Category Archives: oil
What’s Behind Canada’s Oil Driller Exodus?
By Tsvetana Paraskova – Jan 31, 2018, 12:00 PM CST
Canadian drillers are moving rigs south to the U.S. to seize more profitable opportunities. But it’s not just the bright prospects of the Permian that is attracting Canadian companies—moving south of the border has more to do with favorable tax rates and more takeaway capacity and market access opportunities than there is in Canada.
Last week, Calgary-based AKITA Drilling said it would be expanding in the Permian and has contracted a rig with a major U.S. operator that has a significant presence in the Permian. AKITA Drilling has redeployed the rig from the Western Canadian natural gas basin, where it faced limited opportunities to work, the company said.
Another Calgary-based firm, Trinidad Drilling, said on Monday that it would be moving eight rigs to the Permian to meet increased customer demand, redeploying idle rigs from its existing global operations with weaker demand, including Canada.
Trinidad Drilling’s CEO Brent Conway told The Canadian Press in an interview that he would rather avoid the move if he could find profitable drilling work in Canada. The rigs moved to the U.S. would be crewed by U.S. workers, as Canadian crews likely won’t move with the rigs, the manager added.
“What’s happening in the U.S.? They’re lowering taxes, they’re building pipelines and they’re starting to export oil,” Conway told The Canadian Press, adding that in Canada, taxes have been raised, pipelines are not getting built, and there isn’t much regulatory certainty.
His sentiment is shared by AKITA’s chief executive Karl Ruud, who said that the U.S. offers more attractive prospects with more favorable tax rates and regulatory system.
Last November, the Canadian Association of Oilwell Drilling Contractors (CAODC) said in its 2018 Drilling Forecast that it expected Canadian wells drilled this year to number 6,138, up by just 107 from 2017.
“One of the Canadian oil and gas industry’s biggest hurdles continues to be lack of market access and regulatory stability,” CAODC said.
“Market access and a predictable regulatory environment are the most significant factors in creating an environment that will allow our industry to deliver stronger results in the coming years,” CAODC President Mark Scholz said back then.
Speaking to The Canadian Press, Scholz said on Tuesday that the lack of market access continued to be one of the biggest obstacles to Canadian producers to get their barrels to market at higher prices. Western Canadian Select (WCS) is currently trailing WTI prices by a discount of more than $30 a barrel.
By Tsvetana Paraskova for Oilprice.com
Keystone XL Pipeline Gets Enough Shipper Pledges to Proceed
By Meenal Vamburkar and Kevin Orland
January 18, 2018, 7:18 AM CST Updated on January 18, 2018, 10:46 AM CST
TransCanada Corp. has enough customer interest to go forward with the Keystone XL oil pipeline, if the company decides to build it.
The Calgary-based company now has “approximately 500,000 barrels per day of firm, 20-year commitments,” according to a statement on Thursday. The pipeline operator will continue to secure additional volumes.
The announcement marks yet another hurdle overcome for the project, first proposed in 2008. In November, TransCanada received state approval in Nebraska to construct the conduit there along an alternate route, a decision that may spur added legal action by foes who say the new path hasn’t received the same review as the original plan.
“We view the firm commitments as positive for the project,” David Galison, an analyst at Cannacord Genuity Corp., said in a note. “However, the project still has many hurdles to overcome in order for construction to begin.”
TransCanada hasn’t yet officially green-lighted the project and is still working toward a final investment decision, spokesman Terry Cunha said in an emailed statement. The company said in its statement it is working with landowners along the new path to obtain the necessary easements. Construction preparation has begun, with primary work potentially coming in 2019.
Keystone XL would be a victory for Canadian oil sands producers who are facing transportation bottlenecks getting their crude to market. The pipeline would ship 830,000 barrels of crude a day from Hardisty, Alberta, through Montana and South Dakota to Nebraska, where it would connect to TransCanada’s existing Keystone system that carries crude to the U.S. Gulf Coast hub of refineries and export terminals.
“Over the last 12 months, the Keystone XL project has achieved several milestones that move us significantly closer to constructing this critical energy infrastructure for North America,” Russ Girling, TransCanada’s chief executive officer, said in the statement.
Keystone XL drew fierce opposition from environmentalists concerned about climate change and landowners along the path in Nebraska. Former President Barack Obama rejected TransCanada’s application in 2015, saying that it wasn’t in the national interest. That decision was reversed by the Trump administration.
TransCanada shares were little changed on Thursday’s news, down 0.2 percent to C$59.71 at 11:28 a.m. in Toronto. The stock eked out a 1.1 percent gain in 2017.
