The Globe and Mail - 09.03.2020

B8| REPORTONBUSINESS O THEGLOBEANDMAIL| MONDAY,MARCH9,2020

According to2018 government
figures, Alberta’s petrochemical
manufacturing industry employs
more than 7,500 people directly,
with annual exports of $8.2-bil-
lion, making it the largest manu-
facturing sector in the province.
As public awareness increases
about the relationship between
plastics and fossil fuels, compa-
nies are increasingly eyeing plas-
tic waste as feedstock for their
chemical plants and introducing
recycle-ready resins. These resins
maintain their physical proper-
ties even after being repurposed
multiple times through recycling.
Last fall, Dow announced that
it was launching a low-density
polyethylene resin made with 70
per cent recycled plastic, and No-
va said it was introducing a suite
of recycle-ready resins for use in
packaging. Also last fall, Shell,
which has petrochemical facili-
ties in Alberta and Ontario, de-
clared its ambition to use a mil-
lion tonnes of plastic waste a year
in its global chemicals plants by
2025.
Despite more than $8-billion
of new investment in plastic-res-
in production facilities currently
under construction in Alberta,
and another $2-billion in Onta-
rio, Premier Jason Kenney is
warning Ottawa that regulatory
uncertainty is top of mind for pe-
trochemical players.
At a Feb. 25 Edmonton Busi-
ness Association event, he spoke
about a company considering a
$10-billion project that would
create up to 10,000 permanent
and construction jobs in the Ed-
monton region. Mr. Kenney said
the company told him that it was
worried about the burden of pos-
sible federal regulations.
The Premier’s comments
came just days after Teck Re-
sources Ltd. announced it was
withdrawing its federal regulato-
ry application for the massive
Frontier oil sands mine in north-
eastern Alberta, citing a lack of
clarity out of Ottawa around rec-

onciling natural-resource devel-

opment with climate-change ac-

tion.

The International Energy

Agency predicts that by 2050,

global oil demand for plastic pro-

duction will surpass oil demand

for road passenger transport. The

Albertagovernment is not oblivi-

ous to this shift. A major aspect

of the province’s effort to diversi-

fy the economy away from ener-

gy exports is to satisfy the grow-

ing desire for petrochemical

products.

In an interview, Alberta’s As-

sociate Minister of Natural Gas

Dale Nally said he has not yet had

any conversations with the feder-

al government about Ottawa’s

regulatory ambitions, but said

moving aggressively on plastics

would constitute “unimagina-

ble” overreach and a flagrant at-

tack on the province’s economy.

“It’s unthinkable that the fed-

eral government would be that

obtuse that they would make

those kinds of shortsighted deci-

sions,” he said.

Mr. Nally would not disclose

the name of the company Mr.

Kenney was referring to in his re-

marks last month. However, he

said hisgovernment is having

“real conversations” about the

project, which he insisted is “well

past the pie-in-the-sky stage.” He

also stressed that Alberta’s petro-

chemical industry is about more

than just plastics, running the ga-

mut from developing green tires

to making agricultural fertilizers

and injecting liquid carbon into

cement.

Environment and Climate

Change Canada said in an e-mail

that the country’s petrochemical

sector will play a crucial role in

advancing innovative chemical-

recycling technologies, which

convert plastic waste into feed-

stock for the next production cy-

cle. The department also pointed

to a recent Deloitte study that

found that substantially increas-

ing the percentage of plastics

that get recycled in Canada

would lead to tens of thousands

of jobs, while recovering billions

in lost economic value and re-

ducing greenhouse gas emis-

sions.

Most plastic in Canada comes

from ethane, a component of

natural gas. An ethane cracker

breaks down the gas – or cracks it

• into ethylene, a key chemical
  ingredient for plastics such as
  polyethylene. Using crude oil to
  produce plastic feedstock gener-
  ates roughly twice as much
  greenhouse gas emissions as us-
  ing natural gas.
  The majority of plastics pro-
  duced in Europe and Asia rely on
  oil, and some producers in China
  use coal. It is estimated that three
  or four global-scale ethane crack-
  ers are needed each year to keep
  up with demand.
  Mark Plamondon, executive
  director of the Alberta Industrial
  Heartland Association, said his

group has been courting invest-

ment in value-added energy

processing, and “multiple com-

panies” are looking at petro-

chemical opportunities in the In-

dustrial Heartland, northeast of

Edmonton. He has not heard

from investors who are consider-

ing pulling the plug on projects

because of planned federal plas-

tics regulations, but cautioned

that anything causing uncertain-

ty would be viewed as a knock

against Canada.

“Capital is mobile,” Mr. Pla-

mondon said. “You’re always be-

ing compared with competing ju-

risdictions in the world.”

