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Shell Canada leaving Fox Creek area

For many energy companies, 2020 was a terrible year that started with the OPEC price war followed by the pandemic. Financial advisors have suggested a few reasons for the significant increase in M&A transactions that’s happening and expected to continue through 2021. In the case of small to medium-sized oil and gas companies, acquisitions through insolvency procedures are more predominant. Unfortunately, these companies cannot attract the capital to continue and can no longer get funding from the banks. Insolvency is the last option. For the larger companies with capital, they are looking for more growth through acquisition rather than drilling. These companies are looking for other oil and gas plays that can be purchased at a lower price and provide immediate returns on their investment.

One of the most recent acquisitions announced this month is the sale of Shell Canada’s land holdings in the Duvernay field around Fox Creek. “Shell has reached an agreement with Crescent Point Energy Corp to sell its Duvernay shale light oil position in Alberta for a total consideration of $900 million.” as stated in their media release. The transaction is expected to close in April 2021. The sale includes transferring approximately 450,000 net acres in the Fox Creek Kaybob and Rocky Mountain House Willesden Green areas and related infrastructure. Well, licenses will be transferred over to Crescent Point, subject to regulatory approval. Chris Sillito,External Relations with Shell Canada, added, “Crescent Point will retain the Shell field employees and several technical and commercial roles that support the assets.”

The news came as a shock to many in Fox Creek, as Shell has been a pillar of the community for many years. The company didn’t just have an interest in the Duvernay field but invested heavily into its community. Some of Shell Canada’s contributions include the partnership in which Shell can use the Town of Fox Creek’s treated wastewater for its operations in exchange; Shell funded the engineering and design to upgrade the town’s raw water facilities. The company has also sponsored the gymnasium in the new Multiplex, which is named the Shell Fieldhouse. Other contributions consist of making donations and sponsorships to the many smaller non-profit organizations in the community. Many contributions were also made to the Food Bank, the Friends of Fox Creek Hospital Society, to purchase medical equipment at the hospital. Other donations were made to the Fox Creek School, volunteering through the annual Day of Caring, Annual Grant Programs put out to the students to further their education, scholarships for graduates. The list could go on, but it’s a glimpse into the support Shell has given to the community over the years.

 


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Parkland continues its drive into U.S. markets

Move establishes a new growth platform in the Pacific Northwest

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Calgary-based Parkland Corporation has announced it has agreed to acquire Conrad & Bischoff Inc. and its related companies (C&B). Through this acquisition, Parkland will establish a fourth U.S. Regional Operating Center (“ROC”) in Idaho Falls, ID.

C&B is a well-established retail, commercial, wholesale and lubricants business with annual fuel and petroleum product volume of approximately 700 million litres. Family owned and operated since 1959, C&B’s operations are concentrated in the fast-growing markets of Idaho and western Wyoming with additional distribution capability into Utah, Nevada, Montana and other states.

“This acquisition checks all the boxes of our US growth strategy and complements our existing ROCs,” said Doug Haugh, president of Parkland USA. “C&B strengthens our supply advantage, brings a high-quality retail network and offers a long runway for organic growth.”

The transaction includes 58 retail locations, comprising 19 high-quality company-owned sites featuring proprietary branded backcourts and 39 retail dealer sites. Also, terminal operations with combined tank storage of 30 million litres and capacity for 88 rail cars will add significant supply optionality in PADD IV [Petroleum Administration for Defense Districts with IV indicating Rocky Mountain area]. 

“In addition to adding an exceptional team, C&B creates a springboard for growth throughout the Pacific Northwest,” added Haugh. “We continue to profitably grow our U.S. business and will remain disciplined in our appraisal of the many opportunities we see in front of us.”

Parkland reports that the acquisition will be funded out of existing credit facility capacity and is subject to customary closing conditions and is expected to close in the second quarter of 2021. 


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Gas prices in parts of B.C. could reach $1.70 per litre by summer, analyst predicts

shutterstock_692687404Drivers can expect a jump in gasoline prices this week, thanks to a five cent increase from wholesalers, analyst Dan McTeague said.

