N.B. government behind financial problems of CUPE pensions, ruling suggests

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Province ordered to fix $69.2 million funding shortfall

Robert Jones · CBC News · Posted: Nov 09, 2021 6:30 AM AT | Last Updated: November 9

CUPE Local 1253 represents about 1,900 New Brunswick school custodians, maintenance workers and school bus drivers. Its pension plan has a $69.2 million deficit that an arbitrator blamed on the province and ordered it to fix. (Camille LaCroix/Radio-Canada)

New Brunswick Premier Blaine Higgs has made the poor financial condition of two CUPE pension plans that serve school board workers a central issue in a strike by public-sector unions, even though it was the province that drove the pension plans into financial trouble in the first place, according to a labour arbitration case.

In a decision issued June 28, experienced national labour arbitrator Elizabeth MacPherson found the province failed to meet its obligation to fully fund the pension of CUPE Local 1253, representing about 1,900 New Brunswick school custodians, maintenance workers and school bus drivers, over several years.  

That helped drive it into a $69.2 million deficit as of Jan. 1, 2018, its last full actuarial evaluation.

CUPE president Stephen Drost says members of locals 2745 and 1253 have made all of their required pension contributions and are not responsible for their poor financial condition. (Jacques Poitras/CBC News)

In her ruling, MacPherson ordered the government to begin paying $5.5 million per year as part of a 15-year plan to fix a deterioration in the pension that years of underfunding caused.

"I find that by failing to make the contributions to the Plan necessary to fund the going concern deficit identified by the Actuaries, the Employer has breached the collective agreement," wrote MacPherson, the former chair of the Canada Industrial Relations Board, first appointed in 2007 by the former government of Stephen Harper.  

"As remedy for the breach, the Employer is directed to commence making regular contributions to the Plan in accordance with the 2018 Actuarial Valuation in amounts sufficient to eliminate the going concern deficit within 15 years."  

MacPherson noted the figure of $5.5 million per year was an estimate from 2018 of what is required to fix the pension shortfall and may have to be updated when a 2021 actuarial valuation of the deficit is made available.

She is in private practice now in Ontario and was jointly picked by the province and CUPE to rule on the dispute, which came forward as a union grievance in 2018

• Higgs wants striking employees to be willing to discuss pension changes

Another grievance to be heard

A second nearly identical grievance filed by CUPE Local 2745, the union representing school administrative staff, also alleges government wrongly starved its pension plan of millions of dollars in required contributions.

That grievance is scheduled to be heard next year.

Higgs has been criticizing the financial condition of both pensions, which are two of only three defined benefit plans left among New Brunswick government employees. The third plan belongs to provincial court judges.

• Pension reforms have union support, Higgs says

• CUPE wants to intervene in public service pension lawsuit

Defined benefit plans guarantee employees agreed-upon amounts of retirement income and benefits. Although employees and the employer both contribute to a pension fund to pay those costs, any unexpected shortfall is a financial responsibility of the employer alone.

Most New Brunswick government unions were moved from defined benefit to "targeted benefit" pension plans in 2014,  but the two CUPE locals had special wording in their collective agreements that blocked the province from switching them over.

Workers are among lowest paid 

The two plans serve employees who are among the lowest paid in government.  

According to the province's latest financial statements, members of the two unions make an average of just under $36,000 per year with retired members of CUPE Local 2745 earning average annual pensions of $8,724. Average pensions of former CUPE Local 1253 members are $11,979.

"They are no way a gold-plated pension plan," said Theresa McAllister, president of Local 2745.

The pension plans have been depicted as financial wrecks in government messaging as part of an effort to pressure the two unions to give them up for cheaper retirement plans with benefits the province does not have to guarantee.

Theresa McAllister (in pink sweater) is president of CUPE Local 2745, whose members, she says, earn under $36,000 on average, with retirees collecting average annual pensions under $9,000. (CBC)

In government news releases, the plans are described as being unsustainable and in financial "jeopardy" and last week Higgs told the legislature that winning changes to the two plans was a key government goal in its current labour fight with multiple CUPE unions

 "That is one of the stalemates in the CUPE discussion," he said

Largely government's doing

Both pension funds are in a serious deficit position, but according to MacPherson's account of what happened to the CUPE 1253 pension, this is largely government's doing for unilaterally failing to make regular "special payments" to keep the plans fully funded as it is required to do. 

MacPherson said special payments are typical in defined benefit plans.

