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Canada Post urging early Christmas shopping as it gears up for online shopping rush

Shop early, says Canada Post

Canada Post is urging Canadians to shop early this holiday season to avoid the late arrival of gifts caused by a pandemic-induced shift to online shopping.

“We know how important these items are to you and we want to deliver," says Rod Hart, Canada Post's chief customer and marketing officer.

In a video to customers, he says many retailers are gearing up for early shopping.

"We’re gearing up to help you and to help them have a great ending to a very challenging year. So this holiday season, please shop early."

The postal service is scaling up operations to handle an expected surge in parcel volumes by adding more than 4,000 seasonal employees, more than 1,000 vehicles and extra equipment.

Canada Post will also deliver on weekends in many communities, add more pickup locations and extend hours at many post offices.

It is improving its tracking technology so customers can follow the progress of their parcels and working with major customers to improve the flow of parcels.

The changes come as retailers in Canada and the U.S. launch their holiday season earlier in a bid to partially make up for store closures caused by COVID-19.

Hudson's Bay Co. launched its yuletide collection of clothing and decor six weeks early, Indigo added private shopping hours so customers can avoid crowds and Reitmans added seasonal outfits early as COVID upends shopping surges on Black Friday.

Michael LeBlanc, a senior adviser at the Retail Council of Canada, says consumers may have more spending money on hand after shelling out less on vacations, commutes and lunchtime cappuccinos.

"Our message to Canadians for the holidays is: shop early and shop often. This is not the year to wait. And retailers are telling me they're seeing signs of gift buying already," LeBlanc said.

Purolator, the courier service owned by Canada Post, is also rolling out low-speed electric vehicles in busy downtown areas of Toronto and Montreal, along with electric-cargo bikes (e-bikes) in Montreal.

It is also testing automated self-serve parcel lockers at a Montreal subway station.

“More than ever, we’re committed to helping dense metropolitan cities operate more smoothly through new delivery methods that help reduce greenhouse gas emissions,” Purolator CEO John Ferguson said.

Purolator said it has seen home deliveries rise about 50 per cent since the onset of the pandemic.



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OxyContin maker Purdue Pharma to plead to 3 criminal charges

Purdue Pharma to plead

Purdue Pharma, the company that makes OxyContin, the powerful prescription painkiller that experts say helped touch off an opioid epidemic, will plead guilty to three federal criminal charges as part of a settlement of more than $8 billion, Justice Department officials announced Wednesday.

The company will plead guilty to three counts, including conspiracy to defraud the United States and violating federal anti-kickback laws, the officials said. The resolution will be detailed in a bankruptcy court filing in federal court.

The deal does not release any of the company’s executives or owners — members of the wealthy Sackler family — from criminal liability, and a criminal investigation is ongoing. One state attorney general said the agreement fails to hold the Sacklers accountable, while family members said they had acted “ethically and lawfully."

The settlement is the highest-profile display yet of the federal government seeking to hold a major drugmaker responsible for an opioid addiction and overdose crisis linked to more than 470,000 deaths in the country since 2000.

“Purdue deeply regrets and accepts responsibility for the misconduct detailed by the Department of Justice in the agreed statement of facts,” Steve Miller, who became chairman of the company’s board in 2018, said in a statement. No members of the Sackler family remain on that board, though they still own the company.

Family members, in a statement, expressed “deep compassion for people who suffer from opioid addiction and abuse and hope the proposal will be implemented as swiftly as possible to help address their critical needs.”

The deal comes less than two weeks before a presidential election where the opioid epidemic has taken a political back seat to the coronavirus pandemic and other issues. It does give President Donald Trump’s administration an example of action on the addiction crisis, which he promised early in his term.

But to Massachusetts Attorney General Maura Healey, the Justice Department “failed” and she said in a statement that she was not done with either Purdue or the Sacklers. “Justice in this case requires exposing the truth and holding the perpetrators accountable, not rushing a settlement to beat an election,” she said.

Ed Bisch, who lost his 18-year-old son to an OxyContin overdose nearly 20 years ago, said he wants to see people associated with Purdue prosecuted. “The fact that they day this doesn't grant anyone immunity, I'm heartened by that,” he said after the deal was announced.

