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Updated on Thursday, August 17, 2017



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Act of ignorance and stupidity by the Quebec Liberal government — July 31, 2017

The Quebec government announced on July 28, 2017 that it is paying off oil and gas companies for their incurred expenses, if they abandon their activities on Anticosti Island. This clearly demonstrates the ignorance, hypocrisy and stupidity of the Quebec Liberal government. Under the leadership of Premier Philippe Couillard, the province is willing to use public funds to stop prosperity and employment.

Philippe Couillard is spending an additional $41.4 million as compensation to Corridor Resources, Junex Incorporated, Maurel & Prom and Petrolia Incorporated to stop and cease all exploration work in that specific region.

Here is the clincher, in 2014, Quebec Liberal government gave these same companies $114 million to evaluate, explore and develop hydrocarbons on Anticosti  Island. Now it is reported to be worried about environmental issues that this may create. Where was the Couillard government in 2014 on the environment? In total, Quebec government will blow $155.4 million of our money for failing to see a creation of their expensive blunder!

During the past year, the Trudeau federal Liberal government handed the province of Quebec $10 billion in equalization payments, a large sum stems from our western provinces’ resources. We have a right as Canadians to know and demand an explanation from Couillard for this costly act of misconduct.

Pipelines and marine tankers are the safest means of transporting oil — July 27, 2017

A study conducted by the Fraser Institute concludes that transporting crude oil  by pipelines is 2.5 times safer than by rail and marine tankers have established the safest record in the past 40 years.

Kenneth Green, senior director of the Fraser Institute and author of the study states, “ Evidence is clear  that building new pipelines and shipping oil by tanker is the safest and most environmentally responsible way to get Canadian oil to global market.”

The study finds that from 2004 to 2015 pipelines have a record which has excelled and is far superior to that of rail. During that period, pipelines have recorded a spill rate of 0.03 accidents per movement of 1 million barrels  of crude oil. In the same period,  railways have established a record of 0.08 accidents per 1 million barrels.

Marine records show that tankers have the most superior record of all. From 2004 to 2015, tankers have a spill rate of less than 0.01 per 1 million barrels of crude oil transported.

Kenneth Green went on to conclude, "Canadians will benefit greatly from increased oil exports, which should be transported in the safest way possible. That means building new pipelines to Canada's coasts and shipping oil by marine tanker around the world."

 

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

 

 

 

 

 

 

 

 

 

 

  

 

Our most recent ‘Shouts & Toots’  from the Oil Patch  — August 17, 2017

Alvopetro Energy Ltd. ( ALV:TSXV) announced an operational update, including multiple Notices of Discovery on Block 107, and our second quarter financial and operating results.

Company reported a sales revenue of $86 thousand in the second quarter and $257 thousand in the first half of 2017. Company reported a loss of $(814) thousand in the second quarter and a loss of $(1707) thousand in the first half of 2017.

Company reported average daily production decreased to 22 bopd, a 44% reduction from the first quarter of 2017, as the Bom Lugar producing well was offline for much of the quarter for a pump repair. Production from this well resumed in early June and, based on field estimates, average daily production increased to 35 bopd in July 2017.

In July 2017, Alvopetro received the environmental permit for the 177(A1) well on Block 177; company has now completed site construction and expect to spud the well before the end of August. The well is a shallow oil prospect targeting the Agua Grande and Sergi Formations with expected drilling costs of $0.7 million.

Alvopetro Energy Ltd. is a Calgary based independent exploration and production company with operations in Brazil. Company has a market cap of $19 million and 85 million shares outstanding.

Bellatrix Exploration Ltd. (BXE:TSX) announced that it has received notification from the New York Stock Exchange that the company has regained compliance with the NYSE's continued listing standard regarding the price of its common share. Bellatrix common share has exceeded US$1.00 for 30 consecutive trading days following implementation of the 5-for-1 share consolidation on July 6, 2017.

Bellatrix Exploration Ltd. is a Calgary based oil and gas company engaged in its operations in west central Alberta. Company has a market cap of $151 million and approximately 50 million shares outstanding.

Pan Orient Energy Corp. (POE:TSX) announced on August 17th its 2017 second quarter consolidated financial and operating results. Oil sales, net to Pan Orient's 50.01% equity interest in the Thailand Joint Venture, were 260 BOPD in the first half of 2017, with funds flow from operations of $1.9 million ($40.65 per barrel). Total corporate funds flow used in operations in the first half of 2017 was $0.4 million and the net loss attributable to common shareholders was $2.7 million.

For the second quarter of 2017, the company recorded total corporate funds flow used in operations, which includes the economic results of the 50.01% interest in the Thailand joint venture, of $0.2 million ($0.00 loss per share), which is consistent with the first quarter of 2017.Net loss attributable to common shareholders for the second quarter of 2017 of $1.2 million ($0.02 loss per share) compared with $1.5 million ($0.03 loss per share) in the first quarter of 2017 and $1.6 million ($0.03 loss per share) in the second quarter of 2016.