• CUPE official backs pension reforms despite protests

Iris Lloyd is President of Local 1253 and said evidence gathered by the union and presented to MacPherson showed that as a deficit appeared in the plan following the financial crash of 2008, regular special payments from the province began but then suddenly stopped in 2013.  

Higgs was minister of finance at the time and the end of special payments triggered a downward spiral in the pension's financial position from which it has not recovered.    

New Brunswick Premier Blaine Higgs says a decision from a labour arbitrator that the province owes CUPE 1253's pension plan $69.2 million is not why he's pushing for the plan to be changed. (Government of New Brunswick)

The former government of Brian Gallant did make a $10.1 million retroactive payment in 2018 to try to shore up the plan but it remains in a significant hole.

"Premier Higgs back in 2013 decided to stop making payments into our pension plan and therefore we were able to prove that he purposely underfunded our pension plan by that $69.2 million," Lloyd said in an interview. 

"You really have to talk to Premier Higgs about why these plans are in the shape they are in." 

In her decision, MacPherson said the province was wrong to withhold special payments from the plan that were needed for it to remain financially healthy.

"Because this is a collectively bargained pension plan, the Employer is not free to simply ignore or amend the provisions of the Plan text or otherwise act unilaterally, as it has been able to do with pension plans applicable to other bargaining units that are solely controlled by the Employer," MacPherson wrote. 

"Any changes to this Plan, including the parties' respective obligations under the Plan, must be negotiated by the Employer and the Union."

Future of arbitration case

The province has filed for a judicial review of MacPherson's decision. 

Asked Monday about MacPherson's ruling, Higgs said it is unclear who is to blame for the two pensions' poor financial position.  

"We can all have our different views on whether it was funded properly or not, but I'm not an actuary," said Higgs.

He also denied his goal in changing the pension plans is to escape the expense of MacPherson's funding order. 

"Absolutely not." he said

N.B. Premier Blaine Higgs says ‘likely in for a long haul’ on public sector strike

By Staff The Canadian Press
Posted November 8, 2021 


WATCH: Premier Blaine Higgs is drawing a line in the sand in the CUPE labour dispute. The sticking point is over moving two union locals to a new pension model. Nathalie Sturgeon reports.

New Brunswick Premier Blaine Higgs is showing no signs of bending on his government’s latest contract offer to striking public sector workers.

The strike by thousands of public servants, including school bus drivers, educational support staff and workers in transportation, corrections and the community college system, entered Day 11 on Monday.

The two sides are close on the issue of wages, with the government offering 10 per cent over five years and a 25-cent-per-hour annual increase, but the province is also proposing contentious pension changes for two locals.

The premier says the two locals’ pension plans are underfunded and unsustainable, adding that if the union won’t budge on the pension issue, then “we’re likely in for a long haul here.”

The union earlier rejected the proposed pension changes, and CUPE New Brunswick representatives were not immediately available for comment Monday.

On Friday, the government issued an emergency order forcing striking workers in the health-care sector to return to work, threatening fines up to $20,400 per day for employees who refuse to comply.

CUPE filed an emergency complaint about the order to the province’s Labour and Employment Board, but the complaint was dismissed by the board in a ruling filed Sunday. In its complaint, CUPE had alleged that the province was attempting to “compel, by intimidation and threat,” employees to “refrain from exercising their right to strike.”

CUPE seeks clarity around mandatory orderCUPE seeks clarity around mandatory order

The board said it was not satisfied “on the basis of the the evidence led” that there was a violation of the Public Service Labour Relations Act.

The government has also locked out members of two locals that represent school staff, and schools across the province have moved to remote learning as a result.

Higgs says the union must agree to let the two locals in question enter a process to determine a new model for their pensions. Taxpayers, he said, can’t continue to pay into a model “that has proven to have outlived its liabilities.”

“People now live longer and are retired longer than the pension formula was ever designed for. We have people retired for longer than they have worked in many cases.”

This report by The Canadian Press was first published Nov. 8, 2021.

— with a file from Rebecca Lau

Labour board dismisses CUPE complaint after some workers ordered back to work

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Union representing health-care workers who were forced

 back to job alleges intimidation by government

Hadeel Ibrahim · CBC News · Posted: Nov 08, 2021 

Thousands of striking and locked-out public-sector workers and supporters gather at the legislature in Fredericton on Tuesday. More than 3,000 of these workers were forced back to work over the weekend. (Jacques Poitras/CBC News)

A New Brunswick labour tribunal has dismissed an emergency complaint filed by the Canadian Union of Public Employees after the province used a COVID-19 emergency order to force health-care workers off the picket line.

