Canadian Insight

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Updated on Tuesday, January 22, 2019

Alberta government to legislate crude oil production cuts — December 3, 2018

Premier Rachel Notley announced on Sunday that her NDP government will introduce legislation which will make mandatory crude oil production cuts in Alberta. The legislation will take effect on January 1, 2019.

Alberta’s premier stated that her government intends to legislate a production cut of 8.7%, or approximately 325,000 barrels per day.  Once the oil glut is down (possibly by spring), production cuts will drop to approximately 95,000 barrels per day.

Last week, Premier Notley announced that her government intends to purchase 80 locomotives and 7000 tanker cars to move crude oil to markets. In the announcement, the premier estimated that this investment should move 120,000 barrels of crude oil daily.

The federal government appears to be in favor of the two proposals but has not offered any financial help in Notley’s endeavor, or help oil industry through the crisis.

WCS crude oil prices have hit all time lows in recent weeks. The Alberta government is hoping to end the oil glut in her province which would also boast the oil prices in western Canada.

 

Imperial Oil Ltd. about to begin construction of its Aspen Oilsands project — Nov. 7, 2018

Imperial Oil announced today that it will go ahead with its Aspen Oilsands project northeast of Fort McMurray. Construction will begin immediately and be completed by 2022.

The oil sands project is estimated to cost $2.6 billion and is expected to employ 700 jobs during the peak of its construction.

Imperial Oil stated that it will be employing new technology in its operations. It will use 25% less water in its operations compared to traditional steam assisted means.

The project when completed will produce  75,000 barrels of crude oil daily. It will have the capability to expand to double its initial production volumes.

 

National Energy Board releases schedule of Trans Mountain Expansion hearings and summation  — Oct. 15, 2018

National Energy Board released a hearing schedule  for Trans Mountain; this is as required by Federal authorities for its reconsideration of aspects of the Trans Mountain Expansion Project pertaining to project related marine shipping.

The hearings will start this month and end in December. Oral summary arguments will be presented in January, 2019. Complete process and issue resulting report will come no later than February 22, 2019.

 

British Columbia’s carbon tax squeezing the profitability out of natural gas in that province — October 11, 2018

Doug Suttles, CEO of EnCana  Corporation, stated that British Columbia’s carbon tax is costing his company $100,000 per each natural gas well drilled in that province. He went on to say that carbon taxes are making it unprofitable to compete with USA

Suttles went on to say that natural gas is a very clean fuel which produces very low carbon emission, and yet, it is not being credited for its benefits but instead taxed. Natural gas is used extensively to produce electricity worldwide.

Doug Suttles went on to conclude that Canada needs stronger voice in this country to steer the its direction in global energy leadership.

 

Federal government of Canada freezes all offshore Arctic oil and gas drilling and development— October 4, 2018

Minister of Intergovernmental and Northern Affairs and Internal Trade, Dominic LeBlanc,  announced Canada's next steps on future Arctic offshore oil and gas development for current license holders. Government of Canada will freeze the terms of the existing licenses in the Arctic offshore.

The federal government will work with Northern partners to co-develop the scope and governance framework for a science-based, life-cycle impact assessment review every five years that takes into account marine and climate change science.

LeBlanc stated that the federal government will negotiate a Beaufort Sea oil and gas co-management and revenue-sharing agreement with the governments of the Northwest Territories and Yukon, and the Inuvialuit Regional Corporation.

Two years ago, Prime Minister Justin Trudeau stated that his government would engage in a one-year consultation process with the current license holders, and a moratorium on new oil and gas exploration licenses in the Arctic, renewable every five years based on the best available science.

 

LNG Canada Project participants reach a final investment decision — October 2, 2018

Petronas and its five joint partners have reached a final investment decision on a major liquefied natural gas (LNG) project in Kitimat, British Columbia.

The LNG export facility includes the design, construction and operation of a natural gas liquefaction plant and facilities for the storage and export of LNG, including marine facilities. Included with the project is  a 670 kilometer pipeline delivering natural gas from the northeast corner of the province.

LNG Canada project will initially consist of two LNG liquefaction processing units with a total capacity of approximately 14 million tonnes per year.  The project has the potential to expand to four times the initial production capacity. The total project is appraised to cost $40 billion.

Eagle Spirit Energy Holdings waiting and willing to construct a northern route pipeline — Sept. 27, 2018

An all indigenous group of investors, Eagle Spirit Energy Holdings, wants the federal government to withdraw legislation which would prohibit oil tankers from using the northern B.C. coastal route.

