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CEO Mary Moran of Calgary Economic Development

Western separatism, pipeline delays weigh on corporate mood at Alberta forum

Ongoing environmental criticism, delays in building oil pipelines and a surge of separatist sentiment following the last federal election are hurting Alberta’s reputation, presenters at a business forum in the Alberta mountain resort town of Lake Louise said Friday.

CEO Mary Moran of Calgary Economic Development

CEO Mary Moran of Calgary Economic Development

The rise of the western Canadian separation movement or “Wexit” cost Calgary an opportunity to attract a major technology head office, said CEO Mary Moran of Calgary Economic Development during a speech at the event.

“We as an organization just lost a 1,000-person company that didn’t come to Calgary, selected another city, because they’re concerned about Wexit,” she said. “So we need to tell a unified story about Calgary.”

The city was high on the unnamed firm’s shortlist of potential hosts until alarms were raised over Wexit, she said in an interview after the speech.

The company was also unhappy about the removal of some tech-friendly tax incentives in the United Conservative government’s recent provincial budget, she said.

The Canadian digital company can’t be identified because it has not yet announced the community that made the winning bid to host its new headquarters, said Moran.

Premier Jason Kenney, who also spoke at the event, said the only concern he’s hearing in meetings with investors in Houston and on Wall Street is about Canada’s inability to build pipelines to transport oil and gas to market.

“The main concern that I hear is about the lack of pipelines and market access for our energy that is the result of the foreign-funded campaign to landlock Alberta energy,” he told reporters.

“Our single greatest strategic interest is to get pipelines built and that will not happen unless we push back.”

Kenney’s government is “doing exactly what Albertans hired us to do,” he said, by launching a “fair deal” panel to look at establishing a provincial revenue agency, withdrawing from the Canada Pension Plan and replacing the RCMP with a provincial police force.

Many Alberta CEOs in agriculture, energy, finance and transportation sectors agree Alberta’s image now is that of a province with a struggling economy, a declining and outdated industry, a lack of innovation and a fascination with separation, said Adam Legge, president of the recently formed Business Council of Alberta.

Those negative impressions are inaccurate, but they are having an effect, he said.

“(The CEOs) all say one thing. It is hard to attract people to Alberta because of its image. Our brand has taken a hit,” he said in a speech.

Albertans need to avoid the temptation to “wallow in uncertainty,” said Ed Sims, CEO of WestJet Airlines Ltd., in a speech that touched on the Calgary-based airline’s problems with competition, the grounding of the Boeing 737 Max planes and passenger rights legislation.

“The more we talk about uncertainty, the more we talk about tough times, the more we manifest that reality and it becomes our new reality,” he said.

 


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Suncor keeps 2020 oil budget flat, approves $300 million wind farm project

Oilsands giant Suncor Energy Inc. says it will keep capital spending related to its oil operations flat next year while moving forward with a new $300-million wind power project in southern Alberta.

The Calgary-based company says its capital budget for 2020 will rise by about 10% to a mid-point of $5.7 billion from this year’s $5.15 billion.

SunBridge is Suncor's first renewable energy project. Located near Gull Lake, Saskatchewan, the facility generates enough zero-emissions electricity to offset about 33,000 tonnes of carbon dioxide per year.

SunBridge is Suncor’s first renewable energy project. Located near Gull Lake, Saskatchewan, the facility generates enough zero-emissions electricity to offset about 33,000 tonnes of carbon dioxide per year.

Suncor announced it has sanctioned the first 200-megawatt phase of its Forty Mile Wind Power Project, which received Alberta regulatory approval last spring. About 25% of the capital cost is expected to be incurred this year and the remainder in 2020 and 2021.

Suncor say the project is a key component of its sustainability strategy as it targets cutting its greenhouse gas intensity by 30% by 2030.

It says the 2020 capital budget increase also includes $300 million for its $1.4-billion project to replace coke-fired boilers at its oilsands base camp in northern Alberta with cleaner natural gas-powered co-generation units for heat for the plant and electricity for the provincial power grid.