On Friday, Public Safety Minister Ted Flemming said cabinet was using the Emergency Measures Act to issue an order forcing more than 3,000 striking health-care workers to go back to their jobs.

Over the weekend, the affected custodians, patient services workers and laundry workers went back to work while their union challenged the order with the New Brunswick Labour and Employment Board.

According to board ruling filed Sunday, CUPE alleged the province was trying to "compel, by intimidation or threat," employees who are not designated essential to stop strikin

In its response, the province first said the labour board lacked the jurisdiction to consider the mandatory order. The province also said the order is lawful and denied CUPE's allegations.

The order does not note the reasons why the complaint was dismissed, except to say the chair was not satisfied that the province violated the Public Service Labour Relations Act.

The full written reasons are typically completed weeks after the decision itself is made.

On Saturday, CUPE president Steve Drost said the union's lawyers are looking into how they could challenge it.

"It's simply a tool that was used to interfere with these members' legal rights," Drost said of the back-to-work order.

Higgs ready to defend use of emergency act

Asked how the province would respond if CUPE went to court over use of the emergency act, Premier Blaine Higgs said the province would continue to defend the "health and safety of our citizens."  

"It's just unfortunate that CUPE would continue to challenge us in court when we have an Emergency Measures Act in place, when we have a pandemic [in] the fourth wave," Higgs told reporters Monday.

"We have situations in our hospitals that need to be addressed and we were cancelling elective surgeries and starting to get to a point where we could go beyond that.

He said he found CUPE's position hard to understand, but if the union continues to challenge the back-to-work order, "we will defend it fully in the courts."

Offer, counteroffer, pension impasse

On Thursday night, the province made CUPE officials an offer that's closer to what the union has been asking for when it comes to wage increases.

The offer includes a two per cent increase over five years, plus a 25 cent increase per hour over the same number of years. 

The province's offer also includes a memorandum of agreement, where to move forward, both sides would have to agree to allow pension representatives to find a "new retirement vehicle" for two locals. 

Higgs said Monday that the government proposal of wage increases totalling 15 per cent over five years reflected the  good work of employees.

"This offer reflects what people have done throughout the pandemic," said Higgs.

The two locals, one representing school support staff such as bus drivers, and the other representing educational and clerical assistants, are the only ones remaining with no shared-risk pension plan.

READ: The province's new emergency order forcing health-care workers back to work

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The transition to shared-risk pension plans has been contentious. In 2016, CUPE joined a lawsuit against the "unilateral conversion" of the province's public service pension plan into a shared-risk plan.

A shared-risk plan means an employee's retirement payout could increase or decrease depending on how their pension plan is performing.

"The rights of CUPE members and many other public-sector workers were violated when the government unilaterally imposed pension changes on workers, in violation of their right to free collective bargaining," Daniel Légère, then-president of CUPE New Brunswick, said in 2016.

Drost posted a video on Sunday explaining the counteroffer CUPE submitted in response. In it, he outlined wage increases that are almost identical to the ones the province was offering. However, the retirement-plan point in the province's offer would be "major concession" by the union.

Back-to-work emergency order and impact on strike, health care

The health-care workers were ordered back to work Friday after a full week of striking.

In one group, Local 1252 representing support staff and maintenance workers in hospitals, 70 per cent were designated essential and were still working.

However, the CEOs of the province's two health authorities said the system is close to a breaking point, and the remaining 30 per cent were needed urgently.

Over the week of the strike, COVID-19 testing and contact-tracing capacity was significantly reduced, with multiple vaccination clinics cancelled.

If workers don't report to work once ordered, the province could fine them between $480 and $20,400 for each day they don't comply, according to the new emergency order.

On Monday, a few days after the emergency order was enacted, Higgs said he's been impressed with the returning employees' work ethic.

"I've been so impressed with the people that have come back to work and have done so and integrated right back into the workforce as we thought or hoped they would, because they are our friends and neighbours."

That doesn't mean they're content, according to the union. Chris Curran, the president of Local 1251 representing laundry workers, said earlier that members were frustrated and angry with the use of the emergency order.

"Members feel like they've been cheated of their right to strike."

