The Oil Sands Weekly

The Oil Sands Weekly

IN THE NEWS THIS WEEK:
  • Osum's plan to double output at Orion
  • Process hiccup knocks out Suncor's Base Plant
  • NAIT gets funding for membrane technology
  • Horizon North remains hopeful on Fort Mac camp demand
  • Trump exempts Florida from offshore drilling
  • US charts a path to 11 million bbl/day of crude production ...
  • ... and becomes a net natural gas exporter
  • Norway's return to growth in the North Sea
  • Oil prices on a tear as Brent closes in on US$70.

ALBERTA/CANADA

Osum's plan to double output at Orion
Privately-held Osum Oil Sands says it plans to start working on the Phase 2C expansion of its Orion Thermal Project located in Alberta's Cold Lake region. The Phase 2C expansion will be executed concurrently with its previously announced Phase 2B expansion, bringing total output from the current 9,000 to 18,000 bbl/day once all phases are completed. The company says the Orion expansion will be funded internally. 

Process hiccup at Suncor
Suncor Energy reported a power outage on Wednesday afternoon, forcing it to cease operations at its Base Plant operations just north of Fort McMurray. Power was restored on Wednesday evening and the company says it is in the process of returning to normal. The cause of the power disruption was not disclosed.

NAIT receives funding for membrane technology
The Northern Alberta Institute of Technology (NAIT) announced $600,000 in funding from the federal government and $200,000 from Canada's Oil Sands Innovation Alliance (COSIA) to help establish a Membrane Technology Assessment Program at NAIT's Centre for Oil Sands Sustainability. The funds will help support the design and construction of high temperature and high pressure membrane technology for use in water treatment, primarily for oil sands in-situ operations.

Horizon North still bullish on Fort McMurray
Camp-operator Horizon North Logistics completed its acquisition of the Moose Haven Lodge, located 120 km south of Fort McMurray near the hamlet of Janvier, Alberta. Moose Haven Lodge is a 288-bed lodge servicing workers in the Highway 881 corridor between Conklin, Alberta and Fort McMurray. The lodge acquisition is a key element in the company's newly signed partnership with the Chipewyan Prairie Dene First Nation, similar to its existing agreement with the Athabasca Chipewyan First Nation. CEO Rod Graham says that although "reduction in oilsands activity is certainly well-documented ... opportunities are still plentiful in the Fort McMurray area with the right partners." 

NEB hearings in Chilliwack next week
The National Energy Board (NEB) will begin oral hearings next week to consider an application from Kinder Morgan to alter part of its route in the city of Chilliwack, BC. The approved corridor for the Trans Mountain Expansion line follows a BC Hydro right of way between 500 kV overhead power lines. Kinder Morgan would like to relocate 1.8 km of the new pipeline to an existing Trans Mountain pipeline right of way. The hearing is scheduled to run until Friday, January 19.


USA

Trump makes an exception for Florida
After promising to open up nearly all federal waters to oil and gas drilling, President Trump now says he is willing to make an exception for Florida, since the state is "heavily reliant on tourism as an economic driver." Florida state waters extend 3 nautical miles from shore on the Atlantic, and 9 nautical miles on the Gulf side. The new plan would exclude new platforms on certain sections of the eastern Gulf of Mexico. Various other states, including New York, Oregon, Maryland and California are now looking for a similar deal.

Pipeline wars - of a different kind
Several major US pipeline operators are asking US federal regulators to reject Magellan Midstream Partners' request for a new hearing on its attempts to establish a crude marketing arm. Last November, FERC denied Magellan's request to establish a crude marketing division, despite the fact that most major midstream companies operate similar schemes. At the time, FERC expressed concerns that Magellan's trading arm would be "offering capacity below cost" in order to remain competitive. According to Reuters, several pipeline companies began offering steep discounts through their marketing arms last summer, undercutting FERC-mandated shipping rates.

