May 2021
Petroleum Joint Venture Association Board of Directors, Call for Nominations 2021
CO&O Draft 2 Update - Early Morning Session April 28, 2021
Energie Saguenay Webinar, April 21, 2021
Frustrated Canada presses White House to keep Great Lakes oil pipeline open
Canada a Growing Player in 'COVID-proof' Global Propane Markets
Commentary: Canada's next natural gas market - Asia, where prices are 775% higher
PJVA Board of Directors Call for Nominations 2021-2022
The Petroleum Joint Venture Association (PJVA) requests a Call for Nominations to fill Board positions for the 2021 - 2022 Board of Directors. These roles have a minimum two (2) year commitment to the portfolio and the Board.
The following portfolios require a candidate for the upcoming Board year:
Description of Portfolio - Task Forces Director
The Task Forces Director is responsible for coordinating the various Task Forces engaged in maintaining and updating the current suite of PJVA Model Agreements, and initiating new Task Forces as required to develop new Model Agreements for use in industry.
Description of Portfolio - Marketing and Publicity Director
The Marketing and Publicity Director is responsible for the development and implementation of a marketing strategy to increase the visibility of the PJVA in industry, and to coordinate and direct communications with our membership, other industry associations, and industry at large through various platforms including newsletters, joint events, website and email.
Description of Portfolio - Treasurer
The Treasurer serves on the Executive of the Board and is responsible for the accounting, financial, audit, and annual budgeting functions of the Association. The Treasurer will monitor and maintain a balanced budget for each fiscal year on behalf of PJVA.
For questions regarding the nomination process, or for detailed descriptions of the requirements for the portfolios, please contact pjva@pjva.ca. Please indicate Nominations Committee in the subject line of your email.
Candidates interested in putting their names forward for any of the available positions must submit a completed Nomination Form to the Nominations Committee by May 25, 2021.
Helen O'Brien
PJVA Vice President
CO&O Draft 2 Update - Early Morning Session April 28, 2021
An update of Draft 2 of the CO&O was the feature of a PJVA Early Morning Session on April 28, 2021 hosted on Zoom by Doug Klug, Tim Reimer, Ib Moller, Lynda MacNeill and Crawford Hutchinson.
It described changes from draft 1, submitted for comment to membership last year and addressed many of the membership comments incorporated into draft 2. The majority of comments received related to the Operating Procedure and Appendices. Overall, the aim has been to make the CO&O more user-friendly, such as removing elective blank spaces. It has been modernized in order to cover a wider range of scenarios. The slide deck and in session poll results are available by request from the PJVA office at pjva@pjva.ca; we encourage you to review them if you were not able to attend.
The participation of PJVA membership is imperative for all model agreement revisions as well as any new model agreements. Comment deadline for submission to the Task Force has been extended to May 15, 2021, so please take the opportunity to share your opinions and contribute to the success of the new Model CO&O. All information on Draft 2 can be found here.
Energie Saguenay Webinar - April 21, 2021
There was a webinar presentation about the Energie Saguenay Project on April 21, 2021. It was via Zoom conference by the Calgary French Business Club (Club d'Affaires Francophone de Calgary).
The webinar covered the Energie Saguenay Project and was hosted by Emmanual Giry and Vincent Crabol. The main presenter was Tony Le Verger (VP Finance of GNL Quebec / Quebec LNG) who has worldwide experience and qualifications. My summary of the presentation follows:
- In energy and LNG markets worldwide there are approximately 1 billion without electricity
- In 2018-2020, China added 80.9 GW of new coal fired power capacity
- 17% GHG reduction possible through fuel switching
- Renewables still face challenges at present
- In the meantime, gas can fill the gap that renewables are unable to
- Growth is forecast - 250 - 350 mtpa
- Elements in the project include production, liquefaction and storage, shipping, regasification, along with storage and distribution
- Saguenay/ Lac St. Jean region (tributary stream from St. Lawrence river, nearest big city is Quebec City). Other industries nearby include forestry and smelting
- It compares well with LNG Canada plant in Kitimat
- 2026 & 2027 - pipeline is due to start operating
- 1/3 of LNG from Qatar and Russia
- Canada has an advantage due to geopolitical stability and is environmentally superior to other producing nations. Advantage can potentially increase in the future
- There is strong support in Quebec, along with First Nation community collaboration
- It is an all Canadian Project with 139 landowners and 830 km of pipelines.