It also plans to invest $150 million in digital technology initiatives and $50 million to improve efficiency at the Syncrude oilsands mining complex by connecting it by pipeline with Suncor’s nearby base camp works.

“Looking forward to 2020, we will continue to focus on value over volume, investing in high-return projects that are largely independent of pipeline constraints and commodity price volatility, to deliver on our $2-billion incremental free funds flow target by 2023,” said CEO Mark Little in a statement.

Upstream production is expected to increase by about 5% to about 820,000 barrels of oil equivalent per day.


Shutterstock

Feds won’t explain claim pipeline expansion will raise $500M in tax revenue

The federal government says the Trans Mountain pipeline expansion will bring another $500 million a year in corporate tax revenue to be spent on fighting climate change, but the Liberals won’t say where they got that number.

The figure was cited by the government when it approved the project a second time last June and was also included in the Liberals’ campaign platform.

In 2018, the government stepped in to buy the existing pipeline between Alberta and the B.C. coast from Kinder Morgan Canada for $4.5 billion. The company and its investors got cold feet about proceeding as political opposition to the pipeline threatened unending delays, so Ottawa bought it. The government intends to see through the expansion and then sell it back to the private sector.

Under heavy criticism from environmentalists for pushing a major pipeline project at the same time as they’ve insisted on the need to slash greenhouse-gas emissions, the Liberals promised any new revenue from the expansion project, including corporate taxes, will be spent only on climate-change mitigation. That includes natural solutions like tree planting and clean technology projects.

Matthew Barnes, a spokesperson for Finance Minister Bill Morneau, said in an email Monday the $500-million figure was a “Finance Canada estimate based on the additional corporate tax revenue that the federal government could receive from the successful completion and operation of TMX.”

British Columbia-based economist Robyn Allan, who is skeptical about the benefits of the expansion project, said she has not been able to get the government to explain the figure for months and is accusing the government of obstructing the information because the analysis won’t hold up to scrutiny.

“If they can’t tell you how it was derived it really begs the question if there is any substance to it at all,” she said.

She is also demanding the government tell Canadians what the expansion is going to cost to build. The last estimate was $7.4 billion but that figure is now several years old and hasn’t been updated since the federal government bought the pipeline.

The existing Trans Mountain pipeline carries about 300,000 barrels a day of crude oil and related products from Edmonton to a terminal in Burnaby, B.C. The expansion project is to build a second, roughly parallel, pipeline to nearly triple the system’s total capacity. The expanded pipeline is primarily to carry diluted bitumen to be loaded on oil tankers for export.

The government’s hope is if Canada can get more oil to coastal ports, new buyers in Asia will step in, reducing Canada’s reliance on the United States as an oil customer and increasing the price Canadian producers can get.

It is the linchpin in Prime Minister Justin Trudeau’s attempt to continue to benefit from Canadian natural resources while fighting climate change. Alberta is angry the pipeline hasn’t yet been built, and blames Trudeau’s regulations and climate policies for the delays on Trans Mountain and the lack of other new pipelines as well.

Climate activists argue the pipeline works against Canada’s promised reductions in greenhouse-gas emissions.

 


Greenergy CEO Mike Healy

Q&A: Greenergy CEO Mike Healey discusses Inver launch

Greenergy has extended its fuel supply offer to independent fuel retailers in Canada by introducing the Inver marquee to its choice of forecourt brands.

Inver Energy is a wholly owned subsidiary of Greenergy in the Republic of Ireland where it has grown to become the country’s fastest-growing forecourt brand. It is this success that has prompted Greenergy to introduce a new face to Canadian roadside fueling.

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Greenergy Fuels Canada is a supplier and distributor of transportation fuels with terminals in Ontario in Concord, Hamilton, Thunder Bay and Johnstown (opening December 2019). The company uses both sea and rail-fed terminals and storage in the US Mid-West, Quebec and Ontario to reduce supplier chain challenges and enhance dependability.