He expects most cities in B.C. to see a two-cent rise, but central B.C. could get more of a hit. Retailers there have been skimping their own margins to compete, but “some have now thrown in the towel and decided to increase by 10 cents,” he said.

This week’s wholesale increase was caused by the deep cold in Texas and central U.S., but McTeague sees market forces pushing prices higher mid-year.

By summer, McTeague estimates gas could be as high as $1.70-per-litre in the Lower Mainland, and $1.38-per-litre elsewhere in the province.

There are three factors leading to his prediction: summer driving demand, decreased global production and increased carbon prices.

Last year as the COVID-19 interrupted the world, producers got left with barrels selling at minus numbers and nowhere to store them to wait out the market drop. That’s made producers shy, and financiers hesitant to fund oil plays, McTeague said.

The NDP also has a scheduled carbon tax increase, which was postponed in 2020 due to COVID-19. Once things start getting back to normal, McTeague expects the government to double up the planned increase with two years-worth in one, for a total of 2.5 cents-per-litre.

B.C. is affected by two key oil markets. The Lower Mainland and Vancouver Island is fuelled by the Pacific Northwest market, while the rest B.C. is supplied from the Trans Mountain Pipeline which is priced in the Chicago Spot Market.


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Parkland hits new heights in low carbon fuel production

Company sees 140% increase in co-processing over 2019

Calgary-based Parkland Corporation, an independent supplier and marketer of fuel and petroleum products and a leading convenience store operator,has reported it has set a new record in low carbon fuel production at its Burnaby, B.C. refinery. Last year, the facility co-processed approximately 44 million litres of Canadian-sourced canola and tallow bio-feedstocks. Parkland aims to increase this to up to 100 million litres in 2021.

parkland-korgmeierOur refinery is focused on delivering the essential fuels our customers depend on, but with a lower carbon intensity,Ryan Krogmeier, SVP supply, trading, refining and health, safety and environment, said in a statement. This is a made in Canada success story. We continue to ramp-up our use of Canadian bio-feedstocks and scale our innovative co-processing capabilities. In addition to providing our British Columbia customers with low carbon gasoline, diesel and jet fuel, we are growing a competitive advantage that will win new business and drive organic growth.

The Burnaby refinery was Canada’s first facility to use existing infrastructure and equipment to co-process bio-feedstocks such as canola oil, and oil derived from animal fats (tallow) alongside crude oil to produce low carbon fuels. The resulting co-processed low carbon fuels have less than one-eighth of the carbon intensity of conventional fuels.

Parkland states that it is committed to a lower carbon future.“We co-processed approximately 44 million litres of Canadian-sourced canola and tallow bio-feedstocks in 2020, marking an almost 140% increase from 2019.

“In 2021, we aim to co-process up to 100 million litres of bio-feedstocks and offer our customers a variety of low carbon fuels, including an up to 15 percent renewable content diesel,” said Krogmeier, noting that the annual environmental benefit of producing low carbon fuels in 2021 is expected to be the equivalent of taking over 80,000 passenger vehicles off the road.


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Forecourt innovation

Fuel retail sites look to the future with product and service refinements

Forecourt_InnovationInnovation at Canada’s fuel site forecourts has been top of mind for operators since the first gas station opened in Vancouver in 1907. Back then, electricity to power pumps and flameless canopy lighting was considered the latest big buzz. Today, forecourts have solar power systems, interactive media, alternative energy fuels and systems that use less energy than ever. Innovation at forecourts is on-going as operators seek out ways to improve profitability on low margin fuel sales, meet ever-changing consumer demands and deliver on societal needs such as climate change.

Screen Shot 2021-02-16 at 11.28.11 AMIn Vancouver, Shell and Hydrogen Technology & Energy Corporation (HTEC) have built two hydrogen refuelling stations in the greater Vancouver area over the past couple of years in a move to reduce our carbon footprint. Now, 7-Eleven, alongside ESSO, will be offering hydrogen fueling at two sites of its own in the city, with a third coming to the Okanagan.

“The innovative hydrogen refuelling solutions we are building with HTEC continue to reduce our carbon footprint while meeting the evolving transportation needs of our customers,” says Norman Hower, VP & general manager, 7-Eleven Canada.

