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OPEC oil glut is shattering Harper’s superpower dream
Producers’ brinksmanship has worked, and Canada is cutting production
In the battle to see who blinks first, OPEC hasn’t blinked. And it looks like it isn’t going to, as it meets this week in Vienna.
Six months ago the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, announced it would keep pumping crude even though the world was swimming in the stuff.
While some analysts are predicting a surprise at this week’s meeting, most reports now say OPEC is not considering reining in production.
- Global glut grows to two million barrels a day as OPEC pumps more
- Canada’s crude production falls to nearly two-year lows, says Barclays
And whether or not OPEC continues to pump, there are new signs that Prime Minister Stephen Harper’s dream for Canada as an “emerging energy superpower” may be in trouble.
A report this week from Barclays showed Canadian production tumbling. The global giants with a stake in Canada’s oil sands have stopped expansion plans and many have walked away.
Meanwhile, Alberta oil producers have threatened to put new developments on hold until they see whether Rachel Notley’s new NDP government gives them what they want.
Missing a crucial window
To add insult to injury, low prices have emboldened the “dirty oil” lobby. There are new reports this week that the New York oil hub is rejecting petroleum from Canada’s “tarsands.”
Alberta’s oilsands may still contain some of the world’s largest petroleum reserves, up there with Venezuela and Saudi Arabia, but there is an increasing danger that Canada has missed a crucial window to develop and extract those resources.
…click on the above link to read the rest of the article…
Alberta forest fire forces evacuation of oilsands facilities
Cenovus and CNRL shut down operations as precautionary move
Cenovus Energy and Canadian Natural Resources Limited have evacuated their facilities within the Cold Lake Air Weapons range, close to Alberta’s eastern border, due to an out-of-control forest fire in the area.
“Yesterday, CNRL evacuated their plant facilities in the Primrose area and then, last night at 11 o’clock, we advised Cenovus in Foster Creek that it would be a good precautionary move to evacuate their personnel as well,” said Leslie Lozinski, spokeswoman for the province’s environmental and resource ministry.
Cenovus evacuated their facilities at Foster Creek because the fire threatened the only road out, which would have made any evacuation of the facility difficult.
Rhona Delfrari, spokeswoman for the company, said there were approximately 1,800 staff on site last night before the evacuation started early Saturday morning. By the afternoon, only a handful of staff were left over to shut down the plant before escaping by helicopter.
“As far as we know right now, there is no threat from the fire to our facilities, it was more about the road being blocked off from the fire,” said Delfrari.
Monitoring the situation
CNRL’s operations in the area are closer to the fire.
Scott Stauth, the company’s vice-president for North American operations said they have shut down “almost all of our operations, but we still have our main facility, which is not in the weapons range, we still have it manned and operating.”
…click on the above link to read the rest of the article…
New Report Warns of West Coast Tar Sands Oil Invasion
New Report Warns of West Coast Tar Sands Oil Invasion
The West Coast of the United States and Canada is facing an imminent tar sands oil invasion, according to a new report from the Natural Resources Defense Council (NRDC).
“The West Coast is about to fall victim to a tar sands invasion, unless our leaders choose to protect the health and safety of our communities and say no to Big Oil,” said Anthony Swift, deputy director of NRDC‘s Canada Project. “At a time when the nation is moving toward a clean energy future, there is no reason to welcome the dirtiest oil on the planet into our communities.”
While the West Coast is not currently the destination for much tar sands oil, the area’s heavy oil refining capacity and deepwater port access make it a likely destination for large amounts of Canadian tar sands oil in the future.
The Canadian Association of Petroleum Producers (CAPP) forecasts that tar sands supply will increase from 2.4 million barrels per day (bpd) in 2013 to 6.2 million bpd by 2030. To achieve those volumes, a significant portion of that oil would have to go to the West Coast by a combination of pipelines, rail and tanker.
The new report notes that if current plans for infrastructure to handle tar sands oil transportation proceed, “tar sands refining on the West Coast could increase eightfold, from about 100,000 bpd in 2013 to nearly 800,000 bpd in coming decades.” To put this in perspective, this is approximately the amount the proposed TransCanada KXL pipeline would transport to the U.S. Gulf Coast.
…click on the above link to read the rest of the article…
Low Oil Prices Not Enough To Kill Off Oil Sands, Yet
Low Oil Prices Not Enough To Kill Off Oil Sands, Yet
On Friday I visited the University of Alberta in Edmonton, where falling oil prices have brought a record provincial budget deficit despite aggressive tax increases and spending cuts. Here I pass along some of what I learned about how the plunge in oil prices is affecting Alberta’s oil sands operations.
A couple of factors have cushioned Canadian oil producers slightly from the collapse in oil prices in the U.S. First, while the dollar price of West Texas Intermediate has fallen 45% since June, the Canadian dollar depreciated against the U.S. dollar by 18% over the same period, and now stands at CAD $1.26 per U.S. dollar. Since the costs of the oil sands producers are denominated in Canadian dollars, the currency depreciation is an important offset. There has also been some narrowing of the spread between synthetic and other crudes. As a result of these factors, the University of Alberta’s Andrew Leach calculated that when WTI was selling for US $50 a barrel, Canadian producers were receiving CAD $60 per barrel of synthetic crude.
Related: U.S. Oil Glut Story Grossly Exaggerated
Source: Andrew Leach.
Oil sands and U.S. tight oil production have been the world’s primary marginal oil producers in recent years, by which I mean the key source to which the world could turn in order to get an additional barrel of oil produced. Ultimately, in this regime, it is the long-run marginal cost of the most costly producing operation that puts a floor under the price of oil.
…click on the above link to read the rest of the article…