TRUE ACROSS CANADA

New Brunswick
Child protection worker says she was traumatized by what she witnessed on the job

An overwhelming case load of child abuse and neglect led to PTSD for Jacqueline McKnight

Rachel Cave · CBC News · Posted: Nov 09, 2021 

Jacqueline McKnight says she handled 450 investigations in her first three years working for Social Development. (Mike Heenan/CBC)

In an unprecedented interview that pulled back the curtain on working conditions in New Brunswick's child protection services, 31-year-old Jacqueline McKnight described how the job made her sick with fear and despair.

"I have seen human suffering beyond imagination," said McKnight, who went on leave in February, three years into a vocation she considered a calling.

"In terms of injuries, maltreatment, human behaviour … we have seen it all, we have smelled it all. We have touched it all. And those things do not leave you when you clock out."

McKnight said she was constantly fearful for the health and safety of children on her watch because there were almost always too many cases to manage.

She also feared for her own safety, because parents who resented her involvement sometimes lashed out.

"I enter peoples' lives on their worst days, so I understand why they get upset," she said. "I understand why they're angry and take it out on us."
Trial by fire

McKnight went to work for the Department of Social Development in the western part of the province in January 2018, the same month she graduated with a bachelor's degree in social work from St. Thomas University.

On her seventh day on the job, she had to remove two very young siblings from their home because of extreme neglect. She then had to testify in court.

"That was the crash course of all crash courses," she said.

After less than three years of witnessing abuse and neglect, child protection worker says she was diagnosed with PTSD

Jacqueline McKnight says social workers are overwhelmed by workload, as well as feelings of fear and guilt. 8:20

About six months into her job and still not fully trained on systems such as the database, McKnight was given more responsibilities, including consulting with co-workers on how to manage high-risk situations.

She said the files were incredibly complex and "piling up fast."

"I was feeling it. I was feeling the crunch. I was feeling like I had to be in two places at once."

McKnight said if her region had been fully staffed, it would have meant two teams of six social workers with a supervisor for each team — for a total of about 14 people.

Heavy workloads and staff burnout have been identified as issues in several reports that have looked into child protection in the province. (Joe McDonald/CBC)

But she said the office sometimes ran on half that, because of job vacancies, staff shortages, staff burnout and people on leave for burnout.

It was impossible to ask another social worker for help, because everybody was overstretched all the time.

"You'd just be creating more burden for someone else."
Impossible decisions

McKnight said it was an ongoing moral dilemma to choose which family to prioritize when so many cases felt urgent.

"Do you go to the family that's already documented, where you know things are bad? Or, do you go to the family who you haven't laid eyes on yet but it sounds really bad."

There was also built-in agony when deciding whether to leave a child in a home or put that child in foster care.

A lot of deficient situations are still not severe enough to warrant taking a child from a parent.

Make child protection an essential service, investigator says

Social workers optimistic child-protection workload will be addressed

McKnight would feel anxious leaving children in homes lacking in food, clothing and other necessities and would sometimes make emergency purchases with her own money.

She'd also ruminate about all the damage that might follow when a child had to be removed.

"Removing a child from their family? Nobody wants to do that," she said. "Those are the worst days of our job — the absolute worst days. The literature is clear about how that can impact a child, what that means for their development, especially when they're very young.

"And there are times when you wake up at 3 o'clock and wonder, 'Did I make the right decision? Did I do what was actually best for that child?"
Angry parents

McKnight said the scariest part of her job was going to a home for the first time to investigate a complaint when weapons or drugs were involved.

"We're looking at extreme amounts of drug activity, a real emphasis on methamphetamine, organized crime and severe addictions and mental health concerns."

Often, she said, she had to go alone, because other social workers were too busy and the police were also too busy.

McKnight said she had to do 'a lot of mental talk' to get over the fear of being hurt, threatened or intimidated by parents when she came to the door. (Mike Heenan/CBC)

It would take a huge amount of psychological energy just to get the courage to walk up to the door.

"You are literally walking into the complete and utter unknown," said McKnight, recalling how her heart and mind would race.

"Are they going to say, 'Get the hell off my property.' Are they going to punch me in the face? Are they going to show me the gun that they have loaded by the door?"

McKnight said she's been shoved, slapped, spit on, and chased by dogs. She's been intimidated and threatened.

Department failed to protect 5 neglected children, investigation finds

Social workers urge public to watch for suspected child abuse, neglect

"People would say to me, 'I know where you live' How do you deal with that? Are they bluffing, or are they not bluffing?"