Electric vehicles (EV) use has been ahead of hydrogen in equipment placement. Companies such as FLO (AddÉnergie), IVY (Ontario Power Generation and Hydro One), and Chargepoint are helping to grow the market through partnerships with key industry stakeholders. For example, FLO has inked a deal with Canadian Tire to offer EV charging at locations across the country. Chargepoint, a company with 115,000 chargers worldwide, just announced an agreement with Volvo Canada to provide fast charging for its XC40 customers. 

Pump talk

Pompe Media is a Quebec based company that is bringing new merchandising tools to the forecourt. Pompe Media puts news, weather and other content such as c-store specials and promotions in front of customers as they fill their gas tanks. Currently, Pompe Media is partnering with Sobey’s and is present at 90 gas stations in Quebec. In addition, Pompe Media provides a new purchase experience inside the c-stores and is partnering with several hundred c-stores in Quebec including Circle K, Voisin, Bonisoir, and Beausoir.

According to Sylvain Béland, VP of development, Pompe Media, dispenser-top systems offer a 21.5-inch display screen that delivers content to motorists while they spend up to four minutes fueling. “The systems create the unexpected for the customer. They also create additional sales for operators who are telling us lottery purchases have increased by 15% to 20% thanks to the prompts from Pompe Media screens that get people into the store to buy merchandise.” 

Pompe Media joins others such as Bennett Pump, Gilbarco Veeder Root and Wayne Dover with new content laden dispenser systems.

Bennett Pump has come together with Gas Pump TV to bring more messaging to the forecourt. Similar to Pompe Media devices, standalone screens on top of Bennett dispenser units deliver customized content to thousands of fuel sites in the U.S.  

At Gilbarco Veeder Root, they have created a powerful media package with Applause TV, a system that works with their Encore dispenser platform. Gilbarco has teamed with NewsBreak Media Networks, a company that creates unique programming for both fuel and convenience channels. The new on-demand product is available with Encore Experience, a system that enables operators to customize what appears on-screen at Encore dispensers. Fuel customers can choose among news, weather, sports and other content instead of watching a linear content loop at the dispenser.

The new DFS Anthem UX (user experience) platform on the Wayne Ovation fuel dispenser features a 27-inch colour touch display, loyalty abilities and marketing opportunities delivered by a Microsoft Azure cloud-based platform. The Anthem UX will launch in the fall of 2021. The system will deliver personalized experiences in content and targeted advertising, right at the pump. The innovative platform has multi-language capabilities that allow customers to interact with equipment in their language of choice. Returning customers are recognized and can be offered products based on their purchase history, purchase a wash or receive marketing and loyalty messages that drive in-store business. 

The Anthem UX platform is built to perform in the harshest outdoor environments. The display is designed to operate across wide temperature ranges and consists of toughened glass with four to five times the durability of regular glass, while still responding to gloved finger touches. Keyless locks give easy access to the dispenser for maintenance while protecting against unauthorized access. And, it accepts contactless payment options for gas purchases, including Apple Pay and other digital wallet tools to protect your customers and your business.

Reducing enviro footprint

Screen Shot 2021-02-16 at 11.28.39 AMCanadians use a lot of windshield washer fluid. It is estimated we go through as much as 70 million jugs of the product each year. Now, EcoTank is offering a more sustainable solution to the massive plastic waste from fluid containers. 

EcoTank is a standalone dispenser that takes up just two square feet of forecourt space. Systems are low voltage and will be powered soon by individual solar panels. EcoTank uses gravity to pump windshield washer fluid to receptacles in cars.

According to Robbie Mair, president, EcoTank, they are piloting in the GTA and partnering with companies such as AirServe and UltraClear. He reports that the product got its start in the European Union, but EcoTank plans to manufacture in Canada.

Innovation in hand

Dispenser nozzles is another important area where constant innovation is key to success. For example, Husky, a leader in dispenser and fueling products and accessories for decades, has just released an upgraded three-quarter-inch nozzle exclusively through National Energy Equipment. “Canada became the first country to have this product rolled out nationwide,” says Ray Dugan, Husky Corporation regional manager. He reports that the CXS model features a comfortable lever design that requires half of the squeeze pressure to control the nozzle. “It is the only widely used nozzle in North America that complies with disability requirements regarding hand manipulation of an object. This feature, combined with other upgrades including the tilt poppet and stream shaper, makes a great forecourt impression.” 

