Business of Energy - February 2020

OF ENERGY

FEBRUARY 2020

THE HEARTLAND

PETROCHEMICAL COMPLEX

INTER PIPELINE CEO CHRISTIAN BAYLE ON THE MEGA PROJECT HIS COMPANY IS UNDERTAKING

We are pleased to announce that Jody L. Wivcharuk has joined the firm as our newest partner in the Oil and Gas Group. We also welcome Jeff Geib back to the Calgary office.

Jody and Jeff bring years of insight and expertise to the McMillan Oil and Gas team. We are excited to welcome them along with their extensive transactional experience and involvement with energy projects spanning all sectors of the industry.

Contact our team to achieve your business goals

OF ENERGY VOL 2, ISSUE 1 | FEBRUARY 2020

PUBLISHERS

Pat Ottmann & Tim Ottmann

Natural Gas Will Again Energize Alberta’s Economy

by David Yager

Profile: Chapman Petroleum Engineering Celebrates 35 Years

by Jamie Zachary

04 07 11 15

Cover: The Heartland PetrochemicalFEBRUARY Complex 2019

by Melanie Darbyshire

Global Insurers Servicing Our Energy Sector are Doing Right by the Planet

by Cody Battershill

EDITOR

Melanie Darbyshire

COPY EDITORS Lisa Johnston

ART DIRECTOR

Jessi Evetts jessi@businessincalgary.com

COVER PHOTO

Supplied by Inter Pipeline Ltd

ADMINISTRATION

Courtney Lovgren Courtney@businessincalgary.com

ACCOUNTING

Nancy Bielecki nancy@businessincalgary.com

THIS ISSUE’S CONTRIBUTORS Melanie Darbyshire David Yager Chuck Bean Jamie Zachary Cody Battershill

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David Yager | Natural Gas Will Again Energize Alberta’s Economy

NATURAL GAS WILL AGAIN ENERGIZE ALBERTA’S ECONOMY

by David Yager

T

he fifth anniversary of Alberta’s forced and painful adaptation to low oil prices, reduced investment and no new pipelines passed late last year. November marked five years since OPEC’s decision to abandon global supply management which subsequently collapsed world oil prices. There has been reduced prosperity and tranquility since.

For five years, oil prices have struggled to average half what they were from 2011 to 2014.

Four proposed oil pipelines are either dead, stalled or years away from completion. Ignoring collapsed commodity prices, in 2015 new climate activist governments in Edmonton and Ottawa introduced expensive interventionist policies accompanied by huge deficits. Political anger in the West is real and palpable.

Almost forgotten in the drama of oil prices and climate politics is natural gas, the commodity that formerly paid the freight. Gas was the biggest reason why Alberta prospered for the 30 years prior to 2015, and why the five-year slump has been much worse than it would have been otherwise. Like the old Joni Mitchell song goes, “You don’t know what you’ve got till it’s gone.”

The really good news for the new decade is that natural gas is starting a major comeback. The

outlook for 2020 is sharply improved from last year. If a handful of the gas projects underway are completed, this resource will again play a significant role in the economic recovery of the province and its major industry.

Alberta exited the 1980s in tough shape, much like today. Big deficits, low investment and a stalled-out oilpatch clinging to fond memories of better times. But the combination of natural gas prices and export deregulation, new gas pipelines and Alberta’s 1991 royalty regime revisions laid the foundation for a major economic recovery.

Oil, which always hogs the headlines, was going nowhere. After the collapse of 1986, oil prices remained in the dumpster for 15 years. Alberta’s production from legacy conventional fields continued to decline. It peaked at 1.4 million barrels per day in 1973 and by 2000 had fallen by half. It would be well into the 21st century before oilsands development began to seriously stimulate the economy.

According to CAPP data, Alberta’s gas production remained flat from 1973 to 1983 at about seven billion cubic feet per day (bcf/d). Thanks to pipeline capacity additions, production began to grow in the mid-1980s. By the year 2000, gas output more than doubled

4 • Business of Energy • February 2020

Natural Gas Will Again Energize Alberta’s Economy | David Yager

As important as volume was price. Gas sold for under a dollar per thousand cubic feet (mcf) until 1977. For the next 30 years, gas would average $2.95/mcf, peaking at $8.46/mcf in 2005.

For the first decade of the 21st century, the average price was $5.86/mcf. In 2014, gas still fetched $4.36/mcf for the year.