- It doesn't go through a mountain range and worldwide exporting is possible
- It has a 100% hydro power plant with the advantage of lower capex and opex along with lower GHG output
- The liquefaction is carbon neutral
- Customers: utilities - ongoing negotiations. Avoiding potential competitors.
The answer to my question about how it compares to the Pieridae Goldboro plant is that it has the same challenges with supply of natural gas compared to GNL Quebec.
Peter Mitchelmore
PJVA Newsletter Editor
Frustrated Canada presses White House to keep Great Lakes oil pipeline open
Published by Reuters and republished by EnergyNow April 26, 2021.
Canada is pushing on several diplomatic fronts against the U.S. state of Michigan's efforts to close a cross-border oil pipeline, the second such dispute since Joe Biden became U.S. president in January, complicating the governments' efforts to work together to lower carbon emissions.
The conflict over the aging but key pipeline highlights the disruptions caused by a global shift away from fossil fuels. Both governments are working to accelerate the energy transition, but their oil industries are interdependent, so a policy shift in one country can affect energy supply, and the political balance, in the other.
The United States imports more crude from Canada than any other nation, at about 3.7 million barrels per day, or about 80% of Canada's crude output.
Ottawa's strategy, according to four sources familiar with the government's thinking, is to repeatedly raise the issue of Enbridge Inc's Line 5 with numerous U.S. counterparts - including Biden - to get them to pressure Michigan's Democratic Governor Gretchen Whitmer to keep the pipeline open.
Last November, Michigan ordered Line 5 to shut by May 13, citing the environmental risk of a possible leak in the four-mile (6-km) stretch of the 540,000-bpd line passing under the Straits of Mackinac in the Great Lakes.
The White House has shown no sign of responding to Canadian entreaties, so Ottawa is considering more drastic options, including a threat to invoke an obscure bilateral treaty to keep Line 5 operating or intervene in the legal dispute currently playing out in U.S. courts.
Line 5, which flows crude oil and refined products from Wisconsin to Sarnia, Ontario, via Michigan, has been in operation for nearly 70 years, but officials in Michigan are increasingly alarmed by its advanced age.
The line has never leaked into the straits but there have been at least eight other spills since 1980, according to U.S. Pipeline and Hazardous Materials Safety Administration data.
The imbroglio over Line 5 comes just three months after Biden angered the Canadian oil and gas industry by cancelling a permit for the long-delayed Keystone XL pipeline project on his first day in office.
Canadian Prime Minister Justin Trudeau's government reluctantly accepted that decision, even though it killed thousands of construction jobs and further soured Ottawa's relationship with the main energy-producing province of Alberta.
Ottawa has resolved to fight publicly to keep Line 5 open, which - unlike Keystone - is already operating and a vital link in Enbridge's export network that ships the vast majority of crude from Canada's western oil patch to the United States.
DOZENS OF MEETINGS
Canadian government officials are frustrated by how much time they are spending on the matter, the sources said.
Canada has discussed the pipeline's fate in dozens of bilateral meetings, including 23 virtual meetings between lawmakers and U.S. members of Congress, according to a spokesman for Canada's Natural Resources Minister Seamus O'Regan.
"Clearly Line 5 is an important issue for the government of Canada... at the same time we need to be advancing on a cooperative basis the work we're doing on climate action," Canada Environment Minister Jonathan Wilkinson told Reuters earlier this month.
