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Canadian market forces Shell’s hand

Weak oil economy and the lack of pipeline infrastructure caused Royal Dutch Shell to shelve Canadian oil sands project. File photo by Brian Kersey/UPI CALGARY, Alberta, Oct. 28 (UPI) — An uncertain market and the lack of infrastructure needed to move Canadian oil to the global market means it’s time to scrap an Alberta oil project, Shell said. Royal Dutch Shell said it would no longer continue with the construction of its Carmon Creek project in Alberta, Canada, and take a $2 billion write down for the loss. Sanctioned in 2013, the company said it had moved in early 2015 to retool construction operations at the oil sands project, which was expected to yield 80,000 barrels of oil per day. Costs at a time of lingering market weakness and the lack of pipelines needed to move Canadian oil to the global market forced the company to reconsider its priorities. […]

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Is it the Beginning of the End for the Alberta Oilsands?

A new report from Oil Change International challenges industry’s common assumption that the continued production of oilsands crude is inevitable. The report, Lockdown: The End of Growth in the Tar Sands , argues industry projections — to expand oilsands production from a current 2.1 million barrels per day to as much as 5.8 million barrels per day by 2035 — rely on high prices, public licence and a growing pipeline infrastructure — all of which are currently endangered in a carbon-constrained world. As the report’s authors find, growing opposition to oil production — especially in the oilsands, which is among the most carbon intensive oil in the world — has significantly altered public perception of pipelines, a change amplified by the cross-continental battles against the Enbridge Northern Gateway , Kinder Morgan Trans Mountain , TransCanada Energy East and TransCanada Keystone XL pipelines. According to the report’s authors, production growth […]

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Oil majors rush cuts to hit $60 break-even

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Shell Takes $2 Billion Charge to Quit Oil-Sands Project

(Bloomberg) — Royal Dutch Shell Plc made its second major strategic change in as many months, announcing it will take a $2 billion charge as it shelves an oil-sands project in Alberta after walking away from an Arctic drilling program. Shell is halting work on the 80,000 barrel-a-day Carmon Creek drilling development after deciding the project couldn’t compete in its portfolio, the company said in a statement Tuesday. The charge will be recorded in third-quarter earnings results, which are due to be released Thursday. Energy producers are canceling or delaying projects as a crude price slump forces them to prioritize spending. The company last month abandoned drilling offshore Alaska indefinitely after it failed to find enough oil or gas in the Chukchi Sea. Earlier this year, Shell withdrew an application to develop the Pierre River oil-sands mine in northern Alberta. “We are making changes to Shell’s portfolio mix by […]

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Royal Dutch Shell to Abandon Carmen Creek Oil-Sands Project

CALGARY, Alberta— Royal Dutch Shell RDS.A -1.70 % PLC said Tuesday it would abandon the construction of a major oil-sands project in Western Canada and take a $2 billion write-down, a stark reflection of the challenging economics for unconventional oil projects amid a sharp slump in crude prices. The energy giant said it would discontinue its 80,000 barrel-a-day Carmen Creek oil-sands project, citing an uncertain business environment and highlighting concerns about sufficient pipeline capacity to ship oil-sands crude to markets. Several proposed pipeline projects connecting northern Alberta’s oil sands to refiners in the U.S. and elsewhere have been delayed by regulatory issues, including the Keystone XL pipeline to the U.S. Gulf Coast. “We are making changes to Shell’s portfolio mix by reviewing our longer-term upstream options world-wide, and managing affordability and exposure in the current world of lower oil prices. This is forcing tough choices at Shell,” Ben van […]

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Shell takes $2bn charge on Canada oil sands project

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Canadian Oil Sands Says It Has Had No Other Offers Than Suncor’s

Canadian Oil Sands Ltd. says it hasn’t been approached with any other takeover offers after rejecting Suncor Energy Inc.’s C$4.3 billion ($3.3 billion) hostile bid, though it’s exploring alternatives. Chief Executive Officer Ryan Kubik said there are plenty of parties who might be interested in taking over, partnering or merging with his Calgary-based firm. To date though, Suncor’s offer is the only one on the table, he said. “Nobody’s approached us so far,” Kubik said in an interview at Bloomberg’s office in Toronto on Monday. “There are many parties that would like to own it.” Canadian Oil Sands urged shareholders to reject Suncor’s takeover attempt, accusing the larger rival of undervaluing its business and exploiting undisclosed information about a partnership in making a low-ball offer. Suncor, Canada’s largest crude producer, renewed efforts this month to take over its partner and biggest shareholder in the Syncrude oil-sands joint venture after […]

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Canadian Oil Sands Rejects Suncor Offer

Suncor’s unsolicited bid for the largest owner in the Syncrude oil-sands consortium has been closely watched by industry observers as a sign that Canada’s biggest oil and gas producer may think global crude prices are at or close to their bottom, after falling 50% over the past year. Oil’s slump has punished stock prices of most energy producers, including Canadian Oil Sands, whose shares fell to 15-year lows in the weeks before Suncor made its offer. “It’s no secret that Suncor’s timing is opportunistic. It’s designed to take advantage of Canadian Oil Sands’ shareholders during an unprecedented period of market uncertainty in the energy industry,” Don Lowry, chairman of Canadian Oil Sands, said on a conference call. Mr. Lowry accused Suncor of seeking to buy out Canadian Oil Sands at “fire-sale prices,” but he left the door open to a possible deal by saying the board would continue to […]

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Canadian Oil Sands Takeover `Ill Advised,’ Venator’s Osten Says

Suncor Energy Inc.’s offer to buy Canadian Oil Sands Ltd., the largest stakeholder in oil-sands miner Syncrude Canada Ltd., is “ill advised” because of the low oil price and the potential for further share-price declines, said Venator Capital Management Chief Executive Officer Brandon Osten. For the the Canadian Oil Sands purchase “to offer reasonable rates of return, you kind of need $70 dollar-plus oil and you’re not really there,’’ Osten said in an interview Wednesday at Bloomberg’s Toronto office. Venator Capital is a Toronto-based hedge fund with about C$300 million ($233 million) under management, and has shorted Suncor since the first quarter, he said. Suncor, Canada’s largest crude producer, is taking advantage of a prolonged oil rout to renew its effort to take over Canadian Oil Sands after two friendly offers were turned down earlier this year. Suncor has offered to trade 0.25 Suncor share for each share of […]

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Canadian Oil Sands Adopts Poison Pill in Wake of Hostile Suncor Bid

Calgary, Alberta-based Canadian Oil Sands said the shareholder rights plan is meant to give its shareholders and board adequate time to evaluate Suncor’s 4.3 billion Canadian dollar ($3.3 billion) all-stock offer and any other unsolicited bid or strategic options. The company reiterated that shareholders take no action on the Suncor bid until the offer has been fully reviewed by its board. “The board will consider Suncor’s unsolicited offer in both the current context and in light of the strong long-term potential of Canadian Oil Sands,” Canadian Oil Sands Chairman Donald Lowry said in a statement. Shareholder rights plans, or poison pills, are designed to dilute the value of a stock by flooding the market with additional shares, which makes it expensive for an investor to acquire a controlling stake. The rights plan, which is in addition to one already in place, would be triggered upon the purchase of 20% […]

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