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How a Chinese Company Slipped on Canada’s Oil Sands

Weeks after the state-controlled oil company bought Nexen for $15 billion, its executives were in Calgary with a blunt message for the Canadian company, which had struggled for years to extract crude from the oil sands in the Alberta wilderness. Cnooc Chief Executive Li Fanrong told staffers Nexen provided just 2% of Cnooc’s profits, say attendees, warning that “2% is not enough.” Two years later, Cnooc is still trying to fix Nexen, its troubles compounded by low crude prices. And now Cnooc must explain an oil spill: This month, a pipeline Nexen installed last year ruptured, spilling nearly 31,500 barrels of a mixture of crude oil, wastewater and sand in northern Alberta. Nexen’s chief executive, Fang Zhi, on Wednesday stood by the oil-spill site near the hamlet of Anzac. “It is very disappointing that this has happened,” he said, the scent of petroleum wafting. “I therefore personally apologize.” Buying […]

Posted On : Published By : Tom Whipple
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Jobs Machine From Canada Oil Slows as Robots Add to Price Slump

Truck driver Craig Huzulak is unemployed after losing his job four times since December — the new normal in a Canadian oil patch still reeling from a downturn. Huzulak, 49, was working at a mine last year near Fort McMurray, Alberta, when crude prices plunged and work dried up. He lost two more positions in the following months and then had a job offer yanked at the end of June before he could even start. In addition to the market rout, the father of two now worries about the self-driving trucks Suncor Energy Inc. is rolling out in its oil-sands mining operations that will replace workers like him to save companies money. “It’s really, really hard for heavy-equipment operators,” said Huzulak, who has driven trucks and worked on drilling rigs in Western Canada for 15 years. “There’s a lot more fear now that this might last longer.” The burgeoning […]

Posted On : Published By : Tom Whipple
Category:

How a Chinese Company Slipped on Canada’s Oil Sands

Weeks after the state-controlled oil company bought Nexen for $15 billion, its executives were in Calgary with a blunt message for the Canadian company, which had struggled for years to extract crude from the oil sands in the Alberta wilderness. Cnooc Chief Executive Li Fanrong told staffers Nexen provided just 2% of Cnooc’s profits, say attendees, warning that “2% is not enough.” Two years later, Cnooc is still trying to fix Nexen, its troubles compounded by low crude prices. And now Cnooc must explain an oil spill: This month, a pipeline Nexen installed last year ruptured, spilling nearly 31,500 barrels of a mixture of crude oil, wastewater and sand in northern Alberta. Nexen’s chief executive, Fang Zhi, on Wednesday stood by the oil-spill site near the hamlet of Anzac. “It is very disappointing that this has happened,” he said, the scent of petroleum wafting. “I therefore personally apologize.” Buying […]

Posted On : Published By : Tom Whipple
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Falling Crude Prices Upend Canada’s Oil Sands Projects

Two years ago Canadian oil sands producer Cenovus Energy Inc., CVE -2.54 % buoyed by success at its flagship project and eager to cut operating expenses, halved the amount of instrumentation used to measure finicky temperature and pressure at its wells. But that turned out to be a costly mistake that cut into its Foster Creek site’s production volumes, which only have recently recovered after the company reversed course. “We started to cut our operating costs, but in hindsight that’s a lesson learned,” Harbir Chhina, Cenovus’ executive vice president in charge of oil sands, said in an interview. “If I compare the oil sands to a baseball game, I think we just finished the first inning,” he said. Of the roughly two million barrels a day that Canada currently produces from its oil sands, about half is mined from the surface using giant excavators and the world’s tallest dump […]

Posted On : Published By : Tom Whipple
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Alberta pipeline breach causes massive spill

China-subsidiary company apologizes, says cleanup underway for one of North America’s largest-ever oil spills on land Nexen Energy apologized Friday for an oil sands pipeline leak in the Canadian province of Alberta that is one of North America’s largest-ever oil-related spills on land, and said its cleanup crews were working around the clock. The pipeline leaked 31,500 barrels of emulsion — a mixture of bitumen, water and sand, the equivalent of 5 million liters of tar sands oil, or 1.3 million gallons. Nexen, a subsidiary of China’s CNOOC Ltd., said it is still trying to find the root cause of the leak in the new pipeline, which was installed last year. The company has found a visible breach about the size of a hand. The incident is another blow for the environmental record of the oil sands industry, already under fire from activists for its carbon-intensive production process. Ron […]