Wilkinson raised the pipeline on Feb. 24 during a meeting with U.S. climate envoy John Kerry. Trudeau also raised Line 5 with Biden when the two met in February to discuss making global warming a joint priority. The Canadian prime minister attended a U.S. international climate summit hosted by Biden last week.
Neither Kerry nor the White House responded to a request for comment.
Calgary-based Enbridge has refused to shut the pipeline, arguing the governor's order needs to be backed by a judge. The case is being heard in U.S. federal court and the two parties started mediation on April 16.
Enbridge spokesman Ryan Duffy said a negotiated solution would be in the best interests of all parties.
Trudeau's administration is mulling whether to take part in the legal challenge by filing an amicus, or "friend of the court" brief, which would explicitly lay out their reasons for backing Enbridge, said a source directly familiar with the matter.
Ottawa is also considering invoking the never-before-used 1977 Transit Pipelines Treaty, designed to stop U.S. or Canadian public officials from impeding the flow of oil in transit.
"The federal government continues to have a role to play, and we appreciate what they've done to date," Enbridge's Duffy said.
SPINAL CORD
Line 5 is key to fuel supply for the Great Lakes region on both sides of the border, helping supply an area with a population of more than 40 million people.
Environmental campaigners have long been concerned Line 5 could leak into the straits. Whitmer, a Biden ally, made shutting it a key promise in her 2018 gubernatorial campaign.
Wilkinson, after meeting with Kerry, told reporters that "the issue in Michigan is the governor."
Canada's Ambassador Kirsten Hillman and Infrastructure Minister Catherine McKenna have both met separately with Whitmer, but she has not changed her stance.
A spokeswoman for Whitmer told Reuters that the governor stands behind her decision to close the pipeline.
Enbridge said shutting Line 5 would cause fuel shortages and gas price spikes, and require 15,000 trucks and 800 rail cars a day to replace deliveries to Ontario. Michigan would also need truck transport to account for lost propane delivery, while refineries in Ohio and Michigan would need to secure supply from other suppliers.
Scott Archer, business agent with Local 663 Pipefitters Union in Sarnia, home to three of Ontario's refineries, described Line 5 as the "spinal cord of Ontario's infrastructure" in testimony to Canadian lawmakers.
"Shutting down Line 5 will in effect kill my hometown... and many more places like it in Canada and the U.S.," he said.
*The newsletter may contain material sourced from to third party websites. The material is provided solely as a convenience to you and not as an endorsement by PJVA of the contents on such third party Websites. PJVA is not responsible for the content of third party sourced material and does not make any representations regarding the content or accuracy of materials on such third party Websites, or the availability of such Websites. If you decide to access third party Websites, you do so at your own risk.
Canada a Growing Player in 'COVID-proof' Global Propane Markets
Propane from Canada is helping customers in Asia reduce emissions and their reliance on the Middle East for a critical fuel to heat homes, cook food, power vehicles, and produce products like medical plastics.
The first shipments left Canada's newest propane export facility on April 9, 2021, with the start of operations at Calgary-based Pembina Pipeline Corporation's Prince Rupert Terminal.
"We think that the best markets in the world will be non-North American markets in the future, and I don't mean the next five years," Pembina CEO Mick Dilger told a recent investor call.
"If you're looking out 20 years, we think the Asian-Indian market is going to be the place to be. We're the closest to that, and we produce some of the cleanest hydrocarbons, most ethical hydrocarbons in the world as a basin, so we now think it's advantage Canada."
While Pembina is in the early stages of startup, nearby the Ridley Island Propane Export Terminal (RIPET) - Canada's first - is running at full tilt. Owned by Calgary-based AltaGas Ltd., RIPET starting exporting cargo in May 2019.
"Prior to the development of the Ridley Island Propane Export Terminal, the only market for surplus western Canadian propane was to the United States. We recognized the opportunity to develop infrastructure near Prince Rupert, British Columbia to deliver propane to growing markets in Asia that are seeking lower emissions fuels," AltaGas said in a statement to the CEC.
