What is next for Canada Natural Resources Sector — April 2024
Source — Baker Hughes, BMO, and Stats Canada
Moving oil and gas out of Western Canada via pipeline to overseas markets has been an elusive goal for the industry, which relies on exports to the United States.
Canadian crude trades at a discount to the U.S. benchmark West Texas Intermediate (CL=F) due to its heavier grade and transportation costs. In 2018, Alberta’s government temporarily limited oil production in the province when that price gap fell to more than US$40 per barrel due to scarce takeaway capacity.
Flash forward to 2024, when TD Bank says Canada could set a global record for production increases. Ollenberger forecasts international demand for oil is growing at the fastest clip in 13 years.
“If we don’t have that excess capacity going, we’d be putting stuff on rails. We’d be back to that circus we had a few years back where we just couldn’t move product,” Tamarack Valley Energy (TVE.TO) CEO Brian Schmidt told Yahoo Finance Canada on the sidelines of the conference. “You have to think, what would it be like without it.”
NuVista Energy (NVA.TO) CEO Jonathan Wright says two-thirds of his company’s cash flows come from producing condensate, a light oil used to blend with heavy crude so it can be pumped down pipelines. NuVista’s surging stock has ranked the Calgary-based company among the top performers in the TSX 30 over three years.
“Seeing these projects coming to fruition is starting to have a sentiment change for U.S. investors,” Wright told Yahoo Finance Canada. “More heavy oil production going down TMX, and other pipelines, means more demand for our product.”
Chris Carlsen, CEO of natural gas-weighted producer Birchcliff Energy (BIR.TO), is eagerly anticipating the startup of the LNG Canada export project in Kitimat, B.C., which he says will begin taking gas later this year. An unhedged strategy recently left his company exposed to plunging prices, prompting a dividend cut, which recently drove Toronto-listed shares lower.
Natural Gas
Energy conversion projects:
1. Converting old coal-fired plants to natural gas — https://www.power-eng.com/news/babcock-wilcox-receives-246-million-contract-for-coal-to-gas-project/#gref Babcock & Wilcox
2. Conversion of natural gas to hydrogen — https://innovationorigins.com/en/gas-plants-struggle-to-switch-to-hydrogen/
3. Ability to scale up hydrogen production — https://www.biofuelsdigest.com/bdigest/2024/03/19/production-of-hydrogen-at-industrial-scale-state-of-the-art-and-future-prospects/
4. RNG — https://thetyee.ca/News/2024/03/20/Fortis-BC-Promised-Green-Gas/ Fortis Energy Services, Inc. or https://www.wgnsradio.com/article/86407/middle-point-landfills-70m-renewable-natural-gas-site
Demand for LNG
U.S. liquefied natural gas (LNG) exports soared to record highs in 2023, capturing a growing share of the European market. Meanwhile, unseasonable weather across the U.S. in early 2024 added to market volatility.
Trading volume and open interest in Henry Hub natural gas futures also grew sharply last year, while open interest in LNG freight futures for shipments from the U.S. Gulf to Europe rose to their highest level since the contract was launched in late 2019.
Paul Young CPA CGA is a former Senior IBM Customer Success Manager that has deployed over 300 data and AI solutions across industries and geographies for the past 8 years. Paul is also focusing on driving better business decisions through the modernization of the data architecture.
Blog — How to select the best ESG solution for your /Organization — https://www.linkedin.com/pulse/how-select-right-environmental-social-governance-solution-paul-young-83mzc/
Blog — Analysis and Commentary — Electricity Grid — December 2023 — https://www.linkedin.com/pulse/analysis-commentary-electricity-power-generation-oecd-paul-young-duimc/
Blog — Analysis and Commentary — Natural Gas — March 2024 — https://www.linkedin.com/pulse/analysis-commentary-natural-gas-march-2024-paul-young-nxg7c/
Forestry Sector:
What are the key challenges facing the forestry sector?
- Adoption of mass timber building — https://canada.constructconnect.com/dcn/news/resource/2024/04/mass-timber-a-digital-material-with-a-plethora-of-possibilities-panellist
- Construction starts — https://www.bnnbloomberg.ca/housing-market-to-see-gradual-liftoff-in-second-half-of-2024-rbc-1.2028422
- Biodiversity — https://news.mongabay.com/2024/03/previously-logged-forests-struggle-to-thrive-even-with-restoration-study-finds/
- Forest and wildfires — https://www.cbc.ca/news/canada/thunder-bay/ontario-wildfire-season-2024-begins-1.7160420
- Sawmill curtailment and their economic impacts — https://www.timescolonist.com/business/chemainus-sawmill-workers-face-two-week-shutdown-8451679
What is next for climate change and forestry management practices?
