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Amid oil price crisis, major energy producer says Canada’s largest pipeline system is ‘dysfunctional’

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Canadian Natural Resources is doubling down on its concerns about wasted space on Canada’s biggest oil pipeline, blaming a “dysfunctional” process as one reason for slashing its spending plans next year.

It follows complaints the company’s executive vice chairman Steve Laut made last month, saying current rules allow “certain players” to exploit the system by booking pipeline space they don’t need when capacity is tight. 

There are concerns these so-called air barrels mean less oil is reaching the market, resulting in lower prices for Canadian crude.

On Wednesday, Canadian Natural slashed its capital spending for 2019 by about $1 billion.

“Currently the lack of market access and a dysfunctional pipeline nomination process are creating industry challenges,” the Calgary-based company said in a release.

So-called “air barrels” are caused when oilpatch players or traders book more pipeline space than they physically need, resulting in leftover pipeline space. Alberta is desperate for any spare space right now.

Steve Laut, executive vice-chairman of Canadian Natural Resources Ltd., has called the pipeline nomination process ‘dysfunctional’ and said it’s contributing to low oil prices in Western Canada. (Jeff McIntosh/Canadian Press)

Because there is so much competition for pipeline space these days, pipelines can become overbooked, causing the pipeline company to then cut allocations across the board. Oil companies react by booking more space than they need, so that if there is an allocation cut they will still be able to ship all their oil.

Serious complaints

The Enbridge Mainline, running from Edmonton to Sarnia, Ont. and into the U.S. midwest, is the focus of concern that pipeline space is potentially being misused. Most pipelines allocate space based on long-term contracts, while the Enbridge Mainline divvies up space on a monthly basis. 

Analyst Samir Kayande, a director at RS Energy Group, said Laut’s recent complaints around a dysfunctional pipeline nomination process are serious. 

And he has his own questions about how the system is working.

Looking at National Energy Board data, he said Mainline pipeline flows in the third quarter of 2018 appear lower than in the second quarter “by just a little bit” — around 100,000 barrels per day.

A spokesperson for the Alberta led by Premier Rachel Notley said it’s ‘unacceptable if the process for booking pipeline space is resulting in producers having their oil turned back unnecessarily.’ (Jason Franson/Canadian Press)

“But of course we’re in a very tight market and so small differences in flows actually make a big difference in price,” Kayande said.

“The logical question we should be asking ourselves is: why are Enbridge pipeline flows down when there’s all this oil production everywhere and storage is bulging at the seams?”

Government priority

Alberta Premier Rachel Notley has said her government is examining the issue, something the provincial government confirmed Wednesday.

“We think it’s unacceptable if the process for booking pipeline space is resulting in producers having their oil turned back unnecessarily,” said spokesperson Mike McKinnon.

“We’re in close discussions with companies who are working to develop support for an industry-led solution to this issue and we’ll consider if any further actions by government are needed.”

In an emailed response to questions by CBC News, Enbridge said it is working with customers and the provincial government to maximize takeaway capacity out of the province, but said its Mainline system “is essentially full.” 

“There is no material capacity to be gained by changing the apportionment and supply verification procedures,” spokeswoman Tracie Kenyon said.

She said Enbridge’s nomination process is the result of customer consultation and regulatory proceedings, adding “it is a robust process, with a number of checks and balances.” 

For an industry facing an oil price crisis, every ounce of space is critical.

Increasing oil production, coupled with limited space on oil export pipelines, has created a backlog of oil in Western Canada. This oil glut has weighed heavily on the price of Alberta crude, most of which is sold into the U.S.

Past concern

Besides Canadian Natural, other companies have also raised concerns about air barrels, also known as over-nominations.

Devon Energy, for one, wrote to the National Energy Board in June stating its issues with over-nominations or the process of companies booking more space than they actually need. 

“Over-nominations inflate the demand for pipeline capacity and pipeline apportionment on the Enbridge Mainline and negatively impact the ability of producers to access pipeline capacity to sell their monthly oil production,” Devon wrote.

Pipeline company Enbridge says the Mainline system ‘is essentially full.’ (Kyle Bakx/CBC)

“Producers and other industry participants suffer significant economic harm every month as a result of ongoing over-nomination on the Enbridge Mainline.”

The issue of air barrels is not new, but is now under scrutiny due to financial pressure facing the oilpatch. 

“There can be people given space and they don’t necessarily use it,” said Dennis McConaghy, a former executive with pipeline firm TransCanada.

He said there is always going to be some elements of “gamesmanship” in the process of booking space on the Enbridge line.

“There is always some possibility that you will have an individual shipper getting an allocation of space and how they choose to use that allocation through the month can sometimes result in air barrels,” he said.

Enbridge tried to revise how it allocates space on its pipeline system earlier this year, but quickly scrapped the plan.

The company said in recent months it spoke to shippers about potential changes, but it “determined there is no consensus” on how to modify current procedures. 

