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The Oil Sands Weekly

The Oil Sands Weekly

Liquids gathering plants set to expand in northern BC . . . 

Midstream player Veresen has sanctioned $195 million worth of new capital projects, including the South Central Liquids Hub and the Tower Liquids Hub located near the northern BC community of Dawson Creek. Both projects are expected to be in service by the end of 2017.

The projects have been sanction by the Cutbank Ridge Partnership, a joint venture between Veresen Midstream, Encana and Cutbank Dawson Gas Resources, a subsidiary of Mitsubishi Corporation.

Veresen now has $1.4 billion of projects currently under construction. The company says its growth plans are fully funded and it will not need to access capital markets.

BC insists the window for LNG exports is not yet closed . . . 

BC Deputy Premier and Natural Gas Minister Rich Coleman has dismissed suggestions that Canada has missed the window for LNG exports, at least in the short term. Coleman still believes his province remains an attractive place for LNG investments, although he admits patience is a virtue and a lot of work remains to be done.

Coleman says he expects a decision on the $36 billion Pacific Northwest LNG project by the middle of 2017. Bloomberg is reporting that the company is considering changes to the project to alleviate environmental concerns raised by Aboriginal groups, mostly related to salmon habitat.

BC's ruling Liberals are up for re-election next May, however, Premier Christy Clark has already toned down expectations for billions in LNG royalties which will go towards paying down the province's debt.

Lightstream Resources closes the chapter on 2016 . . .

Ridgeback Resources has officially taken over Lightstream Resources, effective January 1, 2017.

A court-supervised sale process closed last Friday, giving creditors shares in the new firm, prorated to the amount of Lightstream debt they held. The Lightstream management team has been hired by Ridgeback, along with other Lightstream personnel. Lightstream’s former president and CEO, John Wright, has also joins the Ridgeback board.

Rigeback has secured $400 million in financing from several Canadian banks, including $100 million if available liquidity. The company is planning to start a new drilling program in January, focused in the Bakken and Cardium formations.

Around the world this week . . . 

Shell Midstream Partners has bought interests in three Gulf of Mexico assets, including 10% of Proteus Oil Pipeline, 10% of the Endymion Oil Pipeline, and a 1% interest in Cleopatra Gas Gathering from BP. Shell Midstream Partners is an Houston-based MLP created by Royal Dutch Shell

Shell also confirmed it has come up dry on two offshore exploration wells near Tanzania. The company acquired the exploration licences through its takeover of BG Group. Partners in the joint venture include privately-held Pavilion Energy and UK-based Ophir Energy

BP announced the purchase of 527 gas stations in Australia from Woolworths for US$1.3 billion. The stations and convenience stores will be rebranded as "Metro at BP" and includes 16 new locations currently under construction. There are currently 1,400 gas BP-branded gas stations in Australia, about 350 of which are company-owned.

BP has also entered into an agreement with Thailand's PTT Public Limited Company for the sale and purchase of LNG. BP has committed to provide PTT with 1 million tonnes of LNG per year for the next 20 years. BP says "Thailand has become a significant LNG market" for the company. Commercial terms of the agreement were not disclosed.

ExxonMobil announced a new natural gas discovery in Papua New Guinea. The company says it is "excited by the results of the Muruk-1 exploration well" located in the North Highlands area, 21 km northwest of the lucrative Hides Gas Field. Exxon has yet to confirm the size of the discovery but says Muruk-1 was found to contain the same "high-quality sandstone reservoirs" as the Hides field.

Brazil's Petrobras has sold its remaining 46% stake in ethanol producer Guarani to French partner Tereos for US$202 million and has found buyers for two petrochemical units in the northeastern state of Pernambuco for US$385 million. That brings total divestitures over the past 24 months to US$13.6 billion, US$1.5 billion short of its target of US$15.1 billion in divestitures planned by the end of 2016. Petrobras has now revised its asset sales target to US$21 billion as it tries to slim-down its debt-load of US$125 billion. The company borrowed another US$5 billion from the China Development Bank earlier this month but says it does not foresee the need to borrow more money next year.




US IMPORTS OF CANADIAN CRUDE
million bbl/day • preliminary data by EIA
US OIL INVENTORIES
million bbls • data by EIA
US OIL PROD'N & RIG COUNT
million bbl/day • data by EIA & Baker Hughes

3,409k
-21k ▼ 0.6%
BBL/D CDN EXPORTS TO US
8,766k
-20k ▼ 0.2%
BBL/D US PROD'N
486.06M
+0.61M ▲ 0.1%
BBL US INVENTORIES
525
+2 ▲ 0.4%
US RIG COUNT
CHANGE WK/WK  

The number of Canadian rigs in oil service declined over 50% this week, falling to just 52. In the US, oil rig counts increased by 2 to 525.

OPEC and non-OPEC members will meet in Vienna on January 21 and 22 to discuss implementation and compliance with production targets.