Since 2014, the price of gas has fallen further than oil. For 2015, 2016, 2017 and 2018, average gas prices were only $2.64, $2.33, $2.33 and $1.44 respectively. In 2018, oil averaged 66 per cent of its 2014 price. For 2018, gas garnered only 33 per cent of 2014 levels. Brutal.

The impact of natural gas on Alberta’s treasury was spectacular. While political legend has it that Premier Ralph Klein was a fiscal management genius, politics is much like oil and gas exploration where the old saying rules, “I’d rather be lucky than good.”

In Klein’s first year in office, 1993, the value of all the natural gas produced in Canada (mostly from Alberta) was $7.9 billion. In 2005, Klein’s last full year as premier, the value was $52.8 billion. Natural gas production royalties in the 1993/94 fiscal year totalled $1.4 billion. In the 2005/06 fiscal year, the figure was $8.4 billion. Alberta’s gas royalties in the first decade of the 21st century totalled $55 billion.

Canada’s total gas production fetched only $8.6 billion in 2018, 84 per cent lower than 2005.

Alberta’s gas royalties for the fiscal year 2018/19 had plunged to only $536 million, a paltry six per cent of 2005’s record.

Natural gas paid the freight during the go-go years when the deficit was retired, taxes were low and the economy boomed. One year there was so much cash sloshing around in Edmonton every living Albertan got $400, the so-called “Ralph bucks.”

Of the all the reasons cited why this century started with Alberta as Canada’s model of sound fiscal management and enlightened conservative administration, the real driver – natural gas – is rarely mentioned.

Except for oilsands and coal, Alberta’s hydrocarbon deposits are deemed “gas prone.” It’s almost everywhere as the CPR learned in 1883 while drilling for water for steam locomotives near Medicine Hat. For years anybody with $100,000 could drill a shallow gas well, put it on stream and call themselves an “oilman.” In large parts of southeast Alberta not hitting gas was less likely than finding some.

For the first 15 years of this century, there were 96,192 gas wells completed in Alberta, an average of 6,413 annually. The 2018 total was only 735. The best year ever for drilling in Canada was 2005 at 22,186 wells. Sixty per cent or 13,268 were new gas wells in Alberta.

The oil service business was rocking. By comparison, only about 4,000 wells were drilled in Canada last year.

North American gas prices began sliding 10 years ago when massive new supplies were unlocked using horizontal drilling and hydraulic fracturing. The discoveries that most impacted Alberta were the massive Marcellus and Utica Shales in Pennsylvania, Ohio and West Virginia. These were close to Alberta’s best gas markets: Ontario, Quebec and the northeast U.S. As more of these customers were connected to closer U.S. supplies, prices and volumes for Alberta gas began to decline.

Geologically, Alberta enjoyed significant excitement from the exploitation of massive deposits of oil and valuable natural gas liquids in new formations like the Montney and

5 • Business of Energy • February 2020

Natural Gas Will Again Energize Alberta’s Economy

reaching 16.1 bcf/d, the all-time high. By 2018, it had declined to 12.6 bcf/d, 25 per cent below record production 18 years earlier.

“

David Yager | Natural Gas Will Again Energize Alberta’s Economy

Most of the challenges facing Alberta’s once vibrant junior and intermediate producing sector can be traced back to natural gas.

Duvernay in the northwest. These also contained large amounts of associated gas production. Just what Alberta didn’t need, more gas. Unlike too many places around the world, Alberta is an environmentallyresponsible producer so the gas cannot be flared. This extra gas with no market further depressed prices. Pipeline transportation interruptions from these new supplies in the northwest to storage reservoirs in the southeast periodically collapsed prices. It has not been uncommon for Alberta spot gas prices to go to zero, even negative.

Most of the challenges facing Alberta’s once vibrant junior and intermediate producing sector can be traced back to natural gas. The majority of Alberta’s suspended wells formerly produced gas but were shut-in as uneconomic to produce or repair. The growing number of abandoned wells managed by the Orphan Well Association are from once-successful gas producers.

However, improvements – on several fronts – are on the horizon. Aware of the gravity of the problem, Jason Kenney’s new UCP cabinet included an associate minister of natural gas to focus on solutions. Working with federal regulators, producers and TC Energy, the tolling system for the NGTL provincial gas gathering system was changed. This immediately improved the Alberta spot price.

NGTL will complete a $9-billion upgrade on Alberta’s gas transportation infrastructure in 2021 which will permanently alleviate the plumbing problems.