The Inver brand extends Greenergy’s existing retail offer in Canada, where it has developed Breakaway, a hockey-themed forecourt marquee tailored to Canadian consumers. The first Inver sites recently opened in York, Etobicoke and Burlington, with a further two sites to open in Thunder Bay in December 2019.

Greenergy CEO Mike Healey

Greenergy CEO Mike Healey

We asked Greenergy Fuels Canada CEO Mike Healey about the new brand and how it will work within the company’s growing Canadian portfolio.

OCTANE: What is it about Inver that has attracted such promising early attention?

 Mike Healey: When we first saw Inver, we viewed it as visually distinctive and saw the opportunity to create something new here in Canada that would offer a unique brand to the market. Inver is a tried and tested international brand with a local mindset, where community matters.

I think Dealers are attracted by this and they like the fact that Inver is backed by Greenergy with a strong value proposition founded upon dependability, good price, and clean and safe forecourts. Our unique supply chain infrastructure, supply dependability, service and customer-centric focus are powerful differentiators in the retail fuel industry. The addition of Inver to our branded retail offer strengthens our ability to best meet dealers’ needs.

OCTANE: Does the Inver launch impact Greenergy’s Breakaway brand expansion?

Mike Healey: No, the Inver brand is intended to co-exist alongside Breakaway. The brand propositions between Inver and Breakaway are different. Breakaway has a very Canadian face that is fun and more experiential. Breakaway is a premium offering while Inver is positioned more like a value brand. Both brands are underpinned by supplier support that is targeted at reliability and price.

OCTANE: Is the idea behind the addition of Inver to create more outlets for Greenergy products?

 Mike Healey: Yes. Greenergy products are available to a lot of fuel retailers, but there is an advantage to having a growing retail base of dedicated customers, such as Breakaway and Inver sites.

OCTANE: Who is the Inver c-store retail partner?

Mike Healey: Our preference is that Breakaway outlets include a c-store however, we’re flexible. There is no c-store requirement with the Inver offer, but if a dealer wants one, we have partner solutions.  Inver won’t constrain you to a specific c-store retail partner.

OCTANE: Is there a region that is the best fit for Inver?

Mike Healey: Best fits are where sites are close to our distribution facilities. As we expand our terminal infrastructure into new regions, we can offer retail brands that are very compelling opportunities for dealers. Both the Breakaway and Inver brands are built to go national as our infrastructure grows.

 OCTANE: Can we expect to see more brand news from Greenergy?

Mike Healey: Our feedback on Inver has been fantastic. We heard from the wholesale market that there was a need for more choice. I think being a new and innovative player in the fuel market, who listens to our customers and offers reliability and dependability is really driving our growth. Inver joins Breakaway as a 100% fresh brand that doesn’t look like anything else.

Expect some new Breakaway and Inver branded sites as we open up new facilities such as the terminal we are opening near Ottawa next month. As our support infrastructure grows so too will our ability to meet the market head-on with new branded sites and benefits for the Canadian retail fuel market.


Screen Shot 2019-11-22 at 1.04.41 PM

Greenergy brings new forecourt brand to Canada

Screen Shot 2019-11-22 at 1.04.41 PMGreenergy is introducing the Inver forecourt brand to Canada, with the opening of three new sites.

The first Inver sites are now open in Ontario, with locations in York, Etobicoke and Burlington, with a further two sites to open in Thunder Bay in December.

Inver Energy is a wholly owned subsidiary of Greenergy in the Republic of Ireland.  According to a release, the Inver brand “has proved extremely popular in that market, growing organically to become the country’s fastest-growing forecourt brand. Based on the success of the format, Greenergy has now decided to make the Inver brand available to customers in Canada.”

The Inver brand extends Greenergy’s existing retail offer in Canada, where Greenergy has developed Breakaway, a hockey-themed forecourt brand tailored to Canadian consumers.

