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Updated on Friday, March 24, 2017
Fire reported at Syncrude oil sands facility near Ft. McMurray — March 15, 2017
An explosion and fire was reported at Syncrude oil sands facility shortly before 2:00 pm on Tuesday, March 14, 2017. There was a big plume of smoke coming from the Mildred Lake upgrader.
Will Gibson, spokesman for Syncrude Canada, reported that one person was seriously injured before the fire was contained and then extinguished. There was no evaluation as to the damage to the upgrader. Gibson stated that more info would be released when available
Syncrude is one of the largest oil sands operations in northern Alberta. Operations produce up to 350,000 barrels of synthetic crude per day.
Largest Alaskan oil discovery in the past three decades — March 14, 2017
Repsol, a Spanish oil company, and Denver based Armstrong Oil and Gas announced jointly last week that they made a huge oil discovery in Alaska’s North Slope. The discovery is in the most northern part of the state between the coasts of Chukchi and the Beaufort Sea
Initial estimates indicate that the discovery may contain 1.2 billion barrels of crude oil. Repsol believes it will take an additional five years before production begins from the new field. The discovery is believed to be from a mature basin and is expected to yield heavy crude oil.
Conference Board of Canada Report “Canadian oil industry in recovery mode” — March 13, 2017
A Conference Board of Canada study concludes that Limited (CNU:TSX) announced on March 23rd its 2016 annual results for the year ended December 31, 2016. During Canadian oil industry is still in a state of survival mode despite higher oil prices. It expects oil companies will continue to report losses until at least the third quarter.
The report states that the industry has witnessed three years of global oil oversupplies and low oil prices. Indications are that oil demand is increasing, crude oil inventories are dropping and crude oil prices rising.
Despite the increasing optimism, the Conference Board of Canada predicts that it will take until the fourth quarter before positive changes occur.
For more info see Conference Board of Canada's latest outlook for the industry.
Bright outlook for natural gas producers
Natural gas prices have simply stunk during the past five years but recovering is now apparent and natural gas prices are looking much more promising.
Oversupplies of natural gas inventories have dropped below the five year average and global changes are occurring. Natural gas demand is rising. Relying on domestic demand will no longer be the single governing factor. The next decade looks very favorable. Global markets are here and demand is about to burst open.
During the past decade, significant discoveries of shale gas were made. In the US, these discoveries developed quicker than the demand was able to sustain. Natural gas prices plummeted to record lows in the past several years.
There has been a significant turnaround in the natural gas markets in the past six months, as US stockpiles have waned and are now replenished at a much slower pace than a year ago. As a result, natural gas prices bottomed last winter and by mid-summer began to recover.
Former Obama administration tightened environmental laws on carbon emissions. This spurred the conversion from dirty fuels like coal to clean burning natural gas. In particular, most US coal fired electric generating plants have been phased out and others will be replaced in the coming years with more efficient and lesser carbon emitting gas fired plants. Natural gas demand on the continent may increase quickly.
Here in Canada, we rely mostly on exporting our natural gas supplies. Exports to our southern neighbor have all but vanished. At one time, US imported most of our natural gas supplies. Today we are looking at exporting natural gas in the liquid form (LNG). Our single obstacle is the lack of infrastructure but it is in the developmental stages and is being quickly constructed. Two LNG projects are under construction in British Columbia and one is being built on the east coast near Stain John, New Brunswick. Several other smaller LNG plants are being planned for Nova Scotia.
Interest in developing natural gas reserves in the provinces of Ontario, Quebec, New Brunswick, Nova Scotia and Price Edward Island is starting to heat up. Even the left leaning provincial Liberal government has eased restrictions on natural gas development in the eastern townships of Quebec. Natural gas companies are optimistic that fracking will soon be approved.
Alberta and British Columbia, the most prominent natural gas producers, have taken the lead. The Montney, Horn River Basin and lesser known discoveries have attained unprecedented development levels. According to COADC, rig utilization in British Columbia has been the highest in Canada during the past five years.
A study, commissioned by B.C. provincial government and released three years ago, estimates that the British Columbia has 2,933 trillion cubic feet of recoverable natural gas in the Horn River Basin and the Montney region. British Columbia’s natural gas reserves have surged to the highest level in Canada and if the study is accurate – one of the largest global natural gas reserves.
These new natural gas reserve estimates have tripled the previous evaluation in British Columbia. Alberta's shale reserves in the Montney have also risen in comparison to a decade ago.
British Columbia's provincial government claims that there is enough natural gas to be capable of developing a viable LNG export operations for 150 years and still being capable of meeting all domestic needs.
The start of 2017 has brought elevated optimism. According to COADC data, rig utilization in British Columbia and Alberta is climbing to record high levels of past decade. Interest is picking up pace in Horn River and the Montney region is continuing to be strong. Producers are preparing for big exports into the Pacific Rim.
