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Project deferral, oil prices troubling for N.L. economy during pandemic

Unknown-2The global COVID-19 pandemic is spelling trouble for Newfoundland and Labrador’s oil and gas industry, adding to existing economic challenges in the cash-strapped province.

Premier Dwight Ball acknowledged last week the province is experiencing “tough times,” referencing deferred investment on projects and historic lows in oil prices.

Equinor and Husky Energy announced the decision to defer the Bay du Nord offshore development project due to falling oil prices and economic downturn as countries respond to the novel coronavirus.

A statement from Equinor Canada says planning on the project will continue with adjusted timelines.

The project in the Flemish Pass Basin, about 500 kilometres east of St. John’s, was announced in 2018 but not yet officially sanctioned. Equinor had set a target of 2020 to decide.

The Bay du Nord project was expected to deliver first oil by 2025. It was a key part of the province’s plan to rapidly increase offshore oil and gasdevelopment, including a goal to double production to more than 650,000 barrels a day by 2030.

Natural Resources Minister Siobhan Coady said the news is disappointing, but she said it’s a positive sign that the project is deferred rather than cancelled during such a tumultuous time.

“These are difficult times, there’s no doubt, and it was difficult to hear that they’re deferring their decision,” Coady said by phone. “I remain kind of optimistic that things will move into a better place as we move forward.”

She said she remains encouraged by exploration ongoing in the province’s offshore.

Ball urged the federal government to take quick action on financial support for provinces on Wednesday but said Ottawa should not respond with a one-size-fits-all approach.

“My message to the federal government is, it’s urgent to get this money moving,” Ball said on Wednesday.

Larry Short, a chartered professional accountant who owns an investment firm in St. John’s, said the situation adds up to a “body blow” for the province’s finances.

“All the bad parts of the Bible have been delivered upon the province, and all the same time,” Short said by phone Thursday.

Short pointed to the immediacy of the COVID-19 crisis, the billions over-budget Muskrat Falls hydro project that accounts for a third of the province’s debt and the oil price collapse as serious challenges to the province’s budget that can’t be ignored much longer.

“We’ve got three major problems here that have suddenly come home to roost, and the province is going to have to really struggle to get through them over the next period of time,” he said.

He said the effects may not be seen until the government tables its budget, likely in the summer after a Liberal Party election set for May that will determine the new party leader and premier.

But with the federal government experiencing financial difficulties of its own, including major blows to Alberta’s oil-reliant economy, Short said Ottawa won’t be in a position to assist Newfoundland and Labrador financially as it normally would.

While prices are being hit hard right now by barrels of cheap oil from Russia and Saudi Arabia, he said Newfoundland and Labrador’s offshore might be left standing as a profitable and desirable drilling site once prices rise again, as the industry is less susceptible to disruptions like pipeline project delays.


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COVID-19: 5 ways to safeguard workers and customers

Shutterstock

Shutterstock

Cleanliness is next to godliness, especially in the face of this COVID-19 pandemic. C-stores, gas stations and car washes can do their part to help keep the population healthy with a few simple steps.

1 – Talk to staff about the seriousness of the situation and the need to take special efforts to safeguard both workers and customers. Health authorities indicate the virus can live on surfaces for a few hours and up to several days.

2 – Have cleaning solutions and tools ready. According to Public Health Ontario (www.publichealthontario.ca) many commonly used cleaners and disinfectants are effective against COVID-19. Use only disinfectants that have a Drug Identification Number (DIN) and follow manufacturers’ instructions.

3 – Establish a cleaning routine and follow it. Clean and disinfect frequently touched surfaces at least twice per day. These include dispenser nozzles, payment buttons, squeegee handles, fuel selector switches and trash receptacles. Pay attention to door handles and light switches to the c-store and wipe all counters and cooler doors with a disinfectant. Bathrooms need to be a constant focus and all surfaces need to be disinfected repeatedly throughout the day. Wipe and clean all vending systems as well.

4 – Staff safety is important. Make sure crews have disposable latex gloves if they are detailing cars and discuss the importance of keeping hands away from faces. Gloves should be discarded into a lined receptacle after each vehicle is cleaned. If reusable gloves are used make sure they are only used for a specific task.

5 – Know your cleaning products.