As part of the resolution, Purdue is admitting that it impeded the Drug Enforcement Administration by falsely representing that it had maintained an effective program to avoid drug diversion and by reporting misleading information to the agency to boost the company's manufacturing quotas, the officials said.

Purdue is also admitting to violating federal anti-kickback laws by paying doctors, through a speaking program, to induce them to write more prescriptions for the company’s opioids and for using electronic health records software to influence the prescription of pain medication, according to the officials.

Purdue will make a direct payment to the government of $225 million, which is part of a larger $2 billion criminal forfeiture. In addition to that forfeiture, Purdue also faces a $3.54 billion criminal fine, though that money probably will not be fully collected because it will be taken through a bankruptcy, which includes a large number of other creditors. Purdue will also agree to $2.8 billion in damages to resolve its civil liability.

Purdue would transform into a public benefit company, meaning it would be governed by a trust that has to balance the trust’s interests against those of the American public and public health, officials said. The Sacklers would not be involved in the new company and part of the money from the settlement would go to aid in medication-assisted treatment and other drug programs to combat the opioid epidemic, the officials said.

As part of the plea deal, the company admits it violated federal law and “knowingly and intentionally conspired and agreed with others to aid and abet” the dispensing of medication from doctors “without a legitimate medical purpose and outside the usual course of professional practice,” according to a copy of the plea agreement obtained by the AP.

First lady Melania Trump, who has focused many of her public efforts on health issues such as this epidemic, tweeted that the agreement was “another big step in defeating” the crisis.

But even before the deal was announced, it was facing resistance from state attorneys general, Democratic members of Congress and advocates who wrote Attorney General William Barr asking him not to make the bargain with the company and the family. They said it does not hold them properly accountable and they raised concerns about some of the details.

The Sackler family has already pledged to hand over the company itself plus at least $3 billion to resolve thousands of suits against the Stamford, Connecticut-based drugmaker. The company declared bankruptcy as a way to work out that plan, which could be worth $10 billion to $12 billion over time. Family members said in their statement that the company’s value is more than twice as much as they profited from OxyContin.

About half the states oppose that settlement, and also wrote Barr to ask him not to make the federal deal that includes converting Purdue into a public benefit corporation. They say it would be wrong for governments to rely on earnings from the sale of more OxyContin to fund programs to mitigate the toll of an opioid crisis wrought by prescription drugs as well as heroin and illicitly produced fentanyl.

The Sackler family was once listed among the nation’s wealthiest by Forbes magazine. A 2019 court filing said they had made up to $13 billion over the years from the blockbuster drug, though a lawyer said they brought in far less after taxes and reinvestment in the company.

Until recently, the family’s name was on museum galleries and educational programs around the world because of gifts from family members. But under pressure from activists, institutions from the Louvre in Paris to Tufts University in Massachusetts have dissociated themselves from the family in the last few years.



JC Penney sees bankruptcy protection exit by Christmas

JC Penney back from brink

J.C. Penney believes it will emerge from bankruptcy protection before Christmas under a new ownership agreement that would save tens of thousands of jobs.

The beleaguered, century-old retailer said Wednesday that it has filed a draft asset purchase agreement with the two biggest mall owners in the U.S. Substantially all of J.C. Penney's retail and operating assets will be acquired by Brookfield Asset Management Inc. and Simon Property Group through a combination of cash and new term loan debt.

Details of the deal that will save roughly 70,000 jobs and avert a total liquidation first emerged last month during a bankruptcy hearing.

J.C. Penney, which even before the pandemic had struggled to compete with the likes of Amazon.com, Target and Walmart, became one of the largest retailers to file for Chapter 11 bankruptcy protection this year amid a wave of store closures forced by the spread of COVID-19 infections in the U.S.

More than two dozen retailers have filed for bankruptcy protection since the pandemic closed stores, restaurants, gyms and other businesses across the country.

The Plano, Texas, retailer will shed nearly a third of its stores in the next two years as it restructures, leaving just 600 locations open.



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Retail sales rose 0.4 per cent in August to $53.2 billion

Retail sales inch up

Statistics Canada says retail sales rose 0.4 per cent to $53.2 billion in August.