— With assistance by Debarati Roy
New U.S. refining demand expected to spur Canadian heavy oil demand in 2018
By The Canadian Press
Jan. 4, 2018
CALGARY — A new forecast from Deloitte says demand for Canadian heavy oil will likely rise this year as shrinking volumes from Mexico and Venezuela open new opportunities to sell to U.S. refineries.
The accounting and consulting firm says the demand surge will work to overcome recently steeper price discounts received by Canadian producers due to pipeline outages that have stretched tight export transportation capacity.
The report forecasts the benchmark West Texas Intermediate oil price will average about US$55 per barrel in 2018, up from US$50.84 in 2017, supported by an anticipated renewal of production limits by the Organization of Petroleum Exporting Countries.
It calculates that Western Canada Select, a blend of northern Alberta bitumen and lighter oil, will average C$46.40 per barrel this year.
Deloitte says the United States is increasing its light oil production, but it is also boosting oil exports to markets such as Asia.
It says Canada’s total bitumen production may for the first time exceed three million barrels per day this year as new projects like Suncor’s Fort Hills oilsands mine and smaller expansions at steam-driven oilsands operations come on line.
“Canadian oil prices lagged behind those in the United States during 2017 largely due to increased U.S. production and possible transportation difficulties getting Canadian oil into that market,” says Andrew Botterill, Deloitte’s oil and gas leader.
“But if Canada can take advantage of declining Venezuelan and Mexican exports to the U.S. and access some of its heavy oil refining capacity, the price differential between WCS and WTI should at least be moderate compared to the historical differential.”
Saskatchewan’s winter drilling season kicks off with a bang
60 rigs hit the frozen ground running in the best opening week in at least three years
BRIAN ZINCHUK / PIPELINE NEWS
JANUARY 4, 2018 09:19 PM
Crescent Point Energy had nine rigs working in close proximity southwest of Torquay. Photo By Rig Locator
Estevan – Bang! Sixty rigs kicked off right at the start of the year.
With oil over US$60 WTI in the first week of the New Year, drilling in Saskatchewan took off. It takes a few days to get most rigs moving, but right off the hop, they’ve been firing up. By Jan. 4, sister publication Rig Locator (riglocator.ca) listed 60 rigs working in the Land of Living Skies. That’s the highest level since the first week of March 2017.
The highest number of active drilling rigs in Saskatchewan over the past three years was March 1, 2017, with 76 rigs for a brief period.
Complete story here.
‘Eco-colonialism’: Rift grows between Indigenous leaders and green activists
Indigenous communities say they’ve had enough of activists invading their lands, misleading them about their agendas and using hard-line tactics against those who don’t agree
With flowing long hair, stoic expression and tribal garb, Martin Louie, the hereditary chief of the Nadleh Whut’en First Nation in north-central British Columbia, more than looked and acted the part of an aggrieved leader in the epic fight against the Northern Gateway oilsands pipeline.
He was quoted in the campaign’s news releases, filed complaints to the United Nations and spoke defiantly to investors. Environmental group Stand.earth even described him as the “poster boy” for Indigenous opposition to Enbridge Inc.’s pipeline.
The $7-billion pipeline was eventually cancelled last year, but Louie didn’t actually want to sink the project. Lost in the heat of the public battle was that he really just wanted to win more money for his impoverished community than the “ridiculous” $70,000 a year being offered by the company.
Louie’s experience is indicative of a widening rift between Indigenous communities and activists over natural resources, particularly in British Columbia, the focal point of major green campaigns generously funded by U.S. interests to thwart oil and gas exports.
The campaigns consistently portray a united Indigenous anti-development front and allies of the green movement, but some Indigenous leaders are becoming alarmed that they could be permanently frozen out of the mainstream economy if resource projects don’t go ahead.
They said in interviews they’ve had enough of activists invading their lands, misleading them about their agendas, recruiting token members to front their causes, sowing mistrust and conflict, and using hard-line tactics against those who don’t agree.
“The best way to describe it is eco-colonialism,” said Ken Brown, a former chief of the Klahoose First Nation in southwestern B.C. “You are seeing a very pervasive awakening among these First Nations leaders about what is going on in the environmental community.”
For instance, Louie is now one of the leaders of the proposed $17-billion Eagle Spirit pipeline, a Northern Gateway alternative championed by First Nations.
“When I went after Enbridge we were trying to gain more benefits for major projects going through our country,” he said.
Word soon got out about his differences with Enbridge and he was approached by a handful of lawyers representing green organizations who promised him assistance and funding, Louie recalled.
Their partnership ended bitterly because the two sides had conflicting objectives. He wanted better benefits; the activists wanted the project to fail.
The eventual failure of Northern Gateway was just one of a series of tipping points in recent months that worry some Indigenous leaders.
