JUNE 19, 2020
PIPELINE NEWS NORTH •
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Federal loans for mid-sized businesses – including O&G
Mid-sized Canadian businesses that are strapped for cash because of COVID-19 can now apply through their own banks to get loans of up to $60 million from the federal government. The loans, to be administered by the Business Development Bank of Canada, are part of a package of federal credit programs Finance Minister Bill Morneau promised in late March. The federal government had initially planned programs specific to oil and gas, which were facing particularly tough times as global demand for oil plummeted during the pandemic-induced economic slowdown at the same time as Russia and Saudi Arabia faced off in a production war that sent oil prices into a tailspin. However, the Business Development Bank of Canada has now merged the oil and gas program with one for other companies, to create a single mid-sized business loan program for any company, in any sector, that meets the qualifying terms.
That includes companies with revenues between $100 million and $500 million that were financially viable before the pandemic, but saw their operations negatively affected by the economic shutdown or falling oil and gas prices. Loan amounts will fall between $12.5 million and $60 million, with the Business Development Bank of Canada covering 90 per cent and a company’s own financial institution the rest. The BDC advises companies interested in the program to reach out directly to their main financial lender, and work with them to determine if the program is a good fit and how to proceed. Applications will be open until the end of September. Ben Brunnen, the vice-president of fiscal and economic policy for the Canadian Association of Petroleum Producers, said this week the loan programs had the potential to help struggling companies but that there was frustration and anxiety in the oil sector at how long it was taking to begin.
Oil prices fell to never-beforeseen lows in April, briefly trading in negative territory, meaning oil producers were paying others to take their oil away. Natural Resources Minister Seamus O’Regan said in an interview with The Canadian Press this week that the day that happened, he thought there was a technical glitch on the app he uses on his phone to monitor the markets. “A lot of us will never forget where we were when the barrel hit negative,’’ he said. “It was something that you never thought you’d see.’’ Prices have rebounded a lot as the production war between Saudi Arabia and Russia appears to have eased, and global demand is slowly rising as countries reopen their economies. Western Canadian Select is back above $34 a barrel now, but a year ago, it was trading for nearly $60. Brunnen said there remains a ton of uncertainty for the industry because nobody knows what might
happen if a second wave of the novel coronavirus arrives. Even in a bestcase scenario, he doesn’t anticipate more normal production until well into next year, and many companies do not have the reserves to keep going for that long without help. O’Regan said the government’s ``eyes are wide open’’ to that fact so the loan programs are being designed to help. A separate program for big companies with revenues over $300 million, is being administered by the Canada Development Investment Corporation. But the terms of those loans are so strict there has been no uptake so far. Brunnen said that program, the Large Employer Emergency Financing Facility, or LEEFF, will be the route of last resort for the big oil producers, because the terms are so strict. They include government officials observing on the board, limits on executive pay, dividends and shareholder withdrawals. — jwnenergy.com
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• PIPELINE NEWS NORTH JUNE 19, 2020
Recovery a long road for B.C. goods, passenger transporters TOM SUMMER The BC Trucking Association (BCTA) says don’t expect to return to pre-COVID-19 business levels for another 10 to 11 months and longer for motor coach companies, who expect to face up to another 20 months of recovery from the harsh changes imposed by the pandemic. Some may not make it that far, reveal BCTA survey statistics. “The majority of our members support government measures to deal with COVID-19, things like closing the border and following stringent health protocols to keep drivers and customers safe,” president and CEO Dave Earle said June 17. “What BCTA is looking at now is how to address changes to operations and find ways to help companies survive until BC’s economy starts to recover. Our own concern is that business will take longer to rebound than we’d like, putting some BC road carriers in jeopardy.” BCTA says motor coach members, in particular, have good cause to worry about fallout from the pandemic. B.C. as yet has no date for a return to international travel, concerts, or conventions, the lifeblood of seasonal support operations like charter coach services. Trucking companies are affected by steep drops in retail sales, housing starts, exports to the US and imports from China and other global supply chain members. Results of the third COVID-19 survey indicate trucking companies have, on average, experienced a 23% drop in revenue, a slight improvement of 7% from our previous survey in April, when revenue fell, on average, by 30%; motor coach companies saw an average 97% drop in revenue, a slight increase over April (about 1%); and suppliers and service providers realized a 39% drop in revenue, a further 3% drop compared to April. Within the Peace Region, Rosenau Transport says it’s experienced severe losses, with five out of 10 business partners closing their
