Yellow Vest Rally in Outlook

Yellow vest rallies have been spotted all over Canada. Outlook has adopted the movement and a group of protesters braved the cold this past Saturday.

Steve Forbes attended the protest this Saturday. He gave his thoughts on the movement. "Here in Canada, the yellow vest represents working people more than anything, people who are doing work, opposed to people sitting in offices making decisions that affect them."

The yellow vest movement originally started in France last year. Canada has also taken up the movement, with many communities organizing rallies to protest decisions made by the federal government.

The protest is opposed against the federally imposed carbon tax, as well as Bill C-69, which they believe will hurt the oil and gas industry. The carbon tax will come into affect April 1st in Saskatchewan.

They are also against uncontrolled immigration. Forbes noted they are not at all against immigration, "We recognize that we are all immigrants ultimately... but we're against the uncontrolled immigration we see these days, bringing people in in such a way that we can't assimilate them into our society. They need to fit in to our society."

Forbes said they are also pushing for more federal government support for the oil and gas industry, "One of our specific concerns in Western Canada is the difficulty in getting pipelines built." Forbes said he used to live in the Peace River Country in Alberta, where they had trouble getting oil to market so he knows how a collapse in the industry can affect working families, "I've seen people lose their cars, their homes, it's a huge hardship, certainly in Alberta and Saskatchewan."

There was a mixed reaction to the rally in Outlook, with many supporting and others disapproving of the protest. There will be a second protest in the town on February 2nd.

Methane Emissions In Flaring And Venting Targeted In New Plan

Over the next few years, the Saskatchewan government is targeting methane emissions from the oil and gas sector.

The ministry is working on a plan to remove 4.5 million tonnes of methane gas due to venting and flaring by 2025.

“To us ... it just makes common sense,” said Saskatchewan Minister of Energy and Resources, Bronwyn Eyre. “We’ve got about 20 percent of natural gas being wasted in Saskatchewan by flaring and venting by producers.”

Consultation was done by the province with members of the industry, which included Crescent Point Energy, Canadian Natural Resource Limited, Whitecap Resources, Inc. and Husky Energy, among others.

The province isn’t sure if this will meet the federal plan for reduction of greenhouse gases.

“We feel pretty confident that our plan will be accepted, and we certainly hope it will,” Eyre said. “It’s results-based and we think it will result is real and measurable emissions rather than theoretical presumed reductions based on models and assumptions, and it’s about flexibility.”

Companies can make investment decisions for all their production facilities, she said.

The consultation with the industry was extensive.

“They certainly are telling us they prefer our plan to the federal plan,” Eyre said of industry. “We feel that has, we hope, traction as well, and certainly it should mean something when members of the sector are on board.”

Part of the government’s plan is to invest in expanding the infrastructure and introduce an expanded oil and gas processing investment incentive and expanded Saskatchewan innovation incentive, which would be a royalty credit system within the oil and gas industry

“We feel it’s necessary to have something infrastructurally incentivizing that goes hand in hand with these goals,” Eyre said.

SOURCE: Corey Atkinson, DiscoverEstevan.com

An Optimistic, yet Cautious Start to the Year for the Oil Industry

Experts say that Saskatchewan still shows as a favourable market for the oil industry despite companies sharpening their pencil on finances.

Premier Scott Moe made comments following Alberta’s announcement of the oil production curtailment starting January 1, 2019, stating that although the province supports Alberta’s decisions, Saskatchewan’s market is not necessarily comparable because of the different oil between the two provinces.

Ben Brunnen, vice president of oil sands operations and fiscal policy for the Canadian Association of Petroleum Producers (CAPP), said that in regards to the curtailment, companies that have an invested interest in both Alberta and Saskatchewan will likely start to look at Sask. for projects as there was no curtailment implemented here. As others have also stated, Brunnen reiterated that the curtailment does signify a crisis within the oil industry that obviously will raise concerns for investors and companies within the oil sector and may have them re-evaluating future decisions.