CURRENCIES • WEEKLY CLOSE
Friday close • data by Bank of Canada & ICE

102.29
-0.66 ▼ 0.6%
USD INDEX
74.48
+0.59 ▲ 0.8%
CDN DOLLAR
2.45%
-0.10 ▼ 3.9%
US 10Y Bond
1.72%
-0.07 ▼ 3.9%
CDN 10Y Bond
CHANGE WK/WK  

An unexplained spike in the Euro on Friday sent the currency higher 0.7% for the week, pulling the US dollar lower.

For 2016, the worst performing major currency was the British Pound (-17%), followed by the Euro (-4%). The Canadian dollar ended the year 3% higher while the US dollar was up roughly 4%.




OIL PRICES • WEEKLY CLOSE
Friday close, USD/bbl • data by CME Group
56.82
+1.66 ▲ 3.0%
BRENT USD/BBL
53.72
+0.70 ▲ 1.3%
WTI USD/BBL
50.37
+0.90 ▲ 1.8%
CDN LT USD/BBL
37.77
+0.70 ▲ 1.9%
WCS USD/BBL
CHANGE WK/WK  

December turned out to be a good month for oil prices, with all the major crude streams reporting good gains for the month:

  • Brent Crude: US$54.92 (+17%)
  • West Texas Intermediate (WTI): US$52.17 (+14%)
  • Canadian Light Crude: US$48.40 (+16%)
  • Western Canadian Select (WCS): US$36.71 (+20%)

December monthly average oil prices are back to levels last seen in July 2015. The average heavy oil differential held steady at US$15.45/bbl, representing a 30% discount to WTI.

Both oil and natural gas prices had a spectacular 2016, rallying from the lows of January:

  • WTI: +45%
  • Brent: +52%
  • WCS: +60%
  • Canadian Light: +52%
  • Natural Gas (Henry Hub): +59%
  • Natural Gas (AECO): +53%

2016 turned out to be the best year for oil since 2009.




ENERGY SECTOR PERFORMANCE
Friday close • data by TSX & NYSE

CANADIAN & US EQUITIES
Friday close • data by TSX & NYSE

SECTOR SUMMARY
Friday close • data by TSX & NYSE
TSX ENERGY STOCKS • WEEKLY CHANGE
NYSE ENERGY STOCKS • WEEKLY CHANGE

This week's new 52-week highs in the TSX energy sector include Athabasca Oil Corp (ATH), Calfrac Well Services (CFW), Canadian Energy Services & Technology (CEU), Savanna Energy Services (SVY), Secure Energy Services (SES) and Suncor Energy (SU). On the NYSE, BP (BP), Total (TOT) and Williams Companies (WMB) all reached 52-week highs. 

The Canadian energy sector gained 37% over the past 12 months, making it the second-best performing sector on the TSX (surpassed marginally by the materials sector). Some of the best performing Canadian energy stocks for 2016 include:

  • Enerplus (ERF): +186%
  • Bonavista Energy (BNP): +172%
  • Birchcliff Energy (BIR): +142%
  • Encana (ECA): +136%
  • Seven Generations Energy (VII): +133%
  • Canadian Energy Services and Technology (CEU): +107%

Canada's big 5 energy companies ended the year in the green, including:

  • Canadian Natural Resources (CNQ): +44%
  • Suncor Energy (SU): +26%
  • Cenvous Energy (CVE): +18%
  • Husky Energy (HSE): +15%
  • Imperial Oil (IMO): +5%

Imperial Oil was one of the worst performers on the TSX energy sector.

Although most US energy stocks ended the year in the green, independent refiners were the exception:

  • Tesoro Petroleum (TSO): -14%
  • Valero Energy (VLO): -0.5%
  • Marathon Petroleum (MPC): -0.1%

Year-end performance for the US large cap energy producers was also quite impressive:

  • ConocoPhillips (COP): +10%
  • Devon Energy (DVN): +50%
  • Anadarko Petroleum (APC): +45%
  • Marathon Oil (MRO): +42%
  • Chevron (CVX): +37%
  • ExxonMobil (XOM): +20%

The US energy sector gained 24% over the past 12 months, making it the best performing sector in the S&P 500.

NEXT WEEK'S EVENTS

Monday:

  • US and Canadian markets closed for New Year's Day holiday

Wednesday:

  • API Weekly Statistics Bulletin released @ 4:30pm ET (holiday schedule)

Thursday:

  • November Industrial Products & Raw Materials Index released by StatsCan @ 8:30am
  • EIA Natural Gas Report released @ 10:30am ET
  • EIA Petroleum Status Report released @ 11:00am ET (holiday schedule)

Friday:

  • December Labour Force Survey released by StatsCan @ 8:30am
  • Baker-Hughes Rig Count released @ 1:00pm ET

Next edition of the Oil Sands Weekly: Friday January 6, 2017 @ 8pm MT.

The Oil Sands Weekly

The Oil Sands Weekly

The Oil Sands Weekly

The Oil Sands Weekly

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