McKnight became so fearful of running into families outside of work, she stopped leaving her home.

"I was routinely having panic attacks in public places such as grocery stores or Walmart or the park. I could not stomach seeing any reminder of work outside of work. There was something wrong with me."

Eventually, McKnight put her house up for sale, and when she went on a medical leave, she moved to another part of the province. She is still employed by Social Development.
Job takes tolls on social workers' kids

McKnight does not have children herself but said she has witnessed how the job impacts the families of her co-workers, and it's not healthy.

Social workers who are parents miss out on time with their own children because they're so preoccupied with the urgent needs of the children in their files, she said.

They miss their own children's sports, concerts, appointments and activities because their jobs are so unpredictable.

Social workers may be needed at the hospital, waiting for a doctor to inspect a child's injuries. They may get held up waiting for the police to arrive to provide assistance or conduct a forensic interview.

McKnight describes the case load social workers are facing as overwhelming, with staff shortages a major issue. (CBC)

"Or it could be negotiating with a family about what we need to see happen before we can leave [the premises] and feel confident that the child is safe," McKnight said. "Or it could be time spent trying to find a foster family.

"You cannot walk away from those situations. It takes as long as it takes. If it takes 24 hours, you work 24 hours. If it takes until 4 a.m., you're there and there's no tradeoff. No one is coming to relieve you."

"They have to choose and the reality from the people I know is that they choose the kids they work with. They don't choose their own families, and their own families suffer."
Career cut short

In addition to her fear of leaving the house, McKnight said she developed an eating disorder and compassion fatigue. She even thought of suicide.

"The world of my co-workers is so deeply entrenched in the negative, the sadness, the despair. We don't see the healthy, well-adjusted, taken-care of children because we don't need to."

Death of six-month-old boy prompts warning that social workers have too many cases

McKnight felt she was losing her ability to connect with families and establish a rapport.

"I was having a hard time finding empathy and that scared me. You can't do this job without empathy.

Eventually, she was diagnosed with post-traumatic stress disorder. In her accepted claim with WorkSafeNB, her injury is described as one to the "nervous system, e.g. nervous shock, nervous breakdown."

George Savoury said in his November 2018 report that social workers were juggling too many cases. He made more than 100 recommendations to government on how to improve the child protection system. (Joe McDonald/CBC)

McKnight was working for Social Development when consultant George Savoury was hired to conduct a review of the child protection system.

His report, released in November 2018, said "the dilemma of caseload/workload is a very pressing issue with staff in New Brunswick. It was the single most frequent concern in the survey employees completed, and most frequently raised in regional meetings throughout the province."

McKnight said the report inspired hope for more hires, but before she went on leave this year, her office was struggling with some of the worst staffing shortages she had seen. She said the office was half-empty.
Workers get 'shell-shock'

As a social worker in the public sector, McKnight belongs to CUPE Local 1418, which has been without a contract since August 2017.

Because the local is on strike, McKnight was given permission from union leadership to speak about her working conditions.

Shawna Morton, the president of the local, said they've never been worse.

"In the field of protection, we have seen a revolving door like crazy," said Morton. "The recruitment and retention issues are absolutely the most horrendous I've ever seen."

The union representing social workers says staff burnout is high in New Brunswick. (Shutterstock)

Counselling is available to child protection workers through their employee assistance program, but Morton said staff may not have the time or energy to seek help — if they can even recognize they need it.

"People become so shell-shocked, they don't even realize what's happening to them," she said.

McKnight said the confidentiality of child protection files and the silence of child protection workers have made it easier for society to pretend that severe child abuse and neglect are not as prevalent as they are.

By letting the system be so ignored and under-resourced, she said, society is complicit in what is happening to children.

McKnight is making some progress in her recovery, she said, but doesn't know if she'll ever be well enough to do the job again.

Planning for Canada-U.S. treaty talks on Line 5 'well underway,' Canada says
James McCarten
The Canadian PressStaff
 Tuesday, November 9, 2021

In this June 8, 2017, file photo, fresh nuts, bolts and fittings are ready to be added to the east leg of the Enbridge Line 5 pipeline near St. Ignace, Mich. (Dale G. Young/Detroit News via AP, File)

WASHINGTON -- Planning is "well underway" for bilateral treaty talks between Canada and the United States in the dispute over the Line 5 pipeline, with formal negotiations expected to begin "shortly," the federal government says in new court documents.