It was the fourth consecutive monthly increase for retail sales since a record drop in April, when pandemic-related restrictions shuttered most non-essential businesses.

Economists on average had expected an increase of 1.1 per cent, according to financial data firm Refinitiv.

Sales at building material and garden equipment and supplies dealers rose 4.5 per cent, while sales at food and beverage stores climbed 0.8 per cent.

Retail sales in volume terms were up 0.5 per cent in August.

The results came as Statistics Canada says an preliminary estimate for September suggests retail sales were relatively unchanged for the month, but added that the figure will be revised.



Cathay Pacific cuts 8,500 jobs, shutters regional airline

Cathay cuts 8,500 jobs

Hong Kong airline Cathay Pacific Airways said Wednesday it would cut 8,500 jobs and shut a regional airline as it grapples with the plunge in air travel due to the pandemic.

About 5,300 employees based in Hong Kong and another 600 elsewhere will likely lose their jobs, and 2,600 unfilled positions will be cut. The cuts are about 24% of the company’s workforce, Cathay Pacific said in a statement.

“The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the group to survive,” Cathay Pacific CEO Augustus Tang said in a statement.

“We have to do this to protect as many jobs as possible, and meet our responsibilities to the Hong Kong aviation hub and our customers," Tang said.

The company said it will also shut down Cathay Dragon, its regional airline unit, with operations ceasing from Wednesday. It will seek regulatory approval for most of the routes to be operated by Cathay Pacific and its budget airlines subsidiary HK Express.

The restructuring is aimed at reducing Cathay Pacific’s cash burn to 500 million Hong Kong dollars ($64.5 million) a month, from about 1.5 billion Hong Kong dollars ($193.5 million) to 2 billion Hong Kong ($258 million) dollars a month currently, the company said.

The plan will cost about 2.2 billion Hong Kong dollars ($283.8 million), it said.

Executive pay cuts will continue throughout 2021 and there will be no pay increments for 2021 nor bonuses for this year for all Hong Kong employees, Cathay Pacific said. Ground staff will be offered a voluntary leave plan in the first half of next year.

In a news conference, Cathay Pacific Airways chairman Patrick Healy estimated that passenger levels will only return to pre-pandemic levels in 2024.

“The future remains highly uncertain. This crisis is deeper and the road to recovery slower and more patchy than anyone thought possible just a few short months ago,” he said.

Healy said Cathay Pacific is more affected than its peers as the airline is “100% reliant on cross-border travel,” much of which has stopped as passengers remain wary of flying amid travel restrictions. Major destinations such as mainland China and other countries like Singapore and Thailand have temporarily closed their borders to visitors.

Cathay Pacific will be operating at less than 25% of capacity for the first half of 2021, and under 50% of capacity for the rest of the year as a whole, Healy estimated. That might pick up in the second half of the year as travel constraints will hopefully ease, he said.

In June, Cathay Pacific raised 39 billion Hong Kong dollars ($5 billion) in a recapitalization plan that gave the city’s government a stake of about 6% in the airline.

The vice chairwoman of Cathay Pacific Airways Flight Attendants Union, Amber Suen, said in a news conference that the union is “completely disappointed” with the company's decision, and said there are others who worry that there may be future redundancies.



Tim Hortons ditches two cups in favour of one with sleeve

No more double cupping

Tim Hortons is ending the practice of double cupping hot drinks, a move the fast food restaurant says will eliminate hundreds of millions of cups from landfills each year.

The subsidiary of Restaurant Brands International Inc. will instead provide customers with a cup sleeve, a thick paper material that protects hands from hot beverages.

Hope Bagozzi, chief marketing officer at Tim Hortons, says cup sleeves will be used by default for hot beverages like tea and espresso and can be requested for other warm drinks.

She says customers who ask for a beverage to be double cupped will now be asked to consider using a sleeve instead.

Bagozzi says the company expects that stopping the practice of double cupping will save roughly 200 million cups from being tossed in the garbage every year.

Most recycling facilities in Canada don't recycle single use paper coffee cups because of a plastic lining used inside.

