Exploring Canada’s Oil & Gas Landscape

00:00:04 Russell Stewart
Welcome to the Energy Pipeline Podcast with your host, Russell Stewart. Tune in each week to learn more about industry issues, tools and resources to streamline and modernize the future of the industry. Whether you work in oil and gas or bring a unique perspective, this podcast is your knowledge transfer hub. Welcome to the Energy Pipeline. Hey, everybody. As always, thanks for listening today. My guest on the show is Jason Williams. Jason is the director of oil and gas business development in Canada for a company called Finning. F I N N I n G Jason, thanks for coming on the show today. 

00:00:49 Jason Williams
Thanks for having me. Appreciate it. 

00:00:52 Russell Stewart
Well, the pleasure's all mine. I'm really excited about having you on the show. We do have listeners, you know, in 134 different countries, but quite frankly, the biggest chunk of the audience is probably in the Texas oil and gas market. And so Finning may not be a household name here in Texas. Most everybody in Texas knows who Mustang Cat is. And you guys are the what, the Mustang Cat of Canada? 

00:01:26 Jason Williams
Yeah, we'd be the Mustang Cat of Canada and South America and the UK as well. 

00:01:32 Russell Stewart
Oh, okay. So that's the Mustang Cat on steroids in, huh? 

00:01:36 Jason Williams
Yeah. 

00:01:37 Russell Stewart
Okay, so you go. So you're in Canada, you're in South America. Where else did you say? 

00:01:44 Jason Williams
In the UK as well? 

00:01:45 Russell Stewart
Yeah, in the UK as well. And so you're the guy in charge for oil and gas in Canada, correct? 

00:01:51 Jason Williams
Yep. 

00:01:51 Russell Stewart
Oh, great. Okay. Well, that's what I wanted to talk about today was Canada. There's a lot of things happening in the oil and gas market in Canada and you guys are particularly involved in it. So let's talk about that. And I think one of the big ones is probably the LNG export market. 

00:02:12 Jason Williams
Yeah, you bet. So LNG is new to us in Canada. We've always exported almost 100% of our gas to the U.S. we don't have any other customers. So very recently, or will happen very recently, is the LNG Canada project will begin transporting LNG this summer would be the first time ever in Canada where we've had more than one customer for our gas. So I know in the US you have multiple projects. You're one of the biggest distributors globally. Right. But here in Canada, it's a big deal for us to get a pipeline to the west coast and to be able to ship that gas internationally. So that's opening up this summer and It'll be about 2 bcf a day shipping out. 

00:03:01 Russell Stewart
Okay, so you're actually building a new pipeline. 

00:03:05 Jason Williams
The pipeline's done, facility's done. They're just Doing all the testing right now and they expect to have first shipment probably by July, mid July, early August. 

00:03:15 Russell Stewart
And so Finning's role in this is what exactly? 

00:03:19 Jason Williams
Well, to back up a little bit. So Finning's the largest distributor of CAT products globally. I don't know if you're aware of that. We're a 92 year old business like right back to 1933 in Canada. We're headquartered in Edmonton, Alberta. So that's kind of the gateway to the north for oil and gas. We have a few facilities there. One of the biggest ones is our OEM facility. 300,000 square feet. So when it comes to LNG, Cat has a premium quality product, the G3600 gas compression engine. And that engine is kind of, we're the first call when it comes to anything related to gas compression just because its total cost of ownership is so low compared to our competitors and because it lasts two or three times longer as well. So when we talk about lng, it really ties into the CAT production and not just gas compression, I guess I should say as well, you know, drilling and completions. I know you're familiar, Russell, with, you know, gas wells. They don't. You don't just drill a gas well like a little oil well and expect it to roost for 90 years. It'll last for a couple of weeks, a month maybe. And then they got to drill another one to get gas. Right. So the rate of decline on these wells is very, very quick. I mean, some can last longer, but for the most part you're like six weeks, you're down to maybe 10, 15% of what the well is producing in the first six weeks. So when we talk about exporting gas that, you know, there should be an additional amount of drilling and completions which fits well with Cat as well and finning as the Cat products, which we call DGB Dynamic Gas Blending engines, which can displace 75% of the diesel that goes into the engine with natural gas. So better for the environment not paying for Diesel at 2 bucks, you know, a liter up here. I don't know what it is in the US but it's pretty expensive. So that all ties into these LNG product. 

