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Updated on Monday, April 23, 2018
Conference Board of Canada reports that tide is turning for the Canadian oil and gas industry — April 12, 2018
Rising crude oil prices are about to bring back optimism to the Canadian oil industry. Expectations are that higher oil prices will also bring back profitability.
The single largest obstacle to the oil industry’s success remains constrained pipeline capacity and limited capability to expand export markets.
Total crude production in Canada is forecast to rise by an average annual rate of 3.4 per cent between 2018 and 2022. The vast majority of that increase will come from the oil sands, while offshore production and diluent production will make up the remainder.
While oil prices and production are expected to rise, industry revenues are forecast to increase by about 8 per cent in 2018. Costs will inevitably rise, as firms will require more materials and investments to sustain operations. However, employment gains will be modest, and efficiency and cost-containment remain at the forefront of the industry's priorities. This should allow the industry to be profitable this year, after suffering losses for three years in a row. Industry pre-tax profits are expected to reach $1.4 billion this year.
Michael Burt, Director with The Conference Board of Canada commented, "The industry has managed to turn the tide on the downturn it has been experiencing since 2014, but the landscape is changing rapidly. New pipelines that provide access to tidewater will be crucial for Canada to develop new export markets given that Canada's biggest export market for oil, the United States, is ramping up its own production.
NEB issues its first ever report on Canadian refineries — April 11, 2018
The National Energy Board released its first ever report on Canadian refineries. It appears that the NEB is justifying why eastern Canada is continuing to import foreign oil
NEB says that only 30% of all Canadian crude oil produced is refined by Canadian refineries. The federal government institution says that most of Canada’s refineries are situated close to where there is an abundant source of crude oil. Most of the refineries were never configured to process heavy oil from the oil sands.
NEB report goes on to say:
Refineries in central and eastern Canada were constructed to process medium and light oils. This is the main reason that light oil is imported to these refineries.
Some Canadian refineries are now increasing to process Canadian crude oil, this includes heavy oil from the oilsands. Unfortunately, foreign oil imports will continue to supply requirements for central and eastern Canada.
Canada has 14 full refineries and two asphalt refineries with a total refining capacity of 295 thousand cubic meters per day or 1.9 million barrels per day.
Kinder Morgan fed up with B.C.’s provincial government intervention and halts construction — April 9, 2018
Kinder Morgan announced that it has suspended its work on the TransMountain pipeline and has given an ultimatum that all legal challenges must be resolved before May 31, 2018.
Kinder Morgan Chairman Steve Kean stated, “We will be judicious in our use of shareholder funds. In keeping with that commitment, we have determined that in the current environment, we will not put KML shareholders at risk on the remaining project spend."
Protestors on the west coast have received full support from the socialist provincial government of British Columbia. Despite federal government warning, the provincial B.C. government is supporting environmental groups such as Green Peace, and is threatening to stop the pipeline by court action.
Federal Natural Resources Minister Jim Carr issued a statement after the Kinder Morgan announcement. The federal minister stated that that he will continue to consider all available options in having the pipeline project built. Jim Carr went on to conclude, “This is no time for any provincial government to be reckless with the financial well being of Canadians and for the fabric of the federation itself."
National Energy Board approves TransMountain realignment through Chilliwack — April 6, 2018
National Energy Board has approved the Trans Mountain Pipeline ULC's variance application to alter the pipeline corridor of the Trans Mountain Expansion Project for 1.8 kilometers within the City of Chilliwack.
The NEB's decision to approve Trans Mountain's Chilliwack variance application now goes to the Federal Government. If approved, the detailed route approval process for the area in which this variance is located will be proceeding in the fall of 2018.
The NEB has approved nearly 66 per cent of the entire detailed route of the Trans Mountain Expansion Project. Detailed route hearings for the segment of the pipeline that include Chilliwack are scheduled for June and October, 2018.
ConocoPhillips selling its US oil assets and buying natural gas properties in the Montney — April 5, 2018
ConocoPhillips announced that it is selling off its oil assets in the US and buying natural gas properties in the Montney region of Alberta and British Columbia.
The Houston based company sold its Permian Basin properties in Texas for $250 million and is buying 35,000 acres of natural gas properties in northern Alberta and B.C. for $120 million.
The purchase adds to its already owned natural gas assets in Montney. It now owns 140,000 acres of natural gas properties in that region.
ConocoPhillips executive vice-president Al Hirshberg stated that the company is planning a 12-well test pad to trial stacking and spacing in the Montney this year. It was also stated that the company’s main focus will be on infrastructure access and profit margins.
Al Hirshberg commented, “The problem with these Montney wells is they're so great that if you want to do a spacing and stacking test where you have a handful of wells, you've got to build quite a bit of infrastructure just to handle all the production that comes gushing out."
