Construction costs have surged by some 70 per cent
Finance Minister Chrystia Freeland, facing a gigantic bill from the federal government’s COVID-19 rescue effort, said the Trans Mountain pipeline will receive no more federal funding, even though the Crown corporation that owns the pipeline revealed on Feb. 18 that construction costs have surged by some 70 per cent.
“There will be no additional public money invested in TMC,” or Trans Mountain Corp., the company the federal government created when it bought the pipeline in 2018, Freeland said at a press conference. “TMC will secure necessary funding to complete the project through third-party financing, either in the public debt markets or with financial institutions.”
Prime Minister Justin Trudeau’s government bought Trans Mountain from Kinder Morgan Inc. for $4.5 billion to keep the project alive. It would expand capacity to 800,000 barrels per day from 300,000, and give oil producers in Alberta a meaningful connection to Asian markets, which should result in higher prices. The oilpatch currently is at the mercy of conditions in the United States, and transportation bottlenecks tend to depress prices by creating a glut of Canadian bitumen.
“The Trans Mountain Expansion will ensure Canada receives fair market value for our resources,” said Freeland, adding that BMO Capital Markets and TD Securities, hired to offer Bay Street counsel, have both advised that the project remains commercially viable and that financing can be easily arranged.
“Our government acquired TMC and the Trans Mountain Expansion project in 2018 because we knew that it was a serious and necessary investment,” Freeland said. “This project is in the national interest and will make Canada and the Canadian economy more sovereign and more resilient.”
It might, but at an ever increasing cost. Trans Mountain chief executive Ian Anderson said in a statement that costs have increased to $21.4 billion from $12.6 billion at the time of the company’s previous update. Anderson cited delays caused by the pandemic and the November floods in the Hope, Coquihalla, and Fraser Valley areas as partially responsible for the cost overrun.
“The progress we have made over the past two years is remarkable when you consider the unforeseen challenges we have faced including the global pandemic, wildfires and flooding,” said Anderson. “At every step of the way, we have found solutions and responded. As a result, the project is advancing with significantly improved safety and environmental management, and with a deep commitment to ensure this project is being built the right way.”
Anderson said the target date for “mechanical completion” was the third quarter of 2023.
“Notwithstanding the cost increase and revised completion schedule, the business case supporting the project remains sound,” he said.
The oilpatch also remains supportive of the project. Suncor Energy Inc. chief executive Mark Little said the pipeline is crucial to the country and sector.
“While like everyone we are disappointed in the increased costs and schedule of the TransMountain project, we remain fully supportive of this world-class infrastructure project which is vital to Canada’s long-term economic success and energy security,” he said.
“The 2021 B.C. floods were a reminder of how critical this energy infrastructure is to both the security of energy supply to British Columbians and access for Canadian resources to global markets.”
Freeland’s decision to quickly shut the door on even the possibility that the federal government might come to Trans Mountain’s aid reflects the difficult fiscal situation in which she finds herself after two years of generously helping households and businesses survive the pandemic.
The federal budget deficit narrowed to $73.7 billion between April and November, compared with $232 billion in the same period a year earlier, but net debt remained elevated at $1.2 trillion, according to the Finance Department’s latest accounting.
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CALGARY – Natural gas producers in Western Canada have white-knuckled it through months of depressed prices, with the expectation that their fortunes will improve when LNG Canada comes online in the middle of next year.
But the supply glut plaguing the industry this fall is so large that not everyone is convinced the massive facility’s impact on pricing will be as dramatic or sustained as once hoped.
As the colder temperatures set in and Canadians turn on their furnaces, natural gas producers in Alberta and B.C. are finally starting to see some improvement after months of low prices that prompted some companies to delay their growth plans or shut in production altogether.
“We’ve pretty much been as low as you can go on natural gas prices. There were days when (the Alberta natural gas benchmark AECO price) was essentially pennies,” said Jason Feit, an advisor at Enverus Intelligence Research, in an interview.
“As a producer, it would not be economic to have produced that gas . . . It’s been pretty worthless.”