- All levels of government, indigenous nations, special interest groups, and the private sector need to work together on sustainable forest practices. -https://www.ingka.com/newsroom/the-role-of-responsible-forest-management-for-the-environment/
- Carbon sink management — https://www.biv.com/news/federal-review-of-forestry-sector-emissions-falling-short-environmental-groups-warn-8539073
The forestry sector continues to face many challenges. https://simplywall.st/stocks/ca/materials/tsx-wef/western-forest-products-shares/news/revenues-tell-the-story-for-western-forest-products-inc-tsew.
The Forestry Sector needs to a complete overhaul in terms of how best to develop the sector in a sustainable way. Data and AI can play a key role with the management of biodiversity, climate change mitigation, and the improvement of overall forestry management practices.
Paul Young CPA CGA is a former Senior IBM Customer Success Manager that has deployed over 300 data and AI solutions across geographies for the past 8 years. Paul is also FPA SME on how best to integrate macro and micro indicators as part of the data journey for the operational, management, and regulatory reporting cycles.
Blog — How to select the best ESG solution for your /Organization — https://www.linkedin.com/pulse/how-select-right-environmental-social-governance-solution-paul-young-83mzc/
Analysis and Commentary — Forestry Sector — March 2024 — https://medium.com/@paulyoung_81567/analysis-and-commentary-forestry-sector-march-2024-e14820dcbb18 or https://www.linkedin.com/posts/paul-young-055632b_analysis-and-commentaryforestry-sector-activity-7181282958958370819-4v8W?utm_source=share&utm_medium=member_desktop
Blog — Forestry — Big River Industries expansion — https://www.linkedin.com/posts/paul-young-055632b_grafton-timber-factory-opens-primed-for-activity-7181548295519920128-e3Z4?utm_source=share&utm_medium=member_desktop
Blog — Analysis and Commentary — Stock Market — United States — March 29 2024 — https://www.linkedin.com/pulse/analysis-commentary-usa-canada-stock-market-we-march-paul-young-uqpyc/
Blog — Analysis and Commentary — Australia — Stock Market — WE March 29 2024 — https://www.linkedin.com/pulse/analysis-commentary-stock-market-australia-paul-young-wjhmc/
Mining Sector
Source — Stats Canada
I can add a bit more colour:
1. Canada needs to address policies that support capital spending and R&D spending — https://www.linkedin.com/posts/paul-young-055632b_investments-in-business-fell-20-over-a-15-activity-7167545083322466305-UgaB?utm_source=share&utm_medium=member_desktop
2. Lithium has environmental challenges that need to be address — https://www.mining-technology.com/analyst-comment/lithium-mining-negative-environmental-impact/
3. Cobalt — https://glarity.app/youtube-summary/education/the-cobalt-challenge-the-dark-side-10692501_1100720
4. Rare Metals — https://www.pictet.com/global/en/insights/rare-earths--the-dash-to-secure-the-future
5. Recycling needs to be part of EV solutions — https://wasteadvantagemag.com/commentary-are-we-reaching-a-crossroads-for-electric-vehicle-battery-recycling/
6. Lack of capital and resources / Junior Miners — https://mexicobusiness.news/mining/news/junior-companies-have-difficulties-accessing-funding-pdac
7. Biodiversity / Mining — https://www.cbc.ca/news/canada/north/yukon-chinook-salmon-protection-mining-1.7121320
8. Data and AI — https://www.miningreview.com/gold/artificial-intelligence-unearthing-new-potential-in-mining/
10. Mining — https://www.cruxinvestor.com/posts/top-mining-countries-in-the-world-2024
Paul Young CPA CGA is a former IBM Customer Success Manager that has deployed over 300 data and AI solutions across geographies and industries for the past 8 years. Paul is also a lecturer and Consultant in many areas like ESG, Financial Close, Emerging Technologies, IoT, Emergency Planning, Crisis and Risk Management, and transforming the board of directors.