Al Hirshberg went on to say, "We'll start construction of those facilities this year and finish the construction next year. That'll get us into the next round of really solid data on Montney that will guide our development work.”
Federal Regulator sets tighter regulations on pipelines — February 22, 2018
The National Energy Board announced tighter regulations on pipeline pipe and components. NEB is ordering that all regulated companies report any identified pipe or components that do not meet industry standards.
NEB stated that to date there have not been any reported accidents due to faulty pipe or components. The federal regulator is taking a proactive approach to insure public safety and prevent possible future incidents.
Trans Mountain Pipeline expansion cleared by NEB — February 16, 2018
Kinder Morgan Canada Limited received word yesterday from Canada’s energy regulator. The National Energy Board has issued three decisions that collectively provide Trans Mountain Pipeline ULC the ability to start construction on the Burnaby Mountain tunnel entrance, subject to other applicable federal, provincial and municipal permits.
The decisions enables Trans Mountain to begin clearing and grading work now at the entrance of the Burnaby Mountain tunnel, or portal, on its Westridge Marine Terminal property to avoid potential impacts on migratory birds that could use that area later in the spring.
Specifically, the NEB issued two detailed route hearing decisions that approved the pipeline route where the Burnaby Mountain tunnel will be constructed.
Trans Mountain also sought relief from the NEB on the applicability of the remaining pre-construction conditions to allow tunnel portal construction to commence within the Westridge Marine Terminal property. NEB has granted relief from all remaining pre-construction conditions specific to the tunnel portal at Westridge Marine Terminal.
Trans Mountain now has the NEB's regulatory approvals to begin work at Westridge portal for the Burnaby Mountain tunnel, but construction is not yet authorized along the rest of the pipeline route. Construction in those areas can begin once the necessary preconstruction conditions have been satisfied, and the applicable portions of the detailed route are approved.
Our most recent ‘Shouts & Toots’ from the Oil Patch — April 23, 2018
MEG Energy Corp. (MEG:TSX) announced on April 23rd that Bill McCaffrey will be retiring from his role as President & Chief Executive Officer as well as from the Board of Directors following the company's Annual General Meeting on May 31, 2018. Bill McCaffrey was served with the company for 19 years and was one of the co-founders.
Harvey Doerr, a member of MEG's Board of Directors, will act as interim CEO during the search process for a permanent replacement. Bill has agreed to act as an advisor to the corporation.
Bill McCaffrey, President & CEO commented, "We've seen the company grow from a concept to having significant resources in the ground and a technology leader with production capacity approaching 100,000 barrels per day. Since the decline in crude oil commodity prices in late 2014, we've worked hard at reinventing ourselves to be successful in this new environment. I'm happy to say the transformation has taken place and our path forward has never been more clear."
MEG Energy Corp. is a Calgary based and bitumen focused company with assets and operation in the southern Athabasca region of Alberta. Company has a market cap of $1.9 billion and approximately 294 million shares outstanding.
Oryx Petroleum Corporation Limited (OXC:TSX) announced on April 23rd that a wholly-owned subsidiary has entered into a Farmout Agreement with a subsidiary of Total S.A. providing for the transfer of the corporation's 30% participating interest in the Haute Mer B exploration license offshore Congo to the buyer or an affiliate.
Subject to closing, Oryx Petroleum's interests in Haute Mer B will be transferred for cash consideration of $8 million, payable at closing. The transfer will be deemed to be made with effect from January 1, 2018. Corporation expects the transaction to close before the end of June 2018.
Buyer has agreed to reimburse the corporation for costs incurred by it in relation to Haute Mer B between January 1, 2018 and the date of the Farmout Agreement and to carry the corporation's share of costs from the date of the Farmout Agreement to the closing of the transaction.
Oryx Petroleum is a Calgary based international oil exploration, development and production company focused in Africa and the Middle East. Company has a market cap of $104 million and approximately 458 million shares outstanding.
Renaissance Oil Corp. (ROE:TSX) announced on April 23rd that Eskandar Maleki has joined the board of directors of the Company. Mr. Maleki has a strong track record of building successful global oil and gas companies, most notably, Tullow Oil PLC. As an early strategic investor, board member and, for a time, the largest individual shareholder of Tullow, Mr. Maleki assisted the company's corporate development as it grew into a leading independent oil and gas exploration and production company.
Craig Steinke, Renaissance's Chief Executive Officer, commented, “Mr. Maleki, who became a major shareholder of Renaissance in 2017. His long-term view and proven skills in generating material value provides Renaissance with another valuable board member on our journey to become a major Mexican energy producer.”
Renaissance Oil Corp. is a Vancouver based oil and gas company with operations in Mexico. It has a market cap of $70 million and approximately 265 shares outstanding.
