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Two New Canadian Oil Sands Projects Started Despite Price Pain

CALGARY, Alberta, Sept 1 (Reuters) – ConocoPhillips and Husky Energy Inc announced key milestones in bringing two new oil sands projects online on Tuesday, underlining how some producers in the high-cost sector are boosting production even as crude prices tumble. The two projects will add around 178,000 barrels per day to the 2.3 million bpd already being produced from the oil sands, the world’s third largest crude reserves after Saudi Arabia and Venezuela. The Canadian Association of Petroleum Producers forecast in June that oil sands production to hit 3.1 million bpd in 2020. That forecast may be overstated however, as Imperial Oil has since delayed plans to expand its Kearl project by another 125,000 bpd. The start up announcements on Tuesday also come as around 900 oil company jobs were cut in Canada, 500 of those by ConocoPhillips, and the U.S. benchmark crude dropped more than 6 percent on […]

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Canadian Oil Sands Halts Crude Production at Oil-Sands Giant Syncrude

A dump truck is loaded with oil sands at the Syncrude Canada Ltd. mine. CALGARY, Alberta— Canadian Oil Sands Ltd. COSWF 2.60 % , the largest owner of the giant Syncrude oil-sands project, said on Sunday that it has halted production after a fire damaged equipment at its synthetic crude oil processing facility in northern Alberta. The company said the fire, which occurred early Saturday and was extinguished without any injuries, affected pipes connected to a water treatment unit at Syncrude’s heavy oil upgrader on the site of its Mildred Lake oil-sands surface mine. The cause of the blaze is under investigation, it said. While the upgrader’s core machinery wasn’t damaged and the strip mine continues to operate, Canadian Oil Sands said in a statement issued late Sunday that “synthetic crude oil production has been temporarily suspended while a recovery and repair strategy are being developed.” Canadian Oil Sands […]

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Moody’s Cuts Credit Rating of Canadian Oil Sands

The rating action targeting the largest owner of Canada’s giant Syncrude oil-sands mining consortium comes amid a swoon in oil prices below $40 a barrel, which has eroded profit margins in the energy industry and made it more difficult for highly-levered oil producers to service their debt loads. Moody’s lowered its creditworthiness assessment of Canadian Oil Sands’ senior unsecured debt to Baa 3 from Baa 2 and kept its “negative” outlook for the Calgary-based company. Baa 3 is Moody’s lowest rung of investment-grade credit and just above the speculative, or junk, grade. “Moody’s expects negative free cash flow [at Canadian Oil Sands] of about 125 million Canadian dollars ($94 million) from June 30, 2015, to September 30, 2016, to be largely debt funded,” it said. The ratings action was prompted by the recent tumble in crude prices to more than six-year lows and Canadian Oil Sands’ deteriorating balance sheet. […]

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Canadian Oil-Sands Producers Struggle

CALGARY, Alberta—Canada’s high-cost oil-sands producers are struggling as oil prices sink to fresh six-year lows, and even the most efficient drillers are losing money on every barrel they produce at current prices, according to a report published Wednesday. Canadian oil-sands production has grown 30% in the past five years but the recent price slump has hit producers’ bottom lines and forced them to suspend development of new projects. Western Canadian heavy crude costs more to extract than other oil sources because it must be separated from deposits of sand. It also trades at a discount to other crudes, in part because of the distance it must be transported from remote boreal forests in Alberta. Benchmark West Texas Intermediate oil cost less than $41 a barrel in Wednesday trading, which although at multiyear lows was still well above the Western Canadian Select average of around $24 a barrel. More than […]

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Athabasca oilsands operations hit by water shortages

Alberta’s first oilsands operation, Bitumont, on the shore of Athabasca River near Fort McMurray, Alta. Many oilsands operators are facing water restrictions due to low water levels. (Jeff McIntosh/Canadian Press) It’s wreaked havoc on crops and shut down fisheries across Alberta, but now the hot dry weather and ensuing stresses on our rivers have hit the oilsands. This week the Alberta Energy Regulator reined in oil companies by imposing restrictions on how much water they can draw from the North Athabasca basin. Those in the lower Athabasca region — including heavy hitters Suncor, Syncrude and CNRL — are not affected by the restrictions. ‘Preview of the future’ Simon Donner says a University of British Columbia study he helped to write predicted this would happen. He says this year’s low flows are the result of both climate change and a strong El Nino event that’s developing. "With regulators this week […]

