OTTAWA — Canada’s oil producers could only sit and watch as the price of their product plummeted last month to less than what it costs to buy a litre of soda, hit by the double whammy of a COVID-19-induced drop in global demand and a production war between Russia and Saudi Arabia that flooded the market with more oil it didn’t need.
Prime Minister Justin Trudeau said Friday his government is looking for a way to help. But it is also clear any aid package is being influenced by the push-pull the Liberals have long felt between one of Canada’s most influential economic sectors and an environment movement which sees this as Canada’s opportunity to move away from fossil fuels once and for all.
Trudeau’s promise came nine days after Finance Minister Bill Morneau said an aid package for the oil sector was “hours, potentially days” away. Morneau’s office would not say Friday how many hours Morneau actually meant.
Keith Stewart, an energy strategist with Greenpeace Canada, said a delay in the package is a good thing, because it would be a lot easier and faster to pump out a bailout of loans and aid to companies than it would be to find innovative ways to fund workers through a transition to greener pastures.
Greenpeace is among a number of national environment organizations demanding no cash be spent to help oil companies.
“Doing it right is more complicated than doing it fast,” he said.
He is hopeful any direct aid to companies will be tied to their willingness to show business plans in line with Canada’s climate targets. Anything else should help workers who need to know they can pay their mortgages and put food on the table while they retrain for new jobs in clean energy or environmental remediation.
An investment to clean up Alberta’s orphan wells was promised by Morneau on March 18, and was expected in the federal budget which has now been delayed indefinitely due to the COVID-19 crisis.
Tim McMillan, president of the Canadian Association of Petroleum Producers, said it is “frustrating” that Ottawa reached out to talk as soon as the demand drop and the Russia-Saudi Arabia spat began to hurt. But right now it’s all still just talk.
“I think it is unparalleled in history to see demand drop like this,” he said.
“The urgency is apparent. We’re seeing the damage being done to our economy.”
McMillan said regardless of global markets, there is no doubt oil and gas is an essential service, producing petroleum-based chemicals used in plastics for health care equipment and natural gas that is keeping the heat on and keeping electricity plants pumping out power.
Global oil demand fell by one-third in March, as worldwide air travel all but stopped, manufacturing plants went on hiatus and workers around the globe heeded requests – and often orders – to stay at home. At the same time Russia and Saudi Arabia could not agree on cuts to oil production, flooding markets with oil and further depressing prices.
In Western Canada, prices fell below US$4 a barrel at one point last week.
The International Energy Agency predicted Friday the oil market collapse could cost 50 million jobs internationally. In Canada, companies are already laying off workers and cutting production because there is no profit to be made pumping out a barrel of oil that costs less than an expensive coffee.
Prices jumped a bit Friday, with news that an online meeting of oil producing countries is set for Monday in a bid to overcome the production war. It does not appear that Canada will be part of that meeting. Trudeau was asked directly Friday if Canada would be participating and dodged the question.
Conservative energy critic Shannon Stubbs said she too wants to see the investments focus on people, but in a way that bridges them and their companies to get back to producing oil. Stubbs said every day constituents in her Alberta riding are calling terrified for their future. Jobs are disappearing and the spinoff impact across her riding’s economy is profound.
She is worried that the delay is caused by a disagreement similar to the one around the Liberal cabinet table earlier this year about whether to approve a massive new oilsands mine in Alberta. The Frontier mine was ultimately shelved by the company before a decision was made, but there were open disagreements among Liberals about whether to approve it.
Trudeau would not tip his hand on any timing or content of the aid package in the works, though he said it was part of the conversation he had with premiers Thursday during a first ministers’ teleconference call. Trudeau said some of the already announced COVID-19 aid is open to oil companies and workers too.
Irving Oil's Come By Chance refinery purchase a 'building block' to get Western Canadian oil east – Financial Post
CALGARY – One of Canada’s richest families is buying Newfoundland and Labrador’s only oil refinery, which will be a “building block” in a larger strategy to process more Canadian oil.
Saint John, N.B.-based Irving Oil announced Thursday plans to buy North Atlantic Refining Corp. and its Come By Chance, Nfld. refinery from New York-based investment firm Silverpeak for an undisclosed sum, which marks the seventh time the refinery has changed hands in its storied history.
The deal is subject to conditions, including a Competition Bureau review, but it would make family-controlled Irving Oil the only refinery operator in Atlantic Canada. The deal comes weeks after Irving Oil secured permission to bring Western Canadian to the East Coast and forms part of a larger strategy to strengthen its business, according to a company spokesperson.
Last month, Irving Oil obtained Transport Canada’s approvals to source Western Canadian oil from the West Coast, through the Panama Canal to its refinery in New Brunswick.
“Our recently announced plans to source Canadian crude oil and today’s announcement in Newfoundland are two building blocks that fit together with our company’s existing strengths,” Irving spokesperson Candice MacLean said in an email. “All of these elements contribute to our long-time objective of helping Canada be even more competitive in the international landscape.”
MacLean also said Irving, which owns a 320,000-bpd refinery in Saint John and a 71,000-bpd refinery near Cork, Ireland, has been investing for years “in the broader Atlantic Basin and have continued to pursue opportunities for growth in these regions, including Atlantic Canada.”
