. But one of the things that we really need to focus on is our permitting. “It’s become very challenging to get permitting. It’s not predictable. It’s not timely, it’s very complex,
But it’s not just the regulatory environment in B.C. that poses barriers for B.C.’s resource businesses. As former senior bureaucrat Don Wright pointed out last week at a Truck Loggers Association forum, urban British Columbians have become disconnected from these industries and are under the illusion they are no longer important to B.C.’s economy and standard of living. There is either indifference or full support among many urbanites for shutting down resource industries like logging and salmon farms. “We need to chart the course, and stand together against those who would like nothing more than to shutter our industry, close the doors on our opportunity,” said Todd Doherty MP for CaribooPrince George. B.C.’s forestry majors have been slammed for profiting off of a public resource for decades, only to start investing elsewhere. Some of these majors now own as many sawmills in the U.S., Europe and other parts of Canada than they do in B.C. now. Yurkovich suggested investment simply goes where the opportunities are. “Between 2009 and 2019, the B.C. industry invested $14 billion in the province of British Columbia,” she said. “They have also made investments outside, and that’s not unusual, as you’re looking to supply your global customers around the world and you’re looking for places where you have more fibre.”
Please Pick Your Mirror at the Following Locations The Dawson Creek Mirror regrets to inform you that unfortunately we do not have a carrier for your area. We apologize for any invonvience this may cause. You may pick up a Mirror at any of the following locations
✥ The Dawson Creek Mirror office ✥ Bill’s News ✥ Co-op Gas Bar ✥ Dave’s No Frills ✥ Dave’s No Frills Gas Bar ✥ Legacy Village Market ✥ Safeway
12 The Pipeline News North, JANUARY 20, 2022
FORT ST JOHN
PETROLEUM ASSOCIATION FSJPA/
fsjpa.wildapricot.org
Dave Wallace, Jack Wilson receive 2021 Oilmen awards The Fort St. John Petroleum Association honoured two community members last month for their contributions to the oil and gas industry
Dave Wallace was named Oilman of the Year for exceptional dedication and service to the oil and gas industry, and Jack Wilson received the Ivor Miller Award for exceptional dedication and service to the Petroleum Association.
Dave Wallace - Oilman of the Year
Dave Wallace moved to Fort St. John in the fall of 1966. He completed his schooling here and upon graduation immediately went to work in the oil patch. He started working pipelines in 1975, moved to the drilling rigs in 1977 where he sold rock bits and drilling tools, and then eventually the supply distribution business in 1979. He spent the next 35 years working with CE Dave Wallace, centre, during the Oilmen’s trapshoot in 2020. Dave Wallace, centre, Franklin and left the company as Senior Vice President when the company during the Oilmen’s trapshoot in 2020. Wallace was named the 2021 Oilman of the Year by the Fort St. John Petroleum Association. (Supplied) sold in 2014. With not being quite ready to retire, he went to work for Baron Oilfield and remained there until his full retirement in May of 2018. Although he travelled a lot with his work, Fort St. John was always home and he was proud of that. He has been a member in good standing since joining the Fort St. John Petroleum Club in 1977. He served on the club executive in the early years and then got involved with the various club event committees. He served on the following committees: Golf tournament - 5 years on committee and chairman once; Kids picnic - 3 years on committee and chairman once; Bonspiel - 6 years on committee, chairman twice; Trapshoot - 18 years on committee, chairman five times. In addition to his commitment to the Fort St. John Petroleum Association, he also served on other multiple boards in the province and community. Some of these are: President/Director, Fort St. John Curling Club, Director at Lake Point Golf & Country Club, Member of the Fort St John Airport Advisory Council, Director, North Peace Rod & Gun Club,Member of Northern BC Mayor’s Coalition Task Force, Board member of Energy Services BC, Board member of ICBA (Independent Contractors Business Association)
Jack Wilson - Ivor Miller Award
Fort St. John Petroleum Association President Shane Stirling presents Jack Wilson with the Ivor Miller Award for 2021. (Supplied)
Jack Wilson first came to Fort St. John in 1973. He started working at the Co-Op grocery department, and then moved on to GNF Construction building houses. Following the money trail, he went pipelining with Ron and Don Chase, and after that to G and E Enterprises, then to Braidnor, with Lindsay Millions, and on to Muskeg, before finally finishing pipelining with Surerus on the Peace Hills running side boom. After that, he had Marathon Express with his sister, then Peacock, and Jerack, and now he has been at JL Filtration for the last 17 years. He has worked on various committees for the Petroleum Association: the Hockey committee since 2015, and the Golf committee since 2015. He is tireless in his commitment to running these events and continues to work and support all our events. With his hard work our functions have been very successful. He works on these committees today and we hope he will continue for some time in the future.
Become a Member
The Fort St. John Petroleum Association is actively seeking new members. The purposes of the society Fort St John Petroleum Association are: • To create a nonprofit fraternal organization for educational, benevolent and social purposes. • To create a medium through which the society members may express themselves in Social activities, Educational pursuits and Athletic endeavors. • To contribute to the community in supporting worthwhile projects as decided upon from time to time by the society. • To provide entertainment that is enjoyable, instructive and beneficial to its members and families. • To encourage a spirit of good fellowship among the society members.
Contact us: Unless otherwise specified all regular meetings are held 6:00 pm on the second Thursday of the month. Mailing Address:
Fort St. John Petroleum Association Box 6122, Fort St. John BC V1J 4H6