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Abu Dhabi’s Taqa Cuts 22% of Jobs Amid Loss on Falling Oil Price

Abu Dhabi National Energy Co., the government-owned utility that produces crude from Canada to the U.K., has slashed 22 percent of its oil and gas jobs in the past year amid a loss due to tumbling global prices. The company known as Taqa plans to cut spending 2.5 billion dirhams ($681 million) this year after reducing capital expenditures by 1.05 billion dirhams in the first half, according to an e-mailed statement from the company on Thursday. Headcount at the Abu Dhabi headquarters is down 32 percent since July last year. Oil producers are cutting costs after Brent crude slumped 48 percent last year and is down another 13 percent this year. Taqa’s oil and gas production averaged 150,000 barrels of oil equivalent a day in the first six months, down 5 percent from a year earlier as revenue from the business slumped 48 percent. “While the current commodity price […]

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Canadian Heavy Crude Slumps To Lowest In At Least A Decade

CALGARY, Alberta, Aug 12 (Reuters) – Heavy Canadian crude slumped to its lowest level in at least a decade on Wednesday after Enbridge Inc closed two of its main pipelines in the United States because of a leak, piling fresh misery on Canadian oil companies that are close to producing at a loss. Western Canada Select heavy blend crude for September delivery last traded at $20.75 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers, having settled at $19.80 per barrel below on Tuesday. Earlier in the session it hit $21.75 per barrel below WTI, the widest differential since August last year. That pushed the outright price of Canadian heavy crude to around $22.50 a barrel, a level at which some companies will struggle to cover the cost of production, blending and transportation. It was lower than the 2008 trough of $24.62, according to one […]

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Oil-Sands Syncrude Drop Reveals Downturn Tactic as Outages Surge

Canadian synthetic crude production fell 15% from previous year Producers of light synthetic crude from Canada’s oil sands found a way to manage this year’s price slump by churning out less and getting more maintenance work done. The strategy is highlighted by a 15 percent decline in the production of the Syncrude benchmark in May from a year earlier, according to data reported by Statistics Canada on Monday. Oil-sands operators including Royal Dutch Shell Plc cut output while collectively undertaking the biggest set of repairs this spring in five years at their upgraders, plants that turn bitumen into light oil, according to Genscape Inc., an energy data company. The work followed the lowest average quarterly price for benchmark U.S. crude since 2009. “From a strategic point of view, I’m sure these major companies are betting that the peak of oversupply is this year, now,” said Carl Evans, a Genscape […]

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Canadian Oil Sands Posts Loss on Lower Crude Prices

CALGARY, Alberta— Canadian Oil Sands Ltd. COSWF 0.90 % on Thursday reported a net loss in the second quarter, citing lower prices for its crude and the effect of a two percentage point corporate tax hike in the Western Canadian province where it operates. The largest owner of the Syncrude oil sands project in northern Alberta lost 128 million Canadian dollars ($98.4 million), or 26 Canadian cents a share, in the three months to June 30, compared with a net profit of C$176 million, or 36 Canadian cents a share, in the year-earlier period. It said the loss mainly came from a C$120 million deferred tax expense reflecting an increase in Alberta’s corporate tax rate to 12% from 10% previously. The company also suffered from a global crude oil price drop, which has affected many so-called unconventional producers of oil-sands crude and shale oil. Citing expenses in excess of […]

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Suncor Deepens Spending Cuts for 2015 as Oil Price Languishes

Suncor Energy Inc., Canada’s largest oil producer, cut its spending plan for 2015 for a second time and eliminated some non-essential projects as part of cost-reduction efforts. The company now plans to spend between C$5.8 billion ($4.5 billion) and C$6.4 billion from an earlier range of C$6.2 billion and C$6.8 billion, Calgary-based Suncor said Wednesday Canadian time in a statement on Marketwired. Suncor has already cut about 1,000 jobs and previously lowered its 2015 capital budget by C$1 billion while delaying projects to weather collapsing prices. Still, it’s pressing ahead with the C$13 billion Fort Hills oil-sands mine. The move to cut spending comes after the price of West Texas Intermediate moved back into a bear market, dropping below $50 a barrel earlier this month for the first time in about a quarter. The U.S. benchmark, averaged about $58 in the second quarter compared with about $103 in the […]

Posted On : Published By : Tom Whipple