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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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Oil-Sands Operations Resume After Wildfire

Both major oil-sands producers’ operations are located in Alberta’s Cold Lake region, about 300 kilometers (186 miles) northeast of Alberta’s capital, Edmonton. The blaze had shut in nearly 10% of Canada’s oil-sands output, or about 233,000 barrels a day, since it was detected May 22. Canadian Natural said full production has resumed at its 80,000-barrel-a-day Primrose site, which had been evacuated due to the closure of an access road, and its 25,000-barrel-a-day Kirby South operation, which had cut back output after the shutdown of a third-party pipeline. Cenovus said operations have returned to normal at its nearby Foster Creek site, which has a capacity of 135,000 barrels a day and is jointly owned with ConocoPhillips . COP -0.81 % The Calgary-based company said it expects the 11-day shutdown to reduce second-quarter production by about 10,500 barrels a day and crimp annual production by about 2,600 barrels a day. However, […]

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Canadian Oil Sands Resume Output as Wildfire Threat Recedes

CALGARY—Two major Canadian oil sands operators said Monday they have resumed output at sites that had been shut down by a more than two-week old wildfire in northern Alberta, which exports much of its crude oil production to the U.S. The blaze had shut-in nearly 10% of Canada’s oil sands output, or about 233,000 barrels a day, since it was first detected on May 22. Canadian Natural Resources Ltd. CNQ -2.32 % said it expects to resume full production later this week at its 80,000 barrel-per-day Primrose site, which had been evacuated and shut down, and its 30,000 barrel-a-day Kirby South operation, which was forced to cut output due to the temporary closure of a pipeline. Cenovus Energy Inc. CVE -3.28 % said it began ramping up production at its 135,000 barrel-per-day Foster Creek site over the weekend, but didn’t provide an estimate for when output levels would return […]

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Fire threat to oil abates in Alberta

Crews returning to oil installations in Alberta as threat of wildfire subsides. Rain forecast through end of the week in the Canadian province. File Photo by UPI/Al Golub CALGARY, Alberta, June 3 (UPI) — Staff members are returning to Alberta oil installations after emergency service officials cleared the area of major wildfire threats, Cenovus Energy said. Rain is expected through the end of the week in Calgary, the nation’s forecaster said. Hot, dry weather led provincial authorities in May to issue an open-fire ban to curb the spread of wildfires in Alberta. As of Friday, more than 43,000 hectares have burned, though only five of the 41 active fires are considered out of control. Cenovus Energy said its crews were working to restore power to its Foster Creek oil sands operation, which has the capacity to process 135,000 barrels of oil per day. Foster Creek was closed by fire […]

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Western Canadian Wildfires Shut in Oil Sands Production

CALGARY—Wildfires that have crimped Alberta’s oil sands production for more than a week continue to burn, officials said Monday, dealing another blow to producers already spooked by low crude prices and expected royalty increases. Some 1,400 firefighters in northern Alberta—including hundreds from neighboring provinces—have been working to douse or corral dozens of wildfires which have raged for several days, spread by strong winds and dry underbrush in the boreal forests that dominate the landscape. Of 35 blazes currently being fought, five have yet to be contained, including the largest which has engulfed nearly 80,000 acres in the province’s northeast, said Richard Horne, a spokesman for the Alberta Agriculture and Forestry Ministry. “Our crews are still working around the clock to get the fire under control and build a perimeter,” Mr. Horne said, adding that light rain and milder winds over the weekend helped firefighters extend a fire proof zone […]

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A visit to the heart of Canada’s oil sands industry

Since 2007 when we published our article, ”A crash program scenario for the Canadian oil sands industry” a visit to Fort McMurray and the areas where oil sands are mined has always been high on my wish list. On my current trip I passed Calgary on the way to Toronto so I finally got an opportunity to visit the oil sands. The flight from Calgary became an interesting introduction to the industry. It was on a small aircraft with around 50 seats and about 40 of the passengers were presumably workers on their way back to Fort McMurray after a week’s leave. A three week session of work on the tar sands awaited them. This report is a description of my trip and does not take a position for or against the mining of oil sands. During the weekends from May until and including autumn the Oil Sands Community […]

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Alberta Wildfires Burn For 6th Day, 10% Of Oil Sands Crude Offline