Eagle Spirit Energy stated that it has a plan to construct a  quadruple 48 inch pipeline from Alberta through northern British Columbia. Two of the pipelines would carry crude oil and the other two would transport natural gas to the west coast.

The leader of the investment group, Calvin Helin stated that the proposed pipeline would be far more advantageous and far more environmentally friendly than the failed Northern Gateway  Pipeline, as the proposed pipeline would not carry any condensate.

Helin went on to conclude that shipping crude oil through Prince Rupert is a safer route and National Energy Board would more likely give approval to. This project would benefit and encourage development of Canada’s natural gas, LNG industry and Alberta’s oil sands.

 

Teck Resources planning a $20.6 billion oil sands mining operation in northern Alberta — Sept. 25, 2018

Public hearings have begun for a proposed oil sands operation near Fort McMurray, in northeastern Alberta. Vancouver based Teck Resources Limited wants to construct a $20.6 billion bitumen mining operation.

The megaproject would be built in two phases. In the first phase, operations would produce 170,000 barrels of crude oil per day. In the next phase, an additional 90,000 barrels of crude oil would be added.

Teck Resources wants construction to start while the industry is still in a slowdown and costs remain low. Teck intends to have the first phase in operation by 2026.

 

Government orders NEB to reconsider recommendations for Trans Mountain Pipeline approval — Sept. 21, 2018

Federal Natural Resources Minister Amarjeet Sohi that he has ordered the National Energy Board to reconsider its recommendations and take into the account the effects of  project related marine shipping.

Honorable Amarjeet Sohi stated, "Today, we have instructed the National Energy Board to reconsider its recommendations, taking into account the effects of project-related marine shipping. The NEB will be required to complete a thorough and prompt review and deliver its report within 22 weeks."

He went on to conclude, “"Today's announcement represents one important step towards addressing issues raised by the Federal Court of Appeal while continuing to deliver the highest levels of marine protection that Canadians expect."

 

 

 

Our most recent ‘Shouts & Toots’  from the Oil Patch  — January 22, 2019

Enbridge Inc. (ENB:TSX) announced on February 22nd that its wholly owned subsidiaries, Enbridge Energy Partners, L.P. and Spectra Energy Partners, LP , received the requisite consents with respect to, and have completed, the previously announced consent solicitations relating to the series of notes.

The supplemental indentures are to be executed in connection with the completion of the consent solicitations will bind all holders of the Consenting EEP and SEP Notes.

For more information see the full news release on company's website: http://www.enbridge.com .

Enbridge Inc. is a Calgary based energy generation, distribution, and transportation company in the U.S. and Canada. Its pipeline network consists of the Canadian Mainline system, regional oil sands pipelines, and natural gas pipelines. Company has a market cap of 83 million and approximately 1.9 million shares outstanding.

MEG Energy Corp. (MEG:TSX) announced on February 22nd its 2019 capital investment plan and operational guidance. Company reported a base capital budget of $200 million, to be fully funded with expected 2019 adjusted funds flow from operations, designed to sustain production capability at 100,000 barrels per day in 2019 and 2020, as well as fund future growth projects beyond 2019.

Derek Evans, President and Chief Executive Officer stated, "In light of the current environment, we have pulled back spending on the Phase 2B Brownfield Expansion project. However, as the temporary production curtailment eases and as pricing stabilizes, we have the ability to layer in additional capital to complete the Brownfield project to grow production to 113,000 bpd. MEG's 2019 budget supports our strategy to profitably grow production and adjusted funds flow from operations."

A conference call will be held to review the 2019 capital budget and outlook at 7:30 a.m. Mountain Time (9:30 a.m. Eastern Time) on Tuesday, January 22, 2019.

MEG Energy Corp. is a Calgary based company focused on sustainable in situ oil sands development and production in the southern Athabasca oil sands region of Alberta. Company has a market cap of $1.6 billion and approximately 297 million shares outstanding.

Razor Energy Corp. (RZE:TSXV) announced on January 22nd that its Board of Directors has approved a capital budget of $13.5 million for fiscal 2019 that allows Razor to maintain production levels while continuing to pay a sustainable dividend.

Company continues to address operating costs through heightened field efficiencies and capital investment. In 2019, Razor will complete the oilfield information system upgrade program, which has already provided immediate enhancements impacting operational awareness, preventative maintenance, personnel safety, and environmental protection through actionable and predictive analytics.

Razor is a Calgary based oil and gas development and production company focused on acquiring, and subsequently enhancing, producing oil and gas properties primarily in Alberta. Company has a market cap of $37 million and approximately 18 million shares outstanding.

