The Future of Canadian LNG

future of canadian lngThe Future of Canadian LNG (Liquefied Natural Gas)

Canada isn’t fully capitalizing on the global LNG market due to speculation and storage – but with global LNG demand growing, how soon should Canada bolster its LNG production and market strategy?

Indexing the Concern

A survey conducted by Alberta Oil Magazine offers a look into the current state of liquid natural gas (LNG) in Canada, particularly in British Columbia, where over twelve LNG megaprojects of historic proportions have been proposed.

Unfortunately, final investment decisions have yet to be made due to price variances because of unfortunate seasonal influence and hoarding.

With regards to investor sentiment, the survey found that:

  1. Investors are concerned with the possibility of over-supplying the market to the point it would make the industry significantly less profitable.
  2. Increasing domestic industry demand will not have a negative effect on the economic viability of the BC projects.
  3. Investors would like to see more government support to introduce training measures that address the small labor pool that the LNG industry will be facing.
  4. Investors would support the idea of using foreign workers to fill the labor gap.
  5. Investors are concerned with the prospect of Japan’s current dependence on natural gas slipping due to the reinitializing of their nuclear power plants, which were shut down since 2011 after the Fukushima disaster.
  6. Investors are on the fence about how much of an effect changing the price index will have on the industry.
  7. Investors feel that the B.C government isn’t doing enough to promote the industry, finding the two-tier tax policy uncompetitive compared to policies in the US and Australia.
  8. If the industry would further pursue floating LNG facilities, with their reduced capital and operating costs, LNG projects would be viable and competitive.

The Answer to Cold Feet: Export, Export, Export

While some LNG productions are being switched over to oil production because of LNG’s low price point, other LNG producers such as Quicksilver Resources and Liquefied Natural Gas Ltd have asked for federal permission to export 20 million tonnes of LNG per year over 25 years. This is a constructive attempt to diversify the markets beyond North America and benefit from higher prices in the Pacific markets. This is in part the reason there is such high interest in developing over a dozen LNG projects along the B.C. coast.

If these projects can gain ground and funding, this can help bring consistency and competitiveness back into the North American LNG market where in turn a wider application and use of natural gas in public and private transportation can help contribute to ongoing efforts to reduce carbon emissions and pollutants, as well as progress the embedding of sustainable and renewable fuel.

In addition to pursuing exportation as an option, it is important for LNG companies to address the investor concerns uncovered through the Alberta Oil Magazine survey. If industry leaders would work to gain greater government support and would consider alternative practices such as foreign workers and floating LNG facilities they may see investor interest increasing and their proposed megaprojects may become a reality.

Is There a Glass Ceiling in the Oil and Gas Industry?

Glass Ceiling in the Oil and Gas IndustryIs There a Glass Ceiling in the Oil and Gas Industry for Women?

Canada has been known to promote gender equality in both the business world and in society. However, a report published by Oxfam indicates otherwise. It has been found that progress for women in the Canadian economy has stalled and, in many cases, moved backwards. The existence of a glass ceiling for women is an unspoken truth in the business world.

This gender inequality is even more evident in the oil and gas industry. A study in 2011 indicated that nearly one third of publicly traded energy companies had no women in executive positions or as members of the board. As much as efforts have been made to break the theoretical ceiling, the energy industry seems to be missing the mark.

The lack of equality advancement in the oil and gas sector could exist for many reasons, including current industry executives being from a previous generation and a general lack of female interest in the industry.

Fortunately, there are a few notable successes in the advancement of women working in the energy sector. For example, the Canadian Association of Petroleum Producers (CAPP) finally had their first Chairwoman, Kathy Sendall, after 15 years of exclusively male leaders. And in May of 2007, Bonnie Dupont, became the first woman to be the president of the Calgary Petroleum Club.

Cracking the glass

In a recent PWC study of women in board positions in the field, it was found that businesses with women on the board and in senior management positions generally have better financial performance and higher profitability.

Despite this, a survey of the 100 largest gas and oil companies saw only 11% of board seats held by women. This ratio is second only to the mining industry in terms of male domination. The average board surveyed held 11 seats, including two executive seats. Of these, 13% were women in non-executive seats and barely 1% in executive positions. Of the women who do hold seats in management, very few have a chance at the board director seat – suggesting the presence of a ceiling even in the highest levels of business.