CALGARY, Alberta, May 28 (Reuters) – Firefighters battled wildfires in northern Alberta, Canada’s biggest crude-producing region , for a sixth day on Thursday, with two blazes near oil sands facilities still out of control. The wildfires have forced producers in the Western Canadian province, the largest source of U.S. crude imports, to shut in 233,000 barrels per day of crude production, around 10 percent of total oil sands output. The biggest fire, on the Canadian military’s Cold Lake Air Weapons Range, had grown in size to 20,000 hectares (49,000 acres) from 17,000 hectares on Wednesday. That blaze has forced Cenovus Energy Inc and Canadian Natural Resources Ltd to shut down production and evacuate staff from their Foster Creek and Primrose oil sands projects. Janelle Lane, a wildfire information officer at the Alberta government, said the fire had advanced to roughly 15 kilometres (9.3 miles) away from Cenovus’s Foster Creek […]

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Alberta fires threaten oil installations

More than 30 new blazes erupt in Alberta as energy companies report key installations under threat. File photo Heinz Ruckemann/UPI CALGARY, Alberta, May 28 (UPI) — Wildfires are moving closer to key oil installations in Alberta province as the government reports nearly three dozen new outbreaks in the last 24 hours. The provincial government in Alberta enacted an open-fire ban amid a persistent threat of wildfires. The government expects hot, dry conditions to continue at least through the end of the week . "In the last 24 hours there have been 33 new wildfires," the provincial government said in its latest update. "The wildfire outlook in Alberta continues to be severe." Since April 1, more than 600 wildfires have been reported , charring more than 32,000 acres of land. As of late Wednesday, there were 63 active wildfires in the province and 13 are out of control. Canadian energy […]

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Hundreds more oil sands staff evacuated on Alberta fire threat

CALGARY, Alberta Statoil ASA, MEG Energy Corp and Cenovus Energy Inc evacuated hundreds of workers from three oil sands projects in northeastern Alberta on Tuesday as wildfires raged through the key crude-producing region. The latest evacuations are in addition to project shutdowns by Cenovus and Canadian Natural Resources Ltd over the weekend, as companies rushed to remove staff from potential danger. At least 233,000 barrels per day of oil sands production, 9 percent of Alberta’s total oil sands output, have been suspended because of the fire risk, though none of the projects have been damaged. The Alberta government said there are 70 forest fires now burning in the province, with 20 considered out of control. Lightning storms are forecast for Tuesday evening, increasing the risk of more fires, a government spokesman said. Cenovus evacuated all 90 staff from its Narrows Lake oil sands project on Tuesday, which is not […]

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New York snubs Albany port bitumen project

ALBANY, N.Y., May 22 (UPI) — New York’s state government found there would be "at least one" environmental issue with a proposal to build a tar sands storage facility at a rail terminal. The state Department of Environmental Conservation rescinded a 2013 notice to Global Partners, which has headquarters in Massachusetts, that a proposed project to warm rail cars filled with the heavier form of crude oil called bitumen would not present environmental threats. Global wanted to install boilers at its Albany terminal to offload to vessels headed for coastal refineries. DEC rescinded its 2013 notice after reviewing thousands of comments and documents, including those submitted by environmental groups. Its review found "little experience" with heating bitumen in major oil storage facilities. "This new information suggests that the proposed project has the potential for at least one significant adverse environmental impact that was not considered in the negative declaration," […]

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Investors Urged to Avoid Oil Sands After Alberta Election

Pipelines run toward oil storage tanks stand at the Enbridge Inc. Cushing storage terminal in Cushing, Oklahoma. Energy suppliers cut about $126 billion of expenditure following last year’s price drop of almost 50 percent, estimates Wood Mackenzie Ltd., an Edinburgh-based consultant. Photographer: Daniel Acker/Bloomberg Investors may want to steer clear of oil sands developers and coal producers and buy royalty stocks and companies with assets outside Alberta. That’s the advice of portfolio managers and analysts after energy stocks declined Wednesday following the surprise election victory by the New Democratic Party in Alberta. An index of Canadian energy companies plunged the most in three months after the win by Rachel Notley’s NDP, which has pledged to boost corporate taxes, review the government’s royalty rates for energy producers and phase out coal power. Canadian Oil Sands Ltd. is among the most exposed to a potential hike in royalties and stricter environmental […]