Brunnen however, touched on the complexities of the current oil market and that the curtailment is only one leg of the stool. At this point, the Alberta government is working to bring the inventory numbers down, in which it is likely the curtailment will be lifted. Although this would allow companies to resume operations, there are still two major factors, the Trans Mountain Pipeline and Bill C-69, that pack more of a blow to the oil sector.

“If we see Bill C-69 pass as is, we fully expect not to see any reasonable substantive incremental investments into pipes in the Canadian economy for the foreseeable future and that’s a problem for our long term prosperity,” said Brunnen

He explained that when investors originally put money into Canadian oil, there were indications of growth and forward movement which would bode well for their dollars. Given the unfavourable changes in recent past, it is no surprise, investors very well may be taking their money elsewhere, which would further cripple the industry.

During the interview, Brunnen said companies may not necessarily be treading water and waiting to see what happens, however with contracts back up for bid and lack of action in the area, it is apparent that 2019 is not off to a booming start. There are still many decisions to be made that will all play a part when predicting the future prosperity of oil within Western Canada, Brennen shared that CAPP has drafted a revision on Bill C-69 in an effort to relay to the federal government the dire results that could ensue if the Bill is put through as is.

Latest Numbers from December's Public Offering Released

The latest numbers are in for December's public offering of crown petroleum and natural gas rights generating $20.1 million for the province.

While most of the attention was placed in the Wilkie and St Walberg area, 5,473.394 hectares of petroleum and Natural gas and 2,800.373 hectares of petroleum natural gas lease were available in the Weyburn-Estevan area totalling $3,083,599.39 of revenue.

“Saskatchewan continues to be an attractive destination for investment by the oil and gas industry,” Energy and Resources Minister Bronwyn Eyre said. “Our competitive policies and incentives, designed in collaboration with industry, encourage sustainable activity, job growth, and good resource management.”

The highest bid for a 5,568.500 hectare parcel of land east of Wilkie purchased by BASM Land & Resources Ltd for $9,126,103.28.

The final offering for the fiscal year will be held on February 5, 2019.

Two key Canada-to-U.S. oil pipelines hit by disruptions

NEW YORK/VANCOUVER (Reuters) - Two major pipelines carrying oil from Canada to the United States were hit by weather-related disruptions on Tuesday, the latest hit to Canada’s oil industry just days after the Alberta government announced forced cuts in crude production.

A number of lines on the Enbridge Inc (ENB.TO) Mainline system, which carries crude and other liquids, were hit by power outages in the Western Canadian province of Saskatchewan due to severe weather, the company said Tuesday.

TransCanada Corp’s (TRP.TO) 590,000 barrel-per-day crude Keystone pipeline was also shut due to the outage, according to a shipper on the line and traders. There was no estimated restart timeline for the line, one source said, citing a notice to shippers. The company did not respond to a request for comment.

The outages, though temporary, are just the latest constraints to hit Western Canadian oil producers already struggling to export crude due to full pipelines as production has surged to a record at more than 4.6 million barrels a day in 2018.

Both systems originate in Alberta, where most of Canada’s oil is produced.

Enbridge, for its part, said it will remain in contact with SaskPower, that province’s primary utility, through the night “to evaluate the possibility of starting the lines earlier.” The Mainline system ships about 1.2 million bpd.

Western Canadian Select (WCS) heavy oil prices weakened on the news, dealers said, closing at $29.25 a barrel below West Texas Intermediate CLc1 benchmark prices. In October, that discount hit a record of $52 below U.S. prices, but had narrowed to a $19 discount on Monday after the production cuts were announced.

Traders said they expect the outages to be brief.

“If the lines are not up tomorrow, I’m sure folks will start to get nervous,” one shipper on the lines said.