Meanwhile, LNG exports survived October’s federal election and look very promising. LNG Canada is spending, building, hiring and working hard towards a 2025 completion date for flowing gas. This project is joined by Woodfibre LNG in Squamish, Énergie Saguenay from eastern Quebec and Pieridae Energy out of Nova Scotia, a project called Goldboro LNG.

Kitimat LNG looks stalled for the moment after Chevron announced its plan to sell its 50 per cent interest. Although this is part of a global asset rationalization, not necessarily the project itself. If somebody buys it, the increasingly bipolar industry will be just as happy as it was disappointed when Chevon announced its intentions.

If they were all (except Kitimat) completed, LNG exports would move about 5.5 bcf/day of gas out of Canada, one-third of current gas production. This would have a huge impact on the natural gas business. Compared to what gas producers have endured in the past five years, you wouldn’t know the place.

Politically, Alberta and B.C. have found peace over mutually-beneficial LNG exports and improved gas markets. While climate change alarmists continue to claim LNG exports are as bad as oil or coal for emissions once accidental methane leakage is included, common sense dictates replacing Asian coal with natural gas for electricity generation will make the world a better place.

What is interesting about LNG is that B.C. and Ottawa introduced financial support to make LNG Canada viable. For oil, these same governments preferred obstacles like opposing and cancelling pipelines.

As 2019 ended, the 12-month futures price for Alberta gas was $1.92. The same price in late 2018 was $1.35, 30 per cent lower. For May 2020, the futures price at year-end 2018 was $1.01. As 2019 ended, it was $1.58, 56 per cent higher. This will only improve with market access.

Irrational optimism? Nope. Just numbers. Better B times ahead. OE

David Yager is an oil service executive, oil and gas writer, energy policy analyst and author of From Miracle to Menace – Alberta, A Carbon Story. He lives in Calgary.

6 • Business of Energy • February 2020

Back row Left to Right: Konstantin Zaitsev, Lya Lamoureaux, Rebecca Howe, Wei Wang, Khaled Latif, Grace Teh, Klorinda Kaci and Denis Briere. Front row seated Left to Right: Svetlana Simeons, Ann Chapman, Charlie Chapman and Roger Sakatch.

THIRTY-FIVE YEARS IN THE MAKING

Chapman Petroleum Engineering celebrates milestone anniversary

by Jamie Zachary with photos by Riverwood Photography

I

t’s 1985 and Charlie Chapman has just ventured off on his own to create what would eventually become Chapman Petroleum Engineering.

Long behind him was the sun-drenched fields from the small central Alberta mixed farm he’d grown up on … the years of study at the University of Alberta … those formative days at Sun Oil.

Chapman did just that, rounding up the cows and then some in guiding his diversified petroleum engineering consulting firm to its 35th anniversary in 2020.

More than 1,200 clients.

More than 6,000 projects.

More than 55 countries.

It was a moment of realization for Chapman — one that required tapping into his roots for inspiration.

More than Chapman could have ever envisioned.

“There’s a sense of urgency you get when growing up on a farm,” Chapman says as he leans across his desk at the Calgary beltline office. “When the cows are out, you don’t go in for cookies. You get the cows back in and then head in.”

“In 1985, I was looking from one day to the next,” he recalls. “What’s been the key to our longevity?

So many things. I think the biggest thing was as the business changed, we found ways to succeed by adapting — by looking for opportunities elsewhere.”

Chapman Petroleum Engineering - Celebrating 35 Years

Charlie and Ann Chapman.

One of those early breaks came as Chapman turned the company’s attention internationally – growing its portfolio of reserve and economic evaluations for purposes such as annual financial reporting, acquisitions and divestitures, and securities underwriting.

“A lot of where we really started to lift off originated with Calgary clients who were getting involved

333 11 Avenue SW Suite 1500 Calgary AB T2R 1L9 403-233-7750 | kmss.ca

CONGRATULATIONS Chapman Petroleum Engineering on 35 years!

We wish you many more years of continued success.

with international projects,” says Chapman. “We got involved with how these countries ran their business. And we’ve since put together models for a lot of countries around the world for the various fiscal regimes they have.”

Today, Chapman Petroleum Engineering offers a catalogue of services. As Chapman himself describes it, “Our slogan is no job is too small, no job is too big.”

However, the core of Chapman’s business continues to be reserve and economic evaluations and resource assessments, which have helped bring several high-profile companies public to the exchanges in Canada, Hong Kong, London and Oslo, among others.

