MARKET ACTIVITY/ TRADING NOTES FOR DAY ENDING WED. JUNE 10 1998 (5)
This little piggie graduated
Calgary Herald
These little piggies help oil and gas get to market. And they're getting smarter at it, too.
Pipeline pigs -- the odd-looking cleaning tools used to keep pipelines crud-free -- are changing from once-simple rooters to high-tec tools.
"Everyone's trying to build a better mousetrap," says Barry Nichols of Fullkote Pipeline Services. "Most pigs are used for cleaning, . . . but smart pigs use electronics to do measurements and give information about topography and corrosion. It's impressive."
Pigs in all shapes and sizes are on display this week at the National Petroleum Show.
The pig improvements are impressive given their humble start.
Legend has it the idea for the device came as crews got tired of cleaning pipelines by hand. Some Texas oil workers are believed to have taken a ball of straw, wrapped it in leather and shoved it inside their pipeline. They hoped the pressure would send the ball through and scrub the pipe clean.
The plan worked, but the high-pitched scream of leather rubbing on steel pipe was incredible. Somebody said it sounded like a squealing pig -- and the name stuck.
"That's my favorite story, anyway," Nichols said Wednesday.
Pigs are typically made from foam or urethane, and any company in the pipeline industry uses them.
"It's a big, big business," says Ron Forwick of Plainsman Manufacturing Ltd.
There are no curly tails or snouts on pipeline pigs, but they're still not very attractive.
Polyethylene foam pigs look like inflated ear plugs or corks. Some other oinkers are made from urethane and range in appearance from simple balls to something resembling a thinly branched Christmas tree.
The pigs are typically carried through the pipeline by the substance being moved and they scrub the sides of the line as they go.
Simple cleaning pigs range in price from a couple of bucks for a mere foam piglet to $5,000 for a 48-inch urethane boar. Why spend so much money on urethane? It lasts longer, Nichols explains.
The biggest innovations in the pig business lately have been in "smart" technology. Smart pigs generate electromagnetic waves to measure pipe corrosion, damage and other potential problems.
The information allows companies to replace a line before it breaks.
Positive Projects Inc. of Priddis has developed a smart pig so innovative that not only did the secretive company not bring it to the National Petroleum Show, but its brochure sketches only scarcely resemble the actual tool. The company says its can detect a defect just a millimetre big.
Hydroscope Inc., on the other hand, loves to show off its snake-like water pig. The stainless steel tool is wired with electronics and can enter a municipal water system through a fire hydrant, eliminating digging.
"When we're done, we just reel it in like a big fish," says the company's Jim Yukes.
And where do the oily oinkers go from here?
Automated systems, says Nichols. Fullkote's sister company has developed a machine that will send a pig into refinery pipes whenever they became dirty.
"The patents are just being put in place." "It's a big, big business," says Ron Forwick of Plainsman Manufacturing Ltd.
There are no curly tails or snouts on pipeline pigs, but they're still not very attractive.
Polyethylene foam pigs look like inflated ear plugs or corks. Some other oinkers are made from urethane and range in appearance from simple balls to something resembling a thinly branched Christmas tree.
The pigs are typically carried through the pipeline by the substance being moved and they scrub the sides of the line as they go.
Simple cleaning pigs range in price from a couple of bucks for a mere foam piglet to $5,000 for a 48-inch urethane boar. Why spend so much money on urethane? It lasts longer, Nichols explains.
The biggest innovations in the pig business lately have been in "smart" technology. Smart pigs generate electromagnetic waves to measure pipe corrosion, damage and other potential problems.
The information allows companies to replace a line before it breaks.
Positive Projects Inc. of Priddis has developed a smart pig so innovative that not only did the secretive company not bring it to the National Petroleum Show, but its brochure sketches only scarcely resemble the actual tool. The company says its can detect a defect just a millimetre in size.
Hydroscope Inc., on the other hand, loves to show off its snake-like water pig. The stainless steel tool is wired with electronics and can enter a municipal water system through a fire hydrant.
"When we're done, we just reel it in like a big fish," says the company's Jim Yukes.
And where do the oily oinkers go from here?
Automated systems, says Nichols. Fullkote's sister company has developed a machine that sends a pig into refinery pipes whenever they are dirty.
Pump prices not fixed, says report
Calgary Herald
The Canadian petroleum industry welcomed a report Wednesday that found it not guilty of fixing prices at the pumps.