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Canada Crude Falls Below $30; BMO Seeks Oil Sands Cost Cuts

(Bloomberg) — Canadian heavy oil prices fell below $30 for the first time in more than six years as Bank of Montreal warned that oil sands producers must cut costs. Western Canadian Select fell 59 cents to $29.85 at 12:28 p.m. Mountain time, the lowest since Feb. 18, 2009, according to data compiled by Bloomberg. The grade’s discount to U.S. benchmark West Texas Intermediate narrowed 80 cents to $13.60 a barrel. Crude futures settled at a six-year low of $43.88 in New York on concern record supply may strain storage capacity. The cash costs of oil sands producers must shrink to remain competitive in the “new normal of lower oil prices for longer,” BMO analyst Randy Ollenberger said in a note today. The majority of Canada’s crude comes from oil sands in Northern Alberta and is among the most expensive to produce. Companies including Royal Dutch Shell Plc and […]

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Oil-Sands Rules Get Tougher as Alberta Seeks Less Damage

(Bloomberg) — Oil-sands producers will be forced to reduce waste water and to clean up and restore mined land within a decade as Alberta seeks to reduce environmental damage. Regulation announced by Alberta Environment Minister Kyle Fawcett in Edmonton on Friday, include limits on water withdrawals from the Athabasca River in the Canadian province’s north. Companies will also be required to slow the growth of tailings ponds, which hold waste water from bitumen mining, and restore land that existing ones are on after 10 years of the end of the mine’s life, the minister said. Oil-sands operators have come under attack for environmental impact including emissions of greenhouse gas and fresh-water use, helping to stall pipeline construction such as TransCanada Corp.’s Keystone XL. Production of bitumen, forecast to more than double by 2030, is Canada’s fastest-growing source of carbon emissions. The new rules are a more “realistic” policy framework […]

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Husky reports start of production from Sunrise oil sands project

Husky Energy Inc., Calgary, reported the start of production at the first of two 30,000-b/d plants at the in situ Sunrise Oil Sands Project in northeastern Alberta. Husky said it expects the project’s total production to ramp up its full 60,000 b/d capacity (gross) by yearend 2016. Steam operations for the project began in December 2014 ( OGJ Online, Dec. 12, 2014 ). Husky is the operator of Sunrise, which lies 60 km northeast of Fort McMurray, with equal working interest with BP PLC , which operates the jointly-owned BP-Husky Toledo refinery. Bitumen from Sunrise can be processed at that refinery. Sunrise contains estimated reserves of 3.7 billion bbl (440 million proved, 2.4 billion probable, and 860 million possible) as of Dec. 31, 2013. Husky has a 50% working interest in these reserves. 03/11/2015 Abu Dhabi Co. for Onshore Oil Operations (ADCO), through a subcontractor, has let a contract […]

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Shell Withdraws Application for New Canadian Oil Sands Mine

CALGARY, Alberta— Royal Dutch Shell PLC said Monday that it was indefinitely postponing plans to develop a proposed oil-sands surface mine in Western Canada, the energy company’s latest sign of retrenchment amid a drop in crude oil prices to six-year lows. The company said it would withdraw its regulatory application to the Canadian Environmental Assessment Agency for a 200,000-barrel-a-day oil project known as the Pierre River North surface mine in northern Alberta. That move followed Shell’s decision last month to cut up to 10% of its 3,000 oil-sands-related jobs. Shell was the first major energy company to shed workers in Canada’s oil patch in response to the recent swoon in global crude oil prices to half their levels in mid-2014. Since then, other large Canadian oil-sands producers have also slashed jobs. Like Shell, some have deferred longer-term projects, but most plan to finish construction of oil-sands projects already under […]

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Canada’s Oilsands Face ‘Death Spiral’ If They Don’t Cut Costs

