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Alberta’s OPEC-style oil cuts help boost prices — but concern over fallout remains





Alberta’s mandatory oil production cuts have helped boost Canadian crude prices, but concern persists that the cure could be worse than the cold.

Since the strategy was executed two weeks ago, the price gap between Canadian and U.S. benchmark crude has shrunk to under $10 US a barrel. On Friday, it was the narrowest it has been in nearly a decade.

It’s the kind of impact many had hoped to see.

But as prices improve, scrutiny of the plan continues — with some critics saying it could undermine efforts to clear a costly oil glut, while creating the kind of investment uncertainty that won’t soon fade. 

“I’m sympathetic to the plight of the Alberta oilpatch,” said David Goldwyn, who was an assistant secretary of energy for international affairs under U.S. President Bill Clinton. “I just think it’s probably, in the long run, going to be an unfortunate step for the Alberta oil sector.”

Alberta’s curtailment strategy went into effect on Jan. 1, enforcing a temporary 8.7 per cent production cut — or 325,000 barrels a day — in raw crude oil and bitumen.

The move came amid calls from some oil executives and politicians for mandatory cuts to reduce a regional oil glut and bolster prices that had fallen well below the U.S. benchmark, West Texas Intermediate (WTI).

Analysts estimated the economy was losing out on tens of millions of dollars a day.

Suncor’s Fort Hills oilsands mine, north of Fort McMurray, Alta., is shown. Suncor is one of the oil companies that opposed the curtailment strategy. (Kyle Bakx/CBC)

Alberta Premier Rachel Notley said late last week the strategy was having an impact, though it’s key for the province to also make progress on increasing its ability to move more oil by rail and pipeline.

“We’ve seen the market respond quite definitively to the actions that we took,” Notley told reporters Thursday. “But we also know that there are a lot of factors in play and that we are planning for a lot of volatility.”

The hope for the coming months is the curtailment will help clear the oil glut, restore normal price differentials and thwart any kind of fiscal disaster, like some CEOs had warned.

On Friday, Scotiabank Economics said the outlook has improved from a few weeks ago. The report came as the price differential between WTI and Western Canada Select (WCS) dipped below $7. This fall, the differential climbed to over $50.   

“The very sharp rebound in the price of Canadian oil since late fall, coupled with global oil prices quickly rising off their Christmas Eve lows, suggest the impact of lower oil prices may not be as large as feared,” Scotiabank said.

Alberta intends to scale back the curtailment as the oil glut clears, winding it down by year’s end. With strengthening prices, there’s hope the cuts could be lifted even sooner.

A truck carrying a full load drives away from a mining shovel at an oilsands mine near Fort McMurray. (Jeff McIntosh/Canadian Press)

But some observers say the impact of the strategy could last longer — and not for the better.

Goldwyn, who is now president of Goldwyn Global Strategies, an international energy consultancy based in Washington, said the Alberta government’s decision to intervene in the market will lead some oil companies to wonder when it will take such action again.

“That’s a permanent uncertainty that the government has created by stepping in with this curtailment,” he said.

Suncor, Husky Energy and Imperial Oil each opposed the curtailment policy. Those companies, which argued the market was working without curtailment, invested in significant refinery and retail businesses that help shield them from wider differentials.

‘Maybe desperate times call for desperate measures, but you have to weigh the consequences of your actions,’ says energy analyst Martin King. (Kyle Bakx/CBC)

“The industry will always wonder, if prices get to a certain level, or inventories get to a certain level, whether they’re going to be looking at that again. Or they’ll start to bargain for assurances from the government that they’ll be protected from any sort of cut,” Goldwyn said.

“It just adds a very serious uncertainty to investment in Alberta at a time when things were already challenged.”

Martin King, an independent energy analyst based in Calgary, said the provincial government should not have intervened in the market and now must resist the temptation to do more.

“Maybe desperate times call for desperate measures, but you have to weigh the consequences of your actions,” he said.

King contends the intervention could undermine efforts to clear the oil glut. That’s because by artificially narrowing the price differential, there’s less of an incentive to ship Alberta crude by rail, he said.