OPW has not been quiet regarding new nozzle developments. OPW reports it has come out with new spout technology designed to enhance the fueling experience with a dripless gasoline nozzle. The new OPW 14E dripless spout is designed to keep gasoline from dripping on customers’ hands, clothing, and vehicles, not to mention the ground. According to OPW, the CARB ECO OPW 14E utilizes a unique interlock system inside the bellows to activate the flow of fuel.

This article originally appeared in the January/February 2021 issue of OCTANE.


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Toyota to add electric, plug in hybrid vehicles next year

Toyota says it will roll out two new battery- electric vehicles and one plug-in gas-electric hybrid in the U.S. this year as the parade of new EVs continues.

The company gave few specifics on the vehicles during a presentation Wednesday, but said one electric vehicle would be an SUV. Toyota said it has a goal of having 40% of its new vehicle sales be electrified by 2025 and nearly 70% by 2035. It also is developing dedicated underpinnings to be used in future electric vehicles.

Toyota broke from other automakers _ and possibly the administration of President Joe Biden _ in calling for a diversity of electrified vehicles to reduce carbon emissions, rather than putting policies in place that require those powered solely by batteries.

The company, which pioneered the gas-electric hybrid, said its research shows that plug-in hybrids can be as clean, and less costly than full battery-electric vehicles, depending on the cleanliness of electric-power generation in a particular region. Also, metals such as lithium must be mined for use in batteries, and the mining process creates pollution, Toyota said.

“We believe the fastest way to lower greenhouse gases in the transportation sector is to offer drivers lower carbon choices that meet their needs,” said Gill Pratt, chief scientist for Toyota.

Pratt said it doesn’t make sense to have a huge battery that can take a vehicle 300 miles (480 kilometres) when the average U.S. round-trip commute is 32 miles (52 kilometres).

“You end up carrying around a lot of extra battery mass,” he said.

Its best to have a diversity of solutions like Toyota offers, such as full hybrids, plug-in hybrids, battery electric and hydrogen-fuel-cell vehicles, Pratt said.

Wednesday’s announcement comes as automakers continue to roll out new electric vehicles, even though fully electric vehicles were less than 2% of U.S. new vehicle sales last year. It also comes as the Biden administration moves toward adding a half-million EV charging stations and tries to swap out much of the federal vehicle fleet with electric vehicles.

General Motors has a target of selling only battery-powered light vehicles by 2035. GM plans to spend $27 billion to develop 30 EVs by 2025, with two thirds of them being available in the U.S.

The company plans to give details about an electric Bolt small SUV on Sunday. Hyundai, Kia, Volvo and others also have plans to announce new EVs for this year.


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How Canada can capitalize on U.S. auto sector’s abrupt pivot to electric vehicles

The storied North American automotive industry, the ultimate showcase of Canada’s high-tensile trade ties with the United States, is about to navigate a dramatic hairpin turn.

But as the Big Three veer into the all- electric, autonomous era, some Canadians want to seize the moment and take the wheel.

“There’s a long shadow between the promise and the execution, but all the pieces are there,” says Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.

“We went from a marriage on the rocks to one that both partners are committed to. It could be the best second chapter ever.”

Volpe is referring specifically to GM, which announced late last month an ambitious plan to convert its entire portfolio of vehicles to an all-electric platform by 2035.

But that decision is just part of a cascading transformation across the industry, with existential ramifications for one of the most tightly integrated cross-border manufacturing and supply-chain relationships in the world.

China is already working hard to become the “source of a new way” to power vehicles, President Joe Biden warned last week.

“We just have to step up.”

Canada has both the resources and expertise to do the same, says Volpe, whose ambitious Project Arrow concept _ a homegrown zero-emissions vehicle named for the 1950s-era Avro interceptor jet _ is designed to showcase exactly that.

“We’re going to prove to the market, we’re going to prove to the (manufacturers) around the planet, that everything that goes into your zero-emission vehicle can be made or sourced here in Canada,” he says.