As the world’s oil glut continues to build, wiping out hopes of a price recovery, the head of one of Canada’s largest oilsands operators is warning the industry faces a “death spiral” if it doesn’t figure out how to cut costs. Speaking before the Chamber of Commerce in Fort McMurray, Steve Laut, president of Canadian Natural Resources Ltd. (CNRL), said oilsands companies can still return to health, but only if they aggressively begin to cut costs. Costs have risen so far, so fast that oil producers were making three times as much profit in 2004, when oil was at $40 a barrel, than they were a few years ago when oil was at $100 a barrel, Laut said, as quoted at the Globe and Mail . Laut’s call for cost cutting may be seen by some as a prelude to layoffs and project cancellations, but so far North America’s […]

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Lower Oil Prices Strike at Heart of Canada’s Oil Sands Production

OTTAWA — For as long as 400-ton dump trucks have been rumbling around the open pit mines of Canada ’s oil sands , crews from Kal Tire have been on hand to replace and repair their $70,000, 13-foot diameter tires. But the relationship, going back over a decade, didn’t spare the company when oil prices began plummeting. Dan Allan, the senior vice president of Kal’s mining tire unit, said that customers immediately began looking for price concessions. Others asked Kal to withdraw personnel from some sites or swiftly canceled plans to add more maintenance crews. “We’re sort of caught at the sharp end of the spear,” said Mr. Allan, who is now looking to relocate some employees. “It’s really difficult.” Canada’s oil sands — and the 167 billion barrels of reserves — prompted an unprecedented expansion over the last decade. But the roughly $155 billion spending spree left the […]

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Suncor Executive Says Growth Plans Based on Bullish Crude Price Outlook

A senior Suncor Energy Inc. executive said Wednesday the company won’t delay its biggest long-term growth projects because it expects crude oil prices to double from current levels within the next three to four years. “In the longer term, oil is going to go back to $90-$100,” Alister Cowan, the oil sands producer’s chief financial officer, told investors attending a Canadian Imperial Bank of Commerce conference in Whistler, British Columbia, saying that prices would rebound to that level “probably in three years or four years’ time.” That bullish outlook echoes recent comments by CEO Steve Williams, who has said he also expects oil prices to climb back to the lofty levels of last summer. U.S. oil for March delivery traded on the New York Mercantile Exchange settled Wednesday at $47.78 a barrel. Oil prices have tumbled more than 55% since June, with the steepest decline following the Organization of […]

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Suncor Cuts Jobs, Spending as Oil Rout Rattles Canada

Suncor Energy Inc. (SU) , Canada ’s largest oil company, said it will cut 1,000 jobs, lower its 2015 capital budget by about 13 percent and delay projects to weather collapsing prices. The company will spend C$1 billion ($836 million) less this year than originally forecast in November, following Canadian Natural Resources Ltd. (CNQ) in revising its budget lower this week. Suncor also plans to reduce operating expenses by C$600 million to C$800 million in two years, according to a company statement today. “Cost management has been an ongoing focus, with successful efforts to reduce both capital and operating costs well underway before the decline in oil prices ,” Steve Williams , Suncor’s chief executive officer, said in the statement. “In today’s low crude price environment, it’s essential we accelerate this work.” The cuts are the latest blow to Canada’s energy industry and economy as plummeting prices reverberate in […]

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As Oil Slips Below $50, Canada Digs In for Long Haul

ENLARGE A machine works at the Suncor Energy Inc. mine near Fort McMurray, Alberta, on June 19, 2014. Bloomberg News CALGARY—In the escalating war of attrition among top oil-producing nations, Canada’s biggest oil-sands mines have a message for the market: Don’t look to us to cut production. Long the unloved stepchild of so-called unconventional crude production, the oil sands have lured some of the world’s top energy producers to a remote corner of Northern Alberta where the heavy oil deposits are richest. There, they have plowed billions of dollars into building up a sprawling industrial complex amid the surrounding forests. And even as oil prices settled below $50 a barrel Monday for the first time in nearly six years, those companies are unlikely to shut off the tap anytime soon thanks to those huge upfront costs, combined with long-term break-even points and lengthy production lives. Unlike shale oil, which […]

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Shell’s Canadian Oil-Sands Operations to Cut Jobs Amid Crude Oil Price Swoon