There was also the demise of Pacific NorthWest LNG and Aurora LNG, as well as the continuing challenges faced by the Trans Mountain pipeline expansion and other proposed LNG projects. These cancellations and obstacles are celebrated by activists, but also wiped out jobs and revenue for First Nations.
Eagle Spirit also faces difficulties. Led by Indigenous lawyer Calvin Helin and supported by First Nations along the proposed route through northern B.C., the project will collapse if the federal government goes ahead with a tanker ban that is making its way through Parliament.
The ban is related to the Great Bear Rainforest, which was created by the B.C. government last year to conserve a big part of the province’s northern and central coast.
Both initiatives are seen by greens as big achievements, but are disputed by First Nations such as the Lax Kw’alaams, who said they were advanced without proper consultation and prevent their members from making a living.
Brown’s experience with environmental activism started about a decade ago, when he was chief of his tribe and supported two run-of-river hydro projects.
The projects were attacked by groups such as Save Our Rivers and Western Canada Wilderness Committee for being harmful to fish habitat, and Brown’s band was criticized for being “sellouts and socially irresponsible people looking for the quick buck,” he said.
“What an onslaught it was. There was a high level of participation from people who had never been to the region … and they were all conveying the same narrative: ‘The sky is falling, keep your blood money, corporations are evil.’”
Brown, who now runs a consulting company, said similar tactics are used against other projects, too.
“If First Nations communities are willing to conform to the prescribed eco-narratives, they are going to get all kinds of accolades and praise, but if they don’t conform, it’s vitriolic hit pieces on these people,” he said.
Louie is still shaken by the backlash he experienced. After complaining to activists they were only using him to advance their cause, he said he was blackballed.
“Workers were spreading the word that I am not a good man, that I am there to ruin the environment, that I am making money on my own,” he said. “They were making me sound like I am taking millions from a lot of people. If I was in that position, I wouldn’t be struggling to pay for my car payments.”
Louie said he joined the Eagle Spirit project to achieve what he couldn’t with Northern Gateway: help his tribe become economically self-reliant.
Environmental organizations and Indigenous communities in recent years have found common cause in opposing some projects and in fighting the impacts of capitalism on the environment, said Dwight Newman, Canada research chair in Indigenous rights at the University of Saskatchewan.
A big reason is that Indigenous people have unique legal rights and by working with them, green groups are better able to block developments than if they relied on environmental grounds alone, he said.
Section 35 of Canada’s constitution states the Crown has a duty to consult with First Nations, Inuit and Métis communities and, where it anticipates adverse impacts, to accommodate to the extent reasonably possible.
So far, the law has been used against development, but one of the unknowns is whether Indigenous communities will use it to pursue economic development and override the environmental laws that block projects such as Eagle Spirit, Newman said.
“At some point, these arguments will end up in the courts, either directly as rights claims or as claims that there ought to have been consultation on potential effects on such rights,” Newman said in an article for the Macdonald-Laurier Institute, where he is a senior fellow.
“And the very presence of these arguments will overturn the expectations of many who think they have liberal views, but actually have ongoing paternalistic views that assume First Nations always need protection from development.”
Many conservation campaigns rely on U.S. funds because there is more money available there due to tax laws and an abundance of wealthy philanthropists.
Vancouver-based researcher and blogger Vivian Krause has tallied the large sums poured by U.S. groups to fight pipelines and gas projects in Canada by analyzing tax filings.
The biggest funder has been the Gordon and Betty Moore Foundation, which has granted more than $190 million to First Nations, environmental and other organizations working in B.C., Krause said.
The top recipient of funds from the Moore Foundation is Tides Canada, which received at least $70 million, she said. Tides Canada spends that money internally and re-grants it to other groups, particularly First Nations organizations.
Other big U.S.-based funders are the Rockefeller Brothers Fund, the William and Flora Hewlett Foundation and Pew Charitable Trusts.
“These American interests are trying to stop these projects any way they can, and one of the best ways is by leveraging the constitutional rights of First Nations in the courts,” Krause said.
The former United Nations worker said she pursued the research because of pleas for help from Indigenous leaders “who want jobs and social and economic prosperity (and) are sick and tired of what they call the paid protesters.”
One of those leaders is Gary Alexcee, a hereditary chief of the Nisga’a Nation near Alaska, and a member of Eagle Spirit’s Chiefs Council. He’s disappointed the federal government is giving more weight to environmentalists than to the needs of Indigenous communities.
“We were totally taken aback and surprised by the announcement of this tanker ban because of the government’s statement that they were going to include First Nations,” he said. “No one got consulted.”
Eagle Spirit would create jobs and opportunities “that people never had” in a region where other industries such as fishing, forestry and eco-tourism are doing badly, he said.