Tidewater Midstream and Infrastructure Ltd. (TWM:TSX) announced on April 23rd that it will hold its Annual General and Special Meeting of Shareholders to be held at Livingston Place Conference Centre, 222 3rd Avenue S.W., Calgary, Alberta T2P 0B4 on Monday, May 14th, 2018 at 2:30 p.m. (Calgary time).
Tidewater will release its 2018 first quarter financial results on Monday, May 14th, before the market opens. In conjunction with the earnings release, investors will have the opportunity to listen to Tidewater senior management review its 2018 first quarter results via conference call on Monday, May 14th at 11:00 a.m. (Calgary time).
Tidewater is a Calgary based diversified midstream and infrastructure company with a focus on the North American natural gas and natural gas liquids. Company has a market cap of $428 million and approximately 329 million shares outstanding.
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Advantage Oil & Gas Ltd. (AAV:TSX) announced as previously disclosed in our press release dated March 5, 2018, a production outage was scheduled at the company's 100% owned Glacier gas plant in April 2018 associated with expanding plant capacity to 400 mmcf/d and 6,800 bbls/d of liquids. This outage was scheduled to coincide with planned third party pipeline maintenance when AECO natural gas prices were anticipated to be negatively impacted.
During plant start-up operations, Advantage experienced an upset in the gas dehydration process that has been fully resolved but required a longer outage than originally scheduled. Additional work is still required to complete the Glacier gas plant expansion project and company expects to have the expanded plant fully commissioned during the second quarter as originally planned.
Advantage's second quarter 2018 production is estimated to be within the range of 205 to 215 mmcfe/d, lower than earlier estimates. Total per unit corporate cash costs will be higher during the second quarter at $1.35/mcfe to $1.45/mcfe due to lower production and are expected to decrease to approximately $1.15/mcfe as production is increased during the second half of 2018.
Advantage Oil & Gas Ltd. is a Calgary based company. It operates as an intermediate natural gas and liquids development and production corporation in the Montney resource play located in Western Canada. Advantage has a market cap of $722 million and approximately 186 million shares outstanding.
Alvopetro Energy Ltd. (ALV:TSX) announced on April 20th the finalization of the required unitization agreement (UOA) and the unit development plan for our Caburé natural gas field (the 197(2) and 198(A1) wells).
Imetame and Alvopetro have agreed to a comprehensive unit development plan. In 2018, two existing wells will be completed and tied-in to a low-pressure early production facility with an early production plateau of 150,000 cubic meters per day.
In 2019, three additional unit development wells will be drilled and a high-pressure field processing facility will be constructed. All unit wells will be completed and tied in by the end of 2019 with a planned gross field production plateau rate of 450,000 cubic meters per day.
Alvopetro Energy Ltd.'is a Calgary based independent oil and natural gas operator in Brazil. Company's strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil. Company has a market cap of $121 million and approximately 85 million shares outstanding.
Cequence Energy Ltd. ( CQE:TSX) announced that it has disposed of its remaining assets located in north eastern British Columbia effective April 1, 2018, for nominal consideration. Upon closing of this transaction, Cequence becomes a pure Alberta operating entity.
Field production estimates for the first quarter of 2018 have averaged approximately 6,900 boe/d of which 6,250 boe/d (17% liquids) was derived from its Alberta properties. Company's three gross, two net winter Dunvegan oil wells were completed and pipeline connected in the first quarter of 2018 with in-line production commencing via artificial lift at the end of March.
With spring break up conditions occurring, consistent run times for the new wells may be challenging. In order to accommodate the increased new oil volumes and achieve stable run times, base Dunvegan oil production has been temporarily curtailed.
Cequence is a Calgary based Canadian energy company involved in the acquisition, exploitation, exploration, development and production of natural gas and crude oil in western Canada. Company has a market cap of $13 million and approximately 246 million shares outstanding.
SDX Energy Inc. (SDX:TSX) announced on April 20th that a conventional natural gas discovery has been made at its LNB-1 exploration well on the Lalla Mimouna permit in Morocco (SDX 75 %). The LNB-1 well was drilled to a total depth of 1861 meters. The well is now being completed as a conventional gas producer. The drilling rig will now move to the LMS-1 exploration well in the Lalla Mimouna Nord permit, which will be the last well of the current drilling campaign.
SDX is an international oil and gas exploration, production and development company, headquartered in London, England. Company has a market cap of $221 million and approximately 205 million shares outstanding.
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Did you know?
Kinder Morgan marine terminal in Burnaby, British Columbia can accommodate oil tankers with 650,000 barrels of crude oil capacity. The limitations at present are the draft restrictions at the Second Narrows bridge. The storage faculties hold more than 1.6 million barrels of crude oil and consist of 13 jumbo storage tanks.
prices compiled and updated on a regular basis by Canadian Insight
$ / liter
WCS / WTI
Price Spread ↑ $18.85
April 23, 2018
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