“If somebody wants to bring what we did over the line and make 100,000 of them a year, I’ll hand it to them.”

GM earned the ire of Canadian auto workers in 2018 by announcing the closure of its assembly plant in Oshawa, Ont. It later resurrected the facility with a $170-million investment to retool it for autonomous vehicles.

“It was, ‘You closed Oshawa, how dare you?’ And I was one of the ‘How dare you’ people,” Volpe says.

“Well, now that they’ve reopened Oshawa, you sit there and you open your eyes to the commitment that General Motors made.”

Ford, too, has entered the fray, promising $1.8 billion to retool its sprawling landmark facility in Oakville, Ont., to build EVs.

It’s a leap of faith of sorts, considering what market experts say is ongoing consumer doubt about EVs.

“Range anxiety”- the persistent fear of a depleted battery at the side of the road – remains a major concern, even though it’s less of a problem than most people think.

Consulting firm Deloitte Canada, which has been tracking automotive consumer trends for more than a decade, found three-quarters of future EV buyers it surveyed planned to charge their vehicles at home overnight.

“The difference between what is a perceived issue in a consumer’s mind and what is an actual issue is actually quite negligible,” Ryan Robinson, Deloitte’s automotive research leader, says in an interview.

“It’s still an issue, full stop, and that’s something that the industry is going to have to contend with.”

So, too, is price, especially with the end of the COVID-19 pandemic still a long way off. Deloitte’s latest survey, released last month, found 45 per cent of future buyers in Canada hope to spend less than $35,000 _ a tall order when most base electric-vehicle models hover between $40,000 and $45,000.

“You put all of that together and there’s still some major challenges that a lot of stakeholders that touch the automotive industry face,” Robinson says.

“It’s not just government, it’s not just automakers, but there are a variety of stakeholders that have a role to play in making sure that Canadians are ready to make the transition over to electric mobility.”

With protectionism no longer a dirty word in the United States and Biden promising to prioritize American workers and suppliers, the Canadian government’s job remains the same as it ever was: making sure the U.S. understands Canada’s mission-critical role in its own economic priorities.

“We’re both going to be better off on both sides of the border, as we have been in the past, if we orient ourselves toward this global competition as one force,”says Gerald Butts, vice-chairman of the political-risk consultancy Eurasia Group and a former principal secretary to Prime Minister Justin Trudeau.

“It served us extraordinarily well in the past … and I have no reason to believe it won’t serve us well in the future.”

Last month, GM announced a billion-dollar plan to build its new all-electric BrightDrop EV600 van in Ingersoll, Ont., at Canada’s first large-scale EV manufacturing plant for delivery vehicles.

That investment, Volpe says, assumes Canada will take the steps necessary to help build a homegrown battery industry out of the country’s rare-earth resources like lithium and cobalt that are waiting to be extracted in northern Ontario, Quebec and elsewhere.

Given that the EV industry is still in his infancy, the free market alone won’t be enough to ensure those resources can be extracted and developed, he says.

“General Motors made a billion-dollar bet on Canada because it’s going to assume that the Canadian government – this one or the next one – is going to commit ”to building that business.

Such an investment would pay dividends well beyond the auto sector, considering the federal Liberal government’s commitment to lowering greenhouse gas-emissions and meeting targets set out in the Paris climate accord.

“If you make investments in renewable energy and utility storage using battery technology, you can build an industry at scale that the auto industry can borrow,” Volpe says.

Major manufacturing, retail and office facilities would be able to use that technology to help “shave the peak” off Canada’s GHG emissions and achieve those targets, all the while paving the way for a self-sufficient electric-vehicle industry.

“You’d be investing in the exact same technology you’d use in a car.”

There’s one problem, says Robinson: the lithium-ion batteries on roads right now might not be where the industry ultimately lands.

“We’re not done with battery technology,” Robinson says. “What you don’t want to do is invest in a technology that is that is rapidly evolving, and could potentially become obsolete going forward.”

Fuel cells _ energy-efficient, hydrogen-powered units that work like batteries, but without the need for constant recharging _ continue to be part of the conversation, he adds.