00:05:14 Russell Stewart
Okay, and so when you say replace 75% of diesel are these like dual, dual capacity engines? 

00:05:23 Jason Williams
Dual fuel, we call them dual fuel. 

00:05:25 Russell Stewart
Okay. All right. So you can use, you can use either the gas or you can use the diesel. But because of, but because of your product, you can use a whole lot more gas than you have to use Diesel. 

00:05:36 Jason Williams
Yeah, and diesel's expensive. And from an environmental standpoint, you know, natural gas is. 

00:05:41 Russell Stewart
Absolutely, absolutely. So is there a lot of, are there a lot of gas wells being drilled in Canada now? 

00:05:48 Jason Williams
Yeah, we have, we have probably the largest play in North America, the Montney play. I don't know if you've heard that term, but I think it's, I want to say 404,49tcf of gas sitting there. And we drill in that area. You know, we can, we can do probably 250 to a thousand wells a year maybe out of that area. And when you think of that much gas, I mean it's relatively unexplored. So yeah, great opportunity in that area. Northeast, Northwest Alberta, Northeast British Columbia. 

00:06:20 Russell Stewart
Okay, that was my next question because you mentioned you guys are headquartered in Edmonton. 

00:06:25 Jason Williams
Yeah. 

00:06:26 Russell Stewart
Okay. And that's. Now you're actually in Calgary, right? 

00:06:30 Jason Williams
Correct. Yeah. 

00:06:31 Russell Stewart
Okay. A lot prettier in Calgary than it is in Edmonton. 

00:06:34 Jason Williams
Yeah, we like it here. But hey, I bleed orange and blue. That's a hockey player. 

00:06:40 Russell Stewart
Okay. 

00:06:41 Jason Williams
West of Edmonton. Yeah, in the country. 

00:06:43 Russell Stewart
Okay. All right. And Ovechkin just broke Gretzky's record. 

00:06:46 Jason Williams
Yeah, well, yeah, they say that, but in my opinion, I think Gretzky is only one goal away from Ovechkin, so. 

00:06:55 Russell Stewart
Okay, all right, maybe I'll come back. We'll see. So, so, so Edmonton and Calgary, that's, that's almost the equivalent to I would say Houston and Dallas Fort Worth. Although we here in Houston, we always say Dallas Fort Worth. Do you go to Dallas Fort Worth? They don't say Dallas Fort Worth, they say Dallas. They are, they say Fort Worth. But Edmonton and Calgary might be the, the Houston and Dallas Fort wor of Canada and they may argue with one another, but I think traditionally Edmonton's kind of considered the Houston of the oil and gas industry in Canada. 

00:07:37 Jason Williams
Yeah. The gateway to the north. Great people, hard working people. Yeah. And that's the way it used to be. A member of Dallas really being quite the headquarters. But I think it's all kind of moved to Houston nowadays. Right. I mean, there's still some stuff there. 

00:07:49 Russell Stewart
Oh yeah, yeah. Houston's pretty much considered the capital, you know, so. All right, so Kat's involved in all this gas drilling and can you comment on. I'm just, I'm just curious about what's going on in, in Canada right now. Are they drilling a lot of oil wells too? 

00:08:10 Jason Williams
Oh, yeah, no, we, we, I think we.98% of our oil goes to the US and it's just about 6 million barrels a day. So the US gets a pretty significant discount on that, which we call Western Canadian Select. So right now it's roughly 10 bucks. I didn't look, you know, in the last few minutes, but roughly $10 difference between it and WTI. But often it can be a $20 difference, so they get it at quite a discount. 

00:08:36 Russell Stewart
Oh, wow. Well, that's. That's very interesting. And is that. Is that mostly in Alberta where they're drilling, doing that? 

00:08:42 Jason Williams
Western Canada, Alberta and Saskatchewan and Manitoba as well? A little bit. 

00:08:46 Russell Stewart
Yeah. 

00:08:46 Jason Williams
But that, that, yeah, it'll all go. It'll. 98% of it goes to the U.S. we just got, oh, I don't know, a few months ago, Trans Mountain Pipeline opened up, which goes to the West Coast. We're actually able, again, like we were talking about LNG, able to export some of our oil, but that's 250,000 barrels a day. It's more of a pressure release valve than it is a real export. 

