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US tariffs on its northern neighbour have renewed calls for pipelines and fast-tracking oil and gas projects

Why Canada’s oil producers see opportunity in Trump’s trade war

Canada’s oil industry is doing remarkably well despite Trump’s global trade war, the recent meltdown in global stock markets and a sharp fall in crude prices.

That was the message conveyed when the Canadian Association of Petroleum Producers (CAPP) met in Toronto last week for an investor conference, where members said that the US turmoil offered a “generational opportunity” for Canada’s oil and gas sector.

“The fundamentals are strong, the business case is there,” said Lisa Baiton, the chief executive of CAPP, who told Energy Source the upside to Trump’s chaotic policymaking was that it has forced Canada as a nation to look to the energy sector to diversify its economy.

“The current trade war has turned Canadians’ full attention towards our energy advantage.”

It is a key topic in Canada’s election campaign as both Prime Minister Mark Carney and Conservative party opposition leader Pierre Poilievre pledge to harness the country’s energy abundance as a way to boost the economy.  

Both men want to ramp up energy-related infrastructure, a key bottleneck that has left Canada’s oil industry overly reliant on the US market.

Trump’s trade war on Canada has renewed calls for pipelines, and fast-tracking oil and gas projects for new customers as the country faces a series of US levies, including a 10 per cent tariffs on Canadian energy supplies in March. Trump subsequently paused these tariffs.

“The current administration recognised the importance of Canadian oil and gas as part of an integrated supply chain that’s been built up over 150 years with a zero tariff on USMCA-compliant goods,” Baiton said.

“I think what everybody is learning is that this administration is very hard to predict,” she said when asked if CAPP members had “buyers’ remorse” after initially expressing support for a Trump presidency. The US president campaigned on a slogan to “drill, baby, drill”.

US oil prices have fallen about 12 per cent since Trump’s “liberation day” tariff announcement on April 2, ratcheting up pressure on American shale producers, which face average break-even costs of about $62 a barrel.

But not all oil is equal. A barrel of oil’s price depends on the type, where it’s produced, and where it’s purchased. And Western Canadian Select, a heavy crude oil, is having a moment despite its own price drop in early April.

Canada sends 97 per cent of its crude oil to the US, where it is bought and sold at a “discount” price as Alberta mostly produces oil of a lower quality than Brent or West Texas Intermediate, the US benchmark. It also costs more to transport via pipelines to US refineries.

At the time of writing WCS crude is being traded at about $10 a barrel less than WTI, the narrowest gap since 2020. The differential more commonly sits at about $13 per barrel but has frequently risen much higher than that.

Peter Tertzakian, founder of ARC Financial Corp, Canada’s largest energy focused private equity manager, said higher differentials had “sharpened the pencils” of Canada’s oil and gas executives who have “needed to become more efficient”.

“They have adapted to reduce their operating costs per barrel.” As a result Canadian companies could withstand oil at $60, or lower, he said.

A weak Canadian dollar, which has dropped due to US tariffs, is also benefiting those in the industry that have more scope to pay down debt and cover running costs and salaries from revenue earned in the stronger US dollar.

The stock market’s downturn due to Trump’s trade war is also an opportunity for Canada’s cash-positive companies to buy back discounted stock that reduces their levels of dividend pay outs. 

But the main reason Canadian oil doing so well is the Trans Mountain Expansion pipeline (TMX) that opened in May last year.

“TMX has been a game-changer. TMX has shrunk the differential,” said Brian Schmidt, chief executive of Tamarack Valley Energy. “We budgeted at C$14 ($10) [per barrel] but now it is C$10.”

After a decade of disruptions and costing C$34bn, four times over budget, TMX is transporting record levels of oil to the US and helping the industry generate huge profits. 

“TMX was the single largest addition to Canadian egress in more than a decade, without which the western Canadian industry would already be facing an acute egress crisis and tariffs would have been far down the list of their concerns,” said Rory Johnston, founder of Commodity Context, an oil research business and University of Toronto lecturer.

He added: “TMX facilitated the shrinking of Canadian crude differentials to their extremely strong current levels, but even more importantly it dramatically lessens the risk of damaging differential blowouts.” (Ilya Gridneff)

Agency is missing deadlines and not responding to biotech companies, forcing some to push back clinical trials

Biotech companies developing drugs for hard-to-treat diseases and other ailments are being forced to push back clinical trials and drug testing in the wake of mass layoffs at the Food and Drug Administration.

Significant delays in the FDA’s core functions—such as approving amendments to clinical trials and guiding companies through processes for drug approval—are hindering the ability to develop drugs, say industry officials. Those setbacks are contributing to drugs taking longer to get through clinical trials and ultimately reach patients—and straining dollars for testing new possible treatments, say people familiar with the matter.

California-based Daré Bioscience hoped to move forward with a late-stage study this year of a treatment for sexual-arousal disorder in women. But the biotech hit a wall getting the final nod from the FDA on how to measure the study’s goals, and now the company is delaying the start of the study indefinitely, said Chief Executive Sabrina Martucci Johnson.