In order to change attitudes and open doors for women, industry insiders have started to change attitudes early. They have started by working with universities since 2010 in increasing the recruitment of female engineering students. The Schulich School of Engineering has had success with their website –, created to pair female professional engineers with prospective female students to promote an increase in participation in the engineering field. Their goal is to foster corporate leadership, community involvement, and most importantly, to encourage women who are considering pursuing related careers.

Personal Deterrents

One possibility of better upward movement for women is to include additional technical subjects throughout their studies so that they are better equipped to move directly into the oil and gas field upon graduation.

Additionally, companies should seek to keep employees happy, as many are beginning to opt ‘out’ of their field instead of ‘up’ within the business. Better support for women, through mentorship and communication, during their time in the leadership pipeline can also prepare them for upper management roles and to support their pursuit of upward movement. Retention of employees through this support is a key factor in keeping qualified women in the field.

Take This Job & Love It! Retaining Oil and Gas Millennials

retaining oil and gas millennials

Take This Job & Love It! Retaining Oil and Gas Millennials

There is no doubt about it – in order for the oil and gas industry to meet the growing demand for energy, they need to formulate effective strategies to attract and engage the industry’s newest resource: Generation Y or Millennials (born between 1980 to early 2000). You may well ask why.  If you’ve been working in upstream oil and gas for over 20 years, chances are you will be looking to retire in the not-too-distant future. This is exactly what corporate leaders in the oil and gas sector have been concerned about for the past decade or so – the pool of talent with all the requisite skills is diminishing, due in most cases to natural attrition and in some cases from incentives to jump ship to other employers.

Although many jobs in the oil and gas sector are highly technical and require skills and experience that are unable to be filled by ordinary means, the industry is looking to replenish their dwindling talent pool by attracting millennials.  Oil and gas employees are responsible for making big decisions that have huge financial consequences — one wrong decision might cost a company millions in a single day. For this reason, upstream oil and gas must ensure that the millennials who are potential employees are engaged, sufficiently trained and able to make autonomous decisions.

How did we get here?    

The current lack of sufficient employees in the oil and gas sector wasn’t helped by the industry’s hibernation for most of the 1980s and 1990s. During those two decades hiring in the industry ground to a halt, and as a natural result universities and colleges dropped petroleum programs from their calendars. Fast-forward 30 years and the demand for energy is at an all-time high.  Universities and colleges have appropriately shifted gears and are producing new graduates that are recruited on-campus.  Oil and gas industry CEOs are acutely aware of the evaporating pool of talent with specialized skills that keep their respective organizations competitive.  There’s only one problem – new hires lack the experience that will ensure they make sound decisions. Employers are also concerned that once a new employee has gained adequate experience they may be persuaded to take a job offer from one of their competitors.

Retention Strategies

As with most recruitment campaigns, a good strategy begins with capturing the hearts and minds of the people you wish to attract.  How is this done with millennials? For one thing, employers need a change of organizational mindset to embrace the notion that millennials are looking to complement their lifestyle with their job instead of the other way around.  For example, if you’re looking to populate work camps for an extended period, the millennials’ quality of life is paramount.

Work/Life Integration

What do millennials want?  In studies such as the PwC 14th Annual CEO Survey, the findings show that millennials value work/life integration more than the conventional balancing act of job and the rest of your time. This is what a laundry list of millennial requirements might look like:

  • Premium accommodations at Work Camp sites instead of requiring workers to find local hotels, motels and trailer parks;
  • Emphasis on healthy eating by providing in-house nutrition specialists and premium dining facilities;
  • Adequate sleep by bringing in experts to facilitate a good night’s sleep for the high-risk jobs of rig workers;
  • Exercise facilities and Wi-Fi hotspots;
  • Encouraging open social networks without the need to monitor usage;
  • Mentorship programs that bring millennials and leaders together.

Next Steps

All of these steps sound expensive to implement, but when you consider that the cost of replacing an experienced professional or technical resource is approximately one-and-one-half times their annual salary, the issue takes on a much clearer perspective.  Remember that the specific skills required in the oil and gas industry don’t allow for seamless transferring-in from other industry sectors, no matter how similar.

