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Forecourt Performance Report 2020

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Choice is now a greater option for both Canadas motoring public and retail fuel operators with more independent petroleum brands and fewer refinery controlled sites coast to coast to coast. This was a key finding in this years National Petroleum Site Census, a watershed study that is done each year by The Kent Group Ltd.

 Based in London, Ontario, The Kent Group Ltd. is a data-driven consultancy that is a leading authority on fuel sector marketing, economics, performance measurement and benchmarking, as well as price/margin reporting/analysis, regulation, and industry economic research and analysis. Since 2004 The Kent Group Ltd. has been the go-to organization for the latest and most complete set of data that describes Canadas retail fueling sector.

Download the full report here

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Western oil heads east

UnknownThe first shipment of Alberta crude from British Columbia tidewater is on its way to the Irving Oil refining facility in Saint John. The route will take the Panama-flagged tanker, Cabo de Hornos, 11,900 kilometres from Burnaby, B.C. via the Panama Canal to New Brunswick.

The petroleum, sourced through Alberta energy company Cenovus, comes just two months after Irving announced it would seek greater Western Canadian resources for its East Coast facilities following the demise of the Energy East Pipeline project. The (CAN) $12 billion Energy East Pipeline was proposed by TransCanada (TC) Pipelines in 2013 and would have travelled 4,600 kilometres to points in Quebec and New Brunswick. If completed the line would have been among the world’s longest and would have carried 1 million barrels of Alberta and Saskatchewan crude per day. Following the election of the Trudeau government, the project was scrapped in 2017, leaving Eastern Canadian-based operators, such as Irving, to continue to source both refined and raw petroleum from the U.S. and other markets.

Now, using the Panama Canal route Irving will see the 229-metre Cabo de Hornos vessel arrive July 14 at refinery receiving docks in Saint John. After the Energy East Project was shelved, Irving approached the Canadian Transportation Agency (CTA) this spring (April) to ask for permission to use foreign tankers in an effort to increase the amount of domestic crude Irving gets from offshore Newfoundland and Western Canada. Approval was granted in May and Irving got busy making arrangements.

Irving has reported that it was importing the vast majority of its refinery inputs from sites in the U.S. and was using about 20% Canadian petroleum in its operations. In its application to the CTA Irving Oil stated that they sought to lessen their reliance on foreign petroleum at their Saint John facility, which is Canada’s largest refinery with a daily processing capacity of 320,000 barrels per day.

“It is critical to our customers, to our business, and to energy security throughout Atlantic Canada that we are able to use foreign crude oil tankers to access Western Canadian crude oil on an urgent basis and going forward for one year to allow for effective and flexible supply chain planning and to strengthen the link between Canadian oil producers and our refinery in this challenging and uncertain time,” said Irving Oil chief refining and supply officer Kevin Scott.

OCTANE editor Kelly Gray can be reached at Kgray@ensembleiq.com.


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Central Canada fuel security at risk

Just when Ontarians were getting used to the low price of gasoline (82.9 cents in Barry’s Bay to 100.7 cents in Oakville on June 30), a U.S. Judge has sent a shockwave through the supply chain that could see pump prices in Central Canada climb significantly.

Screen Shot 2020-06-29 at 4.14.38 PMLast week U.S. Circuit Court Judge, James Jamo, shut down the largest input to Ontario’s fuel sector when he ordered Enbridge’s Line 5 to stop operations by June 26.

Line 5 carries up to 540,000 barrels of light and synthetic crude as well as natural gas liquids to refinery sites in Sarnia where the vast majority of Ontario’s fuel is produced.

Judge Jamo’s decision ruled against the continued operation of Enbridge’s west line and prevented the comapany from restarting its east line.

Judge Jamo is supported by Michigan Governor Gretchen Whitmer and Attorney General Dana Nessel, who both oppose the pipeline on the grounds that it constitutes a major environmental threat to the Great Lakes and should be shuttered permanently. Enbridge has suggested the move by Michigan is legally unsupportable and is proposing a US$500 million project to replace the line and enclose the segment that runs under the lakes in a tunnel. 

Line 5 delivers petroleum to seven refineries of which four are in Ontario (Imperial, Shell, Suncor). According to Imperial Oil spokesperson Jon Harding, the company’s two sites process 232,000 barrels a day, or about half the output of the Enbridge pipe. He says that a reduction in inputs from the pipeline would quickly impact Ontario motorists.  

“Reducing rates will likely result in shortfalls of gasoline, diesel and jet fuel in our distribution points in southern Ontario. That would happen within approximately a week,” according to Harding.

Line5_Map_Michigan_705xAt issue is the safety of Line 5, a system that was built in 1953. The Enbridge pipe runs along a 1,040-kilometre route through to Wisconsin and Michigan, where it channels under lakes Huron and Michigan for 7.2 kilometres before heading to refineries in Sarnia. It is this underwater section in the Straits of Mackinac that is a point of contention for environmental lobbyists that have been fighting for the closure of the pipeline for years.

Screen Shot 2020-06-29 at 4.15.22 PMThis most recent challenge to Line 5 came about following a survey where Enbridge discovered last week that a support anchor had shifted its position under the Strait. Enbridge shut down the operation and notified the state. Michigan followed up by filing for an injunction to shut Line 5 until the state had reviewed all the engineering data. Both sides are expected back in court this week.

OCTANE editor Kelly Gray can be reached at kgray@ensembleiq.com 


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Parkland Fuel sees $79 million loss in first quarter on higher revenues

The Calgary-based company says that equalled a loss of 53 cents per diluted share, compared with a profit of 52 cents per share or $77 million a year earlier.

Revenues for the three months ended March 31 increased 3.4% to $4.36 billion from $4.2 billion in the prior year.