There has been a slow uptick in the industrial market. | Submitted
doors during the early months of the pandemic. “It’s had a significant negative impact. We saw a substantial reduction of our business, almost 50 per cent,” said northern B.C. Regional Manager Chris Richards. Richards said layoffs were given at the start of the pandemic, reducing the workforce for Chetwynd, Dawson Creek, and Fort St. John from 43 to 36. However, he expects that number to rise back to 40 as the economy recovers. “It’s been a misconception that we’ve been busy during this time,” said Richards, who noted the decline of retail and hospitality industries. “The quantity of deliveries has gone down, a lot of companies have reduced their shipping or eliminated it all together.” Rosenau currently operates 24 trucks in the northeast, down from 29 before the pandemic began in early March. Despite the setbacks,
Richards says he’s looking to partners in the oil and gas industry for future revenue, along with forestry. “There’s been a slow uptick in the industrial market, we’re starting to see a little more activity. So I’m cautiously optimistic,” said Richards. The BCTA conducted a third COVID-19 impact survey of members between May 27 and June 9, focusing on data for May 2020, and following surveys for March and April. In this latest survey, looking only at the next three months, 92% of motor coach company respondents indicated they are concerned about the survival of their business (an increase of 7% over April). For trucking, 32% of respondents are concerned about survival (a decrease of 5%); and for suppliers, the number of respondents concerned for survival in the short term has risen by 7% since April, to 25% overall.
For trucking companies: In April, 53% reported an average 22 temporary layoffs per company, and 24% reported an average of 2 permanent layoffs. By May, 54% reported 9 temporary layoffs per company and 21% reported 2 permanent layoffs. For motor coach companies: In April, 92% reported an average of 41 temporary layoffs, with 15% reporting an average of 17 permanent layoffs. For May, 83% reported an average of 42 temporary layoffs, and 8% reported an average of 5 permanent layoffs. For suppliers and service providers: In April, 40% of respondents reported temporarily laying off an average of 34 employees, and 7% reported permanent layoffs of an average of 11 employees. For May, 42% of employers temporarily laid off an average of 21 employees, while 16% permanently laid off an average of 27.
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• PIPELINE NEWS NORTH JUNE 19, 2020
Remote sensing and visualization making it easier to virtually access critical project data NELSON BENNETT To slow the spread of COVID-19, we have all had to make adjustments to how we work. For many of us that means restrictions on travel and working from home. For those supporting projects in the field, site visits are often out of the question. Many project teams have managed to stay connected by adapting to collaborative online tools like Skype and Zoom, but maintaining access to data and information on a distant project site so that essential work can continue presents a different challenge. While some restrictions may be easing soon, others are likely to continue for months and may even necessitate lasting changes to the way we do ‘business as usual’. For many impacted projects, remote sensing and visualization technology are becoming feasible tools to enable virtual access to projects and interact with site data in new ways. Geospatial data acquisition and visualization applications to make that data useful are both areas that have rapidly advanced in recent years. Outputs for end users range from conventional CAD files for design and engineering, to digital twins hosted online that enable virtual reality walk-throughs of a project site from anywhere. Even before the abrupt paradigm shift brought on by the COVID-19 pandemic, Canadian survey, mapping and geomatics firm Challenger Geomatics has been hard at work developing and testing new remote sensing and visualization solutions to enable their clients to virtually access critical project data. Virtual Project Access Services Click Here “At Challenger we’ve always come to work focused on finding new solutions to problems,” says Paul Burbidge CLS, Challenger Geomatics’ Chief Operating Officer. “But the COVID crisis has really accelerated interest and opportunities to use our remote sensing and visualization tools in new ways to keep our clients connected to their projects. I’ve
To slow the spread of COVID-19, we have all had to make adjustments to how we work.