“The amount of investment is huge, and you want to be sure that you’re making the right decision, so you don’t find yourself behind the curve just as all that capacity is coming online.”


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Planned Enbridge Line 5 shut down causes job loss worries for Sarnia, Ont.

Line5_Map_Michigan_705xWorkers in Sarnia, Ont., are raising concerns about the job losses that could occur if a U.S. governor’s plan to shut down an Enbridge pipeline succeeds.

The Line 5 pipeline runs from Wisconsin to Sarnia, crossing parts of Michigan. It’s part of Enbridge’s Lakehead network that carries oil and liquids used in propane from western Canada to refineries in the U.S. and Ontario.

In November, Michigan Gov. Gretchen Whitmer ordered a shutdown of Line 5 by May, saying Enbridge had repeatedly violated an easement that allowed part of Line 5 to be placed along the bottom of the Straits of Mackinac that connect Lake Michigan and Lake Huron.

Pipeline opponents are now urging U.S. President Joe Biden to support Whitmer’s order. Enbridge, which insists the line is safe, is fighting the order in court and says it has no plans to shut down.

Workers in Sarnia say they’re increasingly worried about their jobs as the May shutdown deadline looms.

James Williamson, a steamfitter working for Nova Chemicals in Sarnia, said the pipeline’s potential closure could impact workplaces like his, which processes materials carried by Line 5.

“Each plant in this area feeds off of each other … All of them are tied in together and if we lose that feedstock, it would essentially shut down a lot of the work in town,”said Williamson.

Three of his brothers also work in the petrochemical industry and would be out of jobs if Line 5 is shut down, he said.

“It would require us to travel and move our families out of this area to maintain a good income and be able to provide for our kids,”he said.

“It makes you nervous knowing that the life that you provided for your family and those who are doing the same thing, it may have a direct negative impact on them.”

Scott Archer, a spokesman for the Sarnia-Lambton County branch of a union representing workers in the plumbing and pipefitting industry, said a shutdown of Line 5 would force workers to compete for fewer jobs that may only be available in other areas.

“People are either going to have to basically live out of a suitcase working in other jurisdictions or they’re going to have to make a career change, which nobody really wants to do mid-life,”he said.

The union has been urging the federal government to appeal to Biden to intervene against Whitmer’s plan.

“Everyone’s frustrated with it because it really doesn’t make any sense,”Archer said of how union members feel.

Sarnia Mayor Mike Bradley said at least 3,000 jobs at three refineries in his city, as well as numerous positions in related industries, would be affected if the pipeline shut down.

“If you’re talking about that number of jobs, it is like dropping a neutron bomb on the community,”he said. “It would be truly devastating.”

Bradley has written to Prime Minister Justin Trudeau and Minister of Natural Resources Seamus O’Regan urging them to appeal to Biden.

In a letter last week, O’Regan said he shared Bradley’s concerns.

O’Regan said Line 5’s shutdown would have a “profound”impact on jobs, raise the cost of supplies and take a financial toll on many Canadian and U.S. refineries.

“We continue to advocate for Line 5 to remain in operation while recognizing and respecting the sensitivity of the issue to the state of Michigan, and the importance of furthering a constructive dialogue with the new United States administration,”the minister wrote.

The federal Conservatives said last week that more needs to be done to ensure Line 5 stays open to protect the jobs associated with it.

 


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Cenovus Energy reports $153M Q4 loss, including $100M Keystone XL charge

The cancellation of the Keystone XL oil export pipeline has resulted in a second oilsands company posting a multimillion-dollar impairment charge in its fourth quarter earnings report.

Calgary-based Cenovus Energy Inc. on Tuesday reported a net loss of $153 million for the three months ended Dec. 31 – including a non-cash hit of $100 million related to U.S. President Joe Biden’s decision to cancel the pipeline’s permit the day he took office last month.

Last week, Suncor Energy Inc. reported a fourth-quarter net loss of $168 million, including a $142-million after tax transportation provision related to its “backstopping” of TC Energy Corp.’s Keystone XL project as one of its contracted shippers.