By Chester Dawson CALGARY-Royal Dutch Shell PLC said Friday it plans to cut jobs at its Canadian oil-sands operations, becoming the first major energy company to shed workers in Canada’s oil patch amid a recent swoon in global crude oil prices. Shell, which produces 250,000 barrels of oil a day from its oil-sands mines, will trim about 2% of its 3,000 workers, or about 60 positions, some of whom will be reassigned to other jobs, said company spokesman Cameron Yost. "We’re continuing to review our business to make sure that we remain competitive," Mr. Yost said. "When prices are low the importance of that is underlined," he said. The president of Shell Canada, Lorraine Mitchelmore, said in August that the company’s oil-sands business met internal yardsticks for profitability when Brent crude trades above $70 per barrel. Prices for Brent, the global oil benchmark, have spiraled lower in recent weeks, […]

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Oil Sands Output Rises as Canadian Crude Falls Below $40

Canadian heavy crude traded below $40 a barrel for the first time in five years just as surge of new projects are scheduled to start operation. A total of 14 new oil sands projects are scheduled to start next year with a combined capacity of 266,240 barrels a day, according to data published by Oilsands Review. That’s 36 percent more than was started in 2014. Oil futures have dropped more than 40 percent since June as production surged in the U.S. and Canada , adding to OPEC output that exceeded the group’s target for six consecutive months. OPEC decided to maintain its production level at a Nov. 27 meeting, resisting calls from members including Venezuela to reduce supply. “There is a lot of crude coming on next year,” Juan Osuna, IHS Energy Inc.’s senior director for North American oil said in a phone interview Dec. 12. Producers “aren’t going […]

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Canada Heavy Oil Nearing $40 Threatens Oil Sands Projects

Canadian heavy crude fell to near $40 a barrel, threatening projects under construction as producers boosted output and space on a pipeline was rationed. Imperial Oil Ltd. (IMO) is increasing output at its Kearl oil sands project to 110,000 barrels a day after a shutdown last month, Pius Rolheiser, a Calgary-based spokesman, said by phone yesterday. Enbridge Inc. apportioned space on the Spearhead pipeline, which carries Canadian crude south to Cushing, Oklahoma , after demand to ship on the line exceeded capacity, according to a company statement. Heavy West Canadian Select rose 82 cents to $43.01 a barrel after falling to $42.19 a barrel yesterday, the lowest since April 2009, data compiled by Bloomberg showed. Crude has fallen into a bear market as U.S. output surges to the highest in more than three decades. Calgary-based Cenovus Energy Inc. (CVE) said today it “substantially” slowed development plans at the Narrows […]

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Imperial Oil Restarts Production at Kearl Oil Sands Mine

CALGARY, Alberta— Exxon Mobil Corp. ’s Canadian subsidiary on Tuesday said it has resumed production at one of its largest oil sands mines “to pre-shutdown levels” after it halted operations in November due to a mechanical problem. Imperial Oil Ltd. suspended production three weeks ago after detecting a vibration issue in the mine’s core ore-crushing machinery used to extract heavy oil. That forced it to forgo output, which had averaged 92,000 barrels of crude a day in the third quarter excluding a 14-day maintenance window. “Repairs to the crusher unit have been completed,” and the company is still looking into the cause of the equipment malfunction, Imperial spokesman Pius Rolheiser said. The Kearl plant cost 13 billion Canadian dollars ($11.4 billion) and started production in April 2013 after a series of delays and cost overruns. Construction of an C$8.9 billion expansion to produce an additional 110,000 barrels a day […]

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The Other Oil Sands Fight: It’s in Utah and Involves Citrus

URL: http://www.rigzone.com/news/oil_gas/a/136169/The_Other_Oil_Sands_Fight_Its_in_Utah_and_Involves_Citrus CALGARY, Alberta, Dec 1 (Reuters) – While North America has been gripped by controversy over the Keystone XL pipeline that would ship crude to the United States from the Canadian oil sands, a small Canadian company has been quietly digging in the oil sands of Utah with a secret weapon it thinks may end the environmental argument: citrus. U.S. Oil Sands Inc says its method will cut the cost and reduce the energy needed to separate oil from sand, lowering the environmental impact. Opponents are far from convinced. The Calgary-based firm is developing its PR Spring project on a 32,000-acre lease about 280 kilometers (174 miles) southeast of Salt Lake City. It plans to start producing 2,000 barrels per day next year with the potential to reach 10,000 barrels per day. Its patented technology uses a solvent whose main ingredient is derived from orange and lemon peels. […]