“Our unique supply chain infrastructure, supply dependability, superior service and customer-centric focus are powerful differentiators in the retail fuel industry,” said Mike Healey, CEO of Greenergy Fuels Canada. “The addition of Inver to our branded retail offer strengthens our ability to best meet dealers’ needs and, as a partner in their business growth, to fuel their success.”

 

Established in the UK 27 years ago, Greenergy is a supplier and distributor of transportation fuels. The company entered the Canadian market in 2013 and has since invested in strategically important infrastructure assets across Ontario, includging Concord, Hamilton, Thunder Bay and Johnstown (opening in December).  With both sea and rail-fed terminals and storage in the US Mid-West, Quebec and Ontario, Greenergy can source product through multiple channels, thereby reducing dependency on any one third party provider and minimizing the risk of supply disruption for customers.

Now Greenergy is expanding sales to the retail sector. Inver is an established brand in Ireland and was  acquired by Greenergy in October 2017.  The 35-year-old company is one of the leading importers of fuel into Ireland and launched its retail brand there in  2012: There are now 61 Inver forecourt locations across the country.


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Calgary natural gas producer Canacol making LNG for retail customers in Colombia

A Calgary-based company that drills for natural gas in Colombia says it has started making and selling liquefied natural gas to supply energy consumers in the South American country.

Canacol Energy Ltd. says it is the first to offer the service which will allow customers to replace fuels such as diesel, fuel oil, compressed natural gas and propane that cost more or have higher emissions than LNG.

The company says it installed four small natural gas liquefaction modules purchased from Galileo Technologies of Argentina at its main gas processing facility in northern Colombia.

It says the modules are capable of super-cooling 2.4 million cubic feet per day of gas to create 29,000 gallons of LNG to be sold at the plant gate for distribution via trucks throughout the country.

Canacol says Colombia consumes 65 million cf/d of compressed natural gas and 80 million cf/d of propane, with a significant amount of the propane being imported from the United States.

The company says it is also in negotiation with Galileo to form a joint venture which would install LNG terminals at other natural gas pipelines in Colombia.

“Given the limited capacity of the gas pipeline infrastructure in Colombia, industrial, commercial and residential consumers not located along existing pipeline routes currently use 145 million cf/d of compressed natural gas and propane that is transported long distances via truck as an energy source,” said Canacol CEO Charle Gamba in a news release.

“LNG can replace diesel, fuel oil, compressed gas, propane, and other fuels at a considerable reduction in price given the relatively lower cost of natural gas and the large volume of liquefied gas that can be transported by truck.”


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Parkland acquires U.S.-based Mort Distributing

Parkland Fuel Corporation, through its wholly owned U.S. subsidiaries, is entering into an agreement to acquire the assets of Montana-based Mort Distributing, Inc. and its affiliates.

Founded in 1958, Mort is a family-owned marketer and distributor of fuels and lubricants serving retail, commercial and wholesale customers. Mort’s operations are focused in Montana, which will enable Parkland to “further capture distribution efficiencies and enhance customer service across its Northern Tier Regional Operating Centre (ROC).”

“This acquisition is consistent with our U.S. growth strategy and will complement and strengthen our existing Northern Tier ROC,” Doug Haugh, president of Parkland USA said in a statement. “We look forward to welcoming the Mort team into Parkland and to continuing to deliver high-quality products and excellent service to Mort’s broad customer base.”

The acquisition will primarily be funded from cash from operations. The transaction is expected to close by the end of 2019 and is subject to customary closing conditions.


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B.C. First Nations drop out of court challenge, sign deals with Trans Mountain 

Shutterstock

Shutterstock

Two First Nations in British Columbia’s Interior that had been part of a court challenge against the Trans Mountain pipeline expansion have reversed course and signed deals with the Crown corporation.

The Upper Nicola Band and Stk’emlupsemc te Secwepemc dropped out of the Federal Court of Appeal litigation, leaving four B.C. First Nations to fight the case.