“Generally, the cost of getting crude to market from Alberta is about $15 US a barrel, say up to $20 a barrel — depends on distance, depends on the exact cargo,” King said.

“With the differential having narrowed down to … about $8 [last week], the economics of shipping crude, at least on a spot basis, by rail have largely been eroded down to essentially no viability at all.”

Those who work in the oilpatch are watching how things play out.

Gary Mar, chief executive of PSAC, says there’s ‘no great cheer’ in the energy-service sector as it enters the new year. (Ellis Choe/CBC)

There’s “no great cheer” in the sector as it enters the new year, said Gary Mar, chief executive of the Petroleum Services Association of Canada. PSAC members make up many of the frontline firms that work in or for the oilpatch. 

“If you’re a producer, you benefit from the cash flow that comes from selling oil at a better price,” Mar said. “But it doesn’t help you if you’re in the services sector, because you’re only working when there’s projects in the ground that gets you working.”

Mar is looking to see how much companies plan on spending in the coming year, but expects it to be “relatively low” for at least the first two quarters, with perhaps more activity in the third.

Tristan Goodman, president of the Explorers and Producers Association of Canada, said better oil prices have produced some optimism. But he added improved market access — including rail and pipelines — is what’s needed.

“It is a challenging situation, and I think this [curtailment] has been implemented well,” Goodman said. “But it is disappointing still that we continue to suffer these pipeline problems.”


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Future of Ottawa: Coffee with Francis Bueckert





Francis Bueckert: When it comes to the current landscape of coffee-roasting companies and independent cafes in Ottawa, I think we are at a really interesting moment in time. There are more local roasters that are doing artisanal small-batch production—with more attention to the quality and origin of the beans.

With larger corporations such as Starbucks closing locations, it has opened a bit of space for local players to grow. We have been lucky to work with many folks in the coffee-roasting community, and we have found that there is a willingness to collaborate among different coffee roasters. For example, when Cloudforest started back in 2014, we were roasting our coffee at Happy Goat and it was the expertise of their head roaster Hans that helped me learn how to roast. Other companies such as Brown Bag Coffee have also lent a hand when we needed extra roasting capacity. There are others, such as Lulo, Mighty Valley Coffee, Bluebarn, The Artery, and Little Victories that are also part of the growing local coffee community. It’s small roasters like these who have shown me what a coffee community can look like, and that we can help to elevate each other, rather than being locked in competition.

If you care to make a prediction… What’s happening to the local café industry in 2021?

We believe that there is hope and that 2021 can be a big pivot year for small roasters and cafes.

This year will not be ideal from a business point of view. However, it could create a shift in people’s attitude toward where they get their coffee. We are holding out hope that people will support the roasters and cafes that are local to help them economically survive what is in all reality a very difficult time.

It all depends on where consumers decide to go this year. People are starting to recognize that supporting large corporations at this moment will be at the cost of the local roasters and cafes. There is the growing realization that a future where there is only Amazon, Walmart, and Starbucks would be pretty bleak. So we have an opportunity this year to support the kind of local businesses that we want to see thrive.

In your wildest dreams, what will the landscape for local coffee roasters and cafés look like in your lifetime?

In my wildest dreams, all of the coffee roasters and cafés would be locally owned and independent. They would all be focused on direct trade and artisanal coffee. Each different coffee roaster and café would know exactly where their coffee came from. Ideally, each company would be a partnership between the farmers who grow the beans and the people here selling them. There would be a focus on how to cooperate and collaborate with the farmers in the countries of origin to share the benefits around. We would all work together and share orders of cups, lids, and other packaging so that we could get better bulk pricing. In this way, we would make our local coffee community so efficient that the large corporate coffee companies wouldn’t even be able to compete.

We would also like to see people use coffee as a way to create social good. For example, we started Cloudforest as a way of helping support farmers in Ecuador who were taking a stand against large mining companies. This remote community stood up to protect their environment, so that they could have clean drinking water and soil for the next generation. They started an organic coffee cooperative to help show that there are other models of development, and we are doing our part year after year to help support their vision. They have a vision of development that does not include mass deforestation and contamination, and organic coffee is a key (among others) to show that another way forward is possible.