The U.S. shale boom, com-

bined with aggressive incentive

programs mounted by state and

local governments, has attracted

hundreds of billions of dollars in

petrochemical investments in

the past decade. The flow of

money into Canada, meanwhile,

has been far slower.

To court investment, Alberta’s

then-NDPgovernment unveiled

a petrochemical diversification

program (PDP) in 2016. The first

phase of the program, which pro-

vided $500-million in royalty

credits, spurred $8-billion in in-

vestments in projects that will

produce polypropylene thermo-

plastic, as well as other chem-

icals. The second phase of the

program, which will provide up

to $1.1-billion in credits, has con-

tinued under the United Conser-

vative government after it won

the 2019 election.

Mr. Nally said the government

is reviewing phase-two applica-

tions and considering all oppor-

tunities to diversify Alberta’s

downstream mix. “I would abso-

lutely love to build an ethane

cracker,” he said, adding that it is

not his government’s sole focus.

Alberta is currently home to

four ethane-cracking facilities,

including two of the world’s

largest. Mr. Nally also said that af-

ter consulting with industry, he is

reviewing the PDP to “see if we

can make a really good program

even better.”

Plastics:Regulatoryuncertaintyistopofmindforpetrochemicalplayers,Kenneysays

FROMB1

AshopperinMontrealusesaplasticbagtotransportitemsinJune,2019.Mostoftheplasticproducedin

Canadacomesfromethane,acomponentofnaturalgas.PAULCHIASSON/THECANADIANPRESS

All banks have backup sites at re-
mote locations stocked with
enough trading desks and com-
puters to keep crucial operations
running in the event the corona-
virus spreads to major financial
centres.
Unlike most employee contin-
gency plans – which can require
individuals to work from home –
trading divisions have complex
compliance obligations and re-
quire access to specific work sta-
tions.
The Bank of Nova Scotia and
the Bank of Montreal did not re-
spond to requests about whether
they would be adjusting their
trading operations because of the
outbreak.
Already U.S. banks are making
changes, specifically those based
inNewYork,whichhasseenmore
than100casesofthecoronavirus.
JPMorgan Chase announced in a
memo to staff last week it was
moving its sales and trading staff
tobackuplocationsforitsLondon
and New York offices, while Mor-
gan Stanley and Citigroup were
looking at similar strategies.
“Dividing our work force into
different locations improves our
ability to serve clients contin-
uously while reducing the health
risks associated with physical
contact should a case arise,”
JPMorgan said in its memo.
JPMorgan Chase spokesperson
Brian Marchiony confirmed the
plans to The Globe.
InLondon,HSBCHoldingsPLC
had to evacuate 100 staff in its
Canary Wharf head office after an

employee tested positive for the

coronavirus, while in Spain, Ban-

co Bilbao Vizcaya Argentaria –

which has approximately 400

traders – began moving certain

employees to an off-site location

outside of Madrid.

In Canada, the majority of the

banks have reacted to the out-

breakbyminimizingunnecessary

business travel, restricting in-per-

son meetings and attendance at

large gatherings such as confer-

ences and have been testing sys-

tems to make sure they could

handle large numbers of employ-

ees logging in remotely.

RBC advised its staff to avoid

business travel to Hong Kong,

mainland China and other areas

hardesthitbythevirus.Andother

banks, such as CIBC and National

BankofCanada,nowrequirease-

nior manager to approve non-es-

sential travel.

TDBank,whichhadalreadyre-

strictedtraveltoareasseverelyaf-

fectedbythevirus,tightenedtrav-

ellimitationslastweekinamemo

to all staff sent by executive vice-

president of human resources

Kenn Lalonde and reviewed by

The Globe.

It is not clear if the banks plan

to implement any new measures

in branches.

WithreportsfromJamesBradshaw

Banks:Tradingdivisionshavecomplex

complianceobligationsandspecificworkstations

FROMB1

RoyalBankofCanadaadviseditsstafftoavoidbusinesstravelto

HongKong,mainlandChinaandotherareashardesthitbythe

novelcoronavirus.ANDREWVAUGHAN/THECANADIANPRESS

Saudi Arabia has an oil output
capacity of 12 million b/d, giving
it the ability to swiftly increase
production.
A three-year pact between
OPEC and Russia ended in acri-
mony on Friday after Moscow re-
fused to support deeper produc-
tion cuts to support prices hit by
the coronavirus outbreak. OPEC
responded by removing all limits
on its own output.
OPEC+ has been effectively
cutting production by 2.1 million
b/d, as Saudi Arabia has been re-
ducing its own output by more
than agreed.
Russia’s poor compliance with

the output cuts has been frus-

trating Riyadh, OPEC sources

said.