A proposed motion filed Friday in U.S. district court in Michigan says an initial dispute resolution session, as spelled out in the 1977 pipeline treaty between the two countries, is in the works.

"Planning for a first formal negotiating session under the treaty is well underway, and Canada expects that first session to happen shortly," reads the supplemental brief submitted by Gordon Giffin, the former U.S. ambassador to Canada who is serving as the federal government's American counsel.

"Canada hopes that these negotiations will yield a mutually satisfactory solution as between Canada and the United States regarding the interpretation, application and operation of the 1977 treaty."

Should those negotiations fail, the next stage of the dispute resolution process would be binding international arbitration, the motion says.

"Canada's decision to invoke (the treaty) reflects the importance of this matter to Canada's energy security and economic interests and its relationship with the United States."

Canada opted to formally invoke the 44-year-old treaty last month after talks involving a court-appointed mediator broke down between the state of Michigan and the pipeline's operator, Enbridge Inc.

Michigan Gov. Gretchen Whitmer ordered the cross-border pipeline shut down last November for fear of an environmental disaster in the ecologically sensitive Straits of Mackinac, the waterway where the pipeline crosses the Great Lakes.

The White House has acknowledged that the U.S. Army Corps of Engineers is conducting an environmental assessment on Enbridge's plans to encase the underwater portion of the twin pipeline in a deep, fortified underground tunnel.

But spokeswoman Karine Jean-Pierre was quick to note Tuesday that the process is not an indication that President Joe Biden's administration is looking to shut down the expansion.

"Canada is a close ally and a key partner in our in energy trade as well as efforts to address the climate crisis and protect the environment," Jean-Pierre told the daily White House briefing.

"These negotiations and discussions between the two countries shouldn't be viewed as anything more than that, and certainly not an indicator that the U.S. government is considering shutdown. That is something that we're not going to do."


As to the ongoing operation of the existing pipeline, she added, that's the subject of "litigation between Enbridge and the state of Michigan" and that "we expect the U.S. and Canada to engage constructively on it."

Jean-Pierre would not respond to media reports that Biden, Prime Minister Justin Trudeau and Mexican President Andres Manuel Lopez Obrador plan to meet in Washington as early as next week, part of a long-standing commitment to rekindle their trilateral tradition of annual in-person meetings.

Officials in the Prime Minister's Office and in diplomatic circles in both Ottawa and Washington also declined to comment.

Lawyers for the state of Michigan did not immediately reply to Canada's request to file its latest motion. A Nov. 4 response to an earlier filing, however, dismisses the Canadian position as "legally unfounded."

They argue that bilateral negotiations under the pipeline treaty ultimately have no bearing on the primary legal question before U.S. District Court Judge Janet Neff: whether the case properly belongs in Federal Court.

Line 5 ferries upwards of 540,000 barrels per day of crude oil and natural gas liquids across the Canada-U.S. border and the Great Lakes by way of a twin line that runs along the lake bed beneath the straits linking Lake Michigan and Lake Huron.

Proponents call it a vital and indispensable source of energy -- particularly propane -- for several Midwestern states, including Michigan, Ohio and Pennsylvania. They also say it is a key source of feedstock for critical refineries on the northern side of the border, including those that supply jet fuel to some of Canada's busiest airports.

Critics want the line shut down, arguing it's only a matter of time before an anchor strike or technical failure triggers a catastrophic environmental disaster in one of the area's most important watersheds.

They also point to a recent pipeline rupture off the coast of California, believed to be the result of an anchor strike, as an example of the fate that could befall the straits if Line 5's operations continue.

This report by The Canadian Press was first published Nov. 9, 2021.

White House: U.S. is Not Considering Shutting Down Enbridge’s Line 5 Pipeline

November 9, 2021 EnergyNow Media

WASHINGTON, Nov 9 (Reuters) – The White House said on Tuesday it is not contemplating shutting down Enbridge Inc’s (ENB.TO) Line 5 pipeline after Canada last month invoked a 1977 treaty with the United States to trigger bilateral negotiations over it.

Line 5 is at the center of a long-running environmental dispute between Calgary, Alberta-based Enbridge and the state of Michigan that has embroiled the Canadian and U.S. governments.

“We expect that both the U.S. and Canada will engage constructively in those negotiations,” White House spokesperson Karine Jean-Pierre told reporters.

She said those discussions should not be viewed as an indicator that the U.S. government was considering shutting down the pipeline.

