The Oil Sands Weekly
- Suncor's plan to do more with less in 2018
- Cenovus finds buyer for Weyburn, and leaves door open for more asset sales
- Kinder Morgan hopes for speedy conflict resolution
- Keystone in the headlines for all the wrong reasons
- Norway warns against putting all your eggs in one giant energy basket
- Venezuela officially in default as crude output hits 30-yr low
- Saudis promise to curtail production well past next spring
- IEA sees oversupplied oil market ...
- ... while OPEC says markets are perfectly balanced.
Suncor's plans to do more with less in 2018
In this week's 2018 corporate guidance, Suncor Energy says it plans to spend $750 million less in capital next year but produce about 10% more oil. The company has budgeted a capital spending program of about $4.5 to $5.0 billion for 2018, about one-quarter dedicated to upstream growth projects in the oil sands and its E&P division. Full year upstream production is forecasted to average between 740,000 and 780,000 boe/day, as both Hebron and Fort Hills are expected to come online.
Incident at Scotford Upgrader
One person was reported injured at Shell's 255,000 bbl/day Scotford Upgrader this week, near Fort Saskatchewan, AB. The site was evacuated for several hours on Wednesday afternoon due to a "heavy oil hydrocarbon release." The company did not provide any further details but says the upgrader is running normally. Alberta's Energy Regulator is still investigating the cause of the incident.
And that's a wrap for Cenovus, at least for now
Cenovus Energy has agreed to sell its Weyburn facility in southern Saskatchewan for $940 million to Whitecap Resources. This is the last of four major assets put up for sale earlier this year to finance its massive acquisition of various properties from ConocoPhillips. CEO Alex Pourbaix says this latest sale will allow the company to repay its $3.6 billion bridge loan in its entirety. Weyburn is a CO2-enhanced oil recovery operation that produces about 11,500 bbl/day. Cenovus also hinted it may be looking to sell some of the Deep basin assets purchased from ConocoPhillips.
Resolving conflicts in days, not months
After being shot down last week, Kinder Morgan Canada has filed another appeal with the National Energy Board (NEB), asking it to set up a process to resolve disagreements with provincial and municipal levels of government for its Trans Mountain Expansion Project (TMEP). The company says it is "well aware that reasonable parties can and do disagree" but insists disagreements should be "dealt with fairly, transparently and efficiently," ideally within 18 days. The company warns inaction will push TMEP's in service date to September 2020, which would adversely affect shippers that have already committed volumes on the line and push more crude onto rail cars.
Decision day for Keystone XL
Nebraska's Public Service Commission (PSC) will announce its final decision on Keystone XL on Monday November 20. Five Nebraska commissioners (four Republicans and one Democrat) are set to vote whether the pipeline is in the best interest of Nebraskans. Keystone already has state-level approvals in Montana and South Dakota, as well as all federal environmental approvals and Presidential Permit. If the pipeline is approved, several anti-pipeline groups with very deep pockets are expected to launch demonstrations and numerous legal challenges. Keystone XL will deliver 830,000 bbl/day of Canadian crude to the US Gulf Coast, reducing the load on pipeline flows to the Midwest. Monday's meeting will be live webcast at 10:00am CT.
TransCanada wins prize for most ill-timed oil spill
TransCanada reported a leak of about 5,000 barrels in Marshall County, South Dakota earlier this week, forcing a shutdown of the Keystone pipeline. The company says the line was shut-in within 15 minutes of detecting a pressure drop. The leak occurred on a buried section of pipe on agricultural lands, but no further details were provided. The company says clean-up activities are underway and there is no threat to public safety. TransCanada has yet to confirm when Keystone will be returned to service. The shutdown has disrupted deliveries from Hardisty, Alberta into Cushing, OK and Patoka, Illinois. Keystone's southern leg from the Cushing storage hub to the Gulf Coast is running normally. A pipeline restart requires approval from US federal regulators.
The US Energy Information Administration (EIA) reported a second consecutive weekly build in crude oil inventories last week and yet another production record, nearing 9.65 million bbl/day on rising output from the Lower 48. Crude imports from Canada rose to 3.4 million bbl/day, still recovering from the lows of late October.
Putting all your eggs in one basket
Norway's central bank is asking the country's finance ministry to consider divesting oil and gas holdings from its US$1 trillion sovereign wealth fund. The central bank points out that the country's fortunes are already tightly correlated to the price of oil, and investing oil revenues in energy stocks leaves the country highly vulnerable to a collapse in crude prices. Oil majors represents about 6% of the funds total holdings, or roughly US$37 billion. Top holdings include Shell, BP, Chevron, ExxonMobil, Eni and Total. The fund also holds several billion in several large-cap Canadian stocks, including Suncor, Enbridge, Canadian Natural Resources, Cenovus and Imperial Oil. The finance ministry is expected to make a final decision in the fall of 2018.