In the past week, AECO spot prices have hovered between $1.20 and $1.60 per gigajoule, a significant improvement over last month’s bottom-barrel prices but still well below the 2023 average price of $2.74 per gigajoule, according to Alberta Energy Regulator figures.
The bearish prices have come due to a combination of increased production levels — up about six per cent year-over-year so far in 2024 —as well as last year’s mild winter, which resulted in less natural gas consumption for heating purposes. There is now an oversupply of natural gas in Western Canada, so much so that natural gas storage capacity in Alberta is essentially full.
Mike Belenkie, CEO of Calgary-headquartered natural gas producer Advantage Energy Ltd., said companies have been ramping up production in spite of the poor prices in order to get ahead of the opening of LNG Canada. The massive Shell-led project nearing completion near Kitimat, B.C. will be Canada’s first large-scale liquefied natural gas export facility.
It is expected to start operations in mid-2025, giving Western Canada’s natural gas drillers a new market for their product.
“In practical terms everyone’s aware that demand will increase dramatically in the coming year, thanks to LNG Canada . . . and as a result of that line of sight to increased demand, a lot of producers have been growing,” Belenkie said in an interview.
“And so we have this temporary period of time where there’s more gas than there is places to put it.”
In light of the current depressed prices, Advantage has started strategically curtailing its gas production by up to 130 million cubic feet per day, depending on what the spot market is doing.
Other companies, including giants like Canadian Natural Resources Ltd. and Tourmaline Oil Corp., have indicated they will delay gas production growth plans until conditions improve.
“We cut all our gas growth out of 2024, once we’d had that mild winter. We did that back in Q2, because this is not the right year to bring incremental molecules to AECO,” said Mike Rose, CEO of Tourmaline, which is Canada’s largest natural gas producer, in an interview this week.
“We moved all our gas growth out into ’25 and ’26.”
LNG Canada is expected to process up to 2 billion cubic feet (Bcf) of natural gas per day once it reaches full operations. That represents what will be a significant drawdown of the existing oversupply, Rose said, adding that is why he thinks the future for western Canadian natural gas producers is bright.
“That sink of 2 Bcf a day will logically take three-plus years to fill. And then if LNG Canada Phase 2 happens, then obviously that’s even more positive,” Rose said.
While Belenkie said he agrees LNG Canada will lift prices, he’s not as convinced as Rose that the benefits will be sustained for a long period of time.
“Our thinking is that markets will be healthy for six months, a year, 18 months — whatever it is — and then after that 18 months, because prices will be healthy, supply will grow and probably overshoot demand again,” he said, adding he’s frustrated that more companies haven’t done what Advantage has done and curtailed production in an effort to limit the oversupply in the market.
“Frankly, we’ve been very disappointed to see how few other producers have chosen to shut in with gas prices this low. . . you’re basically dumping gas at a loss,” Belenkie said.
Feit, the analyst for Enverus, said there’s no doubt LNG Canada’s opening will be a major milestone that will help to support natural gas pricing in Western Canada. He added there are other Canadian LNG projects in the works that would also provide a boost in the longer-term, such as LNG Canada’s proposed Phase 2, as well as potential increased demand from the proliferation of AI-related data centres and other power-hungry infrastructure.
But Feit added that producers need to be disciplined and allow the market to balance in the near-term, otherwise supply levels could overshoot LNG Canada’s capacity and periods of depressed pricing could reoccur.
“Obviously selling gas at pennies on the dollar is not a sustainable business model,” Feit said.
“But there’s an old industry saying that the cure for low gas prices is low gas prices. You know, eventually companies will have to curtail production, they will have to make adjustments.”
This report by The Canadian Press was first published Oct. 25, 2024.
Companies in this story: (TSX:TOU; TSX:AAV, TSX:CNQ)
TORONTO – Corus Entertainment Inc. reported a fourth-quarter loss compared with a profit a year ago as its revenue fell 21 per cent.
The broadcaster says its net loss attributable to shareholders amounted to $25.7 million or 13 cents per diluted share for the quarter ended Aug. 31. The result compared with a profit attributable to shareholders of $50.4 million or 25 cents per diluted share in the same quarter last year.