But Bagozzi says the company is trying to change that, and is in talks with suppliers about recyclable and biodegradable cups.

Bagozzi says the challenge is to ensure the cup maintains its structural integrity.

"We want to be sure that they are safe and they don't crumble," she says. "They've come a long way and we're very bullish with our partners about leading the way in innovation there."

Bagozzi says Tim Hortons has two pilot programs coming soon, one that will test a cup with a compostable liner and another with a cup made with 35 per cent recycled materials.

"As the biggest market leader when it comes to coffee and hot beverages in Canada, it's part of our responsibility to look at our footprint and our sustainability," she says.

The end of double cupping is part of a suite of changes the coffee and doughnut chain is announcing as part of waste reduction week.

In a bid to improve its environmental footprint, Tim Hortons said on Tuesday it would soon roll out new recyclable paper-based wrappers for sandwiches and bagels, eliminating of about 460 tonnes of plastic from the waste stream each year.

On Monday, the fast food chain said it plans to introduce new paper napkins that use 25 per cent less material and are made up of 100 per cent recycled fibre. The change in early 2021 is expected to save 900 tonnes of paper a year.

Tim Hortons is also phasing out plastic straws from its 4,000 restaurants across Canada.

The restaurant said last week the transition to paper straws is expected to be completed by early next year, eliminating roughly 300 million plastic straws a year.



Experts say counterfeit hand sanitizer recall at Dollarama is a lesson for retailers

Retailers learning lessons

Dollarama Inc. is removing a counterfeit and recalled hand sanitizer from its shelves, which experts say should serve as a reminder of how important it is for retailers and consumers to do their due diligence when shopping.

"Since coronavirus started, it's just been a huge Wild West of personal protective equipment (PPE)," said Yue Gao, a pharmacist and the quality assurance lead at Ontario-based PPE supplier MedyKits.

"Some people don't realize that this is happening."

Gao's remarks Tuesday came after Health Canada revealed that it had uncovered a counterfeit Daily Shield hand sanitizer for sale at one of Dollarama's Thunder Bay, Ont. with the same lot number as a legitimate Bio Life Sciences Corp. product.

Montreal-based Dollarama said the 250 mL product labelled NPN 80098979, Lot 6942 Expiry May 202 was available in roughly half the chain's stores and each location sold about 17 bottles, which were removed as soon as Health Canada began investigating.

Health Canada believes the fraudulent version of the product may not be effective at killing bacteria and viruses, and poses serious health risks because it contains methanol. The ingredient is not authorized for use in hand sanitizers and can cause severe adverse reactions or death when ingested.

It's far from the only recall the country has faced in recent months as COVID-19 has made hand sanitizers a hot commodity and spurred dozens of distillers and now companies to start pumping out the product.

Health Canada said it has recalled more than 100 hand sanitizers recently and Gao has heard her fair share of complaints about concerning products.

"Working in the pharmacy, I actually had a customer come up to me and show me pictures of her son's hands because he developed a rash and very very dry skin that was red from hand sanitizer he was using in school," Gao said. "It didn't look good right so I had to tell her … to make sure that you're protecting yourself with your purchases."

Fraser Johnson, the Leenders Supply Chain Management Association chair at Western University in Ontario, said recalls highlight that retailers should be focused on two things: suppliers and quality.

"You get non-reputable suppliers that want to cheat and they can go through a review process with (a retailer) and be supplying them for a number of years and then decide that they want to substitute the hand sanitizer that they've been shipping with them and not disclose that," said Johnson.

"That's a very difficult thing for a company to check."

Retailers, he said, can ask hand sanitizer makers for references or search for websites and proof of what other companies have trusted the brand.

Health Canada said in an email to The Canadian Press that it recommends companies refer to a list of authorized hand sanitizers, complete with natural product and drug identification labels, it has posted on its website

The organization has also released a second list of disinfectants and hand sanitizers accepted under interim measure the government put in place allowing for certain products to be sold in Canada if they were approved in other jurisdictions (and were determined not to compromise safety.

Health Canada said it is continuing to investigate the Daily Shield counterfeits with the co-operation of Dollarama, which told The Canadian Press in an email that all of its hand sanitizer purchases go through a full compliance review before being sold to ensure the quality and safety of the product.