Cleaners: These break down grease and remove organic material from the surface. Cleaners can be used separately before using disinfectants and can be purchased with cleaner and disinfectant combined in a single product.

Disinfectants: These have chemicals that kill most germs and are typically used after surfaces have been cleaned. These have a Drug Identification Number (DIN).

Disinfectant wipes: These have combined cleaners and disinfectants in one solution. Disinfectant wipes may become dry due to fast-drying properties and should be discarded if they become dry and are not recommended for heavily soiled surfaces.

Bleach solution: 5 tablespoons (1/3rd cup) bleach per five litres of water or 4 teaspoons bleach per litre of water.

RELATED READ: Prevention training video for operators and staff


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Oil price crash: What it means for Canada’s fuel prices?

esso_bearspaw_thumbWorld oil prices are in free fall after Saudi Arabia slashed its crude sale price Sunday, signalling the start of a price war after OPEC talks with Russia broke down without an agreement on production cuts. The threat of increased crude supply, on top of prices already weakened over fears the global outbreak of a novel coronavirus would lead to lower fuel consumption, triggered the crash. The turmoil is already affecting Canadian companies and consumers.

What does it mean for fuel prices?

Lower oil prices usually mean lower prices at the pump for drivers, although consumers should expect a lag before they see cheaper gas. Refineries work their way through inventories purchased at higher prices before the price drop. Despite the advent of carbon taxes, the price of oil is still the largest component in the price per litre of gasoline, diesel and other fuels, so drivers will eventually notice the drop.

How does it affect Canadian oil prices?

Crude oil is traded on a global market so when oil prices fall in New York or London, they also fall in Edmonton. Heavy-oil benchmark Western Canadian Select is a blend of made of oilsands bitumen and light oil that allows for better pipeline flow. Unlike other commodities, WCS futures are based on the price difference with U.S. benchmarks and therefore reflect changes in those prices. On the other hand, world oil trade is conducted in U.S. dollars, so the plunging loonie will help mitigate the effect of lower oil prices in Canada.

How does this affect Canadian oil and gas companies?

Lower commodity price forecasts are already causing producers to cut spending and payouts to their shareholders. On Friday, Vermilion Energy Inc. halved its dividend. The day before, Canadian Natural Resources Ltd. trimmed $100 million from its 2020 capital spending budget and said it could cut another $300 million to $400 million if market turmoil continues. Lower oil price forecasts were partly blamed for the recent shelving of the $20.6-billion Frontier oilsands mining project by developer Teck Resources Ltd.

How does this affect investors in the stock market?

Energy companies were among the hardest hit Monday on the Toronto Stock Exchange, with Cenovus Energy Inc. and MEG Energy Corp. each down more than 40 per cent in early afternoon trading. Heavily weighted Enbridge Inc. dropped 13.1%. The TSX energy subindex, which tracks the market value of Canada’s largest oil and gas companies, dropped sharply, trading as low as 29.6% below its Friday close. Energy has the second highest weighting of any sector on the TSX, at 15.9%, so a drop in energy stock prices drags down the index.

How will lower crude prices affect the Canadian economy?

Globally, Canada is the fourth-largest producer and fourth-largest exporter of oil and the energy sector accounts for more than 11 per cent of its gross domestic product. That means lower prices are a “huge negative” for the country, says Sherry Cooper, chief economist for Dominion Lending Centres. The scale of the economic hit will depend on how long lower prices persist, she says.

 


Photos: Chantale Lecours

Crevier Group’s new wash site in Beloeil, Que. offers efficiency and quality

Not long after he was named VP of Crevier Group’s fuel division in early 2018, Jean-Claude Clément was tasked with choosing a vehicle car wash system for the company’s showcase service station off exit 112 on Highway 20 in Beloeil, Que., a 20-minute drive east of Montreal.

“To make such a decision you need to consider many things to make sure the system you choose is right for the business,” says Clément. “You need to look at the area and market profile, the type of traffic and the location.”

Crevier Group operates 220 service stations across Quebec and distributes petroleum products, notably Chevron, in seven Canadian provinces.

Photos: Chantale Lecours

Photos: Chantale Lecours

In the end, Clément opted for a touchless LaserWash 360 Plus from PDQ for the company’s new Beloeil site, a system he became familiar with during the 22 years he spent building and running Pétro-T’s network of 150 service stations across Quebec. 