Posted On : Published By : Tom Whipple
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Michigan calls for tar sands ban

A worker tends to an oil boom on the Kalamazoo River near Battle Creek, Mich., in 2010. Pipeline operator Enbridge has been called on to stop sending heavier crude oil grades through a Michigan pipeline network. File Photo by Brian Kersey/UPI LANSING, Mich., July 15 (UPI) — A pipeline report from Michigan calls for a ban on the transportation of heavier crude oil grades through pipelines running through the Straits of Mackinac. "While we recognize the importance of transporting energy to power Michigan communities, it cannot be at the expense of our environment," Michigan Department of Environmental Quality Director Dan Wyant said in a statement. Wyant and Michigan Attorney General Bill Schuette released a report from a pipeline task force, which calls for "an immediate" ban on sending tar sands and heavy crude through Enbridge pipeline Line 5b running through the straits. Wyant and Schuette announced last year they’d […]

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Suncor Oil Sands Project Aims to Replace Steam with Radio Waves

CALGARY, Alberta, July 14 (Reuters) – Suncor Energy Inc has launched a pilot project to replace the high-pressure steam used to extract bitumen from oil sands with radio frequency technology developed by U.S. defence contractor Harris Corporation. Canada’s largest oil and gas company, which produces 440,000 barrels per day from Alberta’s oil sands, said on Tuesday that the technology could significantly reduce costs, greenhouse gas emissions and water usage. Alberta’s oil sands are the world’s third-largest crude reserves after Saudi Arabia and Venezuela and a leading source of U.S. crude imports. However, breakeven costs for new projects are some of the highest globally. And the carbon-intensive process of using steam to liquefy the tar-like bitumen trapped in the sand has attracted fierce opposition from environmental groups. "Anytime you can develop a resource that is more environmentally benign and economically advantageous is going to be a strategic advantage. I would […]

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Oil-Sands Megaproject Era Wanes as Suncor Scales Back

Oil sands in Alberta. Photographer: Ben Nelms/Bloomberg The era of the megaproject in Canada’s oil sands is fading. Crude’s price slump, pressure to get off fossil fuels and tax increases in Alberta are adding to high costs and a lack of pipelines, prompting producers from Suncor Energy Inc. to Imperial Oil Ltd. to accelerate a shift to smaller projects. Companies are deferring new mines in favor of cheaper, bite-sized drilling programs that deliver quicker returns and require less labor. The moves will help reduce cost overruns and make Canadian companies more competitive with U.S. shale producers. The trade off will be reduced production growth and a smaller economic boost for the country’s oil patch. “Capital likes certainty and it’s a bit of an uncertain world at the moment,” Steve Williams, Suncor’s chief executive officer, said June 10 in an interview at Bloomberg’s Calgary office. With crude about 46 percent […]

Posted On : Published By : Tom Whipple
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Oil-Sands Megaproject Era Wanes as Suncor to Imperial Scale Down

(Bloomberg) — The era of the megaproject in Canada’s oil sands is fading. Crude’s price slump, pressure to get off fossil fuels and tax increases in Alberta are adding to high costs and a lack of pipelines, prompting producers from Suncor Energy Inc. to Imperial Oil Ltd. to accelerate a shift to smaller projects. Companies are deferring new mines in favor of cheaper, bite-sized drilling programs that deliver quicker returns and require less labor. The moves will help reduce cost overruns and make Canadian companies more competitive with U.S. shale producers. The trade off will be reduced production growth and a smaller economic boost for the country’s oil patch. “Capital likes certainty and it’s a bit of an uncertain world at the moment,” Steve Williams, Suncor’s chief executive officer, said June 10 in an interview at Bloomberg’s Calgary office. With crude about 46 percent below last year’s level, companies […]

Posted On : Published By : Tom Whipple