Even as early as the mid-1980s and early 1990s, Chapman Petroleum was instrumental in many of the listings on the Toronto Stock Exchange, including Olympia Energy, Canadian 88, Canadian Superior, Neutrino and Vermilion.

Chapman Petroleum Engineering - Celebrating 35 Years - 2

“We evaluated the first well for Vermilion Energy for a roll-in for their public listing and continued to evaluate their company through their early growth stages,” says Chapman. “We’ve established a really nice relationship with the stock exchanges.”

The company’s scope has continued to expand to include specialized technical services such as petrophysical analyses, well test design and analysis, formation evaluation (DST) and geological mapping.

And in the vein of “no job is too big,” Chapman Petroleum even offers management assistance.

“Because of our diversified staff, we’ve been seconded to co-ordinate various well-drilling programs, including a recent project involving the management of up to 170 producing wells in Alberta,” says Chapman.

Some of Chapman’s proudest moments have been the company’s regulatory involvement, including being part of legal applications and hearings, as well as in providing expert witness testimony.

Chapman himself just recently wrapped up a three-year term on the Oil and Gas Committee of the Canada-Newfoundland & Labrador Offshore Petroleum Board, which is a five-participant committee called upon to organize and preside over regulatory hearings.

Chapman Petroleum has also found itself in international dispute resolutions. The company has provided expert witness testimony in forums such as the International Chamber of Commerce in Switzerland. Separately, Chapman Petroleum was an adviser to the Ministry of National Infrastructures in Israel in a dispute between the petroleum commission and an operator that, upon resolution, went on to make the first on-land oil discovery in that state.

Moving forward, Chapman Petroleum is going back to the future, so to speak. In 2004, the company was part of a Canada-Kazakhstan umbrella project designed to foster joint venture agreements between the two countries. Over the next decade, Chapman Petroleum successfully worked on several projects for operators in Kazakhstan, including KazMunayGas, the state-owned oil and gas company of Kazakhstan.

In the last couple years, the company has re-initiated its presence in Kazakhstan through the founding of Chapman Petro Consulting with a 50 per cent

Chapman Petroleum Engineering - Celebrating 35 Years - 3

partner in Kazakhstan. Under this arrangement the company is assisting with the government’s initiative to reclassify and record the country’s reserves under the international Petroleum Resources Management System (PRMS).

“That’s where our real growth focus is right now,” says Chapman. “We’re seen in Kazakhstan as an expert in that area.”

While the company’s new venture in Kazakhstan is emerging alongside other projects in countries such as Azerbaijan, India and Mali – where Chapman has been co-ordinating the evaluation and development of the first known purehydrogen reservoir – Chapman believes there continues to be a lot of unrealized opportunities locally. He points specifically to gas-rich areas of the Western Canadian Sedimentary Basin that extends between Saskatchewan, Alberta and northeast British Columbia.

“I’m on an advisory board for a company that’s doing a gas-to-liquids project, and I know another associate who is working on a similar project. Given these projects, along with the coal conversion to gas for electrical generation, I see the natural gas business getting stimulated,” he says. “And I see that being a big uplift for the oil and gas industry in Western Canada. That’s where the opportunity is for growth.”

Chapman says the company’s longevity hasn’t existed in a vacuum. He credits his staff as being some of the best in their fields.

“We have a diversified spectrum of experience from people from across the globe,” says Chapman, noting members of his 15-person international team hail from countries such as China, Russia, Kazakhstan and Albania. “Everyone in this company has special skills, including several languages, that contribute to the group. It’s a very unique group and I’m very proud of them.”

He also feels everyone is willing to roll up their sleeves to get the job done – himself included.

“One of the lessons I learned early on is that people at the top must participate in the billing along with the other professionals and staff. Everyone has to

carry their weight. That’s how we’ve managed to survive,” he says.

Lastly, Chapman says, “clients sense we really care about them. We work extremely hard to meet their deadlines, and we take our professional responsibilities to society and public very seriously.”

That’s a message echoed by Kal Latif, geoscience manager at Chapman. With more than 35 years of experience working for major players such as Total, BG Group and Encana, Latif was a former client before joining the team full time.

“The team is unique. The way they deal with clients is unique. You feel the compassion that they are looking after your needs. You feel listened to,” says the Egyptian-born Latif, who has called Canada home for the past 25 years. “Many companies will have their own way of doing things.