00:09:08 Russell Stewart
Well, now, that's very interesting to hear about these pipelines, because, of course, here in the States, all we've heard about over the last four or five years is the XL pipeline, which, you know, was on again, off again, off again, trying to now get it, get it on again. So. So this, this. These are old pipeline structures you've been using for a long, long time then? 

00:09:33 Jason Williams
Yeah. And I think for the most part, the US Is refining and shipping out, or just shipping out direct out of the US from the. From the Gulf. Gulf of America. Yeah. 

00:09:41 Russell Stewart
There you go. There you go. Appreciate that. Appreciate that, Jason. Okay, so you guys are heavily involved in the kind of new process of LNG exports to other countries, and the caterpillar generators are very critical to that then. That's not all there is, though, to you guys. You're also powering a lot of data centers, aren't you? 

00:10:13 Jason Williams
Yeah, well, we're definitely got our toes in the water there. I know in the US Obviously, you know, you can kind of look at Canada. It's always whatever we do. US has got 10 times, you know, 10 times the drilling rigs, you know, 10 times the LNG exports, 10 times production. All that same with data centers in Virginia and everything. I mean, there's. There's just a million of those centers popping up. But in Canada, we have a bit of an advantage. Obviously. You know, if you live here, you don't love it, but the cold air, you know, these data centers draw a lot of power and they get really hot. Right. So the natural Cooling really reduces the energy consumption and emissions that are tied with that. So we've got, I think in Alberta alone we have just over 8 gigawatts of application. So basically data centers applying for 8 gigawatts of power from, from the grid. And currently I think we have, I think the number was 1.3 GW available and most of that's non peak. So you know, 11 o' clock at night till 5 in the morning. I don't know if you can operate your business in those hours or not, but. So there's not the capacity for it. But we're the government's, you know, all on board, they're all fully supportive, trying to fast track permits and all that. So really good for cat and finning. Just because they're going to need to get power from somewhere if there's, if they're short 6.5 gigawatts, they're going to need power, you know, from natural gas or you know, maybe wind power and some of the renewables. But right now we're looking at, we've talked to a lot of customers, there's a lot of inquiries, but this is big power. Right. You talk about crypto is probably 150 megawatt kind of on average, data centers are 200 megawatt plus. And then you look at what we call hyperscalers. They're like over a gigawatt of power. To build a facility and plug in one gigawatt over the next two years is going to be pretty tough. So the government of Alberta is very supportive of, you know, we've met with them multiple times with the finning group, supportive of us supplying power to help them get on their feet and then maybe put together a bit of a plan to spoon feed, you know, power to these facilities so that, you know, three or four years down the road they'll be tied into the grid and the government will have, you know, bigger power sources. 

00:12:31 Russell Stewart
Yeah, but what you can do immediately is you can provide power where, where the grid's not there, provides plenty of time for the grid to get there. And then even after, even after they do get connected to the grid, I guess you're still back up, right? 

00:12:48 Jason Williams
Yeah, and that's, that's the beauty. I mean like we're not in the hyperscale business. Right. We're three, four megawatts at a time. You know, one gigawatt plus is tough. That's a lot of, lot of engines out there. But yeah, definitely standby power or even when they're building and construction. We rent a lot of power to these companies to build their facilities. So we have a thing we call, you know, behind the fence or energy as a service where we're partnering with our oil and gas customers. Basically put a microgrid on their location, use their gas and power the, you know, sell electrons to the, to the data centers. Right. So power the data centers. So acting like a little, a mini power company in some cases. Yeah. 

00:13:27 Russell Stewart
Okay, now going back to LNG exports, let's talk about what maybe hybrid energy storage. 