"Developing RIPET has given Canadian producers a tangible benefit of access to new, overseas markets for propane."
Propane is produced as a by-product of natural gas processing and petroleum refining. It's transported by rail to the Prince Rupert-area terminals from production sites in Alberta and B.C.
'COVID-proof' cleaner energy
The global market for propane remained strong in 2020 despite the impacts of the COVID-19 pandemic, according to analysts with Argus Media, who recently described propane as "COVID-proof" compared to other fuels.
Argus estimates that global propane demand fell by just 2 per cent in 2020, compared to drops of 14 per cent for gasoline, 7 per cent for diesel and 10 per cent for crude oil. Propane imports increased to China, India, Indonesia and South Korea by 3 per cent last year, according to Argus data.
Analysts said propane hasn't been impacted in the same way because of its more diverse end uses.
According to an April 2020 briefing by lawyers with Burnet, Duckworth & Palmer LLP, Asia accounts for 45 per cent of the world's propane consumption, with China being the largest importer.
Sixty per cent of Asia's propane demand is for use in residential cooking and heating, with the rest split between commercial use and petrochemicals like operations that make propylene for the plastics industry.
"Propane is considered a greener, cleaner source of energy as it emits 60 per cent less carbon monoxide than gasoline, 98 per cent less particulate matter than diesel, and contains virtually no sulphur - a contributor to acid rain," wrote BDP partner Alicia Quesnel and associate Robyn Finley.
Canadian exports rise while Saudi Arabia's fall
Canada's marine propane exports rose by 77 per cent in 2020 compared to 2019, averaging 39,000 barrels per day, according to the Canada Energy Regulator (CER). All shipments went to Asia, with most delivered to Japan.
"Growth in 2020 Canadian marine propane exports was driven by greater demand due to cold weather and growing petrochemical feedstock consumption in China," the CER said.
"Marine propane exports also increased to Asian countries as a result of reduced supply from Saudi Arabia, which is a major supplier of propane to Asian markets."
U.S. propane exports to Asia are also increasing, the CER said, but the west coast location of Canada's terminals gives them a competitive edge.
"Propane marine exports from Canada have some advantages over U.S. exports from the Gulf Coast, including a shorter shipping distance to Japan and no need to ship via the Panama Canal, which can cause delays due to busy ship traffic," the CER said.
Bright future' for Canadian propane exports
There are three additional propane export terminal projects proposed for the coast of B.C., including increasing capacity at RIPET, a new facility near Prince Rupert owned by RIPET partner Vopak Pacific, and a terminal in Kitimat owned by Pacific Traverse Energy.
"Globally, demand for propane is expected to continue to increase over the next decade," AltaGas said. "The future is bright for Canadian propane exports."
*The newsletter may contain material sourced from to third party websites. The material is provided solely as a convenience to you and not as an endorsement by PJVA of the contents on such third party Websites. PJVA is not responsible for the content of third party sourced material and does not make any representations regarding the content or accuracy of materials on such third party Websites, or the availability of such Websites. If you decide to access third party Websites, you do so at your own risk.
Commentary: Canada's next natural gas market - Asia, where prices are 775% higher
If you've heard that Canada should skip plans to export natural gas to Asia, including from a few anti-oil and gas academics, you'll notice one theme that pops up: how Canadian energy firms really shouldn't waste their time, because there's no money in it.
This reasoning is daft. If there was no profit potential, energy firms would figure it out or go broke trying. The attempt by some to "helpfully" warn off Canadian energy companies is a transparent attempt by anti-oil and gas advocates to find yet another reason to bash one of Canada's biggest employers and providers of tax revenues to all levels of governments.
Natural gas prices vary considerably between what Canadian producers of the "blue flame" garner here at home, versus what natural gas sells for in Asia. That Asia price premium is something energy firms in countries such as Qatar and Australia have long known, which is why they have long been selling their gas into Asia.