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IEA Chief Economist Urges Oil Producers to Invest in New Projects

Petroleum storage tanks at the Suncor tar sands operations near Fort McMurray, Alberta, Canada. IEA… ENLARGE Petroleum storage tanks at the Suncor tar sands operations near Fort McMurray, Alberta, Canada. IEA has singled out Canada as a key focus area for future oil production. Reuters MADRID—The International Energy Agency’s chief economist on Friday urged oil producers to boost investment in new projects to meet an anticipated rise in demand, a move that he said may avoid oil price spikes in coming years. Speaking in Madrid during the presentation of the IEA’s annual report, Fatih Birol said that a tumble in oil prices makes it hard to believe a supply crunch may happen any time soon, but the slow pace of development of new projects makes it imperative to act. “We shouldn’t just ignore tomorrow’s challenges,” Mr. Birol said. “This is hard point to make in this context of lower […]

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Alberta Producers With World’s Cheapest Oil Face Cascading Woes

Canada ’s biggest energy producers now face the same prospects of shrinking budgets and declining profit as their smaller rivals as prices drop for what’s already the world’s cheapest oil. Producers including Suncor Energy Inc. (SU) and Canadian Natural Resources Ltd. (CNQ) , which each fell the most in at least three years yesterday, operate in one of the most expensive places on earth to produce oil. If crude prices continue sinking following OPEC’s decision not to cut global oil supplies, Canada’s producers big and small will have to tighten their belts to prepare for declining profits. “This is a pretty big shock,” said Justin Bouchard, an analyst at Desjardins Securities Inc. in Calgary. “There’s no question there’s going to be a slowdown. Even the big guys will have to look at their capital spending plans.” Western Canada Select, the Canadian benchmark, has lost more than a third of […]

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A cleaner way to get petroleum out of oil sands

4727 Votes The secret to business is buy low and sell high. Canadian holding company MCW Energy Group hopes to do that by economically separating the petroleum from oil sands and then selling it at market rates of double to triple the processing costs. The company uses a patented closed-loop technology that treats the sands with a solvent that helps remove the oil. The oil and solvent are separated, with the latter recycled for the next batch of production. According to CEO Gerald Bailey, the finished sand is 99.9 percent clean and can be put back on the ground. The company currently has 1,000 acres in Vernal, Utah, about a 173-mile drive east of Salt Lake City. “Those sands run about 12 percent oil,” said Bailey, who has a doctorate in chemical engineering. “It looks like black sand. You can pick it up and it’s dry, but it’s dirty […]

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Canadian Heavy Oil Boosted as Imperial Shuts Kearl Operation

Canadian heavy oil strengthened the most in more than a month after Imperial Oil Ltd. (IMO) shut operations at its Kearl oil sands project. Operations were suspended after vibrations were detected in an ore crusher unit at the site, the company said in an e-mailed statement. The shutdown will last “several weeks” and customers will be supplied from inventories and through purchases of crude on the market, spokesman Pius Rolheiser said by phone. Imperial was producing 92,000 barrels a day at Kearl in the third quarter, the company said. Western Canadian Select, a heavy blend that is a benchmark for oil-sands production, strengthened by $1 a barrel to a $15.10 discount to West Texas Intermediate at 11:48 a.m., according to data compiled by Bloomberg. “This should help support prices,” John Auers , vice president of the Dallas-based consulting company Turner Mason & Co., said by telephone. “It’s not super […]

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Outrage over EU proposal on tar sands

EU proposals on Canadian crude oil draws criticism from environmental circles. UPI/Brian Kersey LONDON, Oct. 8 (UPI) — Advocates for a low-carbon economy cried foul over a European decision to ease restrictions on oil sands produced from Canadian fields. The European Commission ruled Tuesday to pull back on some of the low-carbon policies governing oil sands. The Canadian government has lobbied for the measure as it tries to diversify an export economy based almost exclusively on the United States. Caroline Lucas, a member of the British Parliament for the Green Party, told the Independent newspaper the European decision was shameful. "It completely defies reason, enormous public opposition and paves the way for big business to profit from gross exploitation of the earth’s resources," she said in comments published Tuesday. "Tar sand oil is one of the dirtiest, most polluting fuels." Oil produced from Canada is said to be more […]