The Upper Nicola says in a joint news release with Trans Mountain on Friday that its deal represents a “significant step forward” toward addressing environmental, archaeological and cultural heritage concerns.

It says the agreement provides resources to support its active involvement in emergency response and monitoring while also helping avoid and mitigate impacts on the band’s interests and stewardship areas.

A news release from Stk’emlupsemc te Secwepemc says its leadership came together and determined an agreement could be a tool used as part of a larger strategy to protect its cultural, spiritual and historical connections to the land.

Trans Mountain spokeswoman Ali Hounsell says the two bands dropped out of the court challenge last week after continued discussions with the corporation.

“The conversations we had, understanding what their concerns were, seeing where we could address them, ultimately led to their decision to withdraw their participation in the Federal Court of Appeal,” she says in an interview.

Upper Nicola Chief Harvey McLeod says in the news release the band’s negotiating team came up with the “best deal” possible under the circumstances.

“The bottom line is that the consultation process needs to change,” he says. “We still have a number of significant issues that must be addressed directly with Canada.”

The band continues to hold Canada to a consent-based approach consistent with the United Nations Declaration on the Rights of Indigenous Peoples, he adds.

The four remaining Indigenous groups involved in the court challenge against Trans Mountain are the Tsleil-Waututh and Squamish Nations in Metro Vancouver, the Coldwater Indian Band in Merritt and a coalition of small First Nations in the Fraser Valley.

The court has ruled that upcoming arguments can only focus on whether the latest round of Indigenous consultation was adequate.

Last week, the Tsleil-Waututh and three environmental groups sought leave to appeal that ruling in the Supreme Court of Canada, claiming the Federal Court was wrong to refuse to hear arguments about the risk of an oil spill or threats to endangered southern killer whales.


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Trans Mountain received $320M in government subsidies in first half 2019: report

Unknown-2The Trans Mountain pipeline received $320 million in subsidies from the Canadian and Alberta governments in the first half of 2019, says a new report by an economic institute that analyzes environmental issues.

The money included $135.8 million in direct subsidies and $183.8 million in indirect subsidies that were not clearly disclosed to taxpayers, says the report by the Institute for Energy Economics and Financial Analysis.

Unknown-3“This is a very large subsidy. It really does require more public discussion and public disclosure,” says Tom Sanzillo, the group’s director of finance.

Sanzillo and the report’s co-author, institute financial analyst Kathy Hipple, analyzed the second-quarter report of the Canada Development Investment Corp., a Crown corporation meant to further the country’s economic development that counts Trans Mountain Corp. among its subsidiaries.

The document is public but presents a consolidated picture of the development corporation’s finances, including revenues from the Canada Hibernia Holding Corp., which operates the Crown’s interest in oil reserves off Newfoundland and Labrador.

This accounting treatment obscures the real financial state of Trans Mountain, Sanzillo says.

“It’s a good form of accounting. I’m not criticizing it. It just shouldn’t be the only mechanism for showing the public how much money is being spent on this,” he says.

The Canadian government gave the development corporation just over $5 billion to finance the acquisition of Trans Mountain, the report says. Trans Mountain Corp. must make regular interest payments to the Canadian government at a rate of 4.7%.

The cash was provided to Trans Mountain in two sections: a $2.8 billion loan and a $2.3 billion equity investment. The interest on the loan must be paid from the pipeline’s business activity, while the interest on the equity investment can be paid from a third-party subsidy, the report says.

The Canada Hibernia Holding Corp. covered the interest on the equity investment for the first half of 2019, representing a direct subsidy of $46.3 million, the report says.

Trans Mountain posted a $10.9 million loss in this reporting period prior to taxes, the report says.

However, the loss is subsidized in the consolidated financial report by the Hibernia corporation’s earnings, amounting to another $10.9-million direct subsidy, the report says.

Sanzillo also says the development corporation uses an “accounting gimmick” to obscure Trans Mountain’s pension liability of $24.4 million. This is one more direct subsidy, he says.