Twice in the span of two months, the FDA pushed back the date when it would provide guidance for how to measure the study’s goals. Daré Bioscience followed up in March and heard back in April, but the feedback was brief and will require more discussion with the agency before it can move forward with the trial, Martucci Johnson said. In the past, the company has received information about clinical trials and their goals within the planned time frames, she said.

The company is now going to sell the treatment as a compounded drug later this year. It still plans to conduct the trial eventually.

“I know it is a hard time and the system’s under strain, I get it, but we also can’t accept inertia,” Martucci Johnson said. “And if we have another path to make the product available, I think we have to do the right thing.”

The setbacks are the latest ripple effect of Health and Human Services Secretary Robert F. Kennedy Jr.’s aim to reshape the Department of Health and Human Services. About 3,500 workers were cut at the FDA, including Chief Medical Officer Dr. Hilary Marston and Dr. Peter Stein, who oversaw new drug approvals. Top vaccine official Dr. Peter Marks, who oversaw vaccines and biologics, was also cut.

“FDA is actively working to ensure continuity of operations during the reorganization period and remains committed to ensuring critical programs and testing continue,” said an agency spokeswoman.

Both large and small drugmakers rely heavily on the FDA before and after drugs hit the market, from ensuring safe laboratory and animal testing leading up to approval, to monitoring safety once drugs hit pharmacy shelves. Drug development is risky, with most drugs failing in testing, making regulators crucial parties, say regulatory experts and industry officials.

But the biotech industry is particularly vulnerable to agency slowdowns. The sector has been a bleak and challenging market for several years. Companies have filed for bankruptcy, shelved drug programs and companies that went public in recent years have been unable to raise capital. Regulatory hurdles can hurt drugmakers’ pocketbooks even more because the testing and approval process can cost hundreds of millions of dollars.

Large companies generate billions in annual sales from approved drugs, while smaller biotechs might develop as little as one drug. Their success and investors’ support hinges on regulatory milestones, making every interaction with the FDA key.

At one biotech preparing to test an experimental cancer antibody, the company’s request to have study subjects provide a second biopsy was denied by the FDA, according to a person familiar with the matter.

The company has conducted trials for other drugs in which subjects get two biopsies, and European regulators approved it for this trial. A second biopsy in the U.S. trial would have allowed the company to measure how tumors change over time and regulators increasingly allow them in trials, the person said.

In denying the company, the FDA first cited agency guidance that was drafted but not yet adopted, which said the biopsy could only be a secondary goal of the trial, the person said. When the company responded by agreeing to make it a secondary goal, the FDA then said no because there wouldn’t be a benefit to the patient, the person said.

The denials, the agency’s reasoning and the speed at which the subsequent denial was issued—a few hours—makes the company suspect a less-experienced staffer was overseeing the process, the person said. The company could have appealed but that would have meant delaying its early-stage study, the person said.

It is rare for the FDA to stray from deadlines, not respond to companies in timely manners or give feedback that leaves companies confused—measures that were set up years ago to address bottlenecks at the time, said Marc Scheineson, a former FDA associate commissioner.

Some programs were set up with fees from the industry to ensure timely decisions, and agency performance is typically taken seriously, and reported to Congress with reports posted online, he said.

“When you cut the administrative staff and you still have these product deadlines, you’re creating an unwinnable situation,” he said. The worst thing for companies isn’t getting guidance when needed and following all the steps for approval, only to “prepare a $100 million application and get denied because of something that could’ve been communicated or resolved before the trial was under way,” Scheineson said.

For another biotech testing a treatment for a life-threatening genetic respiratory disease, the FDA never responded to its query. In March, the company asked to amend a trial set for later this year by allowing study participants to take steroids to help with possible side effects, according to a person familiar with the matter. The FDA still hasn’t responded to the request, which would normally get resolved within a few days, the person said.

The company is now looking to shift its focus on making changes to its sites in Europe, the person said. The company still plans to start the U.S. trial but might delay the program depending on when the FDA clears the amendment, the person added.

Many in the industry have taken notice of the latest setbacks. Dozens of executives, patient advocates and investors last week sent a letter to Sen. Bill Cassidy (R., La.) asking him to “identify where FDA’s capabilities have been impacted in order to quickly preserve and restore its core functions.” Cassidy chairs the Health, Education, Labor and Pensions Committee, which approved the nomination of new FDA Commissioner Marty Makary. The letter was sent by No Patient Left Behind, an advocacy group founded by Peter Kolchinsky of RA Capital, a health investor.

The Alnylam Pharmaceuticals office in Cambridge, Mass. Photo: Adam Glanzman/Bloomberg News

John Maraganore, a former chief executive of Alnylam Pharmaceuticals, who advises companies as a venture capitalist, said the cuts to the FDA and latest regulatory hurdles will require Makary to rebuild the agency with talented people.

“It is a rebooting of the FDA in a significant way and the hope is he can find the right talent, but it isn’t easy,” he said.

WASHINGTON, April 16 (Reuters) - The administration of U.S. President Donald Trump is looking to cut some $40 billion in funding from its Department of Health and Human Services, the Washington Post reported on Wednesday, citing a preliminary budget document it had obtained.

This cut would represent roughly one third cut of the health department's discretionary spending, it said.