Chapman, however, listens and makes appropriate adjustments to the client’s needs.”

Latif adds that because of his international exposure with several major industrial oil and gas players, he, like many others at Chapman, possess the added benefit of having been on the other side of the table.

“We understand our clients’ needs better.

We know what they mean when they ask for something. We can add better value,” says Latif.

Chapman says, “The last cold-call I made was in 1987. Since then, we have continued by word of mouth and repeat business. I had a client who called me this week who we started doing work for in 1985 – one of my first clients.”

“The best marketing you can do in a professional services company is to do good work.”

Visit chapeng.ab.ca to find out more about Chapman Petroleum Engineering.

1122 4th Street SW, Suite 700 Calgary, AB Canada T2R 1M1 Ph: (403) 266-4141 | Fax: (403) 266-4259 chapeng.ab.ca

Chapman Petroleum Engineering - Celebrating 35 Years - 4

The Heartland Petrochemical Complex | Melanie Darbyshire

Christian Bayle, President & CEO of Inter Pipeline.

THE HEARTLAND

PETROCHEMICAL COMPLEX INTER PIPELINE CEO CHRISTIAN BAYLE ON THE MEGA PROJECT HIS COMPANY IS UNDERTAKING

by Melanie Darbyshire

N

ortheast of Edmonton, on a 230-acre piece of land in Strathcona County – Alberta’s industrial heartland – Calgary-based Inter Pipeline Ltd. aims to transform both the province’s petrochemical industry as well as its own energy infrastructure business with a $3.5-billion mega project. The Heartland Petrochemical Complex, construction of which began in early 2018, will be the first integrated propane dehydrogenation (PDH) and polypropylene (PP) complex in North America. The facility will take something abundant and cheap in the province – propane – and turn it into something the world consumes at a much higher price – PP (recyclable plastic) – while creating significant value for all parties involved.

“Alberta has some of the lowest-priced propane globally,” says Christian Bayle, president and CEO of Inter Pipeline. A University of Alberta mechanical engineering graduate, Bayle, who first joined the company in 1997 as a junior engineer, has led it since 2014. “The province produces over 180,000 barrels per day (b/d) of propane and consumes around 60,000 b/d, so we have a huge surplus that gets shipped to the West and Gulf Coasts at very high costs to producers.”

The Heartland project, expected to be online in late 2021, will consume approximately 22,000 b/d of locally-sourced propane (12,000 b/d of which will come from Inter Pipeline’s own

11 • Business of Energy • February 2020

Melanie Darbyshire | The Heartland Petrochemical Complex

Redwater Olefinic Fractionator, located nearby) to produce 525 kilotonnes per annum (KTA) of PP. The easy-to-transport plastic, used in the manufacture of a wide range of finished products including consumer packaging, textiles, automobile components, medical equipment and currency, is the single-largest polymer in the world, with global demand forecast to grow from ~74,000 KTA to over 90,000 KTA in 2023.

Heartland Complex is being built to compete in a global marketplace. The PP manufacturing process at Inter Pipeline’s complex is estimated to generate 65 per cent less greenhouse gas (GHG) than the global average, and 35 per cent less GHG than the North American average.

Mammoet crane lifts Splitter into place at Heartland Petrochemical site.

“We’re feeding into a nicely growing market,” Bayle explains. “Prices in North America for PP are strong and it’s the cheapest market for us to access. There’s great rail access out of Alberta, particularly into the Midwest U.S. where about 40 per cent of all PP in North America is consumed. There’s also a thriving PP market in Eastern Canada, and we can export globally through Vancouver.”

The advantages of shipping PP – small plastic pellets – rather than propane by rail is profound. “PP is one of the cheapest things to transport by rail,” Bayle says. “It requires hopper cars versus pressurized tanks for propane.

By producing PP in Alberta, we can transport as competitively to the big market hubs in North America, in some cases at a lower cost, than our competitors. We no longer have a transportation disadvantage for hydrocarbonbased product coming out of Alberta.”

An energy infrastructure company born in 1997 as a spin-out of Koch’s Canadian business, Inter Pipeline today has four main business segments: oilsands transportation (comprised of the Cold Lake, Corridor and Polaris pipeline systems); NGL processing (consisting of large-scale NGL straddle plants as well as offgas processing facilities located in northern Alberta); conventional oil pipelines (comprised of the Bow River, Central Alberta and MidSaskatchewan pipeline systems); and, bulk liquid storage (consisting of 23 bulk liquid storage terminals located at terminals across the United Kingdom, Netherlands, Germany, Ireland, Denmark and Sweden).

