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Canadian Oil Sands Not Planning to Sell Future Production

Canadian Oil Sands Ltd. isn’t planning to sell future royalty production after considering the option, a company spokeswoman said. Canadian Oil Sands has enough liquidity to survive a period of low oil prices, Siren Fisekci, a company spokeswoman, said in a phone interview on Tuesday. The company isn’t pursuing any other plans at the moment to raise capital and isn’t for sale, she said. Management of the largest owner of Syncrude Canada Ltd. spoke with Holder Highfields Capital about selling some future production for upfront payment to help boost the company’s flagging shares, the Wall Street Journal reported earlier. The oil-sands producer in January cut its dividend the most since 1998 to cope with sinking crude prices. Shares of Canadian Oil Sands have declined 38 percent this year. The stock rose 3.7 percent to C$6.50 at 2:44 p.m. in Toronto.

Posted On : Published By : Tom Whipple
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How Fracking Changed the Economics of Oil Production Around the World

New technology, high oil prices, and plentiful cheap credit have encouraged the boom. Some $200bn has been borrowed to invest in fracking in the last few years, accounting for 15 percent of the entire $1.3tr US junk bond market . Investors were, in effect, betting on continuing high oil prices making their investments profitable for years to come. Price Slump Last year’s slump in prices trashed that calculation. From a mid-year high of $115 per barrel, by the end of 2014 the price per barrel had fallen by more than 40 percent. More than half of US shale rigs have been laid up since October. The driver, last year, was the behaviour of OPEC – the Organization of Petroleum Exporting Countries. OPEC is a cartel agreement among major oil producers that seeks to manage the international market for oil. With oil prices already plunging over the summer, OPEC could […]

Posted On : Published By : Tom Whipple
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‘Strippers’ Pose Dilemma for Oil Industry

Steve Plants, vice president of Plants & Goodwin Inc. in Shinglehouse, Pa., still pumps crude oil from wells drilled in the 1890s. But with the price of crude below $50 a barrel, some of those low-producing wells, known as stripper wells, don’t turn a profit. Mr. Plants has permanently closed 10 wells, he says, and plans to plug another 10 by the end of the year. “We’re losing money every day,” said Mr. Plants, who operates about 200 wells in Pennsylvania and New York. “If we were pumping wells every day, we might be pumping them once a week now,” to save on costs. Mr. Plants, and thousands of individual operators like him, could turn out to be a key element in ending the oil-price rout, rather than a large producing country like Saudi Arabia or a big public company. A sharp drop in stripper-well output, currently estimated at […]

Posted On : Published By : Tom Whipple
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Surging Atlantic Crude Adds to Seasonal Pressure on Oil Prices

The North Sea and Nigeria will ship the most crude in at least two years in October, adding to downward pressure on oil prices just as demand wanes from refiners shutting down for seasonal maintenance. Output of North Sea grades is poised to reach the highest since November 2013 next month, according to loading programs compiled by Bloomberg. Supplies from Nigeria, the biggest oil producer in Africa, are set to reach a level not seen in more than three years. “It’s directionally bearish for crude,” Vikas Dwivedi, an analyst at Macquarie Capital Inc. said by e-mail. “The large loading programs will need buyers.” Production in the North Sea is rising as projects sanctioned when oil prices were above $100 a barrel come online, according to the International Energy Agency. This coincides with the end of a shutdown in Nigeria caused by a pipeline leak, allowing supplies to flow back […]

Posted On : Published By : Tom Whipple
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The Oil-Sands Glut Is About to Get a Lot Bigger

The last place oil producers want to be when prices plummet to profit-demolishing lows is midstream on a billion-dollar project in one of the costliest parts of the planet to extract crude. Yet that’s exactly where half a dozen oil sands operators from Suncor Energy Inc. to Brion Energy Corp. find themselves with prices for Canadian oil now hovering around $30 a barrel. While all around them projects have been postponed or canceled, their investments were judged too far along when the oil game suddenly moved from offense to defense. These projects will add at least another 500,000 barrels a day — roughly a 25 percent increase from Alberta — to an oversupplied North American market by 2017. For companies stuck spending billions in a downturn, the time required to earn back their investments will lengthen considerably, said Rafi Tahmazian, senior portfolio manager at Canoe Financial LP. “But the […]

Posted On : Published By : Tom Whipple
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The EIA Changes Data Collection Methods

