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Big oil takes a big hit

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Last week was brutal for global oil majors with leading operators such as Chevron, EXXON Mobil, as well as others, including Total, Shell and Husky, reporting huge second-quarter losses with slumping oil prices and demand declines due to COVID-19.  Reports suggest Chevron and EXXON’s poor numbers reflect the biggest losses in U.S.-based petroleum in the more than 160 years the U.S. has been selling oil products.

Chevronamid huge write-downs, announced it will cut 5% of its global output during this quarter and will hold off on plans to ramp up production at its Permian Basin shale holdings. The company announced July 31 that it had lost (US)$8.3 billion in the second quarter. This compares to the (US)$4.3 billion it took home in Q2 profits at this time last year.

Exxon too has announced its expansion plans are on hold after reporting it generated no operational cash flow in Q2. The company reported its (US)$1.1 billion losses in the quarter were the largest since its merger with Mobil in 1998.

While demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results may continue to be depressed into the third quarter 2020,” Chevron offered in a statement.

Husky Energy is also reporting a large loss over the second quarter. Last week the Calgary-based major announced losses of $304 million. This contrasts with last year when the company reported profit of $370 million over the quarter. Behind the loss was the decline in crude pricing that fell from an average of $67.82 to $24.36 per barrel. Husky also suffered from an 8% decline in production as it tried to stem the damage from low oil prices.

France’s Total Energy joined the group with an $8 billion write-down of its assets of which many are in the oil sands region of Alberta. The company recently announced it would slice $5.5 billion in the value of its Fort Hills and Surmont Canadian oil sand projects.

Biggest Q2 losses were recorded by Royal Dutch Shell where losses were (US)$18.1 billion. Earnings were down 82%.

Massive losses aside, expectations are that the market is strengthening as the world seeks to normalize and move into new pandemic phases. Already companies, such as ConocoPhilips, have begun to reverse their Q2 curtailments and are ramping production upward across Canada and the U.S. markets.


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Forecourt’s new normal

COVID-19 has created tremendous change in the marketplace

Screen Shot 2020-07-16 at 2.20.39 PMCanadian convenience, car wash and gas businesses worked hard to keep staff and customers safe during COVID-19. Behind the effort has been a push from major retailers to enhance operational practices and from equipment manufacturers that sped design and production to meet the public health challenge.

Canadian Tire was an early adopter of PPE for customers. When the virus hit, Canadian Tire sites used disposable glove dispensers to help customers stay safe at its gas bars. At Petro-Canada and 7-Eleven sites, they didn’t offer gloves, but fuel dispensers came with a placard that asked customers to use paper towels to keep hands from touching gas dispenser nozzles. At 7-Eleven operators also changed how they handle cash. Certainly, customers can utilize the pay-at-the-pump features at the dispenser, but in-store, customers are asked to place cash on counters so that hands do not touch. When the sale is complete, staff sanitize the area ahead of the next customer.

Shell is another major that has taken action to safeguard staff and customers. According to Shell Canada spokesperson Kristen Schmidt, the company has installed plexiglass at payment counters, added floor signage to maintain physical distance, and enhanced cleaning procedures. “We also have the Shell app, available in the Apple app store and Google Play store, which includes Shell EasyPay. This is a secure and touchless way for customers to pay for their purchases at the pump or in-store. We recognize that customers may wish to limit interactions at this time and practice safe social distancing, which can easily be accommodated through Shell EasyPay.”

Other Shell initiatives include recommendations laid out by the World Health Organization and the Public Health Authority of Canada. Schmidt points to six key items.

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At Esso and Mobil stations the company worked alongside its independent branded retailers to ensure the customer experience was safe and convenient. Imperial Oil is present in the market with 21 fuel terminals and more than 2000 Esso and Mobil sites across Canada.

Screen Shot 2020-07-16 at 2.19.38 PMAccording to Jon Harding, public affairs advisor, Imperial Oil, Esso and Mobil service station personnel have been tasked to make sure sites in Canada are frequently cleaned and sanitized – from fuel nozzles to store countertops to door handles. “When at the pump, we encourage customers to leverage the mobile payment option through the Speedpass+ app to reduce contact with surfaces.  We also recognize the importance of and, where appropriate, are striving to provide services to essential service providers, such as truck drivers. Specific to cardlock sites, we enhanced our online Esso cardlock locator tool for truckers and made it easier to identify cardlock sites and call ahead for information about facilities.”