The Splitter goes vertical at the Heartland Petrochemical site.

Employee works on Splitter at the Heartland Petrochemical site.

The Heartland Complex will diversify and strengthen Inter Pipeline’s existing NGL processing business. It will also be the first in the world where the majority of the plant’s capacity is intended to be contracted under ‘take-or-pay’

12 • Business of Energy • February 2020

arrangements, much like how pipelines are contracted. “We’re not a petrochemical company, we’re an energy infrastructure company,” Bayle reiterates. “We’re undertaking Heartland because it is just another step in the hydrocarbon chain and extracts more value from our products. But we’ll do it within an energy infrastructure business model which allows us to de-risk the facility so we’re not exposed to changes in commodity prices. We’ll have stable cash flow.”

Under these contracts, propane producers pay an operating and capital fee to Inter Pipeline in exchange for a fixed portion of capacity at the plant. “Those fees are designed to, when contracted, cover our costs and provide us with a profit,” Bayle explains. “We’ll then sell the plastic pellets on the producers’ behalf. Essentially, they will get, through no investment of their own, a PP-based price for their propane.”

Inter Pipeline’s contracts with PP purchasers will be similarly structured. “They will pay a fixed capital fee as well as a propane, operating and delivery cost recovery charge,” Bayle explains. “They will then receive their proportionate share of the PP pellets, at no additional costs. These costs will generally be well below North American market prices because of our transportation and feedstock price advantages.”

For example, over a five-year period, Inter Pipeline’s analysis shows an average uplift for propane producers of 110 per cent and a cost savings of 20 per cent for PP buyers. “It’s truly an investment where everybody wins,” Bayle says enthusiastically. “Customers get better prices, we get a strong economic investment and it’s great economic diversification for the province.”

To be sure, Inter Pipeline’s investment in the Heartland project evidences its long-term commitment to Alberta. “If we’re going to prosper over the long term, we have to think about our resources differently,” Bayle insists. “Just trying to produce more and more and pushing our way into markets that are ever further away and costly to reach isn’t the best business model. Trying to make investments to add value to our abundant natural resources makes so much industrial logic.”

A very large step for the company, Bayle sees petrochemical investments as a major franchise in Inter Pipeline’s future. “Not only propane-based investments,” he adds, “but other NGLs and olefinic liquids.” He points to ethane, butylenes and propylene as potential feedstock for other business opportunities.

Two years into construction, Inter Pipeline has thus far spent approximately $1.9 billion on the Heartland Complex, which on some components is ahead of schedule. “It’s a large investment for us, and with any large capital commitment it takes years before you get revenue in the

13 • Business of Energy • February 2020

The Heartland Petrochemical Complex

Heartland Petrochemical site - October 2019.

Melanie Darbyshire | The Heartland Petrochemical Complex

Heartland Petrochemical Complex site construction.

door,” Bayle says. “It requires a lot of patience from our investors. But in two relatively short years, we should start producing significant additional EBITDA per annum for the company.”

Although the first of its kind in North America, the project is utilizing globally-proven technologies sourced from international giants such as Honeywell and Grace. “We’re essentially using proven designs,” Bayle explains, “that have been modified to suit Alberta’s climate and our site plan. We’re confident that something that’s never been done before in Canada will be accomplished reliably.”

Over 2,000 people are currently working on Heartland, including 150 Alberta contractors, with a total of 13,000 jobs expected to be created over the course of the project. Once up and running, between 200 and 230 people will be employed on site, with another 30 to 50 in the Calgary office.

service. “Government support is very important for mega projects like this,” Bayle explains.

“Alberta is still a higher-cost area to construct mega projects given the climate, our relative remoteness and higher labour costs. In order to be competitive, government incentive is important. We’re very pleased to get some help.”

The economic return for government, he adds, is already being realized. Through construction of the complex alone there is over a half-billion dollars in various payroll and income taxes being paid. “That’s in addition to the obvious longterm economic benefits over the next 40 to 50 years from this project.”

As construction activity has tapered off dramatically in Alberta since 2014, Inter Pipeline was able to tap a high-quality and eager workforce.

