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Updated on Tuesday, June 27, 2017
Canadian oil sands expansion will drive the need for more pipelines — June 15, 2017
A study conducted by Canadian Association of Petroleum Producers concludes that oil sands expansion will drive the need for more pipelines in western Canada.
CAPP study estimates that Canadian crude oil output will increase by 53% by 2030. Oil production will rise from the present 3.85 million barrels per day to 5.1 million barrels per day in 2030.
The largest oil production increase will come from the oil sands. CAPP estimates that conventional oil production will remain flat but bitumen production levels will rise by 1.3 million barrels per day in the next 12 years.
Present pipeline capacity can only handle 4.0 million barrels of crude oil per day. An additional 1.5 million barrels per day capacity must be added to insure oil output growth is not restrained.
Federal, provincial and continental climate change policies and potential protectionist uncertainties present some of the biggest challenges.
CAPP disagrees with new federal environment policies — May 26, 2017
Canadian Association of Petroleum Producers are once again in disagreement with the Trudeau government’s environment policies. CAPP said it does not see the extra need to tighten restrictions on methane and volatile organic compound emissions in the oil and natural gas sector.
CAPP stated that Canadian oil and gas producers are already global leaders in methane emissions. Both British Columbia and Alberta have strict regulations on flaring, venting and fugitive emissions from upstream facilities that serve as models of success for other jurisdictions domestically and internationally.
Terry Abe, executive vice president of CAPP, commented, "Canada's oil and natural gas industry has been outperforming other jurisdictions such as North Dakota, Colorado and California for methane emissions reductions. We are confident that we will reduce emissions by 45 per cent from 2012 levels by 2025."
Quebecers prefer western Canadian oil over foreign imports — May 17, 2017
A poll conduct last month by ‘Montreal Economic Institute’ found that two-thirds of Quebecers are in favor of western Canadian crude oil and believe that pipelines are the safest means to transport oil.
Over 1100 Quebecers were interviewed from various regions of Quebec. The general consensus is that the people of Quebec would rather have domestically produced crude oil and see economic benefits and spinoffs here in Canada.
The Montreal based institute concluded that politicians that oppose the construction of oil pipelines do not represent the preferences and needs of the people. It is time they stepped away from opposing and prioritized the construction of oil pipelines.
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
Global oil importers prefer Canadian oil and natural gas — June 7, 2017
A recent global survey conduct by Ispos, on behalf of Canadian Association Of Petroleum Producers, shows many global oil importers would prefer to import Canadian crude oil and natural gas.
The poll was conducted in 32 countries and interviewed 22,000 respondents. Results were that 54% of the global respondents remained neutral because they didn’t know enough information about Canadian oil industry. Over 31% of the global respondents from 11 countries stated that they preferred Canadian oil and natural gas.
The top five countries with the greatest interest in importing Canadian oil and natural gas included Israel, the U.S., Algeria, India, and South Africa.
Of the people surveyed globally, more than half believed oil and natural gas made their lives better. The industry was also seen as having a positive economic impact on communities, strong financial performance, producing high quality products, and supporting socio-economic development.
Our most recent ‘Shouts & Toots’ from the Oil Patch — June 27, 2017
Bellatrix Exploration Ltd. (BXE:TSX) announced on June 27th that it has completed the previously announced sale of certain non-core assets in the Strachan area of Alberta. Concurrent with the closing of the Strachan asset sale, the borrowing base under the company's syndicated revolving credit facilities was reconfirmed at $120 million, unchanged from prior levels, providing the company with approximately $105 million of available liquidity post-closing.
Other than approximately $15 million outstanding on the Credit Facilities, the Bellatrix has no debt maturities until 2020 and 2021. Bellatrix's Board of Directors has approved a net capital expenditure budget of $120 million in 2017, representing an increase of $15 million.
Bellatrix Exploration Ltd. is a Calgary based oil and gas company engaged in the exploration for, and the acquisition, development and production of oil and natural gas reserves in the provinces of Alberta, British Columbia and Saskatchewan. Company has a market cap of $182.5 million and approximately 247 million shares outstanding.
Crescent Point Energy Corp. (CPG:TSX) announced that it has successfully renewed its unsecured, covenant-based credit facilities totaling $3.6 billion, with a maturity date extension to June 10, 2020. Crescent Point's credit facilities provide the Company with significant financial liquidity. As at June 26, 2017, Crescent Point is estimated to have an unutilized credit capacity of approximately $1.5 billion with no material near-term debt maturities.
Under the terms of the syndicated unsecured credit facility, the Company maintains the ability to increase its credit capacity by up to $500 million under certain conditions.
Scott Saxberg, president and CEO of Crescent Point commented, “The renewal of our credit capacity reflects the strong economics within our high-quality asset base. This financial flexibility is especially important in the current oil price environment.”
"Operationally, Crescent Point continues to execute and remains ahead of its production targets," said Saxberg. "In Uinta, we are generating strong drilling results and are excited about advancing the horizontal development of this resource play."