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The Tar Sands Bubble

The Canadian tar sands industry has seen better days. Energy giant Statoil announced last week that it would postpone a major mining project in Alberta for at least three years. It was just the latest in a string of major setbacks for tar sands oil, which has become nearly as bad for corporate profits as it is for the environment. High labor costs and the falling price of crude oil have contributed to the industry’s dark days, but environmental activists can also take a bow. By delaying the proposed Keystone XL pipeline, which would ship tar sands oil across the Midwest to refineries on the U.S. Gulf Coast, they have helped make digging up Alberta’s boreal forest an increasingly bad investment. How did this happen? First you need to understand a bit about the economics of tar sands oil—a cheap, off-brand version of conventional crude. (You know a product […]

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Statoil Calls Off 40,000-Bpd Canadian Oil Sand Development

OSLO/CALGARY, Sept 25 (Reuters) – Norwegian energy firm Statoil said on Thursday it will postpone development of its 40,000 barrel per day Corner oil sands project in Alberta, Canada, for at least three years and cut about 70 jobs at its Canadian unit because of rising costs and limited pipeline space. Corner would have been the second major development at Statoil’s Kai Kos Dehseh property in northern Alberta. The company said its existing thermal oil sands operation, the 20,000 bpd Leismer project, is not affected by the postponement. Statoil said it decided to delay construction of the project because inflation was pushing up the cost of labor and materials, while tightness in pipeline space to the U.S. market was pushing down the price of its oil. "Costs for labour and materials have continued to rise in recent years and are working against the economics of new projects," Staale Tungesvik, […]

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Canadian Natural Allowed to Resume Production at Troubled Site

CALGARY, Alberta— Canadian Natural Resources Ltd. will be allowed to resume production at an oil-sands site in northern Alberta plagued by unexplained leaks of crude that seeped to the surface, the province’s chief energy regulator said Monday. The decision partially lifts restrictions on the company’s operations that had been in place since mid-2013 after mysterious leaks of crude were detected at four separate locations at the site, which is about 217 miles (350 kilometers) northeast of the provincial capital of Edmonton. It comes a month after Canadian Natural lowered its annual production forecast, citing delays in the resumption of operations at Primrose East, the field where the heavy oil seepages occurred on the grounds of the Canadian armed forces’ Cold Lake Air Weapons Range. The Alberta Energy Regulator approved the company’s application, which was submitted July 29, to restart production using low-pressure steam injections to extract oil embedded in […]

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Oil Sands are Biggest Losers From Low Crude Prices: Study

ConocoPhillips (COP) and Royal Dutch Shell Plc (RDSA) are among global oil companies needing crude prices as high as $150 a barrel to turn a profit from Canada’s oil sands, the costliest petroleum projects in the world, according to a study. The next most-expensive crude projects are in the deep waters off the coasts of Africa and Brazil, with each venture needing prices between $115 and $127 a barrel, said Carbon Tracker Initiative, a London-based think tank and environmental advocacy group, in a report today. As the U.S. shale drilling boom floods the world’s biggest crude market with supply, explorers are at greater risk of a price collapse that would turn some investments into money losers. “In order to sustain shareholder returns, companies should focus on low-cost projects, deferring or cancelling projects with high breakeven costs,” the report’s authors wrote. “Capital should be redeployed to share buybacks or increased […]

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Report: Alberta oil spill disclosure delayed

Files obtained from the Canadian government show there was a push to delay publication of information about an Alberta oil spill, a newspaper said. In mid-July, Canadian Natural Resources Ltd. published a 92-page report on the 2013 seep of more than 12,000 barrels of bitumen, the viscous form of oil found in Alberta. Canadian newspaper the Toronto Star reported Tuesday it obtained more than 100 pages of emails showing the enforcement branch of Environment Canada called on a spokesman to "limit information" released about the spill last year. The Star reports the seeps began in May 2013, but weren’t disclosed until July when the newspaper issued its accounts of the incidents. Megan Leslie, a provincial lawmaker from Halifax, told the newspaper the government of Prime Minister Stephen Harper was massaging public relations about the energy sector. "The responses (to media) don’t need to be beefed up," she said. "Our […]

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Costs up for oil sands production

