Canadian crude oil prices are expected to strengthen and natural gas prices are expected to continue to improve into 2020, according to professional services company Deloitte Canada.
“We’re really expecting 2020 to be a lot more constructive for oil and gas producers here in Canada this year than it was in 2019,” Andrew Botterill, national oil and gas leader with Deliotte Canada and the forecast’s author, told Global News.
“A little bit better on the oil market but for sure better for natural gas.”
In an oil and gas price forecast released Tuesday, Deloitte said it expects Canadian crude prices to rise moderately as a supply glut is drawn down by topped-up takeaway capacity via rail and pipeline, as well as because of the effects of extended production curtailments in Alberta.
“As much as they weren’t necessarily are sought after by industry, [curtailments] were kind of needed,” Botterill said. “And I think we’re going to see those come to an end here in 2020.”
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The eight-day CN Rail strike in late November and the 11-day shutdown of the Keystone XL pipeline from a 1.4-million-litre spill in early November increased crude stores, driving down Alberta oil prices and expanding the differential with the price of WTI in 2019.
November’s events also led to the Kenney government to extend production curtailment — initially put in place by the Notley government — to January 2020.
In the forecast, Botterill said curtailment “should have a positive impact on Canadian oil prices.”
Botterill said that with global crude prices sitting around US$55 to US$60, Canadian companies are still able to bring on production.
“We are in a place where there’s a relatively nice balance and we’re able to manage that right now,” the Delliotte partner said. “So that’s why it might be more constructive in oil this year for Canadians with curtailments.
“It’s not that we think it’s going to be on the backs of the dramatic price increase; it’s just going to be in some more stability for Canadian producers.”
Botterill noted that crude debottlenecking projects, like the construction of the federally owned Trans Mountain expansion project and the restoration of Enbridge’s Line 3 pipeline, could add up to 580,000 barrels per day of additional shipping capacity. That represents 10 per cent of Canada’s daily oil production and is about equivalent to the country’s oversupply that dragged down the price of Canuck crude.
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“I think seeing those projects go forward starts to create the room that I think we start to see curtailment come off and start to see more constructive conversations about deploying capital,” Botterill said.
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Canadian oil producers will be seeing reduced pressures from competition stateside.
The Deloitte forecast said growth in U.S. oil production is slowing while the U.S. Energy Information Administration expects the country to continue as a net exporter of oil in 2020. Lower return on investments in the form of new wells put downward pressure on the oil sector of Canada’s southern neighbour.
U.S. companies are also “feeling the tightening of purse strings as the oil and gas industry continues to receive opposition regarding carbon intensity,” Deloitte said in its forecast.
Natural gas to see extended highs
Natural gas will provide a ray of hope for Canada’s energy sector in 2020, according to Deliotte.
Lower natural gas storage levels have helped boost Alberta’s gas trading prices. Low production levels — stemming from volatile and depressed AECO pricing in 2019 — have helped keep Alberta’s gas supplies low.
“Fortunately for producers, there are signs these higher prices could last beyond the winter months, which could provide some much-needed relief to their balance sheets,” Botterill said.
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A glut of U.S. natural gas should allow for more Canadian natural gas to get to market, according to Botterill.
“The major pipeline companies in Canada have been working with producers over the last year on different takeaway capacity and different agreements that I think are going to make Canadian gas prices a lot more competitive,” Botterill said.
The December 2019 Deloitte forecast marks a trimming of its September 2019 expectations in Canadian oil prices from just above US$70 per barrel to just under the US$70 mark, with a modest upward trend through 2023.
However, Deliotte analysts increased their expectations of natural gas from the fall forecast, with increases through 2023.
In December 2018, Botterill estimated conservatively for oil and gas in 2019.
Botterill predicted Edmonton light oil average prices would be US$65.80 per barrel and the commodity outperformed by US$2.98 in 2019.
He overestimated the performance of natural gas, predicting 2019’s average price to be US$1.50 per thousand cubic feet, higher than the actual average of US$1.45.
Leveraging tech and scale
One area Deloitte analysts said Canadian oil and gas companies are not taking full advantage of is embracing digital and innovative programs.
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“We don’t expect high commodity prices to return soon so innovations must deliver value at a time of volatility caused by environmental policies and regulator constraints,” Ian Proctor, Deloitte Digital partner, said in a statement.
Proctor pointed to innovations improving health and safety, reducing operating expenses, enabling the workforce and increasing profitability as priorities for the oil and gas sector.
Botterill said junior and intermediate oil producers have recognized the need to join larger companies in leveraging technology to help improve margins.
“They recognize that if they’re going to produce their barrels, they’re going to have to do so at a competitive cost as well and a good margin,” Botterill said.
“Oil and gas companies are quick adapters to technology, especially when it looks to drilling. But I think now a lot of that technology is coming into day-to-day operations, how to focus on margins.”
Botterill said production curtailment has had “a negative effect on the country’s merger and acquisition markets, particularly on prospective deals involving junior and intermediate producers.”
He pointed to the M&A activity totalling just $600 million in the third quarter of 2019, less than 20 per cent of the same activity a year earlier.
Botterill said curtailment put a damper on any interest in mergers and acquisitions.
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“It’s a tricky dance that I think comes down to who has capital and can we create situations where shareholders and companies feel that they can make a better vehicle going forward?” Botterill said.
“I think size and scale [are] going to certainly be a good story for the next few years, and so we might see some mergers or equals like that.”
