O Canada

With the rise in crude oil prices causing a stir in the fuel oil industry in this country, it’s easy to lose sight of how the costs are affecting other parts of the world, including our neighbors just north of us. After the recent 25th birthday of the Canadian Oil Heat Association, Fuel Oil News decided to talk to the organization’s chair, Steve Wilson. COHA, established in 1983, has over 400 members from the oil heat industry and is comprised of provincial chapters in Ontario, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador. The group focuses on provincial regulatory, training and promotion activities.

 

FON:  We know a great deal of work went into having the 25th anniversary celebration at the BrookStreet Hotel in Kanata on May 28-30.  What were the ‘take aways” for you from that event?  

Wilson: I believe our 25th anniversary symposium was a sound success.  We had approximately 200 attendees from across Canada, and the Kanata, Ontario venue just outside our nation’s capital, Ottawa, was very appropriate.  COHA President Veroncia Yu and the symposium committee did a great job pulling the agenda together.   

The theme of the symposium was ‘Leveraging Technology.” There were a number of seminars stressing the importance of utilizing all available tools to maximize productivity.  One of the keys to building your business through challenging times is to reexamine operational efficiencies like delivery routing, maximizing drops and scheduling maintenance.  There are a variety of excellent tools available to those with the foresight to use them. 

Another take away was the message of ‘Conservation, Not Conversion.” COHA has launched a number of marketing initiatives to emphasize the importance of convincing our customers to save energy for long-term real savings rather than switch energy sources for a short-term perceived energy saving. We will continue to drive this message home over the coming months.

One of the messages I stressed was a quote I borrowed from the great American, Thomas Paine, ‘If we do not hang together, we shall surely hang separately.” Given the challenging market conditions facing our industry, I believe it is important to share the success stories and best practices of our membership. 

FON:   We understand that plans for a second Irving Oil refinery are underway for your province of New Brunswick. Could greater refining capacity help bring down fuel costs on the Atlantic seacoast and in the Maritimes?  

Wilson: I certainly don’t pretend to be able to predict the price of oil these days.  In the traditional supply/demand model one might surmise extra capacity could lead to lower fuel costs.  However, as we all know, refinery capacity remains very tight in North America, and it is difficult to tell whether the Irving refinery expansion will have any appreciable impact on price. 

FON:  We know you are familiar with the fuel oil industry in the U.S. through your work on the Oilheat Manufacturers Association (OMA), currently serving as vice president, and in your work to bring Kerr Heating Products to the U.S. heating industry. What can you tell our readers about the differences in how your industry operates versus on our side of the border?

Wilson: Just as there are a number of cultural similarities and differences between Canada and the U.S., so goes the fuel oil industry. Geographically, fuel oil is largely confined to Eastern Canada (Ontario, Quebec and the four Atlantic Provinces) with pockets in the West.  A special blend of Arctic fuel oil is also used in the sparsely populated far north.

The industry is dominated by a number of large integrated oil companies such as Esso, Petro-Canada and Ultramar operating mainly through branded distributors.  There are also some significant regional independent companies, but not to the same extent as the U.S.  Irving is a bit of an anomaly as a very large regional independent that operates in an international market as both a refiner and retailer.  More typical of independents are smaller companies, like my family-owned business, Wilson Fuel Co. Limited, which services a number of communities in Nova Scotia.

Similar to the U.S., there is also a broad mix of service options in Canada.  Some companies provide delivery, service and installation, while some just provide delivery and outsource all service and installation. There are also companies selling COD fuel oil in truck operations. It really covers the spectrum.  

There is also different fuel-on-fuel competition in Canada depending on the region. In Ontario the primary competitors are gas and propane; in Quebec the competition is subsidized electricity generated through Hydro Quebec.  In Atlantic Canada, fuel oil retains a large market share with electricity being the major competitor along with some pockets of gas.  

To date there has not been as a much dealer interest in biofuel in Canada as the U.S.  Only a handful of companies are offering it. This is in part due to limited supply options, which may change as new regulations come into effect.  The Canadian government is currently conducting a study on the potential of the biofuel industry as a means to reduce GHGs (greenhouse gases), so we may see increased distribution over time. 

Canada also has a different approach to technical training.  Most of the provinces offer ‘Fuel Oil Technician” as a registered trade.  Skills are learned through an apprenticeship program whereby practical training is alternated with classroom training called ‘blocks” over a defined period of hours.  As the student progresses through the system, he/she receives different designations leading up to final certification.   

Canada also differs significantly from the U.S. in terms of insurance driven environmental remediation issues.  Over the past few years the number and cost of fuel storage related incidents has increased significantly. Most of these incidents are related to premature failure of aboveground end outlet steel tanks due to internal corrosion.  In the U.S., underground storage tanks (UST) present the largest challenge. USTs are rarely used in Canada.  In Canada, a typical remediation will cost $80,000 to over $250,000.  Above ground tank failure is a relatively much smaller issue in the U.S. as end outlet steel tanks are not used.  A number of provinces have instituted regulations concerning tank installations promoting indoor installation, bottom outlet tanks, tanks with secondary containment technology and sound installation practices. We are starting to see some progress, but we’re still grappling with dealers who want to install end outlet tanks. 