In short, with the impending loss of institutional knowledge there is an urgent need for companies in the upstream oil and gas industry to update their approach to recruiting, developing, deploying and connecting their people.

Oil and Gas Greenhouse Emissions: Turning to Science to Reduce C02 Emissions

Oil and Gas Greenhouse EmissionsThe Oil and Gas Industry Turns To Science to Reduce CO2 Emissions

There’s no doubt that greenhouse gas (GHG) emissions are a global challenge.  It’s estimated that natural gas flares emit as much carbon dioxide as a million cars a year.

According to a publication released by Statistics Canada in 2008, even though Canada is only 0.5 percent of the world’s population, we are the highest per capital emitters by contributing about 2 percent of the total global GHG. This is largely due to the size of our country, our low population density and our climate, which generates high demands of energy. Furthermore, natural gas flaring causes approximately 0.5 percent of all CO2 fossil fuel emissions in Canada.

To find viable solutions to the GHG emissions, initiatives are being spearheaded from around the world to encourage leaders in the oil and gas industry to think outside the box.

For example, Alberta’s Climate Change and Emissions Management Corporation (CCEMC) has turned to science. CCEMC is using part of the per-tonne charge imposed on large CO2 emitters to fund a global competition to find new ways to turn wasteful carbon emissions into valuable resources.

So far, the $230 million dollars invested seems to be money well spent.  Last year, the CCEMC received 344 submissions from 37 countries using a variety of technologies and winning entries that received $500,000 have the means to further advance their technology. According to the CCEMC, to date, there are 90 projects being adopted that are expected to reduce 20 million tones of CO2 by the 2020.

Other initiatives are also underway.  In North Dakota, Mark Wald of Blaise Energy (and his team of engineers) has come up with an idea to convert natural gas flares into electricity. With the development of fracking, new wells are popping up in North Dakota at lightning speed.  In the last five years, North Dakota has seen a 600 percent rise in oil production, leaving dozens of natural gas flares to light up the skies. Blaise Energy is able to use a mobile generator at each oil well site to capture natural gas, convert it to electricity and sell the electricity back to the power grid.  The downside is that most drilling rigs are powered by diesel, and the cost of running the generator is quite expensive.

Blaise Energy has also figured out how to pull out the heavier propane and butane from lighter gases.  Today, oil companies are able to reduce the size of the flare and are able to sell part of the gas. The next step is to make the entire process more economically feasible. Blaise Energy is using the $375,000 grant received by the North Dakota Industrial Commission to continue its scientific exploration.

Compact GTL and Velocys are also among those who are trying to turn natural gas into a synthetic fuel oil.  Using catalytic reactions, natural gas is combined with steam to create a waxy synthetic mixture of carbon monoxide and hydrogen. At this point the chemical process created by Compact GTL and Velocys are only available on a large scale. The challenge is to scale down the technology so it can fit on offshore platforms or floating barges.

Carbon utilization seems to be an underdeveloped area of science, as many technologies are still in their infant stages. It’s hard to predict how long the natural gas flames with shoot across the sky, but with CCEMC’s initiative and the global community putting their scientific minds together, viable ways to capture and recycle natural gas may be closer than we think.

How the Russian/Ukraine War Will Affect Canada’s Oil and Gas Industry

russia war oilHow the Russian Ukraine War Will Affect Canada’s Oil and Gas Industry

Months after Russia cut off Ukraine’s natural gas supply, no pricing resolution has been achieved.  During Ukraine’s summer months the effects of the cut off were minimal; however with winter fast approaching, unless there’s an agreed upon price, the impact of the Russia / Ukraine war is expected to take its toll on Canada’s oil and gas industry.

As the intensity of the ground fighting in Russia and the Ukraine increases, so does the conflict over energy. Russia, Ukraine and the European Union are scrambling to come up with a last-minute proposal; however the price Russia wants to charge the Ukraine seems to be a major roadblock.

The European Union is concerned that lasting disruptions in gas shipments could expand into the European nations.  Since approximately 15 percent of gas exported to the EU runs through the Russian pipeline, if the pipes remain closed, the financial pressure felt throughout the world is imminent.