“The kingdom is not at war

with anyone, but it is pursuing

its own interest.

“Once the deal expires, every-

one will raise production,” the

second source said.

After marathon talks at the

OPEC headquarters in Vienna on

Friday, Russian Energy Minister

Alexander Novak said that from

April 1 neither OPEC nor non-

OPEC countries had any restric-

tions on production.

Other OPEC producers, such

as Iraq, Kuwait and the United

Arab Emirates, will likely follow

Saudi Arabia’s move on Saturday

with steep cuts to their own oil

prices for April.

“You have to follow the

[Aramco] OSP cut, otherwise

you die in the market,” one oil

industry source at a key OPEC

producer said.

Earlier in the session on Sun-

day, both oil contracts fell to

their lowest since February, 2016,

with Brent down to US$31.02 a

barrel and WTI at US$30.

That puts Brent and WTI on

track for their second biggest

daily percentage drops in history

behind declines for both in Janu-

ary, 1991, of more than 30 per

cent.

REUTERS

Oil:Three-yeardealbetweenOPEC

andRussiahasturnedsour

FROMB1

On Friday, Royal Bank of Canada said it was investigating a

“possible presumptive case” of COVID-19 at its Meadowvale

officebuildinginMississauga.Theinvestigationisfocusedon

an RBC employee, who the bank has not identified.

“March break brings the issue of employee travel for per-

sonal reasons to the forefront,” said James Fu, a human-re-

sourceslawpartneratBordenLadnerGervaisLLPinToronto.

“[Limiting] business travel is generally an employer’s pre-

rogative, but personal travel is more of a grey area.”

Asageneralrule,employerscannotbanworkersfromtrav-

ellingtocertainlocations,hesaid,buttheydohavearespon-

sibility to take all reasonable measures to protect the health

andsafetyoftheirworkforce.Thecontextofthecoronavirus

outbreakmeansitislikelyreasonabletotellemployeesnotto

cometoworkiftheyhavetravelledtoaffectedareasorareex-

hibiting symptoms.

It is crucial to set expectations around return-to-work pol-

icies in advance so workers are not taken by surprise, Mr. Fu

said.There’sageneralprincipletokeepworkandpersonallife

separate, he said, and employers should not usually ask em-

ployeesabouttravelplans.Butthecurrentsituationmakesit

reasonable for businesses to ask their employees to disclose

plans ahead of time and also to check in a few days before re-

turning,incasethelistofaffect-

ed areas has shifted.

Working remotely is a possi-

bility for many, and both em-

ployment and technology ex-

perts say companies should

test their networks in advance

to ensure they can handle any

increased capacity and also

make sure employees know how to log on from home.

“Therearealotofcompaniesthataretypicallyanti-remote

work,” said Nora Jenkins Townson, founder of Toronto hu-

man-resources consulting firm Bright and Early, who adds,

“They’re having to be a little bit more flexible on it now, forc-

ing them to test it out, which is interesting.”

Somecompaniesevenmadeworkingfromhomeablanket

policyinresponsetotheoutbreak,forexample,thejob-post-

ing site, Indeed, which has offices in Toronto and Montreal.

But for employees who cannot work from home – includ-

ing retail and service industry workers, labourers and clean-

ers – the calculus on making a call on international travel

plansistrickier.Employerswillnotberesponsibleforflightor

accommodation cancellation charges and would be within

their rights to prevent workers from coming in if they have

travelled to affected regions or have symptoms, Mr. Fu said.

Hena Singh, a partner with Singh Lamarche LLP, an em-

ployment law practice in Toronto, says employers can lessen

the economic hit for workers by finding ways to use vacation

time or accrued overtime to pay them for the two-week self-

quarantineperiod.Employerscouldalsooffertopayworkers

for 80 hours over the period and have them work extra shifts

toearnbackthattimeoverthenextsixmonths,forexample.

“There’smanycreativewaystodothisandtheobligationis

on employers to be creative. But they can also say, ‘We don’t

want you to travel and there’s repercussions if you do,’ ” Ms.

Singh said. She says that while employers can’t prevent per-

sonal travel, they can encourage workers not to travel to cer-

tain places and set out the consequences if they do.

It is possible that the government will extend sick-leave

benefits under Employment Insurance or find other ways to

help workers. Federal Finance Minister Bill Morneau said Fri-

day that support for Canadians quarantined as a result of the

virus would be announced shortly.

WithreportsfromJoeCastaldo,JoshO’KaneandMattLundy

Marchbreak:It’sessential

tosetexpectationsaround

return-to-workpolicies

inadvance,expertadvises

FROMB1

Somecompanieseven

madeworkingfrom

homeablanketpolicy

inresponsetothe

outbreak.