Plunging oil prices impact project forwarding in Canada

These are trying times for project forwarders notably focused on major undertakings in an oil sector in western Canada battered by plunging world prices. But wind energy projects are still generating shipments of wind farm components throughout Canada and through ports on the Great Lakes. From his vantage point in Calgary, Jan Beringer, president and CEO of Rohde & Liesenfeld, a leading project forwarding firm, offered to AJOT an overview of current project cargo trends – including some positive features partly offsetting the generally gloomy oil and gas environment. With world oil prices now hovering around US$30 a barrel (but expected by some analysts to recover to a moderate extent in the near future), new investments in Alberta oilsands projects have evaporated in recent months. In mid-2014, U.S. benchmark crude was over US$100 a barrel. Biggest blow was Royal Dutch Shell’s cancellation last October of the massive Carmon Creek project in NW Alberta. The lack of pipeline infrastructure to get the crude to coastal waters was a key reason for the decision. The European energy giant had initially announced it would build an 80,000 barrel-a-day, steam-driven operation near Peace River. “Completion is, nevertheless, continuing on several existing projects such as the Northwest Upgrader,” said Beringer. There are a number of LNG projects in British Columbia. “But there have been no financial go-aheads and no construction has started,” said Beringer, adding: “None of the players have proceeded beyond permitting applications.” Regarding last year’s thumbs-down by the Obama administration on the Keystone XL pipeline from Canada to the Gulf Coast, Beringer responded: “Canadians are very disappointed that the current U.S. attitudes in Washington do not recognize the value of the long term supply stability of Canadian oil at stable pricing.”

Wind Power On a more optimistic note, Beringer indicated that wind energy projects are continuing in various regions of western Canada. He pointed to a new port in Stewart, north of Prince Rupert, being used by GE for a wind energy project in Northeastern British Columbia. The power sector continues to be busy as well, Beringer said, singling out BC Hydro’s Site C Hydro Power Project under construction. He reported a growing trend throughout North America of gas-fired power plants. Equipment being moved included transformers, stators and rotors, air-cooled condenser equipment, and transmission equipment. Beringer sees the collapsing Canadian dollar (currently at or below 68 cents U.S.), which has coincided with depressed oil prices as beneficial for Canadian exports. “Oil and gas assets like (inactive) drilling rigs will be moving out of the country to overseas buyers,” Beringer said, alluding to inquiries he has received “to export drilling rigs to the Middle East, South America and even Israel.” “Cranes and heavy equipment are also being relocated out of western Canada to other geographical regions,” he concluded. Trends on the Great Lakes At the Port of Thunder Bay on the tip of Lake Superior, Tim Heney, president and CEO, reports, “while tonnage volumes are not as significant as bulk cargoes, the economic impact of project and dimensional cargoes is substantial.” Late in 2015, general cargo traffic at Thunder Bay was up three-fold over a five-year average thanks to inbound shipments of wind turbines, mining equipment, wood pellets and some surviving project cargo for the Alberta oilsands (with CN offering direct rail service to Fort McMurray). At Hamilton, the largest Canadian port on the Great Lakes, the 2015 project cargo numbers did not match a big increase in 2014, but still brought in business for such terminal operators as Fednav’s FMT. On the U.S. side of the Great Lakes, the biggest port, Duluth, has been impacted by global commodity trends, but Vanta Coda, executive director of the Duluth Seaway Port Authority, sees some positive developments. In October alone, he indicated, the port handled components for oil processing and generators for power generation as well as wind blades exported from North Dakota to Germany. “We hope the surge continues well into 2016.” Recent developments have also been encouraging at the Port of Indiana-Burns Harbor where a sharp rise in the Midwest of craft beer brewing has spurred demand for brewery tanks. In late November, the Lake Michigan port had handled 36 large tanks for breweries in in the Chicago region. At the Port of Milwaukee, FMT recently loaded six rotary kiln sections, each weighing 102 tons, aboard a barge for shipment in Quebec.