Enbridge said its lines 1, 2a, 3, 4, 13 and 67 would be shut through the night, as SaskPower anticipates power will remain down until at least until Wednesday morning.TransCanada’s Keystone line runs to Steele City, Nebraska and from there to other U.S. markets. Decreased power consumption on that line was observed at about 9:30 a.m. EST (1430 GMT), according to market intelligence firm Genscape.

Reporting by Devika Krishna Kumar in New York and Julie Gordon in Vancouver; Editing by Marguerita Choy and Lisa Shumaker

SOURCE: REUTERS

Canadian oil producers trade shares for growth but investors hard to impress

WINNIPEG/TORONTO (Reuters) - Depressed Canadian oil prices are forcing energy companies to use their shares as a currency to fund acquisitions, but investors have been hard to win over to the strategy.

Canadian oil producers face a dwindling amount of capital willing to invest in the sector, leaving many with a stark choice, said Eric Nuttal, senior portfolio manager at Ninepoint Partners, which owns shares in MEG Energy (MEG.TO), Baytex and Athabasca Oil (ATH.TO).

“Do you increase in scale and get your market cap above $1 billion to get on the radar screen? Or do you just throw in the towel?”

Many are scaling up. The result, Nuttall said, will likely be more deals into early 2019, and a shrinking number of small-cap Canadian oil producers in the long term.

The Canadian oil patch has made 29 deals so far in the second half, worth $9.5 billion, the busiest half-year period for deals since the first half of 2017, according to Cormark Securities data.

“When you get into a period of such volatility, I think any kind of M&A is very difficult because revenues are certainly challenged.”

Shareholders are mainly interested in companies that pay dividends or buy back shares, said Cormark analyst Amir Arif.

“It’s almost like you can’t win if you’re a Canadian energy company,” said Janan Paskaran, a partner at Torys LLP who provides M&A advice to energy companies. “It’s hard to invest within Canada, and it’s tough to get investor support when you expand outside.”

“People are saying, ‘let’s not spend any capital.’”

On Tuesday, Trinidad Drilling (TDG.TO) shareholders rejected a friendly stock deal to sell to Precision Drilling Corp (PD.TO), choosing instead the certainty of a cash offer from Ensign Energy Services (ESI.TO). [nL4N1Y24UP]

Swiss-based IPC’s shares have traded more in line with the industry since the steep sell-off last month when it announced its purchase of BlackPearl Resources (PXX.TO), and investors generally support the deal, said CEO Mike Nicholson.

“We’re now well positioned for the recovery over the next two to three years,” Nicholson said in an interview from Geneva. “Should we start to see (Canadian) pipelines and crude-by-rail improve, I think there’s a huge amount of upside now in our share price.”

Reporting by Rod Nickel in Winnipeg, Manitoba and John Tilak in Toronto; Editing by Phil Berlowitz


CANADA FX DEBT-C$ weakens for 3rd straight day as stocks and oil slide

* Canadian dollar dips 0.2 percent against the greenback * Price of U.S. oil falls 0.8 percent * Bond prices trade mixed across the yield curve * Canada-U.S. 2-year spread widens by 1.4 basis points By Fergal Smith TORONTO, Oct 29 (Reuters) - The Canadian dollar weakened for the third consecutive day against its U.S. counterpart on Monday as stocks and oil prices declined, while the greenback broadly climbed. U.S. stocks fell in a volatile session, hurt by fresh worries of an escalation of the U.S.-China trade war and a sharp drop in big tech and internet names. "The Canadian dollar tends to be more risk sensitive, so (I am) not surprised to see it lower," said Erik Nelson, a currency strategist at Wells Fargo. Canada runs a current account deficit and exports many commodities, including oil, so its economy could be hurt if the global flow of trade or capital slows. Oil prices fell after Russia signaled that output will remain high and as concern over the global economy fueled worries about demand for crude. U.S. crude oil futures settled 0.8 percent lower at $67.04 a barrel. The U.S. dollar climbed against a basket of currencies. News that German Chancellor Angela Merkel will not seek re-election as head of her CDU party weighed on the euro. At 4:48 p.m. (2048 GMT), the Canadian dollar was trading 0.2 percent lower at 1.3129 to the greenback, or 76.17 U.S. cents. The currency, which on Friday hit a six-week low intraday at 1.3160, traded in a range of 1.3083 to 1.3149. The loonie got a boost last Wednesday from a Bank of Canada interest rate hike but has lost ground on the three subsequent days of trading. The central bank raised interest rates for the fifth time since July 2017 and said it might speed up the pace of future hikes given that the economy was running at almost full capacity and did not need any stimulus. Speculators have cut bearish bets on the Canadian dollar to the lowest since March, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Oct. 23, net short positions had decreased to 7,228 contracts from 11,019 a week earlier. Canadian government bond prices were mixed across the yield curve, with the two-year up 0.5 Canadian cent to yield 2.264 percent and the 10-year falling 1 Canadian cent to yield 2.396 percent. The gap between Canada's 2-year yield and its U.S. equivalent widened by 1.4 basis points to a spread of 55.8 basis points in favor of the U.S. bond. (Reporting by Fergal Smith Editing by Frances Kerry and Phil Berlowitz)

