The western Canadian oil and gas industry is facing unprecedented challenges on several fronts but top producers are taking the “new normal” in stride.
Leaders of several western Canadian energy producers expressed confidence in both their initial response to COVID-19 and the long-term future of the Keystone XL pipeline in a series of online chats at the Canadian Association of Petroleum Producers recent virtual conference.
Despite the “double black swans” of crashing oil prices and a worldwide pandemic, Cenovus president and CEO Alex Pourbaix said his firm was ready for the sweeping changes hitting the economy.
“In terms of our head office, we were very lucky because we moved to IT systems a year ago that fully supported working from home and remote locations,” Pourbaix said.
He added physical work has also shifted smoothly to a social distancing model.
“In the field we’re following (COVID-19) guidelines and using enhanced cleaning measures and I’ve been impressed with how staff has adopted,” he said. “We’re operating at 40 per cent of our standard complement and I’m confident we can do that for an extended period of time without having an impact on our production levels.”
“Operators that need to be up there are up there, but support staff but with support staff who can do their jobs remotely, we have them working from home,” Pourbaix added.
Enbridge president and CEO Al Monaco said the company “came in ready for this event for different reasons but we’re in good shape.”
“We’re not specifically looking at capital related to production. No doubt it’s a prudent time to review projects and doing that, scrubbing all out projects,” Monaco said. “Generally, we’re in good shape but we’re pruning where we can.”
TC Energy president and CEO Russ Girling pointed to energy production as vital to maintain transportation, hospitals and other key areas fighting the COVID-19 pandemic.
“When it comes to construction, people in close proximity need to be managed and we’re consulting with local health authorities. When workers are out on site they try to isolate from communities where we’re building. We can’t have any issues on our workforce,” said.
So far the measures have worked, he added, “and we have construction going on from north eastern B.C. all the way to potentially Mexico.”
“It’s slower than normal because of social distancing and we’ve had to change some of our practices and procedures to meet those guidelines. It’s evolving, all these people want to be a work and we want to make sure they’re safe,” Girling said.
While the stakeholders acknowledged energy markets will continue to slump, they all stressed they are in a good position to come out of current circumstances in good financial health.
“It’s a challenging time for us business-wise, but we’re in a strong financial position and we have an excellent team to weather the storm we’re in and come out of the other side,” Keyera Corp. president and CEO David Smith said.
“Producer cash flows have been curtailed as a result of lower liquid prices and it’s been liquids that have been driving economic activity. We’ve had lots of conversations with customers over the last few weeks, and they’ve been dramatically reducing capital spending plans which is what they should be doing and what you’d expect them to be doing,” Smith said.
“We’ve implemented a capital program that is absolutely sustainable over a period of time. We wouldn’t want people to think it’s the new normal but we’re comfortably sustaining capital investments,” he added.
“The primary thing we’re working on is right-of-way clearing and preparing for construction which will probably be underway around June. There’s some smaller activity going on that will help us develop best practices around COVID-19,” Girling said.
“We had well over 1,000 people working on the right-of-way over winter and we’re in the process of ramping down construction for the spring break up, which fits well with how we’re going to build post-COVID. We can keep the same pace as we did before with the new protocols we’re going to implement,” Girling said.
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