According to EIA (U.S. Energy Information Administration) about half of Russian federal revenue comes from oil and gas.  Germany, Netherlands, China, Poland and Belarus are among Russia’s largest oil customers.  Stiff economic measures for the EU-27 are not predicted. In fact, the EU is being forced to show restraint as an interruption in oil supply would cause economic turmoil for many countries.

In Canada, the impact can be expected in three major ways:

  • Higher Gas Prices – Pressure is being felt on oil prices around the world. Investors are turning to the USD as a safe haven, which is weakening the Canadian dollar against the US dollar. As a result, energy import costs are on the rise and Canadians are expected to feel the blow on rising oil prices at the pumps.
  • Stock Market Fluctuations – Typically, geopolitical risk and the pause of economic growth tends to wreak havoc on investor confidence. The Russia / Ukraine gas and oil conflict has many investors rattled, which in turn affects everything from pension funds to RRSPs. As oil prices rise, Canadian small-cap oil stocks could do well. However, Ed Devlin, who develops Pimco’s Canadian economic strategies and outlook, argues that the Canadian economy is at a tipping point.
  • Higher Food Prices – As gas prices rise, so will the price of food and food exports. It’s predicted that grain prices will rise and the increase in European food prices could trickle into Canada.

On the bright side, three substantial energy deals have been negotiated with Canada.

  • The Lama Energy Group headquartered in the Czech Republic have partnered with a privately held Prosper Petroleum Ltd to build a multimillion steam-assisted gravity drainage oil sands facility near Fort McMurray, Alberta.
  • In November 2013, Polish firm PKN Orlen S.A. acquired Cardium-focused light oil producer TriOil Resoucres Ltd in Calgary
  • Polish billionaire Jan Kulczyk acquired Windstar Resources Ltd.

Perhaps investing in Canadian light oil producers may be a viable answer.  If the pipeline in Ukraine remains closed, the US could decide to export oil to Europe. If that happens, the US will have a shortfall of oil and will need to turn to Canada for light oil production. This should benefit Canadian oil and gas companies and those who invest in them.

All in all, the oil and gas industry is bound to see some interesting turn of events in the months ahead.

Economic Impact of Unconventional Oil and Gas Production

Economic Impact of Unconventional Oil and Gas Production

It has taken millions of years for the ancient organic matter trapped within North America’s geological formations to become the crude oil and natural gas used today.

These naturally formed reservoirs of carbon and hydrogen are easy to extract with minimal damage to the environment.  They can be extracted using “conventional” drilling and extracting methods that use natural pressure.

However, many of these oil and gas reservoirs are in decline. Thirty years ago finding oil in North America was not difficult; it was abundant. Nowadays, on the other hand, oil is hard to locate and more costly to extract.

To meet the rising demands, the world has turned to unconventional methods of oil and gas production. All of these strategies impact our world today.

The Growing Demand For Oil and Gas

In 2011, Canada produced more than 2.1 million barrels of oil per day. Even that large amount is not sufficient to meet the country’s demands.

Over the past 20 years, the demand for oil has dramatically risen; making crude oil one of the most sought after, actively traded, commodities in the world.

In fact, it is predicted that the global demand for oil will rise by 14 million barrels per day and will reach a demand for 101 million barrels a day in 2035.

With the decline of conventional resources, to bridge the gap between supply and demand, Canada and the US are exploring and developing unconventional production methods.

Unconventional Oil and Gas Production

Canada is fortunate to have the oil sands of Northern Alberta. And although Alberta’s oil sands are the world’s second-largest source of unconventional oil, this vast unconventional source of oil has many benefits and downfalls.

For one, extracting oil from sand is an expensive process. The sands are located in a remote area of Canada that is difficult to access.  Skilled workers must be brought in from other areas of Canada, which also adds to the productions costs.

The oil sands continue to be a source of controversy.  Environmental activists such as Greenpeace and Pembina Institute have increasing concerns of ecological harm, as well as the effects of global warming because of the greenhouse gases emitted during the process.

In the United States, the resurgence in oil and gas production is beginning to redraw the global energy map.  For one thing, fracking has become an “energy game changer”.