Analysts believe the Come By Chance refinery and associated retail fuel station network in Newfoundland and Labrador are a strategic fit for Irving, which operates filling stations across Atlantic Canada and the U.S. Northeast.
The sale marks the seventh time the refinery has changed hands
Irving operates a distribution network in Newfoundland, including its flagship Big Stop trucking stations in multiple locations across the province.
“It makes sense that they would see a benefit to acquiring the Come By Chance distribution and retail assets,” IHS Markit oil markets, midstream and downstream analyst Susan Bell said in an email.
She said the Come By Chance refinery has been challenged historically because it has been prohibited from selling fuels into the broader Canadian market beyond Newfoundland.
Built with federal and provincial money between 1970 and 1973, the refinery operated for just a few years before going bankrupt in 1976. Petro Canada bought the refinery, then dubbed the “biggest lemon in the world” according to Memorial University archives, for $10 million in 1980. The Crown corporation couldn’t turn a profit on the facility either and sold it for $1 to Newfoundland Energy Ltd. in 1986.
The refinery would change hands again and again. Swiss commodities trader Vitol SA sold the facility to Calgary-based Harvest Energy Trust for $1.6 billion in 2006. Harvest, in turn, sold itself to Korea National Oil Corp. for $4.1 billion in 2009.
The refinery changed hands again in 2014 when Silverpeak, then called SilverRange Financial Partners, bought the facility and invested in expansions. The refinery was initially built to process 100,000 barrels of oil per day but now, according to Irving’s release, it is a 135,000-bpd refinery. In 2019, the previous owner of the refinery had applied to further expand the facility to process 165,000 bpd.
A spokesperson for Silverpeak declined to comment while the sale is still pending. North Atlantic Refining was the firm’s main energy holding, though it also owns a joint venture in Peru.
The facility now processes 135,000 barrels per day, up from its original 100,000
Historically, the top five foreign sources of oil to that refinery in Newfoundland were the United States, Saudi Arabia, Algeria, Nigeria and Norway, said Dinara Millington, Canadian Energy Research Institute vice-president of research.
In 2018, the majority of the refinery’s throughput was sourced from the U.S., and data from the Canada Energy Regulator show imports to Newfoundland from the U.S. averaged 88,100 bpd, or about 68 per cent of the refinery’s capacity.
Millington said the refinery is calibrated to refine light crude oil but noted that a proposed expansion project to add a coker could enable the new owners at Irving Oil to run a heavier slate in the future.
The most recent offshore oil discovery in Newfoundland is also a large heavy oil deposit, so the refinery could — at least theoretically — be recalibrated to accept heavy oil produced locally.
That heavy oil from Newfoundland “will need a home,” Millington said, though she noted a likely outcome would be to send the heavy crude to the U.S. Gulf Coast, where refineries are already designed to process heavy grades.
Irving to buy North Atlantic Refining including refinery in Come By Chance, NL – BNNBloomberg.ca
SAINT JOHN, N.B. — Irving Oil has signed a deal to buy North Atlantic Refining Corp., including a refinery in Come By Chance, N.L., from U.S. investment firm Silverpeak.
Financial terms of the agreement, which includes a network of gas stations and other marketing assets, were not disclosed.
North Atlantic provides fuel products to businesses and consumers across Newfoundland.
The refinery has capacity of 130,000 barrels per day.
Production at the refinery was stopped on March 30 due to the pandemic.
The sale is subject to regulatory review and other conditions.
Number of Americans on jobless benefits inches down for 1st time since pandemic began – CBC.ca
The number of Americans continuing to receive government jobless benefits declined in the week ending May 16 for the first time since COVID-19 struck, even as millions of people continue to join the unemployment rolls.
The U.S. Department of Labour said 21.052 million people continued to receive benefits that week. That’s down from the record 24.912 million seen the previous week.
“The number of Americans who remain on UI is still uncomfortably high,” Bank of Montreal economist Jennifer Lee said, “but it is not at a record anymore and that is a start.”
The initial claims figure — which represents the number of people filling out applications for jobless benefits for the first time — held above two million last week for a 10th straight week amid second-wave layoffs in the private sector, such as the 12,000 announced this week by plane manufacturer Boeing.
Initial claims for state unemployment benefits totalled a seasonally adjusted 2.123 million for the week ended May 23, from a revised 2.446 million in the prior week. Economists polled by Reuters had forecast initial claims falling to 2.1 million in the latest week from the previously reported 2.438 million.
Though claims have declined steadily since hitting a record 6.867 million in late March, they have not registered below two million since mid-March. The astonishingly high level of claims has persisted even as non-essential businesses are starting to reopen after shuttering in mid-March to control the spread of COVID-19, an indication it could take a while for the economy to dig out of the coronavirus-induced slump.
“I am concerned that we are seeing a second round of private sector layoffs that, coupled with a rising number of public sector cutbacks, is driving up the number of people unemployed,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.
“If that is the case, given the pace of reopening, we could be in for an extended period of extraordinary high unemployment. And that means the recovery will be slower and will take a lot longer.”
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