Connect with us

Real Estate

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

Editor

Published

on

[ad_1]

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. 

[ad_2]

Source link

قالب وردپرس

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Real Estate

7 Tips For First-Time Home Buyers In Calgary

Editor

Published

on

By

Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

Continue Reading

Real Estate

‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

Editor

Published

on

By

The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

Continue Reading

Real Estate

10 Tips For First-Time Home Buyers

Editor

Published

on

By

Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

Continue Reading

Chat

Trending