SOURCE: REUTERS

C$ weakens for 3rd straight day as stocks and oil slide

* Canadian dollar dips 0.2 percent against the greenback * Price of U.S. oil falls 0.8 percent * Bond prices trade mixed across the yield curve * Canada-U.S. 2-year spread widens by 1.4 basis points By Fergal Smith TORONTO, Oct 29 (Reuters) - The Canadian dollar weakened for the third consecutive day against its U.S. counterpart on Monday as stocks and oil prices declined, while the greenback broadly climbed. U.S. stocks fell in a volatile session, hurt by fresh worries of an escalation of the U.S.-China trade war and a sharp drop in big tech and internet names. "The Canadian dollar tends to be more risk sensitive, so (I am) not surprised to see it lower," said Erik Nelson, a currency strategist at Wells Fargo. Canada runs a current account deficit and exports many commodities, including oil, so its economy could be hurt if the global flow of trade or capital slows. Oil prices fell after Russia signaled that output will remain high and as concern over the global economy fueled worries about demand for crude. U.S. crude oil futures settled 0.8 percent lower at $67.04 a barrel. The U.S. dollar climbed against a basket of currencies. News that German Chancellor Angela Merkel will not seek re-election as head of her CDU party weighed on the euro. At 4:48 p.m. (2048 GMT), the Canadian dollar was trading 0.2 percent lower at 1.3129 to the greenback, or 76.17 U.S. cents. The currency, which on Friday hit a six-week low intraday at 1.3160, traded in a range of 1.3083 to 1.3149. The loonie got a boost last Wednesday from a Bank of Canada interest rate hike but has lost ground on the three subsequent days of trading. The central bank raised interest rates for the fifth time since July 2017 and said it might speed up the pace of future hikes given that the economy was running at almost full capacity and did not need any stimulus. Speculators have cut bearish bets on the Canadian dollar to the lowest since March, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Oct. 23, net short positions had decreased to 7,228 contracts from 11,019 a week earlier. Canadian government bond prices were mixed across the yield curve, with the two-year up 0.5 Canadian cent to yield 2.264 percent and the 10-year falling 1 Canadian cent to yield 2.396 percent. The gap between Canada's 2-year yield and its U.S. equivalent widened by 1.4 basis points to a spread of 55.8 basis points in favor of the U.S. bond. (Reporting by Fergal Smith Editing by Frances Kerry and Phil Berlowitz)

SOURCE: REUTERS

Province Committed To Health and Safety In Response to Sour Gas Report

A study done by researchers from Harvard and Northeastern University showed air quality indicators were reporting off the chart levels of H2S gas in southeastern Saskatchewan, and there was no action taken by the provincial government. The readings were gathered by the researchers who were working with a collaboration of journalists from various outlets across Canada, and the University of Regina.