Help at hand

Like retailers and fuel distributors, equipment manufacturers have been quick to come forward with much-needed innovation. These products have greatly helped retailers keep up their guard on cleanliness and site performance.

Fixture fabricator Gorrie RCP, a frontline company that designs, develops, and builds tailor-made waste and recycling management products as well as amenity fixtures and merchandising displays, got to work early on a range of personal protection equipment (PPE) for staff at c-store, car wash and gas bar. According to Gorrie’s business development manager, David McLean, the company had to speed up production to meet the sudden demand.

“Normally we take about four weeks to design, engineer and manufacture a product. We cut that down to two weeks. Many of our customers are essential services and we had to get products to them to keep them safe,” says McLean mentioning that face shields were the first offering followed by hand sanitizing stations. “At first people were looking for temporary solutions, but as the challenge grew it could be seen that more permanent solutions were necessary. The COVID-19 crisis is one that will be with us for the next couple of years at least. We are seeing that consumer behaviours have changed and retailers need to offer a higher level of safety to make customers feel secure. Our teams are actively looking at not only what is needed now, but we have to look to the future for products that will be needed tomorrow as well as we continue to face great change in our society.”

Gorrie RCP offers a range of PPE that includes distancing signage, clear plastic partitions, sanitizer gels and hand washing stations as well as masks and face shields.

RTS Retail is another manufacturer that came forward quickly with protective equipment during COVID-19. According to Darren Norley, national accounts manager, RTS Retail, the company has been making protective gear for years before the novel coronavirus made itself known. One example is Citrus Wirx a line that has been helping grocery and convenience shoppers keep carts and baskets virus-free for years. Now, this product is at the front lines during the COVID-19 pandemic. “In the last three months we have seen demand soar for sanitary wipes and other items,” says Norley remarking that sales for things like Citrus Wirx have climbed 700% over the past three months. “We have been able to supply our regular customers with PPE, but even with three factories (Canada, US, China) demand was so great we had to step up production and it was a challenge to fully meet this increase.”

RTS Retail also offers Grab Wirx, a protective glove system that is ideal for gas stations where dispenser and windshield wiper handles can carry COVID-19. Grab Wirx dispenses up to 200 gloves in a touch-free environment. 

“We are seeing sectors such as grocery retail now preparing for future health crisis scenarios similar to the current COVID-19 problem,” says Norley. “They don’t want to get caught empty-handed again without proper PPE.  The cost is small compared to the size of the problem to business.”

McCowan Design and Manufacturing, a Canadian leader in-store fixtures and displays for convenience, gas bar and foodservice as well as a range of other retail environments, quickly added new virus safety-related products to their lineup. Helping staff work safe McCowan now offers acrylic screens for retail and service desk personnel as well as stands and supports for hand sanitizers.

The new hand sanitizer stands can accommodate a variety of hand sanitizer bottle sizes and can be set up as a freestanding or wall-mounted unit. Stands can also handle dispensers or bottles and stands come with the ability to lock sanitizer into place to prevent thefts. The acrylic screens are made using 1/4-inch acrylic sheets and come with a solid metal base. Overall size is 40” X 23” X 12” with a large 8.5” X 12” pass-through.

“The ways that convenience store and gas bars offer safety and protection to their customers tell people volumes about the overall service at hand,” says McCowan VP Anthony Ruffolo. “Having a prominently displayed hand sanitizer during these challenging times is a simple way to tell customers you value their business and you are a responsible community member. It’s not an expensive service add on and it says you care.”

Originally published in the July/August issue of OCTANE. 


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Shell gets started on Scotford turnaround

UnknownLast March Shell announced it would hold off on its turnaround work at its Scotford refinery, a facility located about 50kms north of Edmonton. Canada was getting hammered by COVID-19 and Shell wanted to limit transmission of the disease. April was announced as the new date for the important maintenance work, but the health crisis had the company hold off again. Last week Shell Canada announced that its planned turnaround of the Scotford Refinery will commence this July.