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Canadian Homeowners: Meet the Costs of Window Replacement Projects

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Various factors could lead you to consider replacing your windows. However, there are multiple factors to think of that would affect the costs of this project. On average, a window replacement project could cost anywhere from $500 to upwards of $2000. The price is significantly affected by factors such as the design, materials used, and how energy efficient you would like your windows to be.

There are various types of windows to choose from. Understandably, the costs to replace your current window would depend on the kind of window you would like to replace it with.

It is essential to keep in mind that although there are different designs when it comes to windows, you need to take into account the functionality as well. Several types of windows may look suitable for your home but are actually not right for what you need.

Unless you are more concerned with the aesthetic of a window, you should understand what the different types of windows are best used for. To properly understand what makes each window type different, you should be familiar with the term sashes.

Simply put, window sashes are the part that holds the window in place. Depending on the type of window you get, the sash may allow for manoeuvrability or may simply be there to keep your window on the wall.

Moving on, there are several types of windows to choose from. This may all look confusing at first, and you may be tempted to select the best looking one, but you have to put into consideration the functionality of the window.

Unless you’re okay with having a poorly ventilated home or one that is continuously cold because of your window, thorough research and consideration should go into the choosing process.

The thing to remember is that you have to take the process one step at a time. You might feel overwhelmed and indeed, being overwhelmed is not something that will benefit you at all.

So what should you do now? The first stride you need to take when considering a window replacement project is to choose the replacement window. There are various types to choose from. However, it would do you good to consider the six most in-demand window styles first.

Double-hung windows are perhaps the most common choice. The benefits extend to it being easily operable and quick to clean. It operates using two sashes. Both sashes are manoeuvrable and provide you with a top or bottom opening at your choosing.

Single-hung windows are slightly different. Although they operate on generally the same principle, the most significant difference is that one of the sashes is stationary and cannot be moved. One of the sashes usually located at the top is fixed and cannot be moved while the bottom sash can be manoeuvred either upward or downward to allow for air. The benefit of a single-hung window is its ability to decrease the chances of air infiltrating your home. This ultimately means that single-hung windows are incredibly energy efficient.

Casement windows are the optimal choice if you’re looking for ventilation. It operates using one sash and is manoeuvrable through a crank that allows you to swing it open in one direction—usually outward. In addition to its superior ventilation properties, you are also able to enjoy a full and unobstructed view of your surroundings.

Slider windows are perfect if you’re looking for something that requires little to no effort to manoeuvre. Due to its aesthetic and design properties, slider windows are great additions if you would like to have plenty of natural light in the room. It operates using two sashes that allow you to manoeuvre it horizontally, mostly sliding the window from side to side.

Bay windows are an ideal design choice if you would like something that not only looks aesthetically pleasing but also allows for excellent ventilation and natural light. Bay windows are certainly aesthetically pleasing. However, they are also perfect for larger rooms where you would like to bring in a certain amount of outdoor life.

Awnings are generally recommended for areas with damp weather. The easiest way to describe it would be to imagine a casement window that has a top opening instead of side openings. This type of window is perfect if you are looking to add a modern and chic feel to your home.

Now that you have selected the type of window you would like to put into your home, it is time to consider what material to use. There are various options ranging from vinyl to aluminum. Understandably, the costs will vary depending on the type of material you choose.

The best thing to do to ensure that you are making the right choice is to contact a professional in window replacement. The right professional will have all the answers to your replacement windows FAQ.

Contacting an expert not only ensures you make the right choices for your home, but it also guarantees that your window will be installed appropriately and as quickly as possible.

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Window repair or replacement is the responsibility of the condo corporation

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If the windows in your condo are hazy, drafty, or have rotting frames, it’s an indicator that they need repairs or outright replacement.

However, under the Condominium Act, it is the responsibility of the condo’s board to carry out such changes as a replaced window is a common element.

“Under the Condominium Act, a declaration may alter the maintenance or repair obligations of unit owners and the corporation but cannot make unit owners responsible for repairs to the common elements,” said Gerry Hyman is a former president of the Canadian Condominium Institute and contributor for the Star.

“A declaration for a high-rise condominium invariably provides that the unit boundary is the interior surface of windows. That means that the entire window — whether it is a single pane or a double pane — is a common element. Necessary repairs or replacement of a broken pane is the obligation of the corporation.”

According to Consumer Reports, selecting an installing windows replacement can be very overwhelming for homeowners. Therefore, if you aren’t covered by your condo’s corporation, it would be necessary to hire professional hands.

Wood, vinyl and composite windows need to be tested on how they can withstand various natural elements. For wind resistance, a window can be very tight when it’s warm but get quite cold too—especially when it begins to leak a lot.

Whatever the case may be, the bottom line remains that replacement windows can save you heating and cooling costs, but it’s best not to expect drastic savings.

Additionally, while getting a new window might help you save on your electric and gas bills, due to their expensive cost, it may take a long time to offset their cost.

Mid-last-year, the government withdraw a $377 million Green Ontario program that provided subsidy on windows to installers and repairers. Window companies had to install energy-efficient windows in order to qualify for the government subsidy that pays for up to $500 of a $1,000 to $1,500 window.