"It tends to confirm the findings of a whole bunch of other reports from other jurisdictions," said Petro-Canada spokesman Rob Andras. "They didn't find any evidence of price fixing or collusion."
The report was released by the Liberal Caucus Committee on Gasoline Price Fixing. It is the result of meetings the 47 MPs on the committee held with more than 1,000 people across the country over the last eight months.
Since work started on the report, Petro-Canada and Ultramar Diamond Shamrock of San Antonio, Tex., have proposed a refining and retailing joint venture worth $8.5 billion in annual sales. The venture, which would have 3,500 gasoline outlets of a total of 16,500 across Canada, raises concerns about the trend to lessen competition at the pumps.
Petro-Canada president Jim Stanford called it a "refining and marketing powerhouse" at the company's recent annual meeting. It has been held up for approval by the federal Competition Bureau until its concerns have been addressed.
Andras said many of the issues raised in the report, such as honoring supply contracts with independent retailers, are matters for discussion between the companies and the bureau.
The report claims the level of "true and fair" competition in the Canadian oindustry has been eroded and that independent gas retailers are being forced out of the market.
"The committee report includes several conclusions indicating that the market is competitive and that government intervention would not benefit consumers more than the current free-market approach," said Alain Perez, president of the Canadian Petroleum Products Institute.
He cited three points:
- ". . . that the committee heard no compelling arguments for surrendering true competition to attain price stability, or for governments to step in and regulate gasoline prices."
- ". . . the committee believes price fixing and collusion do not occur in the Canadian oil industry."
- ". . . Canadian consumers do have access to one of the world's lowest prices for gasoline."
Len Bellingham, vice-president of Mayfair Taxi Ltd. in Calgary, contested the reference to low prices, suggesting comparison to prices in Europe and other countries is not reasonable.
"The best comparison, I would think, is to the U.S.," he said.
Outside the House of Commons, Industry Minister John Manley said he will give the report due consideration, but wouldn't commit to any of the recommendations.
He also cautioned that a sudden price hike at pumps before a long weekend isn't necessarily enough to convict the petroleum industry of price fixing.
"When demand goes up, price goes up. This happens with roses on Valentine's Day as well."
Patch Lauded - Premier Sings The Praises Of The Petroleum Sector
Calgary Sun
Premier Ralph Klein yesterday told some 200 top-level delegates from about 80 countries to the National Petroleum Show that the oil and gas industry is the most progressive and dynamic business in the world.
And, said Klein, not only does Alberta have a special affinity with the oil and gas industry, but it has taught his government how to run a province efficiently and to the benefit of all residents.
To delegates from the Middle East, South America, Europe, Asia, and Africa, Klein said when he assumed power about five years ago the prov-ince was $30 billion in debt and government had been involved in everything from airlines to telecommunications to magnesium plants -- and almost to running restaurants and barbershops.
But he said, the message from Albertans -- and particularly the energy industry -- was government had no business being in business. Government, instead, should create an environment that allowed businessmen and entrepreneurs to create jobs and prosperity.
That's exactly what his Progressive Conservative government had done.
It had balanced its budget without "picking the taxpayers' pockets" and had ambitious plans to eliminate all debt. Indeed, the net debt was almost eradicated.
His direction, he said, came from the "devastation" suffered by the oil and gas industry after the federal Liberals brought in the National Energy Program and then world oil prices toppled.
The charade of $100 a barrel for oil was seen for what it was.
The oil industry had to downsize and become more efficient.
Yet, said Klein, his government's job in balancing the budget and restructuring government --with a cut in government spending of 21% and in size of 30% -- had been a "Sunday school picnic" compared to what the energy industry had to do in the 1980s.
Yet, as painful as it may have been for many, the lessons learned from the oil industry had taught Alberta well.
Today, Alberta has the lowest unemployment rate in the nation, and a projected growth rate this year of 6.5%. Despite low oil prices, the private sector has some $36 billion in projects under way or planned, and is the most prosperous province in Canada.
Klein also paid homage to every man and woman working in the Alberta energy sector, saying they were active and respected for their talents and enterprise on every continent and ocean in the world.
Deep Impact - Big Events May Mean $50Mil
Calgary Sun
Calgary didn't have the votes when it bid for Expo 2005, but there was never a doubt our city would be awarded the prestigious 16th World Petroleum Congress 2000.