T. Boone Pickens predicts that America’s transportation sector could be the next beneficiary if the industry follows through with a conversion to natural gas. The oil tycoon has spent much time in convincing the transportation industry of the merits to change fuels. Pickens believes that conversion to natural will occur despite a slow start. Truckers are now realizing the benefits of lower fuel costs and lower maintenance.
Low oil prices and political uncertainty has had implications on the natural gas industry. If oil prices had been higher, natural gas demand would have grown at a much faster pace. These factors stalled development of all natural gas reserves. Most oil and gas companies tightened their budgets in response to low energy prices and global uncertainty.
Natural gas drilling throughout North America slowed to a standstill from 2015 to 2016. Despite the short term doom, many natural gas producers knew that the oversupplies of natural gas would drop once US economy recovered and domestic demand picked up .
The return of colder weather this winter has brought further depletion of US working gas stockpiles; presently, stockpiles have fallen below the five year average. Slower development of US shale natural gas reserves has helped curb oversupplies. Should oil prices recover, rig availability may further hamper natural gas development in northeastern US and keep supplies of natural gas tight in that region.
Canadian natural gas stalwarts like Canadian Natural Resources, Devon Energy Corporation, EnCana and Penn West Exploration have witnessed budget restraints due to low energy prices. Stalwarts, such as EnCana, have laid-off significant numbers of their workers and proceeded in the same direction as Devon Energy and Penn West, the three have liquidated some of their most promising natural gas assets.
Other companies, who were more optimistic, budgeted accordingly and took advantage of the situation. Natural gas properties were attained at bargain prices. Canadian Natural Resources Limited is one that has taken over the lead. During the past two years, this company has drilled over 12,000 natural gas wells in western Canada.
While size of a company may help sustain it through the tough times, some smaller companies have made significant strides. Painted Pony Petroleum, who prior to the oil price downturn sold their valued oil properties, and turned their resources to acquire vast properties in northeastern British Columbia. This company has shown that sound management is the key to being successful.
Energy investors should be aware of the developments occurring globally. Political changes throughout the world may hasten change. Should crude oil prices stay low, rising natural gas prices may stall in the range of $3.00 to $3.50/MMBtu. Should oil prices rise, natural gas prices may spike at $5/MMBtu or even high should demand rise.
There is growing optimism amongst natural gas producers. Asian rim markets are looking very good and may be the key to a rise in natural gas exports. China has shown a strong interest in converting from coal to natural gas. The Chinese government has realized that it can no longer set aside the problems created by carbon emissions and pollution.
Vigilant natural gas producers have realized that China alone could change the direction of natural gas demand and supply. Natural gas industry is truly entering a new and golden era.
By Jim Klemchuk
Keystone XL pipeline receives approval — March 25, 2017
After eight years of being stalled by the Obama Administration, the Keystone XL has finally been given a federal approval by the Trump government.
The pipeline still has more hurdles to cross as it faces Nebraska Service Commission and local land owners permission. It is also expected that it will face more opposition from indigenous and environmental groups.
The project spans a total of 1900 kilometers and will cost well over $8 billion to construct. It will connect the Alberta oil sands crude oil with Gulf of Mexico refineries.
‘Shouts & Toots’ from the Oil Patch
.Altura Energy Inc. (ATU:TSXV) announced its financial and operating results for the three months and year ended December 31, 2016. The audited consolidated financial statements, related management's discussion and analysis , and Annual Information Form for the year ended December 31, 2016 will be available at www.sedar.com and www.alturaenergy.ca.
Altura reported a revenue of $4.1 million in fourth quarter and $8.4 million in 2016. Capital expenditures totaled $6.9 million. This included: $3.9 million on drilling, completing, workovers, equipping and facilities; and $3.0 million on land, geological and geophysical costs. Company experienced a net income of $264,000 in the fourth quarter and a loss of $(1.2) million in 2016.
Altura achieved fourth quarter production of 988 boe per day, up 414 boe per day (72 percent per share) from the third quarter of 2016 due to incremental production from the corporation's 2016 drilling program in the third and fourth quarters of 2016 as well as a full quarter of production from the Killam Acquisition.
Altura Energy Inc. is a Calgary based oil and gas corporation active in the exploration and development of oil and natural gas in east central Alberta. Company has a market cap of $50 million and approximately 109 million shares outstanding.
BNK Petroleum Inc. (BKX:TSX) announced its fourth quarter and year end results. Cash flow from operations was $0.5 million in the fourth quarter of 2016 compared to $1.0 million in prior year fourth quarter. Company reported a net loss of $3.7 million was incurred in the fourth quarter 2016. Company reported a revnue of $8.6 million and a loss of $(11.1) million in 2016.
Average production was 1,045 barrels of oil equivalent per day for 2016, a decrease of 26% compared to 2015 production of 1,415 BOEPD due to normal production decline as the company did not drill or complete any new wells in 2016 and also had three wells shut-in during the fourth quarter due to offset fracture stimulation operations by another operator.