The Cenovus report, covering the quarter just before it completed its takeover of rival Husky Energy Inc. in an all-stock deal that closed Jan. 4, largely met analyst expectations but its shares fell by as much as 47 cents or 5.7% to $7.74 in trading on the Toronto Stock Exchange.

Cenovus decided to forego its usual conference call because it held one two weeks ago when it announced the 2021 capital budget for the merged company.

In a Tuesday news release, CEO Alex Pourbaix said the company performed well in 2020, despite “unprecedented challenges,” marked by lower oil prices and volatility due to the pandemic and global oil market turmoil.

“We believe our compelling combination with Husky will provide even greater ability to reduce free funds flow volatility and accelerate debt reduction and returns to shareholders,” he said.

Cenovus set its 2021 capital budget at between $2.3 billion and $2.7 billion, including about $2.1 billion in sustaining capital to keep the combined output of the two companies roughly level at about 755,000 barrels of oil equivalent per day and with refinery throughput of about 525,000 barrels per day.

The company also vowed to use any excess cash flow to pay down debt to an initial target of $10 billion and a longer-term goal at or below $8 billion. It revealed Tuesday its total net debt after the Husky transaction is about $13.1 billion.

After suspending its crude-by-rail program in early 2020, Cenovus ramped up activity at its terminal northeast of Edmonton in the fourth quarter due to improving market conditions. It said it ended December with average shipments of nearly 28,000 bpd of its own oil, plus nearly 10,000 bpd for third parties.

The company reported its fourth quarter oilsands production increased two% to 380,693 bpd from the year-earlier period as it bought unused production curtailment credits from other producers to exceed its output limits before Alberta’s mandatory curtailment program ended in early December.

Throughput at the two U.S. refineries Cenovus co-owns with operator Phillips 66 fell 16% in 2020 to an average of 372,000 bpd because of lower product demand and pricing due to the pandemic, it reported.

Husky released its final audited financial statement for 2020 on Tuesday, reporting a net loss of about $10 billion on gross revenue of $13.46 billion.

The loss for the year included $12.9 billion in depletion, depreciation, amortization and impairment charges, balanced by a $3.2-billion provision for deferred recovery of income taxes.

Cenovus’s fourth quarter loss compared with net earnings of $113 million in the fourth quarter of 2019.

It said its operating loss for its most recent quarter was $551 million, compared with an operating loss of $164 million in the fourth quarter of 2019.


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Suncor Energy announces project restarts

Carbon emission projects to start amid significant austerity

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Suncor Forty Mile Wind Power Project

Suncor Energy Inc. reports it has restarted construction of two carbon emission-reducing projects paused last March as the COVID-19 pandemic erupted. One project is a $1.4 billion undertaking to install two cogeneration units at its Oilsands Base Plant. The second project is a new $300-million wind power plant in southern Alberta.

These projects come in the face of reports from the company that it will not increase capital spending this year despite higher oil prices. Suncor chopped operating costs by $1.3 billion or 12% in 2020 versus 2019 and reduced capital spending by $1.9 billion or 33% compared to the original guidance midpoint.
According to Suncor president and CEO Mark Little, “We’ve restarted construction of the cogen facility at Base Plant and the Forty Mile wind project, which is already accounted for within our current capital guidance.
“That said, despite the commodity price outlook being well above our planning basis for 2021, I can assure you that we will not increase our 2021 capital guidance above the current range.”
Suncor has expectations of capital spending of between $3.8 billion and $4.5 billion in 2021 while paying down between $1 billion and $1.5 billion of debt and repurchasing between $500 million and $1 billion in shares.
The company reported a Q4 net loss of $168 million on revenue of $6.6 billion, compared with a net loss of $2.34 billion on revenue of $9.6 billion in the same period of 2019, with both sets of numbers heavily influenced by asset write-downs. The current loss includes a $142-million after-tax transportation provision related to the recently cancelled Keystone XL oil export pipeline project. The company’s loss also includes a writedown of $423 million on its minority share of the White Rose and West White Rose offshore Newfoundland and Labrador oil projects.
Altogether, oil and gas production of 769,200 barrels of oil equivalent per day was down from 778,200 boe/d in the year-earlier quarter. Refinery crude throughput was 438,000 barrels per day, down from 447,500 bpd a year earlier.