President and CEO Jeff Chisholm commented, "In late July we commenced the long anticipated drilling of the AYU-1X exploration well at the East Jabung PSC onshore Sumatra, Indonesia and anticipate initial results on or about August 31st. In addition to activities in Indonesia, construction of the Thailand L53AC-C1 exploration well site has commenced with drilling expected in October 2017. Pan Orient has maintained a strong cash position with limited future capital commitments, providing strength and flexibility to deal with all future outcomes."

Pan Orient is a Calgary, Alberta based oil and gas exploration and production company with operations currently located onshore Thailand, Indonesia and in Western Canada. Company has a market cap of $96 million and approximately 55 million shares outstanding.

Paramount Resources Ltd. ( POU:TSX) announced that it has completed its previously announced acquisition of Apache Canada Ltd. That company has been renamed Paramount Resources (ACL) Ltd.

A special meeting of shareholders of Paramount and Trilogy Energy Corp. will be held on September 8, 2017. Companies will seek approval of their merger.

Paramount is an independent Calgary base energy company that explores and develops unconventional and conventional petroleum and natural gas prospects in Alberta and British Columbia. Company has a market cap of $2.2 billion and approximately 106 million shares outstanding.

Pembina Pipeline Corporation (PPL:TSX) announced that it has closed its previously announced offering of $600 million of senior unsecured medium-term notes. The offering was conducted in two tranches consisting of $350 million principal amount through the re-opening of the company's 2.99% medium-term notes, series 8, due January 22, 2024 and $250 million principal amount through the re-opening of the company's 4.74% medium-term notes, series 9, due January 21, 2047.

The net proceeds will be used to repay short-term indebtedness of the company under its credit facilities, as well as to fund Pembina's capital program and for other general corporate purposes.

Pembina Pipeline Corporation is a Calgary based transportation and midstream service provider that has been serving North America's energy industry for over 60 years. Pembina owns and operates an integrated system of pipelines that transport various products derived from natural gas and hydrocarbon liquids produced primarily in western Canada. Company has a market cap of $16 billion and approximately 403 million shares outstanding.

Sterling Resources Ltd. (SLG:TSX) announced its interim operating and financial results for the three and six month periods ended June 30, 2017. For the three month period ended June 30, 2017, the Company recorded a net loss of $0.6 million ($0.01 per weighted average common share) for continued operations and a loss of $78.1 million ($0.53 per weighted average common share) for discontinued operations.

For the six month period ended June 30, 2017, the Company recorded a net loss of $6.3 million ($0.04 per weighted average common share) for continued operations and a loss of $242.9 million ($1.65 per weighted average common share) for discontinued operations compared with a net loss of $1.5 million ($0.00 per weighted average common share) for continued operations and a loss of $25.3 million ($0.01 per weighted average common share) for discontinued operations in the six month period ended June 30, 2016.

Breagh sales of gas production were approximately 2.4 billion cubic feet at an average realized gas price of 42.5 pence per therm during the six month period ended June 30, 2017, compared to 4.1 billion cubic feet at an average realized gas price of 30.6 pence per therm for the six month period ended June 30, 2016. Production was recorded until May 16, 2017, the transaction completion date.

Sterling Resources Ltd. is a Calgary based international oil and gas company in the winding-up process. Company has a market cap of $19.9 million and approximately 147 million shares outstanding.

Strategic Oil & Gas Ltd (SOG:TSXV) announced its second quarter results. Company reported that funds from operations increased 26% to $3.0 million from $2.4 million for the first quarter of 2017. Oil and gas sales reached $10.3 million and company reported a net loss of $(7) million.

Company drilled two additional horizontal wells as a part of the summer drilling program. The two new wells are expected to be fracture stimulated in September. It also fracked Muskeg well 15-34 in the third quarter. Initial results are encouraging; the well will be tied in and placed on production in August 2017.

Average daily production increased 46% from the second quarter of 2016, and 17% from the first quarter of 2017 to 2,661 boe/d for the three months ended June 30, 2017, primarily due to new production from the winter Muskeg drilling program. Average daily production increased 30% from 1,899 boe/d for the six months ended June 30, 2016 to 2,468 boe/d the six months ended June 30, 2017.

Strategic is a Calgary based oil and gas company committed to becoming a premier northern oil and gas operator by exploiting its light oil assets primarily in northern Alberta. Company has a market cap of $104 million and approximately 46 million shares outstanding.

 

 

More news on Oilpatch Review

 

Today’s Inspirations

“It is hard to express love with a clenched fist.”

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?

 

The discovery of horizontal drilling is perhaps one of the single major achievements in oil and natural gas recovery. The production factor can be enhanced by as much as 15 or 20 times over conventional vertical wells.

 

prices compiled and updated on a regular basis by Canadian Insight

City

 

Victoria

Vancouver

Calgary

Edmonton

Saskatoon

Regina

Brandon

Winnipeg

Hamilton

Ottawa

Toronto

Montreal

Halifax

Moncton

St. John’s

 

 

$ / liter

 

1.219

1.299

0.929

0.939

0.949

0.909

0.899

0.889

1.049

0.999

1.079

1.149

1.029

1.049

1.179

 

Trend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     WCS  / WTI

 Price Spread  -10.05

  August 17, 2017

Text Box: Cross Canada  Gasoline Prices
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