"The product in question was purchased through a long-standing Canadian vendor. Dollarama was not the importer or license holder of this product," said spokesperson Radmanovich.

"Customers are invited to discard the product or return it to any store for a full refund."

Customers who don't want to be duped should only buy from trusted retailers with brands they associate with quality, said Johnson.

If it looks like it's cheap, think he carefully, he said.

When Gao is purchasing hand sanitizer, she makes sure it doesn't have methanol in it and pays close attention to the label.

"Some of these counterfeit sanitizer companies have a fake label on top of the bottle, and the only time you can really tell that those ones are fake is to just keep an eye on recalls that Health Canada website puts up, so be vigilant and tracking that as well."



CN Rail earnings fall to $985 million in Q3 despite record grain shipments

CN Rail earnings fall

Canadian National Railway Co. isn't quite ready to reinstate its 2021 guidance after experiencing a third quarter that saw its mix of business change with the economic recovery.

The Montreal-based railway says its operating metrics are improving and it has brought back many of the employees furloughed because of the impact of the COVID-19 pandemic on freight trains.

"Some markets recovered fast in a V-shape. Some markets have yet to recover," CEO Jean-Jacques Ruest said Tuesday during a conference call after markets closed for the trading day.

"All of this evolving to a different mix of revenue (per) ton-mile as compared to the pre-pandemic with a significant decline in crude and significant increase in Canadian grain."

Canada's largest railway withdrew its full-year guidance when it released first-quarter financial results and is aiming to provide an annual guidance for 2021 in January.

CN Rail has delivered seven consecutive monthly records for grain movement and said it is on track to deliver a record month in October.

"Canadian grain continues to be a bright spot for CN, with our best third-quarter volume on record, beating the previous best in 2014 by 13 per cent," James Cairns, senior vice-president rail centric supply, told analysts.

It expects Canadian and U.S. grain will be strong in the fourth quarter and 2021 with potential for the Canadian crop to hit a record high and the U.S. crop expected to be above average.

CN has purchased 2,500 new high-capacity grain hoppers and its customers have also added these larger cars. By the end of the first quarter, it will have more than 4,200 high-capacity hopper cars in its network as it looks to take advantage of the 50 per cent increase in west coast grain export capacity.

During the quarter, CN said it experienced a rapid bounceback or V-shaped recovery in ports, lumber and automotive while there was weakness in crude, frac sand and refined petroleum products.

It has brought back all the lumber cars that were in storage and added 500 additional lease cars to meet increasing demand.

CN Rail said the work stoppage at the Port of Montreal resulted in strong import volumes in Halifax and St. John, N.B.

CN rail reported third quarter net income of $985 million, down from $1.2 billion in the same period in 2019.

The earnings amounted to $1.38 per share on a diluted basis, down from $1.66 per share in the same period last year.

Sales fell 11 per cent to $3.41 billion, down from $3.83 billion in the year-ago period. Volumes in revenue-ton-miles fell seven per cent while revenue per revenue-ton-mile decreased three per cent because of the significant change in its business mix.

Its operating ratio, an industry metric where a lower ratio means more efficient operations, was 59.9 per cent, up 200 basis points from a year ago.

Analysts polled by Refinitv expected earnings per share of $1.46 on sales of $3.5 billion.

The company said revenue from petroleum and chemicals dropped to $591 million, down from $788 million in 2019's third-quarter, even as grain and fertilizer sales reached $608 million, up from $552 million a year ago.



Tennessee factory to become GM's third electric vehicle plant

GM factory goes electric

General Motors plans to spend $2 billion to convert its Spring Hill, Tennessee, assembly plant into a third U.S. site to build future electric vehicles.

The Detroit automaker also says it will spend another $153 million to upgrade five Michigan factories for future vehicles.

The company will build the Cadillac Lyriq, a small electric SUV at the Spring Hill factory. Gasoline-powered Cadillac SUVs will continue to be built at the plant, and it will also will get additional unspecified electric vehicles, GM said in prepared statement Tuesday.