Blog — How to select the best ESG solution for your /Organization — https://www.linkedin.com/pulse/how-select-right-environmental-social-governance-solution-paul-young-83mzc/
Blog — Canada leads sustainable mining push — https://www.linkedin.com/pulse/canada-leads-sustainable-mining-push-paul-young-onjrc/
Blog — Oil and Gas Sector Analysis and Commentary — January 2024 — https://www.linkedin.com/pulse/energy-sector-analysis-commentary-january-2024-paul-young-qbexc/
Blog — Stock Market WE February 2 2024 — United States and Canada — https://www.linkedin.com/pulse/stock-market-week-ending-february-2-2024-paul-young-i6uoc/
Blog — Australia Stock Market for the WE February 2, 2024 — https://www.linkedin.com/pulse/australia-stock-market-close-week-ending-february-2-2024-paul-young-s6dnc/
Blog — Stock Market WE February 2 2024 — United States and Canada — https://www.linkedin.com/pulse/stock-market-week-ending-february-2-2024-paul-young-i6uoc/
Blog — Analysis and Commentary — Australia — January 2024 — https://www.linkedin.com/pulse/analysis-commentary-australia-january-2024-paul-young-ffsic/
Blog — Analysis and Commentary — United States — January 2024 — https://www.linkedin.com/pulse/analysis-commentary-united-states-january-2024-paul-young-hq2kc/
Blog — Analysis and Commentary — Canada — January 2024 — https://www.linkedin.com/pulse/analysis-commentary-canada-january-2024-paul-young-ykxhc/
Blog — Stock Market — Australia — January 26, 2024 — https://www.linkedin.com/pulse/australia-stock-market-we-january-25-2024-paul-young-ie2mc/
Blog — Stock Market — USA and Canada — January 26, 2024 — https://www.linkedin.com/pulse/stock-market-analysis-we-january-26-2024-paul-young-oocke/
Trade
- Oil / Canada — https://www.cbc.ca/news/canada/calgary/alberta-february-oil-production-record-tmx-1.7162316
- Canada / LNG — https://www.wetaskiwintimes.com/opinion/canada-gets-another-black-eye-on-lng
- Canada iron-ore — https://www.bnnbloomberg.ca/iron-ore-s-reset-lower-to-100-heralds-china-s-new-economy-shift-1.2053993
- Canada lithium — https://www.canadianmanufacturing.com/manufacturing/full-circle-lithium-secures-additional-client-for-lithium-298533/
- Canada forestry sector — https://simplywall.st/markets/ca/materials/paper-forestry-products
- Canada hydrogen sector — https://www.ey.com/en_ca/tax/tax-alerts/2024/tax-alert-2024-no-21
- Farming — https://www.rmoutlook.com/alberta-news/why-climate-change-on-the-farm-means-a-big-bill-for-canadian-taxpayers-8550638
- Potash — https://www.ibisworld.com/canada/market-research-reports/mineral-phosphate-mining-industry/
- Manufacturing — https://www.automationmag.com/canadian-manufacturing-march-2024/
- Coal — https://calgaryherald.com/business/energy/canada-coal-exports-rise-2023-despite-promised-ban
I estimate that Canada Exports could be 20% higher or about $140B more if there was more focus on developing oil, gas, forestry, metal, and non-metal in a sustainable way. The opportunity loss to Canada federal taxes is estimated at $10B to $22B per year including over 100B in accumulated GDP lost during the Justin Trudeau era — Blog = Analysis and Commentary — GDP per Capita — Canada — https://www.linkedin.com/pulse/gdp-per-capita-canada-december-2023-paul-young-dpf2c/
Paul Young CPA CGA is a former Senior IBM Customer Success Manager that has deployed over 300 data and AI solutions across geographies for the past 8 years. Paul is also FPA SME on how best to integrate macro and micro indicators as part of the data journey for the operational, management, and regulatory reporting cycles.
Blog — How to select the best ESG solution for your /Organization — https://www.linkedin.com/pulse/how-select-right-environmental-social-governance-solution-paul-young-83mzc/
EBITDA
Stock Market — https://medium.com/@paulyoung_81567/stock-market-analysis-for-the-week-ending-april-5-2024-72fcb937cbe8 or https://www.linkedin.com/posts/paul-young-055632b_stock-market-analysis-for-the-week-ending-activity-7182370500784926721-eb2m?utm_source=share&utm_medium=member_desktop