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Special events in the Ottawa Valley dominate annual OVTA tourism awards





The Ottawa Valley Tourist Association hopes that its annual tourism awards will provide a little sunshine during what is a dark time for local tourism operators because of the pandemic.

The Ottawa Valley Tourism Awards are presented annually by the Ottawa Valley Tourist Association (OVTA) to individuals, businesses, and events that recognize the importance of working together for the growth of the local tourism industry, as well as offering exceptional visitor experiences.

“After a year that saw a lot of businesses in the hospitality and tourism industry being challenged like never before, the annual Ottawa Valley Tourism Awards represent a bit of light on the horizon” said Chris Hinsperger, co-owner of the Bonnechere Caves.

The Ottawa Valley Tourist Association’s (OVTA) Awards Committee co-chairpersons, Meghan James and Chris Hinsperger, said they were very pleased with the recent nominations received, especially in the Special Events category. Submissions were received for The Farm to Fork Dinner Series at the Whitewater Inn; Light up the Valley; The Eganville Curling Clubs’ Rock the Rings; The Ontario Festival of Small Halls ; The Bonnechere Caves On-line Underground Concert Series; The Opeongo Nordic Ski Clubs’ Ski Loppet; The Tour de Bonnechere — Ghost de Tour 2020; and The Bonnechere Caves Rock ‘n Roll Parking Lot Picnic.

“During a time when communities were challenged, it is nice to see that people still made an effort to get together and celebrate, albeit under certain conditions. It just shows the creativity and resiliency of our tourism Community here in the valley” said Meghan James, director of sales at the Pembroke Best Western.

There are three Award categories: The Marilyn Alexander Tourism Champion Award, The Business of Distinction and The Special Event of the Year.

Hinsperger, is excited about this year’s awards.

“During this pandemic the hospitality and tourism industry was the first to be hit, was the hardest hit and will be the last of our industries to fully recover. As Valley entrepreneurs we owe it to ourselves, to our businesses and to our communities to be an active part of that recovery. Our livelihood and economic recovery depends on our efforts. And we will get back to welcoming people from all over the world to share a little bit of the place we are privileged to call home. This awards process leaves myself and others fully optimistic about our positive outcomes.”

Award winners will be announced at the Ottawa Valley Tourist Association’s virtual annual general meeting on Monday, May 31.

The OVTA is the destination marketing organization for the Upper Ottawa Valley and proudly represents more than 200 tourism businesses, comprised of attractions and outfitters, accommodation, food, beverage and retail establishments, artists and galleries, municipalities, as well as media and industry suppliers. The OVTA is supported by the County of Renfrew, Renfrew County municipalities and the City of Pembroke.

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Future of Ottawa: Farming with Jeremy Colbeck





Jeremy Colbeck: Well first, let’s talk about what we mean by farming. Although farms, and farming as an occupation, are in decline across Canada, they are still a major part of our rural landscape. That’s even more true for a strange city like Ottawa which includes a LOT of rural areas and whose urban boundary takes, what, three hours to cross? About 40 per cent of the rural land in Ottawa is farmland. Most of that farming is corn and soybean cash-crop, as well as some dairy and livestock farming. That’s mostly conventional farming (the kind that is profitable but not exactly where you take your kids on a Saturday).

There are also a lot of agri-tourism businesses in Ottawa, which give you that oh-so-good Saturday spot for family donkey-petting and apple-picking. And it’s totally understandable from a business perspective, but sometimes surprising to find out, that even though they grow some of the Christmas trees they sell, they might also be reselling some that come from much larger farms far away. The farmland around Ottawa is also inflated in price because of its proximity to the city, where it is in demand by would-be hobby farmers—folks who want to do some farming on their property in their spare time but make their money (to subsidize their small-scale farming habit) elsewhere. Unfortunately, many of these properties will have large mansions built on them, which will then make them completely unaffordable for the average farmer

There’s also a segment of small-to-medium-sized Ottawa farms that grow “premium” (artisanal, unique, extra-fresh, ecologically- or organically-grown etc…) products that they sell directly to local eaters via farmers’ markets or other direct marketing channels, including on-farm stores and farm stands. That’s where BeetBox fits in.

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