Due to the largely generous subsidies from the government under the Green Ontario program, a lot of window dealers were fully booked for months—even after the program had ended.

“We’re fine with the program ending, we just need more time to satisfy consumers,” said Jason Neal, the executive director of the Siding and Window Dealer Association of Canada, the industry group representing window dealers in a report.

According to Neal, the Progressive Conservatives acted hastily, making massive changes with no prior notice.

“No notification was given to us by anyone,” he said, noting he learned about the change through one of his dealers.

“It’s created a ripple effect.If they had just given us notice we would have pushed that down the line from the manufacturer right into the dealer right down to the consumer.”

Neal noted that he wasn’t particularly sad to see the Green Ontario program end, as it was “the worst rebate program in the history of the window industry.”

“It’s been horrible,” he said. “$500 a window has created such hysteria.”

However, despite the program ending about a year ago, numerous homeowners have been contacting window dealers consistently with concerns that they might not be able to afford replacement windows without the government’s subsidy.

“I understand their concern,” said window dealer Chris George. “I would suggest they reach out to their local representative of the government in their riding and let them know about their concerns.”

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7 Vancouver Real Estate Buying Tips

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The real estate market in Vancouver is turning around for good for everyone looking to purchase a home.

Previously soaring prices are now beginning to ease up, making it a perfect time for buyers—with real estate agents already getting ready for a very busy spring and summer season.

However, before splashing cash on a new property, there are some very important tips you need to know to ensure you make the most of the buyer’s market.

Here are some few expert tips that would guide you when purchasing a home in the sometimes frustration Vancouver seller’s market.

  1. Get adequate financing

It is very important that before you make the move to purchase a property, you put into careful consideration your credit score.

Normally, home buyers with lower scores use the secondary mortgage market to finance their purchase, as they’re more likely to pay a higher interest rate.However, it is advisable to get loan approval long before purchasing the house. This way, you are fully aware of how much you are able to spend—but never be tempted to borrow the maximum amount of money available.

“What’s your mortgage payment that you’re comfortable with? And take into the fact the taxes you’re going to have to pay, if it’s a strata – what the maintenance fees are, if it’s a home what type of maintenance are you going to have to pay in the future?” said Phil Moore, president of the Real Estate Board of Greater Vancouver in a report.

Always be careful of the type of loan you secure and ensure that you can comfortably afford it over a long period of time.

  1. Get a real estate agent

Buying a property without professional help is a very risky move and can be likened to choosing to represent yourself in court without a lawyer. While you might trust your negotiation skills, only realtors are permitted to present offers directly.

Therefore, it is necessary to get a professional real estate agent in the area to represent you. So, screen a few agents and select the best one who has in-depth knowledge of the markets and has a great reputation.

“They’re there to protect you. They’re there to walk you through each step of the process,” Moore said.

  1. Sign up for automated alerts

Most—if not all—realtors have access to the Vancouver real estate board’s database which is updated approximately two days before the public MLS website.

Therefore, you can request from your realtor to sign you up for automatic real-time alerts of all new listings. Doing this gives you an edge as you’re among the very first to know about new properties.

  1. Do a thorough inspection

After receiving an alert for a new listing, it is necessary to push almost immediately for an inspection from your realtor. In this current market, buyers now have time to make an inspection.

Making a quick inspection eliminates any surprises—as there could be major maintenance or repair issues that could spring up. Therefore, you can now table your offer based on the outcome of the inspection, with clauses about claiming your damage deposit back if everything isn’t as was advertised.

Additionally, if you notice that renovations were done, you need to be sure that it was permitted work and carried out appropriately. Failing to do this would ultimately lead to further cost down the line and simultaneously affect the resale value.

  1. Have a back-up plan

There’s always the possibility that everything may not go as smoothly as you’d want. From the inspection being a failureto the property not living up to your expectations—or not being able to agree on the closing date that matches with your needs.

However, a professional real estate agent will definitely help you get past all of these things. If you plan on selling the property as you buy, you can table that and make it part of the deal.

“You’ve got an option, especially in a buyer’s market: you can put in an offer subject to selling your place. So maybe you want to have a place lined up,” Moore added.

Additionally, building contingencies into your buying plan is necessary. Things such as unexpected delays in closing the deal, closing cost and moving costs that could result in added living expenses if that’s your permanent home.

  1. Don’t fall for the buyer frenzy

The Vancouver market buying frenzy that caused a serious climb in the prices a couple of years ago has ended. Thus, it is important not to get caught up in bidding wars with properties that have been deliberately under-priced—with the hope of initiating multiple offers.

“Some of the sellers have been on the market for over a year and they’re eager to sell. So what I’m saying to consumers is: you have a lot of choices, you’re in the driver’s seat, let’s go out and take a look at what’s available,” said Moore.

  1. Never be wary of multiple offers

When purchasing a property, don’t be afraid of multiple offers as you have the same opportunity as anybody else.

Typically, there are just a few offers below the asking price: a couple priced fully, and two or three above the asking price—depending on how close the fair market value is from the asking price.

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