Fuel and petroleum product volume increased 12% to six billion litres.

Analysts expected Parkland to lose one cent per share on $4.37 billion of revenues, according to financial markets data firm Refinitiv.

The company says it removed more than $300 million of capital expenditures from its plans this year.


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Oil and gas drilling forecast revised to 49 year low as producers cut spending

Unknown-1The Petroleum Services Association of Canada has revised its 2020 Canadian drilling forecast to an almost 50-year record low of 3,100 oil and gas wells, a level not seen since 2,900 wells were drilled in 1972.

PSAC interim CEO Elizabeth Aquin says more than $7 billion of capital investment in the energy sector has been cancelled to date this year thanks to demand destruction from measures to deal with the COVID-19 pandemic and a supply surplus due to an oil price war between Russia and Saudi Arabia.

She said blockades of the Coastal GasLink Pipeline and cancellation of the Frontier oilsands project have also hurt investor confidence in the Canadian oil and gas industry.

PSAC chairman Mark O’Byrne says the industry appreciates government assistance such as $1.7 billion in federal funding to clean up orphan and inactive wells in Alberta, Saskatchewan and British Columbia, but will need more help to ensure survival.

The new forecast represents a decrease of 1,400 wells, or 31%, from PSAC’s original forecast of 4,500 wells announced in October.

About 4,900 wells were drilled in 2019.

“The majority of the impact will be felt on the oil side as supply overwhelms demand and storage levels surge to capacity,” said Aquin.

“This has left producers little incentive to drill for more with the price of a barrel of oil now fetching less than a cup of coffee. We expect to see a 38% drop in activity for oil wells versus 2019.”


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Petroleum sector pledges support during COVID-19

Screen Shot 2020-05-05 at 11.40.37 AMImperial Oil is the latest major petroleum company to roll up its sleeves in the fight against COVID-19. Already, Shell is offering free sandwiches and beverages to essential workers during the pandemic. Now, Imperial is coming forward with initiatives to help support those on the front line and aid in the fight against the spread of the virus. 

The Calgary-based company reports that they will provide up to $2 million in free fuel vouchers to frontline nurses, paramedics and doctors as part of its Heroes Campaign launched in response to the COVID-19 pandemic. Through this promotion, Imperial is offering 80,000 digital vouchers, each worth $25, to healthcare workers currently providing critical care across Canada. Vouchers can be secured online on a first-come, first-served basis at www.healthcarehero.ca and are redeemable at more than 2,000 Esso and Mobil stations across Canada through the company’s free Speedpass+ mobile payment app.

Imperial is also donating 60 tonnes of isopropyl alcohol (IPA) to be used in disinfectant products. IPA is an ingredient used in medical, health and pharmaceutical applications, such as hand sanitizer, medical wipes and rubbing alcohol. This donation will assist the production of more than 600,000, 350 ml bottles of hand sanitizer.

“We recognize the need is great and while many of us are isolating in the physical sense, I am proud of how our employees and neighbours have come together to donate critical supplies and funding where it is needed the most,” says Imperial CEO Brad Corson.

In addition to helping to meet Canada’s demand for IPA, Imperial has also supported the country’s pandemic response efforts by donating hundreds of laptops to students and matching employee cash donations 2:1.

Imperial reports that their laptop initiative will support on-line learning with a donation of 500 laptops to help meet the demand for technology devices while classrooms remain closed. The program has Imperial working with the Electronic

Recycling Association’s Lending Laptops Program in support of the Calgary Board of Education’s EducationMatters campaign.

With community charities in greater need than ever, Imperial has teamed with its employees to help. Imperial increased its match dollars to $2 for every $1 given by an employee. This is for donations to community charities and not-for-profit organizations.   

“We owe so much gratitude to those on the front lines who are working long hours helping those in need,” says Imperial’s CEO. According to Corson, the company will continue to look for ways to support Canadians as we all manage through this challenging period.


Calgary to host 2023 World Petroleum Congress

Calgary is to host the World Petroleum Congress in 2023, beating out four other global cities in voting that took place in St. Petersburg, Russia.

Screen Shot 2019-06-25 at 11.25.31 AMThe World Petroleum Council selected Calgary to host its global oil and gas forum in a fourth ballot early Sunday, where the other remaining contender was Baku, Azerbaijan.

Held once every three years, the congress attracts industry and government leaders from around the world including government heads of state and ministers of energy.

Mayor Naheed Nenshi, who was in St. Petersburg for the vote, said in a video posted to social media that the selection is “a shot in the arm for the Canadian energy sector.”

Calgary hosted the World Petroleum Congress in 2000 and brought in extra police officers from British Columbia, Saskatchewan and Manitoba in expectation of massive demonstrations which never materialized.

A news release from the World Petroleum Congress Canada calls the event the “Olympics of oil and gas,” noting it will bring in an estimated 5,000 delegates to the city.

“People were excited to learn about Canadian energy. They understand that Calgary remains the epicentre – the global epicentre for the world oil and gas industry, and here’s the chance to showcase our innovation, our environmental stewardship and our sustainability,” Nenshi said in the video from St. Petersburg, standing beside Denis Painchaud, chair of WPC Canada.

“We’ll see the world in 2023,” Nensi added.

Nur-Sultan, Kazakhstan; Dubai, United Arab Emirates; Baku, Azerbaijan and Buenos Aires, Argentina also competed to host the event.

The final round of voting between Calgary and Baku was close at 21 to 20.

“Nothing like a little drama to make the victory all the sweeter,” Nenshi said on Twitter of the final vote.

WPC Canada said the congress is expected to include over 80 national delegations, 700 expert speakers, 500 CEOs, 800 media, and 400 exhibiting companies.