 A turnaround is a scheduled event where an entire process unit of a refinery is taken out of service for an extended period for revamping. This periodic maintenance at Scotford happens about every five years and costs hundreds of millions of dollars. The Scotford turnaround announced last week will impact the site’s south upgrader. This system is one that adds hydrogen to bitumen to turn it into synthetic crude oil, which can then be further refined into fuel products.

The project is expected to take several months and will employ more than 3,800 workers per day. Given this large number of workers, Shell was concerned about the spread of COVID-19 at the location and idled the turnaround project until the company could be assured the health concerns of staff had been addressed. Already, Scotford had two confirmed cases of COVID-19 in June. Shell reports that the two cases were quickly isolated using protocols they had developed earlier.

Working with Alberta Health and other organizations Shell has sought to limit COVID-19 transmission by enforcing physical distancing, implementing screening protocols for workers coming to the site, changing the cafeteria to take-out only, requiring masks or face shields when on the property, and limiting the number of people on buses to create more opportunity for social distancing. The oil company also took a page from professional sports teams where they paired workers into cohorts who regularly work together to create workplace ‘bubbles’ of safety.

The Shell Scotford Refinery was build in 1984 and employs 1300 staff. The complex consists of a bitumen upgrader, oil refinery, chemicals plant and a carbon capture and storage (CCS) facility. Much of the 300,000 barrels per day produced at the upgrader is used by the adjacent refinery to create products such as gasoline, diesel, jet fuel, propane and butane. The refinery has a daily capacity of 100,000 barrels per day. The chemicals plant utilizes byproducts from the refinery to produce styrene monomer and ethylene glycol.

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


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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.


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Suncor Energy announces Lorraine Mitchelmore to join board of directors

director-lorrainemitchelmoreLorraine Mitchelmore is the newest members of Suncor’s board of directors. She stepped into the role Nov. 6,

“I’m delighted that Lorraine is joining Suncor’s board of directors,” Suncor board chair Michael Wilson said in a statement.  “Lorraine brings over 30 years of international oil and gas industry experience. She has deep expertise in risk management, business strategy, operations and employee health and safety. On behalf of the board, we look forward to working with her.”

Mitchelmore most recently served as the president and CEO for Field Upgrading, a private equity backed fuel upgrading technology company located in Calgary. Prior to Field Upgrading, she was the president and country chair of Shell Canada Ltd., as well as executive vice-president, Heavy Oil for Shell Americas.  Prior to joining Shell, she worked with Petro-Canada, Chevron and BHP Petroleum in the upstream business units in a combination of technical, exploration & development, and commercial roles.

She has been a director of the Bank of Montreal since 2015 and has served on the boards of Shell Canada, the Canada Advisory Board at Catalyst, Inc. and Trans Mountain Corporation.

Mitchelmore holds a BSc in Geophysics from Memorial University of Newfoundland, an MSc in Geophysics from the University of Melbourne, Australia and an MBA from Kingston Business School in London, England.

Suncor’s operations include oil sands development and upgrading, offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand.


Pieridae Energy buying Shell Alberta natural gas assets to feed LNG plant

A company planning to build an LNG export facility in Nova Scotia says it is buying southern Alberta natural gas assets from the Canadian arm of British-Dutch giant Royal Dutch Shell.

Pieridae Energy Ltd. says it has agreed to pay $190 million, with $175 million in cash and the rest in common shares.

CEO Alfred Sorensen says the purchase is in line with Pieridae’s commitment to obtain natural gas supplies needed for the first train of its Goldboro LNG project.

Its proposed $10-billion LNG project is to produce about 10 million tonnes of super-cooled liquefied natural gas per year to ship mainly to European customers.

It says the Shell assets produce about 120 million cubic feet per day of natural gas, 5,600 barrels per day of natural gas liquids and 3,200 bpd of condensate and light oil.

The deal also includes three sour gas processing plants, a 14% interest in a sulphur plant and about 1,700 kilometres of pipelines.