CHARLESTON, W.Va. (AP) — A linebacker at Division II West Virginia State was fatally shot during what the university said Thursday is being investigated by police as a home invasion.
The body of Jyilek Zyiare Harrington, 21, of Charlotte, North Carolina, was found inside an apartment Wednesday night in Charleston, police Lt. Tony Hazelett said in a statement.
Hazelett said several gunshots were fired during a disturbance in a hallway and inside the apartment. The statement said Harrington had multiple gunshot wounds and was pronounced dead at the scene. Police said they had no information on a possible suspect.
West Virginia State said counselors were available to students and faculty on campus.
“Our thoughts and prayers are with Jyilek’s family as they mourn the loss of this incredible young man,” West Virginia State President Ericke S. Cage said in a letter to students and faculty.
Harrington, a senior, had eight total tackles, including a sack, in a 27-24 win at Barton College last week.
“Jyilek truly embodied what it means to be a student-athlete and was a leader not only on campus but in the community,” West Virginia State Vice President of Intercollegiate Athletics Nate Burton said. “Jyilek was a young man that, during Christmas, would create a GoFundMe to help less fortunate families.”
Burton said donations to a fund established by the athletic department in Harrington’s memory will be distributed to an organization in Charlotte to continue his charity work.
West Virginia State’s home opener against Carson-Newman, originally scheduled for Thursday night, has been rescheduled to Friday, and a private vigil involving both teams was set for Thursday night. Harrington previously attended Carson-Newman, where he made seven tackles in six games last season. He began his college career at Division II Erskine College.
“Carson-Newman joins West Virginia State in mourning the untimely passing of former student-athlete Jyilek Harrington,” Carson-Newman Vice President of Athletics Matt Pope said in a statement. “The Harrington family and the Yellow Jackets’ campus community is in our prayers. News like this is sad to hear anytime, but today it feels worse with two teams who knew him coming together to play.”
DETROIT (AP) — Joe Schmidt, the Hall of Fame linebacker who helped the Detroit Lions win NFL championships in 1953 and 1957 and later coached the team, has died. He was 92.
The Lions said family informed the team Schmidt died Wednesday. A cause of death was not provided.
One of pro football’s first great middle linebackers, Schmidt played his entire NFL career with the Lions from 1953-65. An eight-time All-Pro, he was enshrined into the Pro Football Hall of Fame in 1973 and the college football version in 2000.
“Joe likes to say that at one point in his career, he was 6-3, but he had tackled so many fullbacks that it drove his neck into his shoulders and now he is 6-foot,” said the late Lions owner William Clay Ford, Schmidt’s presenter at his Hall of Fame induction in 1973. “At any rate, he was listed at 6-feet and as I say was marginal for that position. There are, however, qualities that certainly scouts or anybody who is drafting a ballplayer cannot measure.”
Born in Pittsburgh, Schmidt played college football in his hometown at Pitt, beginning his stint there as a fullback and guard before coach Len Casanova switched him to linebacker.
“Pitt provided me with the opportunity to do what I’ve wanted to do, and further myself through my athletic abilities,” Schmidt said. “Everything I have stemmed from that opportunity.”
Schmidt dealt with injuries throughout his college career and was drafted by the Lions in the seventh round in 1953. As defenses evolved in that era, Schmidt’s speed, savvy and tackling ability made him a valuable part of some of the franchise’s greatest teams.
Schmidt was elected to the Pro Bowl 10 straight years from 1955-64, and after his arrival, the Lions won the last two of their three NFL titles in the 1950s.
In a 1957 playoff game at San Francisco, the Lions trailed 27-7 in the third quarter before rallying to win 31-27. That was the NFL’s largest comeback in postseason history until Buffalo rallied from a 32-point deficit to beat Houston in 1993.
“We just decided to go after them, blitz them almost every down,” Schmidt recalled. “We had nothing to lose. When you’re up against it, you let both barrels fly.”
Schmidt became an assistant coach after wrapping up his career as a player. He was Detroit’s head coach from 1967-72, going 43-35-7.
Schmidt was part of the NFL’s All-Time Team revealed in 2019 to celebrate the league’s centennial season. Of course, he’d gone into the Hall of Fame 46 years earlier.
Not bad for an undersized seventh-round draft pick.
“It was a dream of mine to play football,” Schmidt told the Detroit Free Press in 2017. “I had so many people tell me that I was too small. That I couldn’t play. I had so many negative people say negative things about me … that it makes you feel good inside. I said, ‘OK, I’ll prove it to you.’”
VICTORIA – British Columbia‘s Environment Assessment Office has fined Coastal GasLink Pipeline Ltd. $590,000 for “deficiencies” in the construction of its pipeline crossing the province.
The office says in a statement that 10 administrative penalties have been levied against the company for non-compliance with requirements of its environmental assessment certificate.
It says the fines come after problems with erosion and sediment control measures were identified by enforcement officers along the pipeline route across northern B.C. in April and May 2023.
The office says that the latest financial penalties reflect its escalation of enforcement due to repeated non-compliance of its requirements.
Four previous penalties have been issued for failing to control erosion and sediment valued at almost $800,000, while a fifth fine of $6,000 was handed out for providing false or misleading information.
The office says it prioritized its inspections along the 670-kilometre route by air and ground as a result of the continued concerns, leading to 59 warnings and 13 stop-work orders along the pipeline that has now been completed.
This report by The Canadian Press was first published Sept. 12, 2024.