Crescent Point is one of Canada's largest light and medium oil producers, based in Calgary, Alberta. Company is focused on growing its significant resource base in the Williston Basin, southwest Saskatchewan and the Uinta Basin in Utah. Crescent Point has market cap of $5.6 billion and approximately 545 million shares outstanding.
Crius Energy Trust (KWH.UN:TSX) announced on June 27th that it has closed in full the Over-Allotment Option granted to the underwriters, resulting in the issuance of 1,683,675 additional subscription receipts of the Trustat a price of C$9.80 per additional subscription receipt for total additional gross proceeds of C$16,500,015.
The gross proceeds from the Offering and the Over-Allotment Option will be placed in escrow and invested in one or more interest-bearing trust accounts.
Crius Energy Trust is Toronto based and currently sells energy products in 16 states and the District of Columbia with plans to continue expanding its geographic reach. Trust has a market cap of $420 million and approximately 40 million shares outstanding.
Enbridge Inc. (ENB:TSX) announced on June 27th the commencement of cash tender offers by its wholly-owned subsidiary, Spectra Energy Capital, LLC (Spectra Capital), for the debt securities of Spectra Capital. The tender offers consist of offers to purchase for cash securities issued by Spectra Capital. All Tender Offer will expire at 5:00 p.m. New York City time on July 6, 2017.
More information is available on the company's website: www.enbridge.com.
Enbridge Inc. is a Calgary based energy infrastructure company with strategic business platforms that include an extensive network of crude oil, liquids and natural gas pipelines, regulated natural gas distribution utilities and renewable power generation. Company has a market cap of $86 billion and approximately 1.6 billion shares outstanding.
Marquee Energy Ltd. (MQX:TSX) announced that all resolutions were approved by the company's shareholders at its Annual and Special Meeting held June 26, 2017 in Calgary, Alberta. The shareholders elected the full slate of directors including Messrs., Dr. William J.F. Roach, Adrian H. Goodisman, Stephen J. Griggs, Paul Moase, Leonard J. Sokolow, Richard Thompson and Robert J. Waters.
At the end of the meeting, Mr. Richard Thompson, President & CEO provided a short presentation on the Company's operations. The presentation is available on Marquee's website at www.marquee-energy.com.
Marquee Energy is a Calgary based energy company focused on high rate of return light oil development and production. Marquee Has a market cap of $26 million and approximately 426 million shares outstanding.
Pason Systems Inc. ( PSI:TSX) announced on June 27th that it intends to release its 2017 second quarter results after the markets close on Wednesday, August 9, 2017. An archived audio webcast of the conference call will also be available on Pason's website at www.pason.com.
Pason Systems Inc. is a Calgary based global provider of specialized data management systems for drilling rigs. Company's solutions include data acquisition, wellsite reporting, remote communications, web-based information management, and analytics, which enable collaboration between the rig and the office. Company has a market cap of $1.6 billion and approximately 85 million shares outstanding.
Penn West Petroleum Limited (PWT:TSX) announced on June 27th that its shareholders have approved the name change to Obsidian Energy Ltd., effective immediately. In conjunction with its name change, the stock symbol will be replaced with "OBE" on both the Toronto Stock Exchange.
In addition to the name change, shareholders approved all resolutions outlined in the Notice of 2017 Annual and Special Meeting and Management Proxy Circular dated April 30, 2017 , which is available on SEDAR at www.sedar.com , or company website at www.pennwest.com .
Obsidian Energy is a Calgary based intermediate-sized oil and gas producer with a well-balanced portfolio of high-quality assets based in Western Canada. Obsidian Energy has a market cap of $882 million and approximately 504 million shares outstanding.
Select Sands Corp. (SNS:TSXV) announced on June 27th an operations update. Company reported that it now anticipates second quarter 2017 total Frac/Industrial sand sales volumes to be at least twice the 22,427 tons sold and shipped during the first quarter. For the 2017 second quarter, the Company currently anticipates the blended average selling price for Frac/Industrial sand will be approximately 13% higher than the 2017 first quarter.
Zig Vitols, President and Chief Executive Officer, commented, "I have been extremely pleased with the progress we have made since starting commercial production early this year. During the second quarter, our dedicated management team and operational personnel have continued to do an outstanding job of ensuring that we safely produce premium quality sand. We are currently focused on enhancing our logistics by working closely with customers to secure additional rail cars. The build-out of our delivery capability is expected to allow us to utilize our maximum production rate late in the second half of 2017."
Select Sands Corp. is a Vancouver based industrial Silica Product company developing its 100% owned, 520-acre Northern White, Tier-1, silica sands project located in Arkansas, U.S.A. Select Sands has a market cap of $68 million and approximately 76 million shares outstanding.
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Did you know?
The town of Virden is referred to as the oil capitol of Manitoba. In 1951, the town had 16 legal subdivisions that were drilled and successfully produced oil. Pump jacks and oil rigs operated in the town limits amongst the town parks and school playgrounds. These wells produced a quarter of a million barrels of oil in a time span of 14 months in the early fifties. The town population doubled in two years. Virden sits on one of Manitoba’s largest oil fields named after the town.
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$ / liter
WCS / WTI
Price Spread -11.10
June 27, 2017
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