New emerging technologies are unlocking access to light, tight oil and shale gas resources.  As a result, this unconventional form of oil and gas production is changing the role of North America in global energy trade, and influencing the prices of gas and electricity in the US.  Prices have dropped substantially, giving the industry a competitive edge.

This unprecedented growth of shale production makes the US the largest liquids producer worldwide.  In 2012, of all natural gas production, shale production was 39% in the US and 15% in Canada.

According to a joint US Energy Information Administration (EIA) and Advanced Resources International (ARI) study released in June of 2013 – although a dozen other countries have conducted exploratory test wells – Canada and the US are the only major producers of commercially viable natural gas from shale formations in the world.

Outside of North America, China has registered commercially viable productions of shale gas; however shale contributes to less than 1% of China’s total natural gas production.

Unconventional Oil and Gas Production

The ability to unlock new types of resources (such as light tight oil (LTO) and ultra-deepwater fields) and to improve recovery rates in existing fields shows promising signs. Each year, the amount of oil that remains to be produced is on the rise.

Are Our Oil Troubles Over?

New oil production methods and resources must be discovered. The level of success with LTO needs to be replicated and unconventional resources need to be discovered throughout the country.

For example, the Lorraine Formation in the St. Lawrence Lowlands is predominantly unconventional gas silt and is considered an available resource, but no estimates are available at this time.

Shale gas resources have also been identified in Western Canada, Quebec, the Maritimes and a very small area in Southern Ontario.  Extensive exploration is being conducted to quantify the potential of these resources however sustained production is only occurring from the Horn River Basin in northeast British Columbia and a small field of shallow shale gas in the Wildemere region of east central Alberta.

It is crucial to continue the exploration and advancement of technology in this industry, as the economic impact of unconventional oil and gas production is too beneficial to ignore.

Strategies to Address the Energy Industry Talent Gap

energy industry talent gapStrategies to Address the Energy Industry Talent Gap

Oil and gas companies are facing an industry-wide skills gap across various occupations, and this has the energy sector scrambling to implement long-term solutions to widen their available talent pools and better adapt the existing workforce for an ever-expanding industry.

With more than 50% of the current workforce, mainly consisting of technical specialists and senior managers, being eligible for retirement in 2015, the oil and gas industry is facing a series of complications. These include a lack of adequately skilled employees capable of replacing said retirees, competition over a restricted talent pool and a lack of prospective university students interested in petroleum engineering

The ‘Brain Drain’ – a term referring to the loss of skilled and educated individuals to other locations, motivated by higher pay or preferable conditions – is real and is causing a complex, multi-faceted, and ever-looming problem. Overall, a global shortage of technical talent has been forecasted in the oil and gas industry, with only Europe and Australia seeing a surplus.

Before the crisis can be averted it’s necessary to know where the industry stands. Only after such analysis can the issues begin to be addressed directly and the long-term plans and goals be implemented in an effort to reverse the Brain Drain into a Brain Gain.

Taking a Look at the Problem

A 2014 survey conducted by KPMG in collaboration with Rigzone uncovered largely overlooked issues contributing to the talent shortage. The survey analysis consisted of over 2,000 energy sector professionals in a broad cross-section of the industry.
Through its findings, four problem areas were discovered:
1. connection and communication,
2. age and generational gaps,
3. application of technology,
4. and resource development collaboration.

The report outlines the general approach to each of these problems and potential ways of addressing them.

Proposing Solutions

With all the complexities in mind, the problem simply reduces to a need to increase human capital in the industry in a comprehensive and cooperative way.

In his address to the 2013 Petronas International Human Capital Summit, Jay Doherty, partner and co-founder of Mercer Workforce Sciences Institute, highlighted key issues regarding the deficit in human capital and provided the following insight into the solution pathways provided by workforce planning.

Expanding on Connections and Improving Communication

The strongest need that organizations are currently facing is ensuring that their workforce is capable of performing expected job functions. This is pressuring companies to devote resources into recruitment, resource development, and improving how their existing workforce is utilized.

The key to meeting this need is to broaden how connections and communications are made. Internal communication needs to be formalized in order to promote collaboration in corporate culture. Over the last seven years, oil and gas firms have seen a 12% drop in talent building, as they rely more and more on buying out existing employees from other firms, or other industries. It is vital that companies focus on building talent from within, as opposed to perpetually looking outwards.