“I’d bought several earlier generations of that model and they always worked well,” recalls Clément, who left Pétro-T in 2015.“It’s a reliable car wash that we thought offered the right mix of efficiency and quality for the Beloeil site.”  

Impressive development

Screen Shot 2020-01-07 at 12.58.28 PMIn operation since July 2019, the new car wash and four-island gas bar are part of an ambitious plan by local promoters to develop the entire 1-million-sq.-ft. site into a multi-functional commercial, entertainment and residential oasis within commuting distance of downtown Montreal.

 

Dubbed the Faubourg du Richelieu, the $125-million project by Groupe Lobato involves the construction by 2021 of commercial and office space, a 100-room hotel and convention centre, a water park, a sports facility (including an indoor soccer field), residential condos and the project’s pièce de résistance—a marina on the historic Richelieu River. Deals have also been inked with Tim Hortons and A&W. To date, only the Crevier service station, a 99-slip marina and several condos are built on the land, which is still mostly greenfield.

However, work is to begin soon on 400 parking spaces conveniently located adjacent to the wash site. The spots are expected to be in heavy demand starting in January 2021 when Montreal’s Louis-Hippolyte Lafontaine Bridge-Tunnel, which runs over and beneath the St. Lawrence River in the city’s east end, will close for repairs for one year.  

 “Commuter traffic on Highway 20 will be backed-up right to our door,” says Clément.  “I’m sure many people will decide to simply park their cars here and take the bus. Having 400 cars here every day will be good for our gas and wash business.”

Screen Shot 2020-01-07 at 12.58.18 PMThe Crevier service station is one of four that the company operates within a few kilometres of one another on both sides of the river. Of those sites, the Beloeil location is the only one with a convenience store and a universal fast charge superstation for electric vehicles (EV). 

The fast charging station is one of 10 that Crevier operates at service centres across Quebec in conjunction with Electric Circuit, Canada’s first public charging network for electric vehicles, which offers 240-volt and 400-volt charging stations in the parking lots of partners in Quebec and Eastern Ontario. Crevier’s Beloeil station is the first with rapid charge facilities, which recharge most cars to 80% in only 20 minutes.

 “EV is getting big in Quebec,” says Clement. “That’s why we are working to install them at every station in our network whenever we renovate or build new.”

Site meshes with business plan

Screen Shot 2020-01-07 at 12.58.40 PMClement says that Crevier was “in no rush” to build a car wash in the first phase of the Beloeil site—plans originally included the gas pumps and EV charging station, plus a well-stocked convenience store.

But, his hiring and being tasked with finding the right car wash system for the site dovetailed with Crevier’s increasing interest in the retail side of its service station network. “We used to be more focused on the sale of petroleum products,” says Clément.  “But our model has changed over the past four or five years.”

With the addition of the Beloeil car wash, Crevier now operates five automatic washes, including four in Quebec and one in the Eastern Ontario border town of Hawkesbury.  

They are all different makes and models and include both touch and touchless equipment. “We’ve got a bit of everything,” says Clément.

“We went for simplicity, we didn’t add any extra features or gadgets like Lava Baths or Armor All,” he says of installing the LaserWash 360 Plus at Beloeil.  “We went for a standard format where people can choose between three kinds of wash—regular wash, wash with wax and super wash, where we put three-colour foam on vehicles, which puts on a nice show.”

 In the spirit of keeping it simple, there are no apps; instead customers can pay at the pump or inside. 

 Clément suggests it is too early to know if Quebec’s famously cold and snowy winters—coupled with the notoriously strong winds that whip across Beloeil and its low-lying, farm-rich St. Lawrence Plain region—will be a problem for the new wash.

“Bad weather shouldn’t be a challenge,” says Clément. “Car washes are built for winters. The entrances and exits are heated, as are the cement pads, which are heated when electronic sensors detect a risk of freezing. Those heat-active systems should help to avoid any ice buildup.”

He expects the same solid performance from the new wash in Beloeil as the earlier generation models he installed years ago for Petro-T.  

“These are solidly constructed systems that respond to our needs, which are providing an acceptable wash at the best price/quality ratio for both purchase and operation,” says Clément.  “I’d make the same choice again today.”
Originally published in the November/December issue of Octane. 