“That is something that we’re not going to do,” she said.

The Line 5 pipeline ships 540,000 barrels per day of crude and refined products between Superior, Wisconsin, and Sarnia, Ontario, via Michigan, and is a key link in Enbridge’s Mainline network, which transports the bulk of Canadian crude exports to the United States.

Michigan Governor Gretchen Whitmer ordered Enbridge to stop operating the pipeline by May because of concerns a section running underwater in the Straits of Mackinac could leak into the Great Lakes. The company ignored that order and the two sides are in a legal battle over Line 5’s fate.

Last month, the Canadian government, which backs Enbridge, escalated the dispute by invoking the decades-old pipeline treaty with the United States to trigger negotiations.

“Line 5 is a top priority for Canada,” said Lama Khodr, a spokesperson for Canada’s foreign ministry. “Canada’s objective remains to work with the U.S. in these formal treaty negotiations to seek a solution where Line 5 remains open and operating safely.”

U.S. President Joe Biden is planning to host an in-person meeting next week with the leaders of Mexico and Canada, the first of its kind in more than five years, sources told Reuters on Tuesday.

MEG Energy CEO doesn’t expect Line 5 dispute to hurt ability to move heavy oil

November 9, 2021 The Canadian Press

CALGARY — The chief executive of MEG Energy said Tuesday he doesn’t expect the ongoing dispute between Canada and the U.S. over the Line 5 cross-border pipeline to hurt his company’s ability to move heavy oil to the U.S. Gulf Coast.

On a conference call with analysts, Derek Evans — the head of the Calgary-based energy company — said that now that Enbridge Inc.’s Line 3 replacement project is operational, MEG is less concerned about the outcome of bilateral talks over Line 5.

“Line 5 does not carry a huge amount of volume. And I think it’s about 330,000 barrels a day. It tends to be light product,” said Evans, whose company produces heavy oil from the Athabasca oilsands region of Alberta.

“With Line 3 now up and running, there actually appears to be incremental space on the light system that heavies can utilize with the way that line is now configured. So we’re even more comfortable today that the shutdown of Line 5 won’t, wouldn’t negatively impact our long-haul capacity.”

Court documents filed by the federal government say planning is well underway for bilateral talks in the dispute over the Enbridge’s cross-border pipeline. A proposed motion filed last week in U.S. District Court in Michigan says the first formal negotiating session between the two countries will happen “shortly.”

Canada decided last month to invoke a 1977 pipelines treaty between the two countries after talks broke down between the state of Michigan and Enbridge. Michigan wants the line shut down for fear of an ecological disaster in the Straits of Mackinac, the waterway where the pipeline crosses the Great Lakes.

But whatever the outcome of the talks, Canada’s oil and gas industry already scored a major win last month, when Enbridge brought its $9.3-billion Line 3 replacement project into service. The 1,765-km Line 3 added about 370,000 additional barrels per day of crude oil export capacity from Western Canada to refineries in the U.S. Midwest.

Evans added the company expects to also have additional take-away capacity when the federally owned Trans Mountain expansion project is completed, expected to be sometime in mid to late 2022.

On Monday, MEG Energy reported what Evans called “exceptional financial results” against the backdrop of strengthening global oil prices and an improvement in heavy oil differentials.

The company boosted its output forecast for the year as it reported a profit of $54 million or 17 cents per diluted share in its latest quarter compared with a loss of $9 million or three cents per share a year ago.

Revenues for the three months ended Sept. 30 were $1.09 billion, up from $533 million in the third quarter of 2020.

MEG was expected to earn 29 cents per share on $1 billion of revenue, according to financial data firm Refinitiv.

Adjusted funds flow increased to $239 million or 77 cents per share from $26 million or nine cents per share a year earlier.

Quarterly production increased 28 per cent to 91,506 barrels per day, compared with 71,516 bbls/d in the prior year quarter. As a result, it again increased its annual average production guidance, this time to 92,500 to 93,500 bbls/d from 91,000 to 93,000 bbls/d.

This report by The Canadian Press was first published Nov. 9, 2021

.Companies in this story: (TSX:MEG)

Amanda Stephenson, The Canadian Press

Enbridge Chief Stresses Importance of Oil, Natural Gas Mainstays

BY GORDON JAREMKO

November 8, 2021

While promising to work toward “lower-carbon solutions,” Enbridge Inc. reported Friday that its mainstay North American oil and gas pipeline network stayed profitable and essential during the third quarter. In fact, the Calgary-based pipeline, utility and power giant grew during the period.