BNK's President and Chief Executive Officer, Wolf Regener commented, "With the proceeds from the equity offering that was completed in October 2016, we were excited to begin our 2017 drilling program at the end of the year. We drilled and completed the Chandler 8-6H well (99.9% working interest), which was our first well in the 2017 drilling program, during the first quarter of 2017. The 30 day initial production rate (IP) is 230 barrels of oil per day and 265 barrels of oil equivalent per day. The well continues to produce a higher oil percentage (87%) than expected from this part of the field while still continuing to clean up.”
BNK Petroleum Inc. is a US based international oil and gas exploration and production company focused on oil and gas resource plays. Company has a market cap of $49 million and approximately 233 million shares outstanding.
Ithaca Energy Inc (IAE:TSX) announced on March 24th a receipt of Bonds consent. Company has received consents from holders of the requisite aggregate principal amount of its $300 million 8.125% senior notes due July 2019. Notes are as they relate to the takeover offer made by DKL Investments Limited. The Consent Solicitation Statement can also be obtained from the official website of the Luxembourg Stock Exchange (www.bourse.lu).
Ithaca Energy Inc. is a UK based oil and gas operator focused on the delivery of lower risk growth through the appraisal and development of UK portion of the North Sea. Company has a market cap of $797 million and approximately 415 million shares outstanding.
Prairie Provident Resources Inc. (PPR:TSX) announced on March 24th hat it has posted an updated corporate presentation on its website following the closing of its previously announced acquisition of strategic assets in the Greater Red Earth area of northern Alberta, as well as the related financing. PPR is an oil and liquids weighted company with low-decline production that generates attractive netbacks in the current environment. Company has high working interests and operatorship in its core areas, and ample financial flexibility supported by an active hedge program.
Investors and other interested parties are encouraged to visit www.ppr.ca for further details and to review the updated presentation.
Prairie Provident Resources Inc. is a Calgary based company engaged in the exploration and development of oil and natural gas properties in Alberta. Company has a market cap of $67 million and approximately 109 million shares outstanding.
SDX Energy Inc. (SDX:TSXV) announced on March 24th its financial and operating results for the three months and year ended December 31, 2016 (with full year results prepared on an audited basis). The Company's full annual audited financial statements and annual report have been published on the Company website at www.sdxenergy.com and on SEDAR at www.sedar.com and will shortly be posted to shareholders.
Company reported a revenue of $5.4 million in the fourth quarter and $12.9 in 2016. It relealized a comprehensive loss of $(2.1) million in the fourth quarter and a loss of $(28) million in 2016.
SDX Energy is a UK based oil and gas company. It has a market cap of $157 million and approximately 187 million shares outstanding.
Tethys Petroleum Limited (TPL:TSX) announced that it has applied to the United Kingdom Listing Authority to cancel the standard listing of the company's ordinary sharesfrom the Official List of the UKLA and the cancellation of trading in the Shares on the Main Market of the London Stock Exchange, following a determination by the company that the costs of maintaining a dual listing on the London and Toronto stock exchanges is unnecessarily expensive for a company of Tethys' size.
Shares will continue to trade on the Toronto Stock Exchange which should provide shareholders with liquidity and places sufficient corporate governance requirements upon the company. Further, the company's conclusion, that the London listing be cancelled, is supported by the limited trading and liquidity of the shares on the London Stock Exchange.
Tethys is a Cayman Islands based company focused on oil and gas exploration and production activities in Central Asia and the Caspian Region. Company has a market cap of $10 million and approximately 508 million shares outstanding.
TransCanada Corporation (TRP:TSX) announced on March 24th that the U.S. Department of State has signed and issued a Presidential Permit to construct the Keystone XL Pipeline.
In conjunction, TransCanada has discontinued its claim under Chapter 11 of the North American Free Trade Agreement (NAFTA) and will end its U.S. Constitutional challenge.
TransCanada will continue to engage key stakeholders and neighbors throughout Nebraska, Montana and South Dakota to obtain the necessary permits and approvals to advance this project to construction.
Russ Girling, TransCanada's president and chief executive officer commented, "This is a significant milestone for the Keystone XL project. We greatly appreciate President Trump's Administration for reviewing and approving this important initiative and we look forward to working with them as we continue to invest in and strengthen North America's energy infrastructure."
TransCanada is a Calgary based energy transporter. It operates a network of natural gas pipelines that extends more than 91,500 kilometres (56,900 miles), tapping into virtually all major gas supply basins in North America. Company has a market cap of $54 billion and approximately 867 million shares outstanding.
More news summaries on ‘Oilpatch Review’ page...
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Quotes are directly taken from a book entitled, ‘Phrase A Day Inspirations’, written by Bernie Shimko. ‘Canadian Insight’ wishes to thank Bernie and his wife Adeline for permitting the use of their inspiring quotes.
Did you know?
In 1929, Dr. Karl Clark headed the Alberta Research Council and set up hot water extraction plant on Clearwater River to extract oil from bituminous sand. Clark discovered numerous ways to improve oil sands extraction. Later that same year, Dr. Clark received a patent for his hot water extraction process for separating oil from bitumen. Unfortunately, the Great Depression halted the project.
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March 24, 2017
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