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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.”


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Canada among three G20 countries least likely to hit emissions targets: report

Canada’s plan to meet its greenhouse- gas emissions targets is among the worst in the G20, according to a new report card on climate action.

Climate Transparency issued its annual report Monday grading all the countries in the group of 20 with large economies on their climate performance and finds none of them has much to brag about. The international group compiles data on countries’ emissions and policies in an attempt to push them into investing in clean technology.

The G20 nations account for 85% of global economic activity and in 2018 produced 80% of all greenhouse-gas emissions, which accumulate in the atmosphere and trap heat.

B2G-Report-2019_Cover-PageThe report says about half the G20 members—19 countries with advanced economies plus the European Union collectively—are on track to meet their current targets for cutting emissions by 2030 but those targets are much too mild. If every G20 member does not drastically scale up its targets, the G20 overall will produce more emissions in 2030 than it does today, Climate Transparency said.

Canada, South Korea and Australia are the farthest from meeting targets to cut emissions in line with their Paris Agreement commitments, but those commitments are nowhere close to enough, the report says. Canada’s per-capita emissions, the greenhouse gases it releases divided by the number of people who live here, are the second-highest in the G20, behind only Australia.

Canada’s national reports show existing plans will leave Canada about 80 millions tonnes shy of its existing 2030 goal of 513 megatonnes of carbon dioxide and equivalents. That target is only about half as tough as it needs to be, Climate Transparency argues.

Under all current G20 targets, the world is projected to warm by 3 C by the end of the century. After 1.5 C, scientists say there is a “growing risk that critical tipping points will be crossed, at which point the Earth’s system will experience major and largely irreversible changes.”

Critical water shortages will be five times greater in G20 nations at 3 C of warming, compared with 1.5 C, the report said. As well the average number of days above 35 C in G20 countries each year will exceed 50 at 3 C compared with 30 at 1.5 C. Drought, extreme rainfall, food scarcity, shorter growing seasons and greater spread of insect-borne diseases are all among the expected problems of climate change.

Extreme weather, including that caused by climate change, already kills 16,000 people a year in the G20 and costs more than $142 billion.

The report applauded Canada for introducing a national price on carbon earlier this year, and for implementing tougher environmental reviews for major projects like pipelines and mines. But it slammed the Liberal government for approving the Trans Mountain pipeline expansion a second time in June, just days after Parliament voted in favour of a Liberal motion declaring a climate emergency.

The report says Canada is among global leaders in getting rid of coal power but is a laggard on a number of fronts, including energy use and emissions from cars and buildings.

It says Canada has four times the G20 average for emissions per person from transportation and has more than twice the average emissions from buildings. Canada’s economy is the third most energy-intensive in the G20, meaning only two other countries use more energy for every $1 of their economic production. While energy use is dropping in the G20 overall, Canada’s energy use has stayed steady over the last five years.

Climate action was a key part of the recent federal election, with four of the five parties that elected MPs pledging to do more to cut emissions and reduce energy use. The issue is expected to take centre stage in the next Parliament.

Prime Minister Justin Trudeau promised to do better than Canada’s existing 2030 commitment but did not say by how much. He also intends to get Canada to zero net emissions by 2050, meaning any emissions that do come out of Canada would be absorbed by either natural features like forests or technology like carbon capture and storage systems.

The report notes that 2020 is a critical year for climate change because it’s the year Paris Agreement signatories are required to submit new national targets.


Federal judge grants B.C. injunction against Alberta’s turn off the taps law

A Federal Court judge has granted the British Columbia government a temporary injunction against an Alberta law that could have limited oil exports to other provinces.

In a decision released Sept. 24, Justice Sebastien Grammond said Alberta’s so-called turn-off-the-taps legislation raises a serious issue and could cause irreparable harm to the residents of B.C.

“British Columbia has met the criteria usually applied by the courts for the issuance of such an injunction,” he wrote in his decision.

“It has shown that the validity of the act raises a serious issue. It has demonstrated that an embargo of the nature evoked by the members of Alberta’s legislature when debating the act would cause irreparable harm to the residents of British Columbia.”

The B.C. government initially brought the action before Alberta’s Court of Queen’s Bench, which passed it to the Federal Court.