seen our people at their best collaborating on new ways to solve problems that didn’t exist until a month or two ago.” According to Challenger Geomatics, many of their clients’ project teams have experienced significant delays in getting the geospatial data they need to continue planning, design and engineering work. The cause: difficulties and restrictions on travel and access to their project sites as a result of pandemic containment measures. Some remote project sites have even simply been shut down. “Right now we’re performing a high definition laser scan of a key piece of energy infrastructure that’s deforming. Due to travel restrictions, subject matter experts can’t visit the
site to investigate what’s causing the deformation. Using the scan data, we’re setting up a virtual model online where they can view it in 3D, make measurements and analyze the deformation from afar.” While laser scanning delivered the millimetre-level precision required for deformation measurements on that particular project, Burbidge says the unique needs of each client for their project means a customized approach every time. “After consulting with you to determine the specific needs for your project, we advise you on the appropriate technical solutions for your unique challenge.” Challenger Geomatics can deliver a wide range of solutions to enable clients to continue or enhance work on their projects,
such as: CAD files to support design and engineering Online 3D viewers to enable virtual project visits Virtual reality walk-throughs 3D PDFs to enable virtual project visits Proprietary 3D visualization and site/route selection software Collaborative video conferences hosted by Challenger using their specialized software And while the idea of a customized solution may sound pricey, it often isn’t the case according to Burbidge. “These visualizations don’t always require new data, and can often be put together by using data that already exists in new ways.”
JUNE 19, 2020
PIPELINE NEWS NORTH •
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Oilpatch veteran, philanthropist Charlie Fischer dead at 70 A member of the Canadian Petroleum Hall of Fame and the Order of Canada, who was well known for his contributions to both his industry and his community, died Wednesday in Calgary. Charlie Fischer was 70. A native of Saskatoon, Sask., he graduated from the University of Calgary in 1971 with a Bachelor of Science degree in chemical engineering and earned a Masters in Business Administration - finance degree in 1982, also from the UofC. Following graduation, Fischer began his career at Dome Petroleum Limited and in 1972 joined Hudson’s Bay Oil and Gas Company Ltd., where he worked in several areas before joining Bow Valley Industries Ltd. as vice-president in 1982. He moved to TransCanada Pipelines Limited as president of its upstream oil and gas subsidiaries, TCPL Resources Ltd. and Encor Energy Corporation Inc. in 1988, serving as president and chief executive officer of Encor Inc. until it was acquired by Talisman Energy Inc. in 1993. In February 1994, Fischer joined Canadian Occidental Petroleum Ltd. (later Nexen Inc.) as senior vice-president of exploration and production for North America. Named executive vice-president and chief operating officer in 1997, his role was expanded to include Nexen’s international oil and gas operations. In June 2001, Fischer was appointed president and chief executive officer, a position he held until his retirement at the end of 2008. Fischer served as a leader both within the industry and in helping those outside gain a better understanding of the industry. He served as chair of both the Independent Petroleum Association of Canada (IPAC) and the Canadian Association of Petroleum Producers (CAPP), and in those capacities
worked closely with government, regulators, the press and the public to ensure that the industry was properly understood. He had been a member of the Enbridge Inc. board of directors since 2009. At the provincial level, Fischer co-chaired the board of Climate Change Central and served on the boards of the Climate Change and Emission Management Corporation (CCEMC) and Alberta Innovates – Energy and Environment Solutions. Nationally, he was a participant in the Clean Energy Dialogue between the governments of Canada and the United States, co-chairing the carbon capture and storage discussions.
Fischer also served as vice-chair of the Canada West Foundation. A major volunteer force within the Calgary community, he served on the Alberta Children’s Hospital Foundation board for 12 years — two as chair. Following that, Fischer co-chaired a capital campaign that raised more than $50 million to support the building of the new Alberta Children’s Hospital in Calgary. He also served as a vice-chair of the UofC board of governors, was a member of the Calgary Airport Authority business development advisory council, and a special advisor to SAIT Polytechnique, supporting its capital campaign.
In 2019, Fischer and his wife, Joanne Cuthbertson, were invested as members of the Order of Canada. “This devoted couple has, with unwavering commitment, spearheaded and taken action on a broad range of initiatives related to public education, children’s health, the arts and responsible business practice in Calgary and beyond,” said Governor-General Julie Payette in the announcement. “As prime funders of the Cuthbertson-Fischer Chair in Paediatric Mental Health and the Chancellor Cuthbertson Centre for Student Success, they are lauded for their transformational donations and positive, energetic spirits.”