00:13:39 Jason Williams
Yeah. So hybrid energy storage is one of the cooler solutions we've dealt with over the last few years. Cat's been very proactive there and come up with some great things. And it complements, you know, some of the stuff we were talking about with the dynamic gas blending or dual fuel type engines. So if you're talking about a drilling rig, we can go out, have our gas engines out there. We have what we call sims, smart engine management system software. This is all proprietary CAT software and it basically will shut engines down or predict when to shut them down or even level load them. So that one isn't operating super high. Like this would all be handled manually. Right. One wouldn't be idling super high and the other two are idling low. We spread the load across all three engines. It adds to the longevity of the engine. Right. It helps it out. But at the same time we can plug in a battery and shut down engines and just have like hotel power on the rig being run by that battery. And the battery can have handle load spikes. If there's too much draw on the engines, the battery kicks in. It's a 1 megawatt battery. And Cat's working on some pretty cool stuff a couple years down the road. I think it still is, but some higher powered stuff. So the hybrid solution, it's just like a hybrid car. I mean like it just, it works so well for these big applications and it saves diesel on these engines. Right. Because they're either going to be have the dynamic gas blending option or they're going to be shut down and run off the battery. So there's a huge savings on emissions. And we're also, this is kind of a Canada first thing with finning is we're plugging these into our customers gas processing facilities with the same idea where the battery's there. If there's too much load on those engines, if one goes down, then all that load goes to the next few engines and it'll just cascade and shut down. When you have the battery there and the SIM software, the smart engine management system, it knows when to shut down engines, level loads and if the engines are all revving high, it'll kick the battery on to offset the load spikes. So fantastic solution. We've got, I want to say 1, 2, 3, 4, 4 or 5 plugged into facilities right now. And this is relatively new over the last year and a bit technology and accolades from each one of those customers. It's been a fantastic solution. Cat really knocked it out of the ballpark with that one. 

00:15:55 Russell Stewart
Okay, and so what kind of facilities are these in gas processing? 

00:16:00 Jason Williams
Processing facilities. Yeah, for sure. 

00:16:01 Russell Stewart
Okay. All right. Okay. All right. So I'm just kind of curious and I found this very fascinating about what's going on in Canada. And so you guys are actually, you talk about everything being bigger in the States, but this hybrid energy storage thing, you guys are kind of on the forefront of that in Canada. 

00:16:25 Jason Williams
Yeah, it's funny. Well, it's adopted, you know, on the drilling rigs, I think it took. It started in the US and we followed it, but we just, we have a few customers up here, you know, Tourmaline Oil is one of them. They're early adopter of new technology like that and they just, they just took the stuff and ran with it and just worked wonders with it. And others like Advantage Oil and Gas, they're fantastic as well. So yeah, it's been great. 

00:16:48 Russell Stewart
Okay. All right. So the Canada Energy Corridor, describe that. 

 00:16:55 Jason Williams
Yeah, so this is a term that's been kicked down the road, kicked the can down the road for a lot of years. It's starting to rear its head again just because of what's going on with tariffs, what's going on with what's happened in the Ukraine and countries like Germany being cut off on natural gas at the worst possible times, energy security. So the idea is we've got a little bit of energy going to the west coast, we've got nothing going to the east. Eastern Canada actually buys their oil from, I would say non ethical countries. You know, the way they get their oil is unethical. The way they treat their people probably is similar. And they also get the gas out of the US So we actually send pipelines into the US and we either supply it to them or it comes from, you know, Haynesville or whatever in Northeast U.S. so the whole idea is, you know, if something happened, we're completely reliant on the U.S. right. So in eastern Canada, so we like to put, you know, it's not, we, the government would like to put a roughly 20 kilometer wide, you know, swath or easement across Canada and essentially open that up for rail and energy, renewables and pipelines so that we could supply energy to the, to the east. And then that opens an avenue for us to export out of Hudson Bay, out of the St. Lawrence river, anywhere there's Tidewater. Right. Where we could get ships in and, and ship gas or oil out. So it's a controversial thing. I think we've got an election coming up on the 28th, and one's for, one's against, or one's for, and one hasn't sit whether he's for or against. And from an environmental standpoint, I'm sure there's a lot of people that have a problem with it, so we'll see what happens. But as far as from an energy security standpoint, it makes nothing but sense. And the way the companies have operated in Alberta and D.C. and Saskatchewan, western Canada, you know, they've reduced their emissions so much. They're so environmentally focused. I'd be shocked that something like this would get turned away, especially on the security side. 

00:19:08 Russell Stewart
Yeah, yeah. And for those who don't know, you start talking about going from Western Canada to eastern. Eastern Canada. That's a lot of territory. Yeah, that's a, that's a lot of space. And I would think your energy security would, would be very important. So you say controversial. Obviously that's because the, I, I guess because of the environmentalists. Same thing. To shut down the XL pipeline here in the States or something like that. Yeah. 