Current fossil fuel demand and price increases “underscore the criticality of affordable, reliable and secure energy supply for consumers and our social well-being,” said President Al Monaco. “The energy we deliver is critical to fueling quality of life in North America and globally and this will continue for decades to come.”

A major 3Q2021 landmark on Enbridge’s heritage fossil fuel side included completing the Line 3 oil pipe replacement project, adding 370,000 b/d of Canadian export capacity. During the period, Enbridge also closed on its $3 billion acquisition of the Ingleside Energy Center for U.S. oil exports. Moreover, the company augmented its natural gas pipeline network in British Columbia and New England.

Looking ahead, Enbridge anticipates a scheduled decision this month from the Canada Energy Regulator on a hotly contested proposal to convert its 3.1 million b/d oil Mainline into a contract service after 70 years as a common carrier filled by monthly bookings.

Enbridge also is devoting considerable attention to its corporate sustainable development strategy, adding alternative energy ventures to align with environmental, social and governmental initiatives 

The company said its low-carbon project portfolio includes French offshore wind power projects, hydrogen blend trials in Ontario gas distribution, renewable natural gas projects that tap waste disposal sites and a pipeline solar self-power plant. In addition, the company highlighted the formation of a corporate New Energies Team, a planning partnership with Royal Dutch Shell plc and sustainability-linke” bond sales.

“Our objective is to be a differentiated energy infrastructure service provider for our customers by leading our industry on environmental, social and governance performance,” said Monaco.

Enbridge posted 3Q2021 earnings of C$682 million ($545.6 million), or C34 cents/share (27 cents),  down year/year from C$990 million ($792 million), or C49 cents (39 cents).

© 2021 Natural Gas Intelligence. All rights reserved.

Oil Sands Tiptoe to Record Output, But Keep a Lid on Spending
November 9, 2021 EnergyNow Media


Pipelines run at the McKay River Suncor oil sands in-situ operations near Fort McMurray, Alberta, September 17, 2014.REUTERS/Todd Korol/File Photo

Nov 8 (Reuters) – Canada’s oil sands are inching toward record production, as the country’s biggest producers squeeze more barrels out of existing assets, but they are holding back on big spending despite some of the highest oil prices in seven years.

The oil sands, which make up the bulk of Canada’s production, are on track to reach 3.5 million barrels per day (bpd) by year-end, surpassing January’s record of 3.25 million bpd, said Matt Murphy, analyst at investment bank Tudor, Pickering, Holt.

Oil demand is rebounding as expanding COVID-19 vaccination rates spur greater economic activity, and as the OPEC+ group of major producers ignores U.S. calls to raise supply faster. Those factors have driven global prices to more than $80 per barrel. read more

Canada’s majors all signaled recently, however, that they have no plans to take on big new projects or significant expansions to existing facilities.

Canadian Natural Resources Ltd (CNQ.TO) (CNRL), Suncor Energy Inc (SU.TO) and Cenovus Energy Inc (CVE.TO) elected instead to increase dividends to take advantage of stronger revenues.

Those producers are scheduled to unveil 2022 capital budgets in coming weeks, but will prioritize small expansions and efficiencies to their sites to raise output.

Total Canadian production, including conventional crude oil and condensate, hit a record of 4.96 million bpd in December 2019, according to the Canada Energy Regulator. Canada produced 4.67 million bpd in August 2021, the most recent data available.

Cenovus plans to raise production through small expansions and reducing bottlenecks to assets it acquired this year, rather than big projects, Chief Executive Alex Pourbaix said.

“These projects have way lower capital, they have very high returns and we can bring them into service in very short order,” Pourbaix said in an interview. “They’re actually much more compelling economically than looking at the large-scale, phased expansions that cost several billion dollars and take five to six years to construct.”

Imperial Oil Ltd (IMO.TO), majority-owned by Exxon Mobil Corp (XOM.N), has a number of projects planned for its Kearl oil sands plant that will increase production to 280,000 bpd by 2025 from 265,000 bpd this year, CEO Brad Corson said.

CNRL President Tim McKay said the company is focusing on efforts like introducing solvents to boost production at thermal oil sands operations and reduce emissions from natural gas.

“Given what we have been through with all the volatility with oil and gas prices, it’s very difficult to go out and sanction major expenditure,” McKay said.