The reports and findings presented by the group showed the provincial air quality standards had been breached multiple times since 2014, and no action was taken by the provincial government in response. This includes penalties for companies who are responsible for the emissions.

In a written reply to Discover Weyburn’s questions about the report and the province’s response, the Ministry of Energy and Resources didn’t directly provide a response when asked about the government’s reaction or position to the report. The reply did highlight the province has made a number of steps to strengthen oversight of sour gas management, including increasing inspections, collection gas composition data, increasing staffing levels and funding of air monitoring stations.

H2S is also known as sour gas or hydrogen sulphide. It is a colourless, poisonous gas which is found commonly around crude oil and natural gas production sites. It can be fatal when inhaled. The report presented last week in the media indicated high levels of the gas were found in many areas, which does provide an immediate health risk to some residents of southeastern Saskatchewan.

The statement from the province indicated there had been no need to issue any notices to residents of the air quality reaching critical levels, as the regional air quality levels didn’t reach the point where they would pose a risk to public health and safety. They did state they took action where there were high levels of the gas, and followed up on public complaints related to odours of the gas.

In order to operate a well or facility in Saskatchewan, a company needs to have an emergency response plan in place, which puts the onus on the operator to take steps to notify those at risk of an incident, and to protect safety in the immediate area of the incident, including contacting the Ministry of Energy and Resources when there is an uncontrolled release of sour gas.

While the report from the researchers last week stated there were cases of levels of the gasses high enough to cause corrosion to various items, there were no incident reports available from the individual companies according to the researchers. The province, which monitors incidents to make sure they are dealt with by the operator, said there has been no need for prosecution under The Oil and Gas Conservation Act for failure to follow the reporting procedures. There was no clarification if any companies had their licenses suspended for not following procedure.

In their statement to Discover Weyburn, the government highlighted the regulatory staff respond to all sour gas complaints on a 24/7 basis, and the cases are investigated and corrective actions ordered when necessary, with a commitment to keeping public safety as the number one priority.

No officials from the Ministry of Energy and Resources were available for an interview to clarify or elaborate on any of the responses received in the written statement.

Canadian dollar shakes off plunge in oil as investors brace for rate hike

TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Tuesday as investors maintained bets that the Bank of Canada will hike interest rates on Wednesday even as oil prices plunged.

At 3:43 p.m. (1943 GMT), the Canadian dollar CAD=D4 was trading 0.1 percent higher at 1.3088 to the greenback, or 76.41 U.S. cents.

The currency, which on Friday hit its weakest level in more than five weeks at 1.3132, traded in a narrow range of 1.3082 to 1.3123.

“I think it is in a holding pattern, waiting for the Bank of Canada tomorrow,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

The central bank, which sees Canada’s economy operating near capacity, has hiked four times since July 2017 to leave its key policy rate at 1.50 percent.

Chances of a rate increase on Wednesday held at more than 90 percent despite further volatility in global equity markets and a sharp drop in the price of oil, one of Canada’s major exports. BOCWATCH

 

U.S. crude oil futures CLc1 settled 4.2 percent lower at $66.43 a barrel as the sell-off in stocks raised worries about demand growth and after Saudi Arabia said it could supply more crude quickly if needed, easing concerns ahead of U.S. sanctions on Iran.

Canada runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows.

A deep discount for Canadian heavy crude could explain why the slump in U.S. oil prices had little impact on the loonie, Cieszynski said.

“We didn’t participate as much when (U.S.) oil was going up so therefore we haven’t been getting hit when it goes back down,” he said.

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries as investors sought safety in low-risk debt.

The two-year CA2YT=RR rose 3.5 Canadian cents to yield 2.277 percent and the 10-year CA10YT=RR climbed 30 Canadian cents to yield 2.449 percent.

The 10-year yield touched its lowest intraday since Sept. 28 at 2.418 percent.

Reporting by Fergal Smith; editing by Jonathan Oatis and Sandra Maler

SOURCE: REUTERS

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