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Tide turning for Canadian oil industry despite remaining challenges

With oil prices and production both on the rise, Canada's oil industry is expected to return to profitability. However, constrained pipeline capacity and limited capability to expand export markets are jeopardizing Canada's competitiveness as an oil producer, according to The Conference Board of Canada's Canadian Industrial Outlook: Oil Extraction. 

"The industry has managed to turn the tide on the downturn it has been experiencing since 2014, but the landscape is changing rapidly," said Michael Burt, Director, Industrial Economic Trends, The Conference Board of Canada. "New pipelines that provide access to tidewater will be crucial for Canada to develop new export markets given that Canada's biggest export market for oil, the United States, is ramping up its own production." 

Highlights of the report include:

  • Following three years of losses, Canada's oil industry will be back in the black, with pre-tax profits are expected to reach $1.4 billion this year. 
  • Global demand for crude is estimated to remain strong, increasing at an average rate of 1.62 million barrels per day (MMb/d) in 2018, compared with 1.60 MMb/d in 2017. 
  • Canada's oil companies have become more efficient and labour requirements have weakened. The industry is expected to create just 2,150 new jobs over the next five years.

Backed by solid economic growth, global demand for crude oil is projected to increase this year. Oil markets will remain mostly balanced, with supply projected to slightly outpace demand this year and acting as a ceiling for price increases. The report forecasts WTI to average US$59.20 over the rest of the year. Starting in 2019, however, prices are projected to rise again, along with investment and production. 

Total crude production in Canada is forecast to rise by an average annual rate of 3.4 per cent between 2018 and 2022. The vast majority of that increase will come from the oil sands, while offshore production and diluent production will make up the remainder. 

With prices and production both on the rise, industry revenues are forecast to increase by about 8 per cent in 2018. Costs will inevitably rise, as firms will require more materials and investments to sustain operations. However, employment gains will be modest, and efficiency and cost-containment remain at the forefront of the industry's priorities. This should allow the industry to be profitable this year, after suffering losses for three years in a row. Industry pre-tax profits are expected to reach $1.4 billion this year. 

However, bottlenecks in pipeline capacity and soaring shale oil production in the U.S. are eroding Canadian oil producers' competitiveness. As pipeline capacity in Western Canada cannot keep up with growing production, more oil has to be shipped by rail at a higher cost. This causes a price differential between Canadian oil prices and other global benchmarks, resulting in foregone profits for Canadian oil producers. Canada will also need to rely on new pipelines to expand into new export markets, which might soon become crucial given soaring U.S. oil production. 

Total crude production in the U.S. hit 10 MMb/d in November 2017 and is forecast to surpass 11 MMb/d sometime in 2018, making it the largest oil producer in the world. This has a series of implications for Canada. In the short run, the increased oil supply dampens the prospects for oil price growth. Canada is also competing with the U.S. for investment capital and limited pipeline capacity. In the long run, the U.S. will likely be less dependent on oil imports. 

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Pipelines

Surerus Murphy JV named as Coastal GasLink pipeline contractor

Surerus Murphy JV named as Coastal GasLink pipeline contractor

Surerus Murphy Joint Venture (SMJV) is pleased to announce that it has been named as one of four contractors for TransCanada Pipeline's (TCPL) Coastal GasLink pipeline project. SMJV brings together two leading family owned construction companies, Surerus Pipeline Inc. of Fort St. John, B.C. and J. Murphy & Sons Ltd. of London, UK. As a fully integrated joint venture, the company has completed pipeline projects in some of Western Canada's most challenging terrain and takes pride in its motto of "Safe Work. Quality Work." 

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Industry News

U.S. natural gas production may grow up to 60 percent in next 20 years

A well in the Pennsylvania Marcellus Shale.  – Flickr user wcn247, used under Creative Commons license https://creativecommons.org/licenses/by-nc/2.0/

A decade since the start of a shale gas revolution that unlocked new supplies and resulted in a "wholesale turnaround" in U.S. production, the overall size of recoverable gas reserves continues to increase and the pace of production growth is only accelerating, a new report by business information provider IHS Markit says.

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Liebherr showcases latest crane innovations at Customer Days 2018

Liebherr has successfully wrapped up it's impressive 2018 Customer Days event at its mobile crane facility in Ehingen, Germany. Established in the early 1990s and taking place every three years, the Customer Days event has grown substantially. This year 3,000 customers from over 80 countries descended on the sprawling factory grounds to see first-hand the impressive range of cranes on display. 