External hiring from universities remains stagnant at roughly 10%, while hiring employees from competitors continues to grow, and represents just over 45% of new hires. University recruiting can be bolstered by closer participation with institutions by helping design curriculums that meet the needs of the industry in order to attract and produce more graduates in a given specialty. The use of recruitment specialists can help screen and integrate graduates into corporate culture. Training and development must be focused on internally to develop a talented pool of professionals for internal recruitment and talent retention.

Another alternative to tackling this issue is it to integrate technology by means of Internet job boards and social media tools. Job boards are used to fill just under 19% of open positions in the industry, and can be further utilized and expanded on to attract new graduates. Additionally, social media can widen the pool of potential applicants. The various mediums allow employers to promote discussion of company events, industry achievements and plans for future developments. This can be a powerful tool for connecting to a large audience who may recall a company when considering choices for future employment.

Bridging the Age Gap Will in Effect Bridge the Talent Gap

The generational gaps between each segment of the workforce are largely overlooked. These gaps are between the Pre and Post-Baby Boomer era, as well Generations X and Y. The gaps are evident in the differences in approaches to learning, addressing authority, adoption of new technologies, and the kind of experience that only comes with time – creating a standard process to bridge these gaps is no easy task.

Companies must find a way to ensure that the older and retiring workforce passes on its knowledge to the younger workforce in order to utilize years of knowledge with new technologies and a modern mindset. Viable options include implementing knowledge-sharing and training programs that are able to filter out experience-based knowledge versus opinions.

Implementing New Technology for the New Workforce

Embracing technology into the recruitment process is paramount. Collection of “Big Data” with the use of business intelligence software will help forecast future workforce needs, as well as being able to compare labour force demand, and how it ties into matching and comparing occupational labour market data by cross-referencing skills and experience requirements. Such tools can be used to map out and plan career paths, as well as help in restructuring internal labour market analysis.

Ditching Recruitment Poaching for Cross-Industry Collaboration

In its study, KPMG found that the industry’s top risk assessments were difficulty in recruiting from the competition, as well as losing existing talent to its competitors (risk levels were assessed at about 3.4 and 3.7, out of 5, respectively).

Rather than focusing on competitive recruitment strategies, companies can differentiate themselves in how they operate. Companies must collaborate on how to identify and take advantage of labour capital with geographical and skill set considerations in mind. In essence, the industry needs to make the initiative in developing potential resources to widen the overall talent pool and serve the entire energy sector as a whole, in other words: mutually-assured prosperity.

These various solutions to the four main problems in the energy industry talent gap are the stepping stones to a brighter future. By adapting their practices and procedures to include and implement these ideas, companies put themselves in a position to take the lead in the industry and maintain a competitive edge. Both the labour market and the energy industry must begin addressing and overcoming this challenge before it’s too late.

The Geopolitics of Oil and Gas

The Geopolitics of Oil and Gas

An unsettling topic for some and a downright pariah for others – the combined form of geography and politics when associated with production and distribution of oil and gas leaves little room in the polarized debate over which country deserves to have their share of the world’s oil and gas reserves.

How Did We Get Here?

Around the onset of the Second World War, the US supplied about 63 per cent of the world’s oil, with a barrel of oil costing about a dollar (roughly $17 in 2014 dollars).  Many decades later, an important shift took place when the US reached its peak oil production in 1970; as the output was squeezed, oil shifted from a suppliers’ market to a demand market.

That is why the Organization of the Petroleum Exporting Countries (OPEC) oil embargo in conjunction with the Yom Kippur war in 1973 was such a game changer.  In the weeks before the Arab-Israeli conflict, oil was just $2.90 a barrel (in the same range as the pre-second world war price in today’s dollars). During that war, the oil producers’ cartel began flexing its economic muscles causing the price of oil to quadruple by the end of the year, it would never again return to pre-1973 levels.

A new dynamic emerged: energy exporters discovered their influence in global markets, the global balance of power in energy shifted and importing countries found themselves vulnerable as never before.

geopolitics of oil and gas








Source: Institute for the Analysis of Global Security

The Geopolitics of Natural Gas

In a study directed by Harvard University’s Geopolitics of Energy Project at the Kennedy School, the Center for Energy Studies at Rice University’s James A. Baker III Institute for Public Policy, and the University of California, Davis Graduate School of Management, it was concluded that some of the most dramatic energy developments of recent years have been in the realm of natural gas.