Repairs continue on Garden Banks pipeline
After being out of service for three months, Enbridge's 1 Bcf/day Garden Banks gas pipeline is expected to restart sometime in February. The line was shut-in after a fire broke out on Shell's Enchilada platform in the Gulf of Mexico, causing several adjacent platforms to cut production. Enbridge says it is working to separate the pipeline from the fire-damaged platform and will begin refilling the line when work is completed.

Norway's diversification away from oil and gas delayed for now
After declining for the past four years, investment in Norway's oil and gas sector is set to rise in 2018, helping output to return to levels last seen in 2004. Norway's total output is expected to reach 4.0 million boe/day this year and up to 4.4 million boe/day by 2022, thanks to some major finds in recent years, including the Johan Sverdrup field, the largest North Sea discovery in decades.

A record-breaking 2019 for crude oil ....
In this month's Short Term Energy Outlook, the US Energy Information Administration (EIA) says it expects US crude production to average 10.3 million bbl/day in 2018, surpassing the previous record annual average of 9.6 million bbl/day in 1970. Production is expected to continue to rise from there, topping 11 million bbl/day by November 2019, surpassing output from Russia and Saudi Arabia.

... and natural gas
The EIA also expects natural gas production to rise from an average of 73.5 Bcf/day in 2017, to 80.4 Bcf/day in 2018, the highest year/year increase. Production is expected to rise again in 2019 to an annual average of 83.0 Bcf/day. The US is poised to become a net natural gas exporter for the first time in 60 years. Net inflows totalled 1.8 Bcf/day in 2016 and narrowed to just 0.4 Bcf/day last year. Aside from exports to Canada, exports to Mexico are becoming increasingly more important. LNG exports are also expected to ramp-up in the next few years.


US PRODUCTION & INVENTORY DATA

Wacky winter weather put a dent in US crude oil production last week, declining 290,000 bbl/day to 9.5 million bbl/day. Crude inventories continue to fall at the expense of product stockpiles, which have been rising steadily since early November.

 
us-inventory-report.jpg

WEEKLY US INVENTORY REPORT

JAN 10, 2018

US crude production unexpectedly declines while product stockpiles continue to rise

 

AROUND THE WORLD

Another earthquake rattles the Dutch
A magnitude 3.4 tremor in the Groningen region has renewed calls for further cuts in gas production in the northeastern part of the Netherlands. Groningen was discovered in 1959 and is the largest natural gas field in Europe. The field produced almost 40 billion cubic meters (bcm) in 2015/16, but production was reduced to 21.6 bcm late last year due to property damages brought on by seismic activity. The government has already mandated another cut to 20 bcm by 2021. Operator NAM has agreed to shut-down some of its production clusters while it awaits a final decision from the Dutch government. NAM is a joint venture between Royal Dutch Shell and ExxonMobil.

Iranian tanker set ablaze
An Iranian oil tanker caught fire after it collided with a grain ship earlier this week in the East South China Sea. Bad weather hampered the rescue mission. The tanker was sailing from Iran to South Korea, carrying 136,000 tonnes of highly-flammable condensate. At last count, 32 crew members were missing as bad weather has hampered the rescue mission. Korean authorities estimate the vessel could continue to burn for several months.

Oil heist in Singapore
Eleven men have been charged in connection with a large-scale oil theft at Shell's biggest refinery in Singapore. Shell reported the illegal oil trade to authorities last August. Most of those arrested were current or former Shell employees. The government has seized millions in cash and a small tanker at the Pulau Bukom industrial site, located just south of the main island.

Oil prices on a tear
Strong economic data from around the world and a weak US dollar has helped prop up commodity prices, particularly crude oil, as Brent creeped closer to the US$70 mark this week and closes in on multi-year highs. Higher oil prices have renewed calls for OPEC and Russia to develop an exit strategy on their agreed production cuts, without toppling energy markets.


NEXT WEEK'S EVENTS

Monday:

  • NEB kicks off oral hearings for TMEP re-routing in Chilliwack, BC
  • US markets closed for Martin Luther King, Jr. Day

Tuesday:

Wednesday:

Thursday:

Friday:

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