EIA begins monthly survey-based reporting of U.S. crude oil production With the release of today’s Petroleum Supply Monthly , EIA is incorporating the first survey-based reporting of monthly U.S. crude oil production statistics. Today’s Petroleum Supply Monthly includes estimates for June 2015 crude oil production using new survey data for 13 states and the federal Gulf of Mexico, and revises figures previously reported for January through May 2015. Beginning with the June 2015 data, EIA is providing estimates for crude oil production (including lease condensate) based on data from the EIA-914 survey. Survey-based monthly production estimates starting with January 2015 are provided for Arkansas, California, Colorado, Kansas, Louisiana, Montana, New Mexico, North Dakota, Ohio, Pennsylvania, Texas, Utah, Wyoming, and the Federal Gulf of Mexico. For two states covered by the EIA-914—Oklahoma and West Virginia—and all remaining oil-producing states and areas not individually covered by the EIA-914, production estimates are […]

Posted On : Published By : Tom Whipple
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Private-Equity Firms Plunge Back Into the Oil Patch

EOG Resources CEO Mark Papa Private-equity firms are doubling down on energy, despite heavy damage from their last adventure in the oil patch. These firms’ stakes in a dozen publicly traded energy exploration-and-production companies have lost more than $18 billion in value since last summer, when oil prices began their slide from more than $100 a barrel. Yet with U.S. crude prices down to about $46.75 a barrel at Thursday’s close, private-equity firms are looking for opportunities to spend the hundreds of billions of dollars they have amassed to make new energy investments. They are hoping the commodity-price crash will open up opportunities to pick up assets and entire companies on the cheap. “This is a temporary situation, and investments that are made in this low-price environment are going to look pretty good two or three years out,” said Mark Papa, who joined energy-focused firm Riverstone Holdings LLC earlier […]

Posted On : Published By : Tom Whipple
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Former Bakken Operator Pleads Not-Guilty

Saltwater Waste A Southlake, Texas man charged with illegally injecting saltwater into a disposal well in North Dakota pled not guilty to federal charges last week in federal court. Jason Halek, a former operator of a saltwater well in southwest North Dakota, was indicted on 13 federal counts and fined a record $1.5 million in 2013 for putting drinking water at risk by illegally dumping more than 800,000 gallons of salty, oilfield wastewater into a former oil well in Stark County. He entered not guilty pleas to all charges including violating the Safe Drinking Water Act, making false statements and obstructing grand jury proceedings. The indictment claims Halik conspired to hinder by “craft, trickery, deceit, and dishonest means the lawful and legitimate functions of the EPA, in enforcing federal laws relating to the requirements of the North Dakota underground injection control program.” Saltwater is considered an environmental hazard that […]

Posted On : Published By : Tom Whipple
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Majority of U.S. shale firms pass up second quarter chance to hedge $60 crude

With the benefit of hindsight, last quarter may have been the best chance for cash-strapped U.S. shale oil producers to ensure they would get at least $60 a barrel for the next year or two. Barely a third did so. According to a Reuters analysis of hedging disclosures by the 30 largest such firms, more than half of them did not expand their hedges during the three months ended June or had no hedges at all, exposing them to a plunge that wiped more than $20 off the price of oil in the following months. In total, 12 companies increased their outstanding oil options, swaps or other derivative hedging positions by 36 million barrels at the end of the second quarter compared with the end of the first quarter, according to the data. Another 14 companies ended the quarter with hedging positions reduced by a total 37 million barrels, […]

Posted On : Published By : Tom Whipple
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Cnooc Canadian Oil-Sands Plant to Shutdown Amid Pipeline Probe

CALGARY, Alberta—The Canadian unit of Chinese state-controlled energy giant Cnooc Ltd. CEO 0.69 % said Wednesday it will halt production at a 50,000 barrel-a-day oil-sands plant indefinitely as part of its effort to comply with an order from regulators forcing it to shut down pipelines at the site. The move comes after the chief energy regulator in the Western Canadian province last week suspended operating licenses affecting 95 pipelines at Cnooc subsidiary Nexen Energy ULC’s Long Lake heavy oil extraction facility in northern Alberta for suspected failure to comply with certain rules . Shutting down Long Lake is the latest in a string of setbacks at the plant , which started up in 2008 but has never reached its capacity of 72,000 barrels a day. The loss of output is a blow to parent company Cnooc, which bought Nexen for $15 billion in 2013 and installed its own management […]

Posted On : Published By : Tom Whipple