The costs of producing bitumen and synthetic crude in the Albertan oil sands have increased over the past year, says the Canadian Energy Research Institute in an annual report that projects steady growth in output. Compared with last year’s report, estimated costs of production before blending and transportation are up 4.4% for steam-assisted gravity drainage , 1.6% for mining without upgrading, and 5.9% for integrated mining and upgrading ( OGJ Online, May 29, 2013 ). The new estimates of plant-gate supply costs: $50.89/bbl (Can.) for SAGD, $71.81/bbl for stand-alone mining, and $107.57/bbl for integrated mining. CERI estimates the cost of stand-alone upgrading at $40.82/bbl. When the price of West Texas Intermediate crude is $100/bbl, the only economic production technology when blending and transportation are included in the estimate is SAGD, CERI points out. After those adjustments, the WTI-equivalent supply costs at the Cushing, Okla., pricing hub are $84.99/bbl (US) […]

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CERI: Costs up for oil sands production

The costs of producing bitumen and synthetic crude in the Albertan oil sands have increased over the past year, says the Canadian Energy Research Institute in an annual report that projects steady growth in output. Compared with last year’s report, estimated costs of production before blending and transportation are up 4.4% for steam-assisted gravity drainage , 1.6% for mining without upgrading, and 5.9% for integrated mining and upgrading ( OGJ Online, May 29, 2013 ). The new estimates of plant-gate supply costs: $50.89/bbl (Can.) for SAGD, $71.81/bbl for stand-alone mining, and $107.57/bbl for integrated mining. CERI estimates the cost of stand-alone upgrading at $40.82/bbl. When the price of West Texas Intermediate crude is $100/bbl, the only economic production technology when blending and transportation are included in the estimate is SAGD, CERI points out. After those adjustments, the WTI-equivalent supply costs at the Cushing, Okla., pricing […]

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Steam-injection blamed for Canadian oil seep

Canadian Natural Resources Ltd. said a steam-injection practice at an oil extraction site in Alberta may have led to major oil spill there last year. More than 12,000 barrels of bitumen, the viscous form of oil found primarily in Alberta, seeped from the company’s exploration areas near the Cold Lake Air Weapons Range in Alberta last year. The company initially said legacy issues at the site may have led to the incident. In a 92-page report , released to the public Tuesday, the company said a process dubbed cyclical steam stimulation, or CSS, may have contributed to what the report described as a flow-to-surface event. CSS may have cracked open other subsurface layers, allowing oil to leak out of control from the site. "The identified causes indicate that changes to steaming strategies and enhanced monitoring, as well as remediation of defective wellbores can prevent the conditions […]

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Canadian Oil Sands Projects Continue to Vie for Skilled Talent

Article title More than 98,000 oil sands construction, maintenance and operations jobs will be generated over the next decade, according to a new report “the Oil Sands Construction, Maintenance and Operations Labour Demand Outlook to 2023”. “Accurate labor market information gives us a clear understanding of the workforce issues affecting oil sands development, and helps ensure that $172 billion in wages and salaries continues to generate economic benefits right across this country. This new information helps government and industry make the best possible decisions, and helps Albertans and Canadians make informed choices about their careers,” said Kyle Fawcett, minister of Alberta Jobs, Skills, Training and Labour, in the report. The Labour Demand Outlook report analyzed data and viewed insights from the construction sector, the oil sands sector and government to highlight the need for the construction and oil and gas industries to work together to ensure the supply of […]

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Aboriginal leaders outraged by Canadian oil pipeline

A decision by the Canadian government to approve the planned Northern Gateway oil pipeline will be an insult to the aboriginal community, a tribal leader said. Canadian company Enbridge Energy aims to build its Northern Gateway pipeline to the coast of British Columbia. The pipeline received conditional approval from the National Energy Board, the country’s independent regulator, and a final decision is expected before the end of the month. Members of the aboriginal community and some eastern provincial leaders have expressed concern about the potential environmental threats from a pipeline designed to carry the heavier grade of crude oil in Canada. Dubbed oil sands, it’s viewed by critics as more toxic than conventional oil. Stewart Phillip, the chief of the Union of British Columbia Indian Chiefs, said a decision in favor of the pipeline from the government of Prime Minister Stephen Harper would undermine the relationship […]

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