To see this, let's first compare natural gas prices in Canada with the American market. That is Canada's only natural gas export market due to a lack of liquefied natural gas (LNG) plants on Canadian coasts. (In Canada, 18 LNG projects have been proposed. However, only one is under construction due to delays caused by regulatory and financial barriers over the years, along with anti-natural gas activism. In comparison, Australia has 16 LNG liquefaction terminals while Qatar has 12, and the United States has seven.)
Between 1990 and 2019, American (US Henry Hub) and Canadian (AECO-C) natural gas spot trading prices closely tracked each other. For example, the tightest price gap was in 2008 when US natural gas sold for U$8.85 per million BTU, just 11 percent higher than the US$7.99 that Canadian natural gas fetched that year.
In contrast, the largest percentage gap between the two countries was in 2018, when US natural gas sold for US$3.13 per million BTU, 179 percent higher than the US$1.12 average fire-sale price in Canada that year. But even then, the difference between Canada and the U.S. was two bucks.
Now ponder prices in Asia. Tracking comparable data as far back as it goes, to 2000, between that year and 2019, average natural gas prices in Asia have been significantly higher than in Canada in most years. The exceptions were in 2003, when Asian spot prices were three percent higher, and in 2005 when they were three percent lower than in Canada.
In every other year, natural gas sold for a premium in Asia compared to Canada.
For example, and using AECO-C natural gas prices again for Canada and the LNG Asia average, in 2012 natural gas sold for US$2.27 per million BTU in Canada, but for US$18.15 in Asia. Asia's price was thus $15.88 more, fully 699 percent higher.
In 2018, when Canada's natural gas prices were rock-bottom, the largest percentage gap between Canada and Asia was evident. Canadian natural gas sold for just US$1.12 per million BTU but US$9.80 in Asia. That was an $8.68 difference, or 775 percent higher.
This permanently high price gap between Canada and Asia has been obvious for over a decade and reflected in specific markets.
In Japan, prices for LNG, with data going back to 1990, were higher than Canada's gas prices, in all but two years (2003 and 2005). In every other year, natural gas prices in Japan were higher in a range of 3 percent (in 2004) to 797 percent (in 2018). The highest dollar "gap year" for prices was in 2012 when natural gas sold for US$2.27 per million BTU in Canada but US$16.75 in Japan, a $14.48 or 638 percent difference.
In South Korea, where data are available only from 2009 onward, prices for natural gas have always been above Canada's. The range was between US$1.90 and US$13.63 more per million BTU (in 2009 and 2013, respectively). As a percentage, natural gas prices in South Korea have ranged from 56 percent more in 2009 to 771 percent higher in 2018.
For the record, Western Canada currently has several cost advantages over other LNG exporting countries such as the U.S., Qatar and Australia. For example, shipping costs to Japan from Canada are estimated at between 99 cents and $1.09 per million BTU. That compares to between $1.50 and $1.54 per million BTU from Qatar, and between $2.40 and $2.45 per million BTU from the U.S. Gulf of Mexico.
This is explained in part by distances: Qatar is 11,773 kilometres away from the Japanese port of Himeji and 12,056 kilometers away from the port at Sodegaura. Canada's westernmost port (Kitimat) in British Columbia is 7,698 kilometres away from Himeji and 7,322 kilometers away from Sodegaura.
All of these are distinct Canadian advantages so if you hear an anti-oil and gas advocate claim that Canadian energy companies should avoid Asian markets, know this: They haven't run the (honest) numbers.
*The newsletter may contain material sourced from to third party websites. The material is provided solely as a convenience to you and not as an endorsement by PJVA of the contents on such third party Websites. PJVA is not responsible for the content of third party sourced material and does not make any representations regarding the content or accuracy of materials on such third party Websites, or the availability of such Websites. If you decide to access third party Websites, you do so at your own risk.