Large quantities of North American unconventional gas are now commercially viable, changing the strategic picture for the continent and raising the possibility that the United States could become an exporter of natural gas to Asian and European markets.

The modeling approach to global gas markets used in this project highlights the importance of economics and geology in determining the future of natural gas, but, importantly, the study pays particular heed to the geopolitical dimensions of natural gas.

The study recognizes that the interplay between international politics, security, and energy is multi-directional and therefore seeks to:

  1. Identify the political, economic, geopolitical trends and realities that could frustrate or facilitate increases in global gas consumption and production in the decades ahead;
  2. Anticipate the impact of these geopolitical realities, their implications for domestic or global gas consumption and production, and how they will affect global gas markets;
  3. Assess how these changes in the global gas market will influence global politics.

The Geopolitics of Oil
It’s a fact worth keeping in mind that many of the world’s leading oil producing countries are either politically unstable or at serious odds with the United States. Most of these countries are members of the Organization of the Petroleum Exporting Countries (OPEC). While OPEC countries produce about 40% of the world’s oil, they hold 80% of proven global reserves, and 85% of these global reserves are in the Middle East. The oil wealth of OPEC countries allows them to be the strategic pivot of world politics and economy, but their record on human rights, political stability and compliance with international law is, unfortunately, not positive.

It is important to have an understanding of the geopolitics of oil and gas when trying to comprehend current economic conditions surrounding these scarce resources. Western countries must bear in mind the fragility of political circumstances with the leading oil producing countries and make decisions that continue to decrease dependence on these unstable countries.

Oil and Gas Partnerships: A Proven Success

oil and gas partnerships

Oil and Gas Partnerships: A Proven Success

Strong partnerships are important when investing in the oil and gas industry.  Since you cannot invest directly into an oil well, being a member of an “investment club” or entering into an investment partnership is the ideal solution.

The MANY Advantages of Investment Partnerships:

  • You’ll find the RIGHT opportunity to invest in.
  • Diversify your energy portfolio.
  • Reduce your tax liabilities.
  • Get higher return on your investment income.
  • Discover (and share) best practices for maximum gains.
  • Amplify your project’s value by learning about leading technologies and innovations.
  • Expand and profit from any new frontiers in oil and gas.

Why Limited Partnerships Could Be Right For You:

Limited partnerships provide an ideal way for investors to get their feet wet without having to purchase expensive stocks from established gorillas like Chevron and Exxon Mobil.

A limited partnership is a business structure formed by a group of co-owners who pool their capital, resources and knowledge in order to invest in larger portfolios.

Investors would enter a partnership agreement that allows one or more limited partners to invest in a company’s cash assets. In other words, the group finds and contributes to a variety of businesses that purchase or lease real estate in order to locate, extract and sell commercial oil and gas.

In Canada, limited partnerships in the oil and gas industry provide a substantial federal tax shelter, and in some cases additional provincial tax breaks. The advantages of a limited partnership include: 100% tax write-offs, a low minimum investment of $2,500, and decreased risk because you are only liable for the amount you’ve contributed.

Keep in mind, that there are tax implications when you redeem, so it’s best to seek advice from a qualified tax professional regarding the best timing and strategy.

Furthermore, when investing in the right oil and gas company, limited partnerships increase the likelihood of higher returns.  The odds of seeing a substantial pay-out with a small oil and gas company is much higher than what stocks might offer.

Where do you begin? 

Unfortunately, the number of limited partnerships available to Canadian investors is limited. For this reason, it’s important to find a limited partnership with an established track record.

There are organizations available that will play “matchmaker” and help you establish potential partnerships with oil and gas companies.

Commonly referred to as an Oil and Gas coach, these matchmakers provide many key benefits.

Oil and gas coaches will bring together resource-holders and investors. They will look at current portfolios and suggest beneficial investment partnerships.

As industry experts, oil and gas coaches help to transfer knowledge, information, and technology to a large global network of investors.  They help innovators, researchers and governments maximize the value of their energy resources and help support inward trade.