00:19:39 Jason Williams
And I mean, like, you have to see their side of things. They want it done properly, and maybe things get expedited and things get overlooked, but I feel like that's, that's the way of the past. I can't see that happening with this project. But. 

00:19:51 Russell Stewart
Yeah, well, you know what? You just, you just said something very important. And of course, this is the, the Energy Pipeline podcast, which I think most everybody who listens to this podcast knows. It's, that's kind of a play on words. It's not just a, it's not a podcast for pipeliners. You know, it's, it's, it's the pipeline. It's evolving. It's, it's everything that, that involves oil and gas. But I also have an OGG and HSE podcast, and so we talk about these things. In fact, I, I had somebody from cat, I think I interviewed them for the HSE podcast. They talked about some of these. What'd you call them again? Dual. Dual what? Engines. Dual fuel. And as we Always say on that podcast, you know, I tell people that first of all, we're not for dirty air, dirty water, you know, throwing grandma off the cliff and all that sort of thing, you know, and not only are we not, you know, not only do we care about the environment, actually if you look at the oil and gas industry, it's becoming the solution to the environment. 

00:21:07 Jason Williams
Yeah. 

00:21:08 Russell Stewart
Just like the things you're talking about here, they've cut emissions so much, your dual fuel cat engines and all that sort of thing. And it's one of the reasons for this podcast, we just are doing everything we can to get that message out that the oil and gas industry is not the problem with the environment, it's the solution to the environment. 

00:21:34 Jason Williams
Yeah, support too. Right. Like they're not, they're doing this on their own dollar. Right. They're not getting, you know, huge grants or anything like that from the government to do it. They're just doing it because. Right. And the shareholders want them to do it and they're doing it and they're doing a great job of it, I think. 

00:21:48 Russell Stewart
Yep, they absolutely are. So Jason, we said you're in Calgary, you talked about the weather. We're actually, this podcast will be a few weeks down the road, but we're actually recording on April 7th. So what's the temperature there? 

00:22:04 Jason Williams
All right. It's beautiful today. I think it's, it's supposed to hit 20 degrees today, so. 

00:22:08 Russell Stewart
Oh my goodness. 

00:22:09 Jason Williams
A heat wave like six inches of snow like three, three days ago, four days ago. That's how we roll up here. 

00:22:18 Russell Stewart
Wow, that's interesting. For those who, who don't know, actually when I was a teenager, thanks to my dad's job for three years, I lived in western Canada. I actually lived in a, a little town called Lloyd Minster, which is about 150 miles east of, of Edmonton. And yeah, gets cold. The first winter we were up there was one of the worst they had had in 50 years. There was one week, the, the high for the week was 25 below. So. 

00:22:56 Jason Williams
Yeah, I love my American friends, but I used to also, also get a kick out of having our, you know, my previous career having CEOs come up and visit. But they would roll in mid January and not knowing. Right. So they would roll in when there was six feet of snow and you know, minus 40. And that was the last visit we ever had. You know, it seemed like. But anyway. 

00:23:18 Russell Stewart
Well, Jason, I really appreciate you taking the time to come on the, the show and, and share this with us and, and perspectives about what finning and Cat's doing in Canada. Is there anything else I missed? Anything else you want to share? 

00:23:33 Jason Williams
No, I just. Yeah, I just wanted to point out that Canada is the land of opportunity. We have some hurdles with our federal government right now, but you know, Cat's very bullish on what we can do up here and just really appreciate you having us on your show. 

00:23:48 Russell Stewart
Well, it's my pleasure. And we'll put your contact information in the show notes so everybody can can reach out to you. So Jason, thanks as always. Thanks to everyone out there for listening. Please tell your friends to listen. Post us on LinkedIn. We really appreciate the nice reviews. You can also reach out to me on LinkedIn and let me know if there are any other subjects you'd like to hear on the energy pipeline. And as always, thanks for listening and we'll see you next time. Thanks for listening to oggn, the world's largest and most listened to podcast network for the oil and energy industry. If you like this show, leave us a review and then go to oggn.com to learn about all our other shows. Don't forget to sign up for our weekly newsletter. This show has been a production of the oil and gas. 

00:24:46 Jason Williams
Sam.