Finally, the Alberta government reduced corporate taxes through a tax credit starting in January 2019. This policy action allowed TransMountain to save $54.1 million in taxes, yet another direct subsidy that the development corporation uses to turn the corporation’s pre-tax loss into a post-tax gain, according to the report.

Sanzillo also identifies what he calls an indirect subsidy; the difference between the interest a private company would have charged TransMountain versus the rate charged by the Canadian government.

Canada’s 4.7% interest rate stands in contrast with the 12 to 15% rate of return used by its former owner, Kinder Morgan, the report says.

Sanzillo used the lower figure, 12%, to calculate that a private company would have charged Trans Mountain $302.1 million in interest in the first half of 2019. The Canadian government, meanwhile, charged it $118.3 million.

That amounts to an indirect subsidy of $183.8 million for the first six months of the year, according to the report.

The report authors acknowledge that the Canadian government does not have to adhere to commercial standards.

“(The report) is about transparency and not meant to be a legal challenge to the right of the Canadian government to subsidize the pipeline project. It is a matter of dollars at risk that the Canadian taxpayer might absorb,” it says.

When the authors added the $46.3-million interest payment and the $24.4-million pension expense back to Trans Mountain’s financials, they concluded the pipeline corporation had a $67.1-million pre-tax loss and a $12.9 million loss after taxes.

The Canadian government plans to ultimately sell the pipeline. If it does so for a lower price than it paid for the infrastructure, it can legally forgive any debt that is left over, Sanzillo adds.

The Canadian Press was unable to reach out to the Department of Finance and Trans Mountain Corp. for reaction until the group’s report was published Tuesday morning.


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B.C. introduces gas price transparency law forcing companies to reveal data

gas-pumpIt’s time to reveal to drivers in British Columbia how the price of gasoline is set, says provincial cabinet minister Bruce Ralston.

If passed, legislation introduced Monday would legally force oil and gas companies to make known how gas prices are set.

Ralston, the jobs, trade and technology minister, told the legislature the bill is in response to a recent investigation by the B.C. Utilities Commission, which found “considerable markups on the price of gasoline.”

Premier John Horgan tasked the independent utilities commission to examine fuel prices in the province as gasoline costs in Metro Vancouver were consistently the highest in Canada, reaching $1.70 per litre and above.

In a report released last August and a follow-up one issued last week, the commission said it couldn’t explain why B.C. drivers pay about 13 centres more per litre for gas than residents in similar jurisdictions.

Ralston said the Fuel Price Transparency Act would allow the commission to collect information from fuel companies on market conditions involved in setting prices.

“This legislation brings us greater transparency at the gas pumps and sends a message to the oil and gas companies that the days of setting your prices in secrecy are coming to an end.”

No one from the Canadian Fuels Association, the voice of transportation fuels industry in Canada, was immediately available to comment on the proposed legislation.

The association said in a statement in May 2018 in reaction to volatile gas prices that the rising demand for gasoline and a decrease in supply through the Trans Mountain pipeline have created a greater reliance on fuel imports using higher-cost transportation modes.

It noted that Vancouver had much higher tax rates on fuels than elsewhere in North America, by nearly 50 cents per litre.

The association joined the Petroleum Marketers Association in commissioning a report on gas pricing fluctuations in B.C., and submitted it to the commission last July.

The report says demand for petroleum products in the province exceeds supply while capacity to produce them has remained stable, resulting in B.C. relying on Alberta or other jurisdictions for growing demand.

Ralston said if the legislation passes, the information would be available to the public as well as consumer and watchdog groups.

The unexplained premium results in residents and businesses in B.C. paying an extra $490 million every year for fuel, Ralston said.

The goal, he said, is to improve public confidence and competitiveness in the fuel market and perhaps lead to lower and more predictable gas prices for drivers in B.C.

“It’s time to pull back the curtain to get some answers for British Columbians on how the price of gasoline is set.”