FON: The province of Nova Scotia pursued an equipment/appliance rebate program for a couple of heating seasons. Could you tell us how it was managed and received by the homeowner and small business owner? Was it strictly for residential locations?

Wilson: The ‘Retire Your Furnace” program was a joint industry-government initiative designed to replace older less efficient residential oil-fired residential heating equipment with new, high efficiency, Energy Star qualified oil-fired heating equipment.  The program only ran for nine months ending in March 2008 and dealt only with retrofit installations, but despite these limitations, we were able to replace approximately 3,000 heating appliances. Basically, homeowners were able to access rebates of up to $750 depending on the type of qualified equipment installed. For example, the rebate on an Energy Star qualified furnace was $400.  The $400 was made up of matching fuel oil dealer and government contributions and was deducted at source from the customer installation invoice.  The Canadian Oil Heat Association (COHA) administered the program on behalf of the Nova Scotia government and the dealers.  Overall the program was a great success, and we won an Energy Star marketing program of the year award.  We are hopeful the Nova Scotia government will restart the program this fall, and we are also discussing a fall start for a similar program in the province of Newfoundland.

FON:  Where is the acceptance level of using ultra-low sulfur heating oil? Is there an interest level for this product in your country (maybe interest comes before acceptance)?

Wilson: I would say there is a great deal of interest in using low and ultra-low sulfur heating oil in Canada, albeit nobody wants to pay more for it.  Most dealers are aware of the environmental and equipment maintenance benefits of using low sulfur fuel as demonstrated in all the good research conducted by NORA, Brookhaven and others.  However, unlike road diesel, no legislation currently exists in Canada to mandate sulfur reductions in fuel oil. Anecdotally, we are seeing reductions in sulfur due to the logistical difficulties in maintaining different product streams. Certain refiners are producing primarily low or ultra low fuel, but other refiners are not; hence, the sulfur level can vary load to load depending on the supply chain.  In my home province of Nova Scotia, we are seeing sulfur levels in the 1,500 ppm range, which is better than the traditional 2,500 ppm, but a long way from 15 ppm.  Given the interconnected nature of our industry across our common border, I hope we will come into line with the U.S. as you approach your reduction deadlines.  I understand MANE-VU has instituted levels for its member states coming into effect in 2012 and 2014. 

FON: We learned at the last OMA meeting from a U.S. manufacturer that codes and standards regarding venting of heating appliances have come into play with TSSA (Technical Standards and Safety Authority)? Do you know the origin of this concern? Are we talking about safety or C02 issues?

Wilson: I believe you are referring to a proposed depressurization standard.  Kerr Heating Products has representation on this committee.  Depressurization has become more top-of-mind with regulators like TSSA in Canada over the last few years.  To some extent the concern arises through the law of unintended consequences.  Canada has done a great deal of research and regulation around improving the tightness of building envelopes in an attempt to improve the overall efficiency of homes and buildings. As the envelopes of homes improved, ensuring adequate combustion air became more of an issue, particularly coupled with trends like high velocity range hoods, gas/propane fireplaces, etc.  Apparently there were a few fatal incidents with natural gas appliances spilling C02 back into homes due to depressurization, particularly gas units with atmospheric burners. I’m not aware of any oil related incidents of this nature.  However, regulators want to impose mandatory depressurization limits and ratings on all combustion appliances regardless of fuel. 

While I don’t necessarily oppose some form of depressurization ratings, I do believe each appliance, including the range hoods, exhaust fans, fireplaces, et al, should be responsible for providing their own make-up air. COHA has not presented a formal position on this issue yet.  

In Canada we also have to sell a blocked vent switch with each appliance in order to prevent combustion gas spillage in the event a chimney or venting system becomes blocked. There is no similar requirement in the U.S.

FON:  Montreal was the site chosen by COHA members for the 2009 COHA meeting/event. Do you think having this important event in the province of Quebec will spur interest in forming a provincial chapter for COHA there?

Wilson: There already is a Quebec oilheat association,  L’Association Quebecoise de Chauffage au Mazout or ‘AQCM” (For the benefit of your non-francophone readers, ‘chauffage” is French for heating, and ‘mazout” is French for heating oil).  The AQCM is not a chapter of COHA.  I understand there have been discussions over the years about AQCM formally joining COHA, but to date it remains a separate entity.  That being said, we have a number of common members, and we’re always open to strengthening the ties between our organizations. We’re definitely looking forward to hosting the symposium in Montreal. I invite your U.S. readers to grab their passports and come join us.