Alberta tried to strike the action by arguing that it wasn’t in the jurisdiction of the Federal Court, but the judge dismissed that motion.

Grammond said B.C. has met the test for blocking the law until the courts can decide its validity.

B.C. Attorney General David Eby said he’s pleased the injunction was granted and the case will be going to trial.

“We think it’s quite a straight forward case, but the ultimate decision will of course be up to the court,” he told reporters in Vancouver.

“On our reading of the Constitution, Alberta is not allowed to restrict the flow of refined product to other provinces in a way to punish them for political positions that are taken they don’t like,” said Eby. “That’s our understanding of the Constitution. Alberta has a different understanding and the court will be deciding about that.”

The turn-off-the-taps legislation gives Alberta the power to crimp energy exports from the province.

It was passed, but never used, by Alberta’s former NDP government as a way to put pressure on B.C. to drop its fight against the Trans Mountain oil pipeline expansion to the West Coast.

The new United Conservative government proclaimed it into force shortly after Premier Jason Kenney was sworn into office in April, but he had said it wouldn’t be used unless B.C. throws up further roadblocks to the pipeline.

B.C. had called the law a loaded gun and had asked the courts to make sure it didn’t accidentally go off.

NDP Leader Rachel Notley said that the injunction has rendered the law useless.

“We told the premier not to proclaim this legislation because it would be like blowing up the missile while it’s still on the launchpad,” she said in a news release.

“And that’s exactly what has happened today. This injunction has rendered the legislation powerless. Any further threats from the premier to turn off the taps are empty.”

Grammond said in his decision that members on both sides of the Alberta legislature explained the law’s purpose in relation to the British Columbia government’s actions on the Trans Mountain expansion project.

“These statements make it abundantly clear that the purpose of the act is to inflict economic harm to British Columbia through an embargo on the exportation of petroleum products to that province,” he said.

The embargo, he said, would not only cause a considerable increase in the price of gas and diesel in the province, but any fuel shortages could also endanger public safety.

The Trans Mountain expansion, first approved in 2016, would triple the amount of oil flowing from the oilsands to B.C.’s Lower Mainland and from there to lucrative new markets across the Pacific.

The federal government bought the existing pipeline last year for $4.5 billion after its original builder, Texas-based Kinder Morgan, threatened to walk away from the project because of B.C.’s resistance.

The Federal Court of Appeal quashed the approval months later on the grounds that there hadn’t been enough consultation with First Nations or consideration of the pipeline’s potential impact on marine wildlife.

The project was approved for a second time by the federal cabinet this summer.


Energy prices spike after Saudi oil attack

Global energy prices spiked Monday by a percentage unseen since the 1991 Gulf War after a weekend attack on key oil facilities in Saudi Arabia caused the worst disruption to world supplies on record, further fuelling heightened tensions between Iran and the U.S.

American officials released satellite images of the damage at the heart of the kingdom’s crucial Abqaiq oil processing plant and a key oil field, alleging the pattern of destruction suggested Saturday’s attack came from either Iraq or Iran – rather than Yemen, as claimed by Iranian-backed Houthi rebels there. A Saudi military spokesman later made the same accusation, alleging “Iranian weapons” had been used in the assault.

Iran rejected the allegations, with a government spokesman saying now there was “absolutely no chance” of a hoped-for meeting between Iranian President Hassan Rouhani and President Donald Trump at the U.N. General Assembly next week.

For his part, Trump sent mixed signals, saying his “locked and loaded” government waited for Saudi confirmation of Iran being behind the attack while later tweeting that the U.S. didn’t need Mideast oil, “but will help our Allies!”

The tensions have led to fears that action on any side could rapidly escalate a confrontation that’s been raging just below the surface in the wider Persian Gulf in recent months. There already have been mysterious attacks on oil tankers that Washington blames on Tehran, at least one suspected Israeli strike on Shiite forces in Iraq, and the downing of a U.S. military surveillance drone by Iran.

Those tensions have increased ever since Trump pulled the U.S. out of Iran’s 2015 agreement with world powers that curtailed its nuclear activities and the U.S. re-imposed sanctions on the country that sent its economy into freefall.

Benchmark Brent crude gained nearly 20% in the first moments of trading Monday before settling down to over 10% higher as trading continued. A barrel of Brent traded up $6.45 to $66.67.