Revenue for the quarter totalled $269.4 million, down from $338.8 million a year ago.
On an adjusted basis, Corus says it lost two cents per share for its latest quarter compared with an adjusted loss of four cents per share a year earlier.
The company also announced that it has signed an deal to amend and restate its existing syndicated, senior secured credit facilities with its bank group.
The restated credit facility was changed to reduce the total limit on the revolving facility to $150 million from $300 million and increase the maximum total debt to cash flow ratio required under the financial covenants.
This report by The Canadian Press was first published Oct. 25, 2024.
Companies in this story: (TSX:CJR.B)
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Job seekers owe it to themselves to understand and accept; fundamentally, hiring is a process of elimination. Regardless of how many applications an employer receives, the ratio revolves around several applicants versus one job opening, necessitating elimination.
Essentially, job gatekeepers—recruiters, HR and hiring managers—are paid to find reasons and faults to reject candidates (read: not move forward) to find the candidate most suitable for the job and the company.
Nowadays, employers are inundated with applications, which forces them to double down on reasons to eliminate. It’s no surprise that many job seekers believe that “isms” contribute to their failure to get interviews, let alone get hired. Employers have a large pool of highly qualified candidates to select from. Job seekers attempt to absolve themselves of the consequences of actions and inactions by blaming employers, the government or the economy rather than trying to increase their chances of getting hired by not giving employers reasons to eliminate them because of:
“Communication, the human connection, is the key to personal and career success.” ― Paul J. Meyer.
The most vital skill you can offer an employer is above-average communication skills. Your resume, LinkedIn profile, cover letters, and social media posts should be well-written and error-free.
If you can’t quantify (e.g. $2.5 million in sales, $300,000 in savings, lowered average delivery time by 6 hours, answered 45-75 calls daily with an average handle time of 3 and a half minutes), then it’s your opinion. Employers care more about your results than your opinion.
Before scheduling an interview, the employer will review your LinkedIn profile to determine if you’re interview-worthy. I eliminate any candidate who doesn’t have a complete LinkedIn profile, including a profile picture, banner, start and end dates, or just a surname initial; anything that suggests the candidate is hiding something.
If an employer is considering your candidacy, you’ll be Google. If you’re not getting interviews before you assert the unfounded, overused excuse, “The hiring system is broken!” look at your digital footprint. Employers are reading your comments, viewing your pictures, etc. Ask yourself, is your digital behaviour acceptable to employers, or can it be a distraction from their brand image and reputation? On the other hand, not having a robust digital footprint is also a red flag, particularly among Gen Y and Gen Z hiring managers. Not participating on LinkedIn, social media platforms, or having a blog or website can hurt your job search.
Confidence = fewer annoying questions and a can-do attitude.
It’s important for employers to feel that their new hire is confident in their abilities. Managing an employee who lacks initiative, is unwilling to try new things, or needs constant reassurance is frustrating.
Job searching is a competition; you’re always up against someone younger, hungrier and more skilled than you.
Besides being a process of elimination, hiring is also about mitigating risk. Therefore, being seen as “a risk” is the most common reason candidates are eliminated, with the list of “too risky” being lengthy, from age (will be hard to manage, won’t be around long) to lengthy employment gaps (raises concerns about your abilities and ambition) to inappropriate social media postings (lack of judgement).
Envision you’re a hiring manager hiring for an inside sales manager role. In the absence of “all things being equal,” who’s the least risky candidate, the one who:
An experienced hiring manager (read: has made hiring mistakes) will lean towards candidates they feel pose the least risk. Hence, presenting yourself as a low-risk candidate is crucial to job search success. Worth noting, the employer determines their level of risk tolerance, not the job seeker, who doesn’t own the business—no skin in the game—and has no insight into the challenges they’ve experienced due to bad hires and are trying to avoid similar mistakes.
“Taking a chance” on a candidate isn’t in an employer’s best interest. What’s in an employer’s best interest is to hire candidates who can hit the ground running, fit in culturally, and are easy to manage. You can reduce the odds (no guarantee) of being eliminated by demonstrating you’re such a candidate.
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Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.
