As the urban centre at the heart of Canada’s oilsands industry, Fort McMurray has seen more than its share of ups and downs.
A decade and a half ago, the northern Alberta community was this country’s most famous boom town. High oil prices helped to drive unprecedented demand for the thick, viscous bitumen that lies beneath the earth’s surface here, and workers flocked from around the world to cash in on the bonanza.
Then crude prices crashed, layoffs began, and the frenzy of oilsands-related construction dried up. The party, it seemed, was over.
Now, with the official opening of the long-awaited Trans Mountain pipeline expansion just days away, those who live and work in this region hope their fortunes are once again headed for an upswing.
‘What supports them, supports us’ — a community tied to one industry
Fort McMurray, population 68,000, is situated in northern Alberta in the heart of the Athabasca oilsands, the world’s third-largest proven crude oil reserve.
The oil industry permeates every aspect of life here. Every morning, oil workers clad in blue-and-yellow coveralls line up at the local Tim Hortons for double-doubles, and diesel trucks and big rigs churn up dust on their way out to industrial work sites. The airport gift shop sells “Canada’s Oilsands” sweatshirts and local rec centres and educational facilities are emblazoned with the names of their oil company sponsors.
With so many livelihoods dependent on oil, all eyes here are on the expected opening this week of the Trans Mountain pipeline expansion, a years-in-the-making megaproject which will soon start shipping Canadian crude to export markets.
“It’s hard to quantify the value of the … pipeline to a region like ours,” said Dennis Vroom, senior strategic advisor for the regional municipality of Wood Buffalo, which encompasses Fort McMurray and the surrounding rural area.
“We are so heavily supported by oilsands operators in the region, that when things that are important to them — like the Trans Mountain pipeline — happen, there are direct benefits to us. What supports them, supports us.”
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The Trans Mountain pipeline, which was bought six years ago by the federal government, is Canada’s only oil pipeline to the West Coast. The expansion will increase its capacity from approximately 300,000 barrels per day currently to 890,000 barrels per day, improving access to export markets for Canadian oil companies.
The path to get here hasn’t been rosy. The pipeline project, which took more than four years and at least $34 billion to construct, has been marred by environmental protests, delays and budget overruns.
The federal government, which paid $4.5 billion for the project in 2018, is likely to take a significant writedown when it tries to sell the completed project, experts say. And Trans Mountain itself remains locked in a dispute with its oil company customers about the rising fees it wants to charge them to ship their product.
Still, oilsands producers have been waiting for this pipeline for a long time. Export issues have been a thorn in the side of Canadian energy companies for years, due to a lack of pipeline capacity from Alberta’s oilsands region to coastal tanker loading facilities.
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That shortage of pipeline space, combined with refinery and transportation costs, is the reason Canadian oil producers typically take a price discount on their product compared with their U.S. competitors.
It has also inhibited oil companies’ ability to grow, so the anticipation when it comes to Trans Mountain is real.
“It’s an exciting time. It’s been a long time since we’ve had some new incremental egress for Canadian products,” said Drew Zieglgansberger, executive vice-president and chief commercial officer for Cenovus Energy Inc., a major contracted shipper on Trans Mountain.
“We had some growth and efficiency projects on the books already, but (the pipeline expansion) does enable some stability in the market in the near and medium-term that really does give us some confidence to add more growth to the company.”
The additional export capacity that Trans Mountain will provide means that 2024 is expected to be a boom year for oil output.
A recent TD Economics report suggested Canadian oil production this year could grow by between six and 10 per cent year-over-year, the equivalent of between 300,000 and 500,000 barrels per day.
Even on the low end of the forecast, this growth rate would match the average annual oil output growth rate Canada saw in the booming years between 2010 and 2015, when commodity prices were high and Alberta’s oilsands region was undergoing unprecedented levels of construction and activity.
But today, the oil price downturn of the last decade forced companies to tighten their belts. Rather than spending on major capital projects, oil companies have spent the last couple of years of strong commodity prices paying down debt and rewarding shareholders with healthy dividend payments.
Technological advancements have also meant that companies now know how to increase their oil output without massive increases in capital spending.
Cenovus, for example, plans to grow its production by 150,000 barrels a day over the next five years.
But the company — which once thought it would build an entirely new processing facility at its Narrows Lake oilsands asset, now under development — has decided instead to use new technology and engineering methods to connect that site with the central processing facility at its currently operating Christina Lake project, located about 150 km southeast of Fort McMurray.
Like Cenovus’ other oilsands projects, the Narrows Lake development will use a drilling method called steam-assisted gravity drainage to extract the thick, heavy oilsands bitumen. But because of these changes, it will cost much less and require far less construction than originally planned.
“The oilsands of 15 years ago, we just didn’t have some of the technologies or the operating experience and practices that we have today,” Cenovus’ Zieglgansberger said.