That spike represented the biggest percentage value jump in Brent crude since the run-up to the 1991 Gulf War that saw a U.S.-led coalition expel Iraqi dictator Saddam Hussein’s forces from Kuwait.

U.S. benchmark West Texas crude was up around 10%. U.S. gasoline and heating oil similarly were up.

The attack halted production of 5.7 million barrels of crude a day, more than half of Saudi Arabia’s global daily exports and more than 5% of the world’s daily crude oil production. Most of that output goes to Asia.

At 5.7 million barrels of crude oil a day, the Saudi disruption would be the greatest on record for world markets, according to figures from the Paris-based International Energy Agency. It just edges out the 5.6 million-barrels-a-day disruption around the time of Iran’s 1979 Islamic Revolution, according to the IEA.

Though the world’s overall energy demands in the past were smaller, the Saudi outage has sparked concern among analysts of prices pushing to $80 a barrel and beyond. Publicly traded airlines, whose major costs include jet fuel, suffered globally. That could in turn push up prices on everything from travel to a gallon of gas at the pump.

Saudi Arabia has pledged that its stockpiles would keep global markets supplied as it rushes to repair damage at the Abqaiq facility and its Khurais oil field. However, Saudi Aramco has not responded publicly to questions about its facilities.

Yemen’s Houthi rebels, who have been targeted by a Saudi-led coalition since March 2015 in a vicious war in the Arab world’s poorest country, maintain they launched 10 drones that caused the extensive damage. They reiterated that Saudi oil sites remained in their crosshairs, warning foreign workers to stay away.

U.S. officials say that the damage done to the north-facing parts of the facilities suggest the attack instead came across the Persian Gulf from Iraq or Iran. American officials have yet to offer substantial evidence to support their claims, though Iran in the past has relied on hard-to-attribute attacks or proxy forces to launch assaults against its enemies.

At a news conference Monday, Saudi military spokesman Col. Turki al-Maliki said the kingdom’s initial investigations showed “the terrorist attack did not come from Yemen as claimed by the Houthi militia.”

“This terrorist attack is a large-scale cowardly act, and as I said, targets the global economy and not just the kingdom,” al-Malki said. “All the indications and operational evidence, and the weapons that were used in the terrorist attack, whether in Buqayq or Khurais, indicate with initial evidence that these weapons are Iranian weapons.”

Al-Maliki offered no immediate evidence to support his allegations, which came after Trump said the U.S. awaited word from Saudi Arabia about who it suspected launched the attacks.

Iraqi Premier Adel Abdel-Mahdi said he received a call Monday from U.S. Secretary of State Mike Pompeo, who confirmed that the attack didn’t come from Iraq. The State Department did not immediately acknowledge what was discussed. Iraq is home to Iranian-backed Shiite militias who aided it in its fight against the Islamic State group.

Iranian Foreign Ministry spokesman Abbas Mousavi again denied the U.S. claims Monday, telling journalists the accusation was “condemned, unacceptable and categorically baseless.” Government spokesman Ali Rabiei meanwhile said a Trump-Rouhani meeting in New York as of now wouldn’t happen.

“Currently we don’t see any sign from the Americans which has honesty in it, and if the current state continues there will be absolutely no chance of a meeting between the two presidents,” Rabiei said.

Russia’s Foreign Ministry, while expressing “grave concern” about the attack, warned against putting the blame on Iran, saying that plans of military retaliation against Iran are unacceptable.

U.S. satellite photos released overnight Monday appeared to show the attack on Abqaiq, the world’s largest oil processing facility, may have struck the most sensitive part of the facility, its stabilization area. The Washington-based Center for Strategic and International Studies has said the area includes “storage tanks and processing and compressor trains – which greatly increases the likelihood of a strike successfully disrupting or destroying its operations.”

Stabilization means processing so-called sour crude oil into sweet crude. That allows it to be transported onto transshipment points on the Persian Gulf and the Red Sea, or to refineries for local production.

Fernando Ferreira, the director of geopolitical risk at the Washington-based Rapidan Energy Group, said rebuilding that infrastructure “will take many months.”

Saudi Aramco did not respond to questions from The Associated Press regarding damage at Abqaiq and the satellite images.

Meanwhile, the attacks are expected to affect gas prices here in Canada, with consumers bracing for a slight jump at the pumps.