TransCanada Corporation (TRP:TSX). National Energy Board announced today that it has approved TransCanada's Keystone Pipeline GP Ltd. request to begin winter clearing work on the North Spread of its Keystone XL Project.

Keystone has now satisfied the regulatory requirements for winter 2019 clearing of trees and shrubs along the pipeline route's north section, starting at Hardisty, Alberta, as indicated in the NEB's letter to the company.

NEB's approval applies to the North Spread of the Project only. Clearing activities in other areas of the Project, other construction activities, and any activity during the restricted activity periods for migratory birds are excluded from this approval.

Further pipeline construction would be subject to NEB approval of other condition compliance submissions.

TransCanada Corporation is a Calgary based energy transporter company. It owns and operates pipelines and power generation assets in Canada, the United States, and Mexico. Company has a market cap of $48 billion and approximately 918 million shares outstanding.

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Enerplus Corporation (ERF:TSX) announced on January 21st that a cash dividend in the amount of CDN$0.01 per share will be payable on February 15, 2019 to all shareholders of record at the close of business on January 31, 2019. The ex-dividend date for this payment is January 30, 2019. Dividends paid by Enerplus are considered an "eligible dividend" for Canadian tax purposes.

Enerplus is a Calgary based exploration and production company focused on activities in North American. Company has a market cap of $2.9 billion and approximately 239 million shares outstanding.

Point Loma Resources Ltd. (PLX:TSXV) announced on January 21st an operations update. Company reported production test results for the Wizard Lake HZ 16-17-48-27W4 Rex oil pool discovery.

Final pumping rate for the Rex horizontal well over last 24 hours of the test period was 305 barrels per dayof oil (17 API) and 340 barrels of oil equivalent per day. Corporation determined that commercial production has been established and has ended the test period. Plans are underway to tie-in and conserve solution gas associated with the well and install production facilities.

Point Loma Resources Ltd. is a Calgary based oil and gas exploration and development company focused on conventional and unconventional oil and gas reservoirs in west central Alberta. Company has a market cap of $13.9 million and approximately 63 million shares outstanding.

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Emerald Bay Energy Inc. (EBY:TSX) announced that pumping operations commenced today on the Floyd 1 and Floyd 2 wells at the Company's F. Poentiz lease near LaVernia, Texas. The wells were fracture stimulated on December 28th and 29th, and the pump jacks were installed earlier this week. The Floyd wells are completed in the Navarro formation at approximately 1000' deep, and the lease has an additional 14-18 drilling locations for future development.

Floyd 1 and Floyd 2 are the first two wells drilled in partnership with HugoCellR Ltd., whereby HugoCellR pays 100% of the costs to drill the wells to earn a 75% interest. As the operating partner, Emerald Bay earns a 25% interest in the wells at no cost to the company. Partnerships like the HugoCellR Ltd. partnership represent a unique opportunity to grow at no risk or cost to the company.

Emerald Bay Energy Inc. is a Calgary based energy company with oil producing properties in southwest Texas as well as non-operated oil and natural gas interests in Central Alberta. Company has a market cap of $4.2 million and approximately 277 million shares outstanding.

MEG Energy Corp. (MEG:TSX) announced that the takeover offer for MEG did not meet Husky's minimum tender conditions, due to insufficient shareholder support.

Derek Evans, President and Chief Executive Officer commented, "MEG Shareholders' rejection of the Husky offer confirms that the bid did not fully recognize the quality and long-term potential of MEG. During this process we had the opportunity to meaningfully engage with a significant number of our shareholders. We appreciate their ongoing support and feedback on the strengths of, and opportunities for the company. MEG will be providing an update on its 2019 business plan in the near-future. We remain focused on executing our strategic vision to unlock value from our world class resource on behalf of our shareholders."

MEG Energy Corp. is a Calgary based company focused on sustainable in situ oil sands development and production in the southern Athabasca oil sands region of Alberta. Company has a market cap of $1.6 billion and approximately 297 million shares outstanding.

 

More news on Oilpatch Review

Quote of the day

Sheryl Crow, “I don't spend a lot of time thinking about regrets because there's nothing I can do”.

 

Did you know?

In 1858, James Miller Williams drilled the first successful oil well in Canada at Oil Springs, Ontario. He struck oil at 66 feet. It was a year later that Edwin Drake drilled the first oil well in the U.S. at Titusville, Pennsylvania. Drake struck oil at 69 feet. By 1864, there were twenty-seven oil refineries operating in Ontario, twenty near Oil Springs and seven in Petrolia.

 

prices compiled and updated on a regular basis by Canadian Insight

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1.129

 

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     WCS  / WTI

 Price Spread $18.75

  January 22, 2019

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