That was the word from Paul Tempest, congress director general, who told me yesterday in the secret ballot two years ago involving some 50 nations, there was an "extremely strong majority" voting for Calgary.
Indeed, listening to the likes of Calgary's own Ray Cej, chairman of the Canadian organizing committee; Holland's Dirk van der Meer, congress president; and Francisco Pradas Perez, of Venezuela, chairman of the scientific program committee, it was obvious the personnel and expertise behind Calgary's bid won the contest for us hands down. This time, we didn't stand a chance of losing.
To be held in conjunction with the year 2000 National Petroleum Show, the World Petroleum Congress will attract some 3,000 international oil and gas industry executives, scientists and politicians. It's expected the economic impact on Calgary from the congress alone will be as high as $20 million, and combined with the National Petroleum Show the total will be $50 million.
That's one huge wallop of money, considering most of it will be spent during the five-day period of June 11-15 when the congress and the show are under way. Already, Cej explained, some 2,000 hotel rooms have been booked for congress delegates.
It might initially seem strange that congress officials would make their announcements and pronouncements in the midst of another major show.
But as they said, there are synergies between the two events, with each super-charging the other. These are not competing events since the petroleum show is a trade exhibition and the petroleum congress provides a forum to discuss international issues facing the industry.
They complement each other fully.
Cej, who many Calgarians know from his tenure with Shell Canada, and who is now with Arakis Energy, said Canada has probably never held a forum at which so many prestigious speakers of international note will be involved.
Perhaps significantly, Cej made that comment into a microphone resting on the hefty Canadian Exporters directory. It seems the congress will ignite a lot of business deals for local companies.
The theme of the congress -- Petroleum for global development: Networking, people, business and technology to create value, has been known for some time, but, long as the title is, it well capsulates what the 2000 event is all about.
Rapid advances in technology -- as in other industries -- are changing the oil and gas business and the congress will explore how to take advantage of those changes at the mammoth Calgary gathering.
And a couple of final nice touches by Paul Tempest. Looking at the National Petroleum Show, he said it was nice to be in our city when "the oil is really flowing in the streets," and since the World Petroleum Congress represents the Olympics of the oil industry, it was surely fitting its next international meeting be held in the city of the '88 Olympics.
Who could disagree with that?
Northern U.S. gas pipeline set for weekend outage
The Viking Gas Transmission Co. natural gas pipeline that runs through Minnesota and Wisconsin is set for scheduled maintenance this weekend that will reduce throughput by 70 percent, a company spokeswoman said on Wednesday.
Viking, a unit of Minneapolis-based Northern States Power Co. , is taking a four-mile section of pipe near Milaca, Minnesota out of service for hydrostatic testing to meet regulatory requirements, Northern States spokeswoman Mary Heimstead said.
The work, which will cut gas flow to 130 million cubic feet a day from the usual 440 million, is slated to start early Saturday and wrap up late Sunday, Heimstead said.
The 500-mile Viking line carries Canadian natural gas to an interconnection with Enron Corp.'s Northern Natural pipeline at Marshfield, Wisconsin from Emerson, Manitoba on the Canada-U.S. Border.
Canadian gas marketers said on Wednesday that Alberta gas prices could be pressured over the weekend by the outage, which had the potential to back gas into the province.
Heimstead said, however, that Viking's shippers had been aware of the outage for some time and many had made other transportation arrangements.
Higher gas prices loom, report warns - Oil firm alliances could lead to gouging
Globe & Mail
Big oil companies will soon be in a position to charge higher gasoline prices, warns a federal Liberal committee report to be released today.
The proposed refining and retailing joint venture of Petro-Canada and Ultramar Diamond Shamrock Corp. in particular raises concerns about a trend toward reduced competition at the pumps in some parts of the country, the 68-page report said.
Unless the federal Competition Bureau orders changes to the Petrocan-UDS alliance and closely reviews future mergers, drivers will be gouged because of corporate concentration at service stations, it said.
Dan McTeague, an Ontario MP who headed the 39-member Liberal Committee on Gasoline Pricing in Canada, has called a news conference for today in Ottawa to release details of the group's conclusions and recommendations.
The committee found no evidence of price fixing and collusion at the pumps, but said major oil companies control prices to a greater extent than they are willing to admit, and market forces have less of an influence than the industry maintains.