Shell sells its entire stake in Woodside Petroleum
Royal Dutch Shell struck a deal with two investment banks to sell its entire stake in Woodside Petroleum, comprised of 111.8 million shares valued at US$2.7 billion. This latest sale brings total divestitures at the Dutch oil major to about US$25 billion, still US$5 billion short of its target. Shell still owns about 98 million shares in Canadian Natural Resources acquired when it sold most of its oil sands assets earlier this year. The shares are worth around US$2.8 billion and most analysts expect a deal to be announced shortly.
Expanding production from LibyaLibya's National Oil Corp (NOC) announced plans to open a procurement office in Houston, its first international facility since the 2011 uprising. NOC chair Mustafa Sanalla says his company plans to spend about US$20 billion over the next three years to restore output from the north African country. Sanalla says the new office should be up and running by January, vowing to put "America's world-class equipment manufacturers and oilfield service providers" at the centre of NOC's procurement strategy." Libya produced about 1 million bbl/day last month, down from 1.6 million bbl/day prior to the displacement of Muammar Gaddafi.
Expanding production from GhanaThe West African country of Ghana has begun negotiating with ExxonMobil on expanding production, particularly from ultra-deepwaters offshore. Exxon signed an MOU with Ghana in 2015 to assess the Deepwater Cape Three Point region, located at depths between 2,000 and 4,000 metres. The government acknowledges that ultra-deepwater exploration is beyond the reach of most operators and ExxonMobil has the technical know-how "to unlock the potentials" of high-risk offshore oil fields. Ghana presently produces about 165,000 bbl/day of crude but hopes to boost that number to 250,000 bbl/day next year.
Expanding production from UAE
Abu Dhabi's National Oil Company (ADNOC), Exxon Mobil and Japan’s Inpex have signed an agreement to boost production from the Upper Zakum offshore oil field to 1 million bbl/day by 2024. Upper Zakum is the world's second largest offshore oil field. ADNOC produces about 3 million bbl/day.
Shrinking production from Venezuela
According to OPEC, output from Venezuela fell below 2 million bbl/day in October, the lowest in almost three decades. Oil accounts for 95% of the country's exports. S&P declared Venezuela technically in default on US$60 billion in bonds while state-owned PDVSA has also deferred bond payments. US sanctions recently imposed by the Trump Administration prohibit US banks and investment firms from buying distressed debt. Last spring, Goldman Sachs was heavily criticized for purchasing US$2.8 billion worth of Venezuelan debt for pennies on the dollar.
A new report with a familiar tuneThe International Energy Agency (IEA) played both sides of the fence this week in their latest 2017 World Energy Outlook, praising the rise of renewables and electric vehicles while still signalling strong demand growth for crude and natural gas. The IEA says world energy demand will grow 30% by 2040, driven by strong population growth and urbanization in Asia and Africa. Natural gas use is expected to rise by 45% over the next two decades. Demand for oil will increase to 105 million bbl/day by 2040, up from the current 98 million, driven by strong demand for petrochemicals production and the transportation sector.
A tale of two monthly oil market reports - Part 1
In this month's Oil Market Report, the IEA says higher prices and a warm start to the winter will drop demand growth to 1.5 and 1.3 million bbl/day in 2017 and 2018, respectively, 100,000 bbl/day lower than previously forecasted. Non-OPEC supply grew about 100,000 bbl/day in October while OPEC supply declined 80,000 bbl/day on lower output from Algeria, Nigeria and Iraq. Supply is expected to increase by another 1.4 million bbl/day next year, driven mostly by the US. The IEA says oil markets are currently oversupplied, which is expected to extend into the fourth quarter of next year.
A tale of two monthly oil market reports - Part 2
In this month's Oil Market Report, OPEC raised its forecast for oil demand growth rising to 1.52 million bbl/day this year and 1.51 million bbl/day in 2018. Supply is expected to expand 650,000 bbl/day this year and another 870,000 bbl/day next year. OPEC production declined 151,000 bbl/day in October to an average of 32.59 million bbl/day. OPEC says the recent rise in oil prices is proof that markets are balanced.
- Decision day for Keystone XL in Nebraska @ 10:00am CT
- NEB begins route hearings for Trans Mountain Expansion in Hinton, AB
- Alberta Premier Rachel Notley gives speech at Empire Club in Toronto, ON
- Last trading day for WTI December contract
- September Wholesale Trade data released by StatsCan @ 8:30am ET
- Alberta Premier Rachel Notley gives speech at Economic Club of Canada in Ottawa, ON
- EIA Weekly Petroleum Status Report released @ 10:30am ET
- EIA Weekly Natural Gas Storage Report released @ 12:00pm ET (holiday schedule)
- US markets closed for Thanksgiving
- CD Howe's Canada’s Energy Agenda & National Unity annual event in Calgary, AB