PROCESSWEST Magazine Online

New year, new approach

Don Horne   


The Energy Sector, by Ian Verhappen


We all view the start of each year as a fresh start with new hope. After the challenges of 2018 – including the lowest price for Canadian oil in history, another stall on the pipeline front, the wildfires – it is time we addressed head-on the “politics of oil.”

This last item is significant in that it may be the start of a new trend in Canadian politics where the majority have decided “enough” of the tyranny of the minority/special interest groups/elitists driving the economic and political agenda.

This appears to not only be happening in Canada, but internationally; France has its “yellow vests,” while in almost every Alberta community there can be found pro-pipeline truck convoys.


Unfortunately, the “politics of oil” has gone from being an international issue to a domestic struggle of ideologies. So how should we respond? Perhaps by raising awareness and educating those involved so they can make an informed decision.

Raising awareness has already started with demonstrations in Calgary and elsewhere, and has grown to include the convoys, and continues with industry leaders realizing this is no longer an issue they can ignore, or rely upon groups such as CAPP, CAODC, and others to carry the banner alone. With provincial and federal elections this year, having an informed electorate can have impact on the environment in which Canada needs to be to become competitive once again.

As for the education component, it needs to be about more than money; the message needs to be about legislation – particularly Bills C-48 and C-69 – and how it affects Canada’s ability to expand markets without artificial handouts from Ottawa.

Bill C-69 looks to be more fractious and will likely deliver less consensus between the provinces and Ottawa. C-69 is so broad, masquerading as another attempt to impose the present government’s political agenda on hydrocarbon industries, that we are unlikely to see another energy project completed, if it is passed in its present state.

If sectors of industry were subject to these same requirements, I do not believe we would see another automobile plant, plane manufacturing facility, or any factory that made something with resultant greenhouse generating gases built in Canada.

Meanwhile, our international competitors’ emissions continue to increase despite their governments signing on to the same Paris Accord as Canada.

The corollary Bill C-48 Oil Tanker Moratorium Act prohibits oil tankers that are carrying more than 12,500 metric tons of crude oil or persistent oil as cargo from stopping, or unloading crude oil or persistent oil, at ports or marine installations located along British Columbia’s north coast from the northern tip of Vancouver Island to the Alaskan panhandle.

As discussed in previous columns, the 100 per cent indigenous-supported Eagle Spirit Pipeline would lose out to a new port in Hyder, Alaska – only some 40 kilometres away from Prince Rupert, B.C., if Bill C-48 becomes law.

The ineffectiveness of handouts

You could look at the federal investment (pipeline and recent $1.6 billion loan) and how that isn’t really benefitting the industry; and how the industry doesn’t want handouts to just get by. The $1.6 billion consists of $1 billion available as loans through Export Development Canada to invest in new technology to explore new markets; but without tidewater, the only new products that would qualify I suppose would be CN Rail’s bitumen pucks.

The next half billion in loans are available from the Business Development Bank of Canada (BDC) for energy diversification projects, $100 million through Innovation, Science and Economic Development Canada’s Strategic Innovation Fund and a final $50 million via Natural Resources Canada’s Clean Growth Program for green initiatives.

Canada depends on U.S. refineries to process its oil, because three-quarters of the crude oil produced in western Canada is heavy oil with high amounts of sulphur; yet Canada’s refineries are by in large configured to process light crude. BP’s Whiting Refinery near Chicago, Ill. had a maintenance shutdown last year, with that refinery buying roughly 250,000 barrels per day of Canadian crude.

The Northwest Sturgeon Refinery in Redwater, Alta. Can handle 80,000 barrels per day – approximately one-third of Whiting’s capacity.

Rather than build new refineries, shouldn’t we be adding processing capability to our existing refineries to handle and upgrade bitumen here in Canada? Investments of this sort are likely a better use of $1.6 billion announced in December and likely meet many of the criteria.

But, that would mean becoming more competitive, and removing the red tape of such things as Bills C-48 and C-69, and modifying corporate and personal taxes changes as well.

Then there is the knock-on effect of low crude prices and the mandated cuts by Alberta: the impact on cash flow is reflected in the number of rigs not working. There were only 70 rigs working in December, 50 per cent lower than 2017. December also saw another LNG facility cancelled in British Columbia – in part I believe due to the lack of stability in the political situation, while five new LNG facilities are under construction in U.S.

On the positive front, Enbridge Line 3 is planned to be on line in the second half of 2019, almost doubling its capacity from the present 390,000 barrels per day to 760,000 barrels per day, in part due to the increase in line size from 34” to 36” along with new pumping capacity.

The recent Leger Energy Survey of Quebecers poll of 1,000 Quebecers indicates that the above messages about the importance of hydrocarbon development to Canada’s economy are being heard since as the results indicate, grass roots population of the province over age 35 across country understand the message rather than the headline sound bites of the special interest groups.

What is interesting in the Leger poll is that approximately 20 per cent of the respondents refused to respond and that despite the horrific July 2013 rail incident in Lac-Mégantic, there is still significant support for oil transport by rail. It was also worth noting that the 18-34 age group were more likely to not support Western Canada/pipeline transportation, which to me indicates they are not getting the same message as the 35-plus audience.

Three things to help get energy industry on track in 2019:

  1. Continued education of Canadians through awareness of how the hydrocarbon industry impacts the well-being of the country;
  2. Increased access to bitumen processing; and
  3. Expanded markets for gas (LNG) and liquids (pipeline and rail), particularly to new markets which inherently means tidewater.

As the Leger poll indicates, educating Canadians on the need for pipelines is getting through – but we need to keep driving that message home to move forward on bitumen processing and expanding our foreign markets.



Leger Energy Survey of Quebecers, Project number 13026-036, November 30, 2018,

About the author: Ian Verhappen is a professional engineer, ISA Fellow, certified automation professional and a recognized authority on industrial communications and process analyzer technologies with 25-plus years’ experience in the hydrocarbon industry. Verhappen – a regular contributing columnist to ProcessWest magazine – provides global consulting services specializing in industrial communications, SCADA, process analytics and heavy oil/oil sands automation and control system migrations. Reader feedback is always welcome. Email


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