JUNE 19, 2020
PIPELINE NEWS NORTH •
Energizing the oil and gas industry with AI An industry built on ancient fossils is becoming a trend-setter in artificial intelligence (AI). Surprising? Maybe, but the reasons are clear. Buffeted by an unprecedented downturn that shows no signs of letting up, the Canadian oil & gas (O&G) industry is turning to innovation and technology in a bid to boost efficiency and buoy profits. Added to that is the global spotlight on sustainable practices that reduce emissions and water consumption, prompting O&G companies to seek new ways to optimize upstream operations and eliminate practices that waste time and money. In Alberta, the heartland of the O&G industry in Canada, industry leaders are beginning to modernize business models through a savvy combination of data analytics, AI and machine learning – and the results are nothing short of revolutionary. Data: The new oil From commercializing its first oil well in the late 1850s to becoming a leader in digital technology in the 1970s, Canada has always exhibited ingenuity in solving problems below the earth. The secret to staying one step ahead in a highly competitive industry? In a word, innovation. Today, data analytics and machine learning are breathing new life into O&G. The oil industry is literally awash in data – after all, a single drilling rig generates terabytes of data daily – but until recently, only a small fraction has been used to create new business value. As UK data science pioneer Clive Humby famously said, “Data is the new oil. It’s valuable, but if unrefined it cannot really be used… Data must be broken down and analyzed for it to have value.” O&G is beginning to capitalize on the opportunities made possible by combining structured and unstructured data with innovative technology. The door is wide open for machine learning and AI to play a pivotal role in turning the tide back to black for Canadian O&G companies. Predicting upsets and optimizing production
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with AI Making money-saving decisions every day Optimization of the end-to-end oil and gas value chain – where multiple plants, processes and assets are interdependent – has always been a complex challenge for upstream O&G operations. Now, a new AI solution is making it possible to get barrels out of the ground more efficiently and cost-effectively. Here’s how it unfolded. Two years ago, one of Canada’s largest integrated oil and gas producers began working with IBM to apply the latest AI and data science methodologies to improve production optimization within their upstream operations facilities. Their goal was threefold: optimize across siloes, flag upsets early for timely response and identify actionable opportunities in real-time.
Production Optimization is designed to quickly pay for itself with the multi-milliondollar savings and new efficiencies generated from rapid ROI. Firsthand, this company is seeing how trustworthy data can be turned into relevant insights to make money-saving decisions. Having a single picture of all the plants in an upstream operation has never been possible before – and for this major player in O&G, it is providing a sure path to optimization and cost savings. Now that they are capitalizing on the real-time decision making made possible by AI, there’s simply no going back. How AI could change the future of O&G
Christened “Production Optimization,” the solution uses advanced AI models and data science methodologies to optimize end-toend production. Plant operators are placed in full control of process upset management and opportunity awareness, enabling them to predict and minimize plant upsets and act quickly on valuable opportunities in real time. The project scope was huge – encompassing 35 individual plants, staffed by thousands of frontline operators, engineers and supervisors across 12 individual business units. Over one hundred machine learning models in a multi-layered approach were applied in a ‘systems of systems’ approach which included advanced AI models for a predictive systems layer. Today, plant general managers are using the solution to maximize production performance and minimize energy use via a user interface that instantly delivers a comprehensive picture of their plant operational environment anytime, anywhere, on any device. The Production Optimization solution: Predicts plant upsets well before they happen with a high degree of accuracy. Continuously monitors production to provide recommendations that will maximize production volume, quality, inventory levels, profitability and more. Rapidly generates new production schedules and creating a new plan in just a few minutes.
With plenty of data accumulated over the years from conventional oil and gas production, the biggest game for AI in the upstream is interpreting, analyzing and modelling that data to enhance existing production, to extend the life of existing wells, or bring older wells back to life. AI is poised to drive unprecedented operational productivity and efficiency in O&G. AI allows machines to interpret, act and learn from data by combining digital technologies such as machine learning, natural language processing and robotics. By augmenting human decision making through real-time insights,AI has the power to optimize and transform upstream operations. Worldwide, the potential payoff from data-driven decision-making is enormous, including billions of savings from productivity improvements, reduced water usage and lowered emissions. Yet, according to a World Economic Forum report, only 13% of the world’s O&G companies are using data-driven insights to reduce waste and streamline operations, both upstream and downstream. Imagine the effect widespread adoption of AI could have on productivity and operations. For more information visit ibm.com/industries/ oil-gas