Collaboration is the First Step to Success!

The new Australian Innovation Partnerships is a fine example of how this collaboration works.

Australia has a federal labour plan designed to increase jobs, expand growth and become more productive and competitive in the global marketplace.  They describe their partnership as a network of 35 businesses and research institutes, all backed by government.

The partnership consists of fortune 500 companies like Woodside, Shell and Santos (who do business on a large global scale) as well as universities and research facilities (like Western Australian Energy Research Alliance) and a mixture of small and medium sized enterprises.

Together, this dynamic partnership forms a large network of knowledge, skills and resources that can dramatically affect future growth.  They continue to develop leading strategies to improve workforce skills and productivity, encourage innovation, and increase distribution and marketing channels in order to see larger global penetration and more international investment.

When limited partnerships are executed correctly, investing in oil and gas can be a profitable option, worth consideration.

Top 3 Safety Issues in Oil and Gas Industry

safety issues in oil and gas industryTop 3 Safety Issues in Oil and Gas Industry

When the National Energy Board (NEB) issued their paper on Emerging Issues in Oil & Gas Industry Safety Management, they established the ground rules that essentially ‘put safety and environmental protection at the forefront of its responsibilities in protecting Canadians’. From the perspective of industry leaders, oil and gas producers now have a set of guiding principles upon which to gauge their current processes and look for any gaps in their corporate safety culture.

The NEB has identified three oil and gas safety management issues that are the areas “where all regulated companies must invest effort and resources to demonstrate continual improvement of safety and environmental protection outcomes.” In her article, Alina Libkind of Field ID and Modern Safety distills the major components of the NEB’s paper and articulates what can be called the Top 3 safety issues in oil and gas industry, namely:

 1. Corporate Leadership and Safety Culture

At the risk of stating the obvious, company leaders do have a profound influence on overall safety culture. Their attitudes and day-to-day decisions guide the corporate performance and culture. It is management that sets the standard for safety culture throughout an organization, by taking an active role in overseeing the safety of the company’s operations.

Senior corporate leadership must play an active role in the way an organization manages safety risks. Although major accidents occur infrequently, the potential consequences are so high that leaders need to recognize:

  • When major accidents are considered credible business risks;
  • Regard the integrated nature of many major hazard businesses as including the potential for supply chain disruption;
  • The management of processing safety risks should have equal status with other business processes such as financial governance, markets, and investment decisions and so on.

2. Effectiveness of Management Systems

Effective implementation of management systems is what companies find difficult. Effective management systems must be consistently applied and thoroughly integrated. They facilitate the process by which companies share information and intelligence thereby promoting better decisions.

Although everyone in a team has a role to play in ensuring an organization’s safety, security and environmental protection, goals and accountability must be assigned. Performance and improvement of integral safety systems should be measured and tracked on an ongoing basis.

3. Hazard Identification and Risk Mitigation

Many high hazard industries define and measure the safety of their operations as the occupational health and safety of individual workers. This approach to measuring safety performance has two known limitations:

  • It places an inordinate amount of attention on “slip and fall” hazards, which may divert awareness away from other hazards and risks that need to be readily managed;
  • It is one-dimensional and is an incomplete and inaccurate account of the overall level of safety of an activity, a facility or organization.

As many high profile incident investigations have demonstrated, focusing on personal injury data while limiting or excluding information related to process safety and corporate culture can have catastrophic effects. For the purpose of creating a more complete picture of safety performance, regulators and companies should consider indicators relating to both high frequency, low consequence events (typical worker injuries) and low frequency, high consequence incidents (fatalities).

An effective understanding of present risks must ensure that active and potential threats to process safety (asset integrity, human factors, organizational deficiencies, and safety culture) are effectively identified and managed by companies in order to maintain the greatest margin of safety. The Senior Leader Considerations recommended after each of the issues is considered by many industry analysts to be very helpful. They comprise lists of possible questions to start a dialogue within a company and generally provides a great deal of information that is actionable.

In order for companies in the oil and gas industry to demonstrate safety as a priority in their organization, leaders must consider the example they set, the effectiveness of management systems and hazard identification. By addressing these three issues, business leaders can begin to take responsibility for safety and pursue a better overall workplace.