“It’s allowed us, from an overall development cost, to really lower the cost of producing oil.”
‘So Many Things Have Changed’
Many people’s mental image of Fort McMurray is synonymous with the period when the community was a bustling boom town defined by heavy traffic, high housing costs and money that seemed to grow on trees.
Sarah Thapa, the owner of Avenue Eatery & Café which opened in 2021, remembers those days. She moved to Fort McMurray in 2012, during the height of the oilsands boom.
“I got a job as a server at one of the local restaurants, and they made seven to 10 grand just by selling breakfasts,” she said.
“It was packed every day, it didn’t matter if it was Monday, Tuesday, 6 a.m. in the morning — every table was taken,” Thapa said. “Every restaurant, every small business in town, was doing so well.”
Owner Sarah Thapa works at Avenue Eatery and Café in Fort McMurray, Alta., on Thursday, April 25, 2024. Many businesses have felt the strain of the pandemic, natural disasters and the oil crash.
“COVID happened, the flood happened, the fire happened — and we’ve not seen the town the same way,” Thapa said. “So many small businesses have already closed and left town … so many things have changed since I moved here.”
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While Thapa said she welcomes the Trans Mountain pipeline expansion, she knows this year’s record oilsands output is not going to turn Fort McMurray back into the boom town of yesteryear. The companies are leaner, they’re producing more oil but spending less, and the days of the construction-heavy oilsands expansion projects are over.
The climate change problem
Another factor that makes today’s oilsands different is ever-growing environmental scrutiny. Since the last industry boom, Canada has signed the Paris Agreement, an international treaty on climate change that commits signatories to greenhouse gas emissions reduction targets. The world has faced a growing number of climate-related extreme weather disasters, and calls to reduce society’s reliance on fossil fuels are intensifying.
The process of extracting oilsands bitumen is a comparatively emissions-heavy way of producing oil. And while companies have been able to reduce the greenhouse gas intensity per barrel, the industry’s overall emissions footprint is increasing due to increased production. In 2021, the oil and gas sector was responsible for 28 per cent of Canada’s overall emissions.
The industry believes it can continue to grow while reducing its environmental impact. Six of the largest oilsands companies have banded together to form what they call the Pathways Alliance, through which they are proposing to build what would be one of the largest carbon capture and storage projects in the world.
That project would involve building a 400-kilometre pipeline to transport carbon dioxide emissions from 20 different oilsands production facilities in northern Alberta and embed them safely in an underground storage hub. If it goes ahead, it could mean a new era of construction in the oilsands.
“That’s a $16 billion project right there that’s looking to start construction,” said Lisa Sweet, director of business and investment attraction for Fort McMurray-Wood Buffalo Economic Development.
“There are investment opportunities that are coming, and we’re out there to promote that.”
But the Pathways Alliance companies haven’t yet made a final investment decision and there are a number of uncertainties hanging over their project. One of these is the federal government’s proposed emissions cap, which is supposed to be finalized sometime this year.
The government has said the cap is meant to cap pollution, not production, but the industry has warned the cap will have “unintended consequences” — scaring away investment and potentially causing companies to curtail their output and spending.
It seems likely that the environmental impact of the oilsands will continue to be scrutinized for years to come, and that too has an impact on the local community.
“Our community is so closely tied to the oilsands that sometimes the negative image of the oilsands that gets painted unfairly translates to our community as well,” Vroom said.
A new era
The Trans Mountain project has taken so long to build, and the oilsands industry has had so much time to prepare, that it is expected to be filled soon after coming online. Many in the industry believe Canadian oil output will exceed pipeline capacity again within a few years, perhaps as early as 2026.
But for the time being, the Trans Mountain pipeline expansion represents a new era — for both the industry and the community most closely linked to it. The next few years may not be a repeat of the heyday of Fort McMurray, but they do represent a revival of opportunity.
“People come here for economic opportunity, and that hasn’t changed and that won’t change,” Sweet said.
“The Trans Mountain pipeline just reiterates that message.”
Back at Avenue Eatery & Café. Thapa echoed that sentiment. “I’m optimistic about the town picking up again,” she said.
“We may not see the businesses doing as well as they were 10 to 15 years ago, but overall I think we’re going to come back. I think we’re going to see some positive changes, I really do.”
Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.
The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.
Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.
The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.
Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”
“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.
“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”
Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.
The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.
It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.
Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.
It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.
“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.
Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.
The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.
Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.
The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.
“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.
Asked how long that environment could last, he said that’s out of Telus’ hands.
“What I can control, though, is how we go to market and how we lead with our products,” he said.
“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”
Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.
On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.
That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.
Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”
“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.
“We will continue to monitor developments and will take further action if our codes are not being followed.”
French said any initiative to boost transparency is a step in the right direction.
“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.
“I think everyone looking in the mirror would say there’s room for improvement.”
This report by The Canadian Press was first published Nov. 8, 2024.
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