Gasoline prices typically move in unison in various markets because when one gasoline chain changes prices, the competing outlets quickly follow suit, it said.
The report acknowledges that taxes at various levels account for roughly half of the pump price, but accuses oil companies of tacking on a few extra cents a litre after some federal and provincial budgetshoping the blame will go to government.
As well, the committee said rural regions have pump prices that are too high. For instance, gasoline prices in Northern Ontario have been between 8 and 15 cents a litre higher than in Southern Ontario.
The Liberal study also said motorists have been slow to receive the benefits of lower world oil prices over the past eight months, noting that "gasoline prices do not come down as fast as they [go] up."
Last fall, days before the McTeague committee kicked off its public hearings, Ontario Premier Mike Harris accused the oil giants of colluding to cheat consumers at the pumps, especially during holiday weekends.
Industry officials countered that such increases were less frequent than commonly thought, and, even when prices rise, they merely reflect the laws of supply and demand. Variations among the provinces also reflect different provincial taxes at the pump, company executives said.
The oil industry has already fired a few shots of its own in anticipation of the Liberal committee's study.
In April, the Canadian Petroleum Products Institute launched a campaign to explain its views on gasoline marketing, arguing that pump prices are subject to intense competitive pressures.
While the CPPI said it had no illusions about making Canadians feel "warm and fuzzy" about oil companies, it defended the industry by producing charts indicating that retail profit margins are razor thin for service stations.
The McTeague committee agrees that in many instances, gasoline outlets are making just pennies a litre in profit.
However, the group said service stations are diversifying into fast food and convenience items, which provide huge profit margins.
In total, the report makes 29 recommendations to create a "truly competitive marketplace," such as urging the Competition Bureau to make sure that the Petrocan-UDS deal honours supply contracts to independents.
It also said that integrated oil companies should be forced to publicly disclose details of their refining and retailing operations, criticizing them for a "closed-shop mentality."
Other recommendations focus on making amendments to the Competition Act to grant greater powers to the Competition Bureau and setting aside money from Ottawa's potential sale of its 18.2-per-cent stake in Petrocan into a fund to help refineries produce cleaner-burning gasoline.
The Liberal study also questions the oil industry's argument that bigger is better, expressing skepticism about claims that reduced operating costs translate into lower gasoline prices.
While the report's recommendations are non-binding, industry observers have said that the committee's input will be important in shaping the Liberal government's views on gasoline marketing. However, observers do not expect the government to directly regulate the market.
The report is already in the hands of the Competition Bureau, which announced last week that it has "serious concerns" about the Petrocan-UDS deal, saying the transaction needs greater scrutiny before approvals are granted.
Among other things, critics of the Petrocan-UDS deal worry that the new joint venture would give Petrocan-UDS too much control of the refining and retailing sector in Quebec and Atlantic Canada.
Calgary-based Petrocan runs a refinery in Montreal and UDS of San Antonio, Tex., operates the St-Romuald refinery near Quebec City.
And some observers have estimated that at least 250 of 1,940 stations will be closed across Quebec and Atlantic Canada if the Petrocan banner replaces the Ultramar brand name as planned under the proposed
joint venture.
The Liberal committee began holding public meetings last October to gather information after many urban markets in Central Canada and on the East Coast experienced sharp hikes in gasoline prices last summer.
More than 1,000 people testified or submitted papers, including major oil companies, independent gasoline retailers, government officials, individual drivers and consumer groups.
After fanning out across the country collecting data, the group of Liberal MPs concluded that major oil companies are getting too powerful.
The committee said the Competition Act needs to be toughened to prevent predatory pricing -- when big oil companies engage in price wars to drive independents and "mom-and-pop gas bars" out of business and prevent others from entering the market.
It said higher pump prices typically follow price wars because service stations need to recover losses incurred during a stretch of artificially low prices.
Canadians do enjoy relatively low gasoline prices by world standards and after factoring in inflation, today's pump prices represent reasonable value, the study said.
However, the McTeague committee is worried about corporate concentration because the number of refineries has dropped to 18 from 26 since 1991 and thousands of gasoline outlets have closed during the same period.
MJ Ervin and Associates, a Calgary-based energy consulting firm, recently estimated that there were roughly 16,500 gasoline outlets across Canada last year, compared with 22,000 in 1989.
Oil companies have blamed the closings on red ink because too many stations were chasing too few consumers.
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