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Unexplained difference of 13 cents in Vancouver and Seattle gas prices: inquiry

Screen Shot 2019-09-03 at 10.53.54 AMAn inquiry into British Columbia’s high gas prices says there’s an unexplained difference of 13 cents per litre between Metro Vancouver and Seattle that is costing drivers on the Canadian side of the border nearly $500 million a year.

Wholesale prices in southern B.C. are set based on those in the Pacific Northwest of the United States because it is a nearby region and a similar price is considered justifiable, B.C. Utilities Commission CEO David Morton said Friday.

However, the commission found that even after accounting for transportation costs and higher B.C. fuel standards, Metro Vancouver drivers are still paying more than those in Washington.

“The higher price differentials cannot be explained by economic theory or justified by known factors in the market, nor can the panel find a specific trigger in 2015 that would explain the beginning of this disconnect,” Morton said at a news conference.

Premier John Horgan called the public inquiry in May as prices reached a record-breaking $1.70 per litre. It was asked to explore factors influencing gas and diesel prices, not including taxes, since 2015 and actions the province could take.

Morton said some things have changed, including higher crude prices, the Trans Mountain pipeline’s capacity constraints and higher costs for retailers.

But prior to 2015, Metro Vancouver drivers paid five cents a litre more than Seattle drivers. Wholesale prices in northern B.C. are based on Edmonton prices and drivers in that part of the province pay six cents more a litre, he added.

Morton said B.C.’s wholesale market is not truly competitive because a small number of wholesalers control distribution and have the ability to influence prices.

In the retail market, companies including Parkland Fuel Corp., Suncor Energy, Shell Canada and Husky Energy have greater direct control over pricing in B.C. compared with the Canadian average, he said.

“There’s no evidence to suggest collusion among the retail operators exists nor is there evidence of cartel behaviour. However, the panel refrained from suggesting that the B.C. retail market is performing optimally,” Morton said.

“Rather, we observed that prices move up and down in a manner that gives the appearance of a functioning competitive market. But it’s also possible this pricing behaviour is choreographed.”

B.C.’s refineries have been operating at capacity since 2015 and it appears the amount of storage is not a factor in prices, he said.

The Trans Mountain pipeline changed its allocation that year to increase crude oil and reduce gasoline shipped to Metro Vancouver, he said, but more capacity would not guarantee a price reduction.

“Even if cheaper gasoline from Alberta was available, as long as pricing is based on the Pacific Northwest spot price, customers would not see the benefits of that.”

Morton said the province could consider encouraging more refinery capacity, but it would be challenging given that gas and diesel demand is projected to decline. Another option would be regulations to reduce the price differential.

Jobs, Trade and Technology Minister Bruce Ralston said the report provides “significant evidence” to support the view that price gouging exists in the market.

“An oligopoly is a word that is not used very frequently, but it means a state of limited competition in which a market is dominated by a small number of producers,” he said.

The Canadian Fuels Association said the report highlights a number of factors that contribute to B.C. price fluctuations, including increased reliance on fuel imports.

“While price regulation can moderate price fluctuations, it can also have unintended consequences. We recommend that B.C. consult with price-regulated jurisdictions to understand the real market impacts. In our view, markets work best without interference.”

Peter Milobar, a Liberal who represents Kamloops-North Thompson in the legislature, said the inquiry should have been allowed to consider the impacts of provincial taxes.

“Horgan and the NDP dragged their feet with a sham review that was barred from looking at the impact of their policies and taxation on the costs of fuel. John Horgan insisted high gas prices were due to industry collusion and this review has proven him wrong.”

Federal Fisheries Minister Jonathan Wilkinson said expanding the Trans Mountain pipeline could help reduce prices, despite Morton’s comments to the contrary.

“The lack of supply – whether that’s lack of refined product in the pipeline or it’s lack of refined product that’s being produced by the Parkland refinery – can have an impact on prices,” Wilkinson said.

“Certainly in that context, having additional capacity in an expanded pipeline may be useful.”


B.C. gas price report in the pipeline

The B.C. Utilities Commission inquiry into gasoline and diesel prices in the province is expected have its final report done by Friday.

Premier John Horgan called the public inquiry in May when gasoline prices at the pump reached a record-breaking $1.70 per litre.