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Asset Management

NOV launches GoConnect condition monitoring services

NOV launches GoConnect condition monitoring services

National Oilwell Varco, Inc. has announced the commercial launch of GoConnect condition monitoring services for intervention and stimulation equipment, which provides real-time process monitoring, predictive analytics, and condition-based maintenance capabilities for NOV's pressure pumping, coiled tubing, nitrogen, and wireline equipment. The GoConnect system uses machine learning to provide data-driven insights into the condition, health, and performance of customers' equipment and operations. The GoConnect system's capabilities allow customers to reduce downtime-related costs, enhance equipment performance, and improve operational efficiencies of completion services.

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Pipelines
Software & IT

Web-based software improves pipeline survey speed and quality

Web-based software improves pipeline survey speed and quality

American Innovations is pleased to announce Survey Manager, the first product in the company's new Concentric product line, is now available for purchase. The goal of Concentric products is to use cloud and mobile technology to help pipeline personnel collaborate on survey data and get more accurate insights, faster. Survey Manager does this by allowing surveyors and their supervisors or clients to collaborate on data in real-time, using a rich dashboard that can display survey data on a map, in a grid or on a chart. Users can view these three data displays simultaneously, allowing them to better visualize and analyze their survey results. 

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Pipelines

Eagle Spirit, unions sign MOA for pipeline proposal

Back Row – (L to R) Heiko Wiechern - International Representative, UA Canada; James Kennedy - Director & Administrator, Eagle Spirit Energy Holdings Ltd.; Mark Olsen - Western Canada Sub-Regional Manager, LIUNA; Walter Canta – Business Manager, Teamsters Local 213; Gary Kitchen – Director of Construction, Teamsters Canada; Patrick Campbell – International Representative, IUOE Sitting – (L to R) Calvin Helin – Chairman & President, Eagle Spirit Energy Holdings Ltd.; Brian Cochrane – Business Ma (CNW Group/International Union of Operating Engineers)

Eagle Spirit Energy Holdings Ltd. and Canada's Four Pipeline Craft unions are pleased to announce the signing of a Memorandum of Agreement (MOA) to collaboratively pursue and deliver the Eagle Spirit Energy Corridor Project (the Project) from Fort McMurray, Alberta to Grassy Point, British Columbia (B.C.). 

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Pipelines

Durable screw and vane pumps from SPX FLOW

Within the SPX FLOW business, the breadth and depth of pumping knowledge is based on decades of pump development and experience. From its Plenty brand comes a wide range of vane and screw pumps which are widely used for the pumping of heavy viscous fluids across industries such as oil & gas, power generation and naval, and are ideal for forced lubrication of rotating machinery and fuel transfer processes.

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Industry News

Permian Basin production expected to rise by 3 million bpd by 2023, report shows

Permian Basin production expected to rise by 3 million bpd by 2023, report shows

Oil production in the Permian Basin, already a major force in global supply growth, will rise nearly 3 mbd by 2023 — a level of growth exceeding most recent estimates, a new outlook by business information provider IHS Markit says. What the report describes as a "stunning" level of growth will comprise more than 60 percent of net global production growth during that timeframe.

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Power Systems

Siemens low-voltage motors tailored for chemical, petrochemical, oil and gas uses

Simotics XP Chemstar is a customized solution from Siemens for the chemical and petrochemical industries as well as oil and gas. The new low-voltage motors are offered with preconfigured industry-specific option packages tailored to the specific requirements of the process industry. Benefits for customers include fast, simple processes, standardized components and low lifecycle costs. These motors offer a high level of reliability under even extreme conditions and in potentially explosive atmospheres while providing precisely tailored compliance with industry-specific requirements.

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Power Systems

Volvo Penta targeting electric power introduction for 2021

Volvo Penta’s chief technology officer, Johan Inden, and system engineer, Karin Åkman, discuss innovation for electromobility at the company’s new development-and-test laboratory in Gothenburg.

With the aim of becoming a driving force in sustainable power solutions, Volvo Penta is going full charge into hybrid and all-electric drivelines, offering electrified solutions in both its marine and industrial segments by 2021.

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Pipelines

SPX FLOW ClydeUnion pumps designed for most stringent of demands

The SPX FLOW ClydeUnion Pumps brand is well known for its pumping solutions in demanding markets such as oil exploration, refining and distribution, water treatment and distribution, desalination and other industrial processes. With 140 years of expertise in the field of flow technologies, a continuous program of research and development, and the ability to precisely engineer and customize pumps to exact process requirements, ClydeUnion Pumps is a partner of choice for critical pumping solutions.

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Radio remote control offered for J D Neuhaus hoists and cranes

J D Neuhaus (JDN) has further enhanced their remote control capabilities. This innovation will bring exceptional ease-of-use and convenience to users across all industries. Three remote control models are now available, RC-X, RC S and RC-SP, each comprising of a transmitter and receiver and all can either be integrated in existing JDN solutions or directly combined with a new JDN hoist.

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