Partnerships with the community have also been formed. Inter Pipeline has invested $580,000 in a three-year partnership with Women Building Futures (WBF), to empower women to pursue careers in the industrial trades. “It’s an underserved area of the employment market in Alberta – women in construction and industrial operating jobs,” Bayle says. “We’ll support through mentoring, pre-apprenticeship and training programs in six different industrial trades.

We have high hopes for that partnership.”

“We made a conscious choice to support local industry through the construction of this project,” he continues. “To direct much of the fabrication and construction activity here in the province rather than offshore. We felt it was the smart thing to do business wise but also the right thing for the province. It’s worked out well for us.”

In November, Inter Pipeline announced a 10-year partnership with NAIT to research opportunities to reuse and recycle plastic in Canada. Known as Plastics Research in Action, it will be funded by a $10-million commitment from Inter Pipeline, the largest applied research partnership in NAIT’s history.

The federal and provincial governments have provided $250 million in financial incentives to the project, the majority of which is from the Alberta government in the form of royalty credits, monetizable once the plant hits

A mega project with the promise of immeasurable economic benefits and diversification for the province, the Heartland Petrochemical Complex is great news for Alberta.

B It’s cause for everyone to be optimistic. OE

14 • Business of Energy • February 2020

Global Insurers Servicing Our Energy Sector are Doing Right by the Planet | Cody Battershill

GLOBAL INSURERS SERVICING OUR ENERGY SECTOR ARE DOING RIGHT BY THE PLANET

by Cody Battershill

W

hat are companies really saying when they claim publicly, under intense activist pressure, that they plan to shun our energy sector in the future?

I’ll ask it another way. If some international insurers and other financial groups say they plan to shift their business away from us and toward Canada’s competitors, how will these competitors be selected?

According to news service Reuters, last summer a coalition of 32 anti-oilsands groups wrote to global insurers and urged them to stop underwriting the Trans Mountain pipeline, which activists hoped would block the delivery of oil from Alberta to B.C. It’s a standard manoeuvre in the activist playbook, dating back to the 1990s and the so-called “war in the woods” that pitted environmental groups against B.C. forestry companies. In the current version, pipeline opponents hoped this move would bring pressure to bear against the federal government to cancel its plan to expand the pipeline.

Of the world’s top 10 oil exporters, Canada ranks number one globally in every single one of the following rating categories: Resource Governance Index 2017; Environmental Performance Index 2018; Democracy Index 2018; and Sustainable Development Index 2019.

Further, Canada also ranks first among those same top 10 suppliers in these additional ratings: Global Cleantech Innovation Index 2017; Women, Peace, and Security Index 2018; Rule of Law Index 2019; and Global Peace Index 2019.

Who signed the letter pressuring these companies to shun oilsands development? You won’t be surprised to learn signatories included Tzeporah Berman’s Stand.earth, as well as Burnaby Residents Opposing Kinder Morgan Expansion, Greenpeace, Friends of the Earth Canada and others.

Some say global capital markets are so large that any one organization that chooses not to provide services will have little, if any, impact on the larger market.

Again, the key question has to be asked: what are these anti-oilsands groups and the insurers that cave into their demands really saying about the Canadian energy sector, especially in relation to Canada’s competitors?

But I say we have every reason to be proud of Canadian energy – of our world-class people, research, technology, regulatory environment, indigenous relations and product that touches virtually every aspect of our lives.

And more important, what should they be saying?

If you want more information on Canada’s incredible record on the environment, health, safety and social justice – or you’d simply like to check my sources on Canada’s top rankings – then B please visit HowCanadaRanks.com. OE

Examples of financial corporations and insurance companies having pledged to stop financing oilsands projects continue to mount. The list of entities that apparently have caved into activist demands include Munich Re, Zurich Insurance Group, Axis Capital, and French firms AXA, Societe Generale, Natixis and Credit Agricole.

Here’s what they need to know about global supply and Canada’s position within it.

Cody Battershill is a Calgary realtor and founder/spokesperson for CanadaAction.ca, a volunteer-built organization that supports Canadian energy development and the environmental, social and economic benefits that come with it.

15 • Business of Energy • February 2020

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Trido Zero Emission Chemical Injection Pump. + 2800 deployed to date

4 0$ Capital Outlay 4 Reduce Emissions & Costs 4 Increase Compliance & CSR

Lease to own model paid down by emissions offsets - Typical payout < 2 years

LETâ&#x20AC;&#x2122;S TALK 587.747.4077 or info@tricoresolutions.ca

TriCoreSolutions.ca