The Lyriq is due in showrooms sometime late in 2022. GM also is expected to announce details of an all-electric GMC Hummer pickup truck this week. They’re among 20 electric models the company plans to sell globally by 2023.

GM already has announced that electric vehicles will be built at its plant in Orion Township, Michigan, and at the Detroit-Hamtramck plant, which straddles the border between the city of Detroit and the hamlet of Hamtramck.

Currently the 7.9-million-square-foot Spring Hill facility employs about 3,400 hourly workers who make the Cadillac XT5 and XT6 gas-powered SUVs as well as a GMC SUV. The complex, which is GM’s biggest in North America, also makes four engines that go into GM trucks and SUVs.

The paint and body shops at Spring Hill will see major expansions, and the general assembly area will get new machinery, conveyors, controls and other equipment. Renovation of the plant will begin immediately, GM said in a statement.

The investments aren't expected to create additional jobs, but will help keep the ones at the Tennessee and Michigan factories.

Other factories getting investments include the $100 million being spent at the Delta Township plant near Lansing, Michigan, to make the GMC Acadia crossover SUV. That SUV will be transferred from Spring Hill.

GM's Flint Assembly plant will get $32 million for future production of heavy-duty pickup trucks, while the powertrain plant in Romulus, Michigan, will get $17 million for automation and to increase the output of a 10-speed automatic transmission that goes into pickups and large SUVs.

Also, the Orion Township plant will get $3.5 million and a plant in Brownstown Township, Michigan, will get $750,000, both to help build a test vehicle for the Cruise autonomous vehicle unit.

Over the past 19 months, GM has announced investments of more than $4.5 billion at the three future electric vehicle factories.



Dairy farmers call for compensation amid pandemic, CUSMA losses

Dairy farmers on the brink

Canadian dairy farmers are demanding compensation from the government because of losses to their industry they say have been caused by a series of international trade deals.

Dairy Farmers of Canada representatives say they have received a multi-year commitment for $1.75 billion in compensation from the government for losses they have incurred due to Canada's trade deals with Europe and with Pacific Rim countries.

But they have yet to be compensated for a third trade deal: the new North American trade pact with the United States and Mexico that came into force July 1.

The lobby group says that by 2024 trade concessions will mean that 18 per cent of domestic milk will be outsourced to foreign dairy farmers.

"When the pandemic started here in Canada, we were very careful not to be pushing hard. We knew that the government had their hands full in trying to deal with the pandemic to ensure that Canadians were well-looked-after," said David Wiens, the vice-president of the organization.

"It's eight months later, and we're saying, you know, those commitments were made."

Access to Canada's supply-managed dairy sector was a thorny issue during the negotiations for the Comprehensive Economic and Trade Agreement (CETA) with Europe that went into force in 2017, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that took effect in 2018 and the recent Canada-U.S.-Mexico Agreement (CUSMA).

Wiens said the dairy farmers received their first instalment of compensation payments last year for CETA and CPTPP. But it wants the government to set up a schedule to start payments to compensate for losses due to CUSMA.

"Without the compensation that has been promised to us, dairy farmers may have to postpone or forego investments, which will have serious consequences for rural communities across the country," he said.



Duelling forecasts disagree on LNG's impact on Canadian economy

LNG - boon or bust?

Liquefied natural gas will either be a major economic boon for the Canadian economy, or a dud, depending on which recent report you favour.

The Institute for Energy Economics and Financial Analysis (IEEFA) on Monday published a report responding to an earlier economic analysis by the Conference Board of Canada that estimates the annual investment in LNG in Canada could total $11 billion annually between 2020 and 2064 -- $500 billion in total.

B.C. alone would generate 71,000 new jobs per year and more than $4.6 billion in wages, the Conference Board estimated.

“At $2 billion in annual provincial taxes and royalties, the LNG sector could become one of the largest revenue generators in B.C.,” the report stated.

However, that analysis does not indicate how many LNG export projects that calculation is based on. In a report released Monday, the IEEFA points out only one large LNG project is moving forward in Canada – the $40 billion LNG Canada project in B.C. – and casts doubt on whether a second one – Kitimat LNG – will ever be built.

“The most important fact is that the fundamentals of British Columbia’s LNG export cost structure are not competitive enough to keep private capital interested,” the IEEFA report states. “Although many pundits cite political and regulatory issues, Canadian LNG’s biggest problem is profitability.”

The IEEFA suggests Canadian LNG projects won’t be able to compete with Qatar, on a price basis. Then again, few countries can.

It’s estimated that any new large LNG projects will need a break-even price of US$7 to US$8 per MMBTU of delivered LNG.

Qatar is expanding brownfield projects and restructuring contracts to build new LNG export facilities that could deliver LNG at US$5 MMBTU, Clark Williams-Derry, an analyst with the IEEFA, told BIV News.

“That’s going to put price pressure on the entire global stack of LNG projects,” Williams-Derry said.

“Qatar is attempting to boost LNG exports and capture market share with low prices. This will make it much harder for higher-cost projects to succeed, not just in Canada but likely in the U.S. and Australia as well.”

Asked if Canadian projects face challenges that the U.S. and Australia don't, Williams-Derry pointed to a recent S&P Global Platts analysis that pointed out that the break-even capital costs are much higher in Canada than American LNG proposals.

That’s mainly due to remoteness of location and the need for new pipelines, like Coastal GasLink.

But the same S&P Global Platts analysis also points out that Western Canadian LNG projects have the lowest transporetation and feedgas costs, compared to U.S. projects. Of all the North American proposals, B.C. LNG projects are much closer to Asian ports in shipping distance.

So while the upfront capital costs of building an LNG plant in B.C. is much higher than in the U.S., the ongoing transportation and feed-gas costs are much lower.

“LNG Canada offers large shipping and feedgas savings over US Gulf Coast,” the S&P Global Platts report notes. “Given a weaker price outlook, LNG Canada is looking less attractive, but will still run at high utilizations once complete.”

The IEEFA report happened to come out shortly after the release of the International Energy Agency (IEA) 2020 World Energy Outlook, which notes that the global pandemic has shocked the oil and gas industry, something which it estimates could take some years to recover from. It notes that natural gas is more resilient than oil, however.



Ottawa approves $2.3-billion northern BC gas pipeline expansion

Pipline expansion approved

The federal government has approved NOVA Gas Transmission's $2.31-billion NGTL 2021 expansion project.

The expansion consists of 344 kilometres of natural gas pipeline and associated facilities in the Peace River project area, constructed in segments from Grande Prairie to a point north of Calgary.

The 1.45-bcf/d pipeline is designed to transport natural gas from the western side of the system to the growing demand on the east side. It will “loop” the existing NGTL System with the new pipeline connecting to existing NGTL segments or running adjacent to existing lines.

The government said the project will give natural gas producers better market access and help end coal-fired electricity by 2030.

It's estimated to create up to 2,920 jobs, and add $1.2 billion to Alberta's GDP, according to government figures.

"We want good projects to get done, moving our natural resources to new markets and creating good jobs," Natural Resources Minister Seamus O'Regan said in a release announcing the project's approval late Monday.

"This means meeting our duty to meaningfully consult with potentially impacted Indigenous communities and addressing risks to the environment and species at risk, particularily. By taking the time to do the hard work, good projects are being built in Canada."

The approval comes with 35 conditions related to safety, environmental and wildlife protection, Indigenous engagement, and protection or Indigenous rights and interest, the government said. That includes a requirement for NGTL to restore 3,840 hectares of caribou habitat.

The government was to have decided on the project by May 2020 but the deadline was extended to no later than Oct. 19 at the request of several Indigenous communities due to the COVID-19 pandemic.

The expansion had a commercially required in-service date of April 30, 2021, but NGTL revised the timeline in response to the federal government delay in its decision. Under the preliminary timeline, construction was scheduled to begin in September 2020 to enable work to occur primarily during the winter season to take advantage of frozen ground conditions for access to and along the pipeline rights-of-way.

The revised construction schedule is expected to provide up to six per cent of project capacity by April 2021, increasing to as much as 12% of capacity in September-October 2021 and up to 37% in December 2021. The remaining project capacity is expected to be available in March-April 2022.



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