Alexcee, 70, said many in his community don’t support green campaigns. He said activists have come to the region in big numbers and picked “token” members to advance their causes.
Relations between activists and Indigenous people got really ugly in nearby Prince Rupert, in the territory of the Lax Kw’alaams.
The community was initially opposed to a liquefied natural gas project proposed by a consortium led by Malaysia’s Petronas because of its location on Lelu Island, which they believed would threaten juvenile salmon.
They became supporters after negotiating bigger benefits and getting the project to re-locate.
But a small group of opponents continued to protest. Their frontman was Donnie Wesley, who claimed to be a hereditary chief and led an occupation of the site. That opened the door for activists to come in and offer band members funds and assistance to defeat a high-profile target, said Mayor John Helin.
Dozens of “professional protesters” travelled to the area from as far away as California with funding from groups such as SkeenaWild Conservation Trust, which, in turn, was getting money from Tides and the Moore Foundation.
“More or less, they called me a traitor,” Helin said.
Petronas pulled the plug on the $36-billion venture this summer, which meant $2 billion in benefits over 40 years for the band were lost.
The Lax Kw’alaams chided Wesley for misrepresenting himself as a hereditary leader. The dispute over who represented the community ended up in court. Wesley lost and is appealing.
Greg Knox, executive director of Terrace, B.C.-based SkeenaWild, said there is a wide range of perspectives in Indigenous communities and while some may feel they lost opportunity when Petronas cancelled its LNG project, others were relieved because salmon were no longer threatened.
“This project was proposed for a terrible location,” Knox said. Many other LNG projects were also proposed, but “this was the only one that people were concerned about and there was big opposition to.”
His group also campaigned against Northern Gateway and supports the tanker ban, he said, but doesn’t have a position on Eagle Spirit yet because it doesn’t have enough information.
Stand.earth brags on its website that it has delayed or stopped 21 “dirty oil pipelines and train projects.” But it relied on Will George, a member of the Tsleil-Waututh First Nation, to confront Kinder Morgan Canada chief executive Ian Anderson at a recent Vancouver Board of Trade event promoting the $7.4-billion expansion of the Trans Mountain pipeline.
“I do not welcome you onto my territory. You are not welcome on my lands, and you certainly cannot be doing business here without Tsleil-Waututh consent,” George said, according to a statement distributed by the group.
“It’s really Indigenous nations protecting their land that allows us to win these fights,” said Stand.earth campaigner Hailey Zacks, noting 150 First Nations in Canada and the U.S. are opposed to the project.
For its part, Kinder Morgan said 42 directly impacted Indigenous communities are supportive of the pipeline expansion and have signed benefits agreements.
Zacks couldn’t speak to that, but said, “What I do know is that the communities that I work with are willing to do whatever it takes to stop it.”
Haida Gwaii is one community known as a hostile place for development of all kinds — and for those who dare to promote it.
Hereditary chief Ray Jones, 66, was harshly castigated for doing consulting work for Northern Gateway, which would have included tankers sailing to and from Asia, potentially impacting the island.
A former captain in the fishing industry with intimate knowledge of the coast, the 66-year-old said he supported the shipment of oil and gas and any other work that promised desperately needed employment.
His contract job with Enbridge involved building communications between the island community and the company, he said.
But Jones was up against powerful forces. Haida Gwaii’s leadership worked closely with activists, he said, “a whole pile of them,” particularly from the David Suzuki Foundation, visited the area regularly and influenced the local population.
The foundation did not respond to an interview request.
The community was so close-minded about getting an alternative point of view, few even asked him what his job with Enbridge involved, Jones said.
“Everybody said they hated me for working for Enbridge, you are the enemy, you are a traitor,” he said. “I have two sisters who don’t talk to me. I have had people call me the village clown, a lot of derogatory things. I’ve had my tires slashed, I’ve had somebody key my car. It’s ugly.”
The same attitude has killed other jobs, pushing young people away and leaving the rest with nothing to improve their lot, he said.
“I always tell my grand children, get a damn good education because I don’t know what you kids are in for in your life,” Jones said. “We lived in a good time.”
TORC plans on 44 wells in southeast Sask in 2018
DECEMBER 22, 2017 09:38 AM
TORC Oil & Gas will keep turning to the right in 2018. Photo By Brian Zinchuk
TORC Oil & Gas Ltd. announced on Dec. 12 the company’s board of directors has approved a 2018 capital budget of $165 million.
TORC’s capital program in 2018 is focused on light oil development projects, with the majority of the capital directed to drilling, completions and tie-ins (over 80 per cent), and the remainder allocated to operational and facility optimization to maximize production efficiency. The capital program is concentrated on the company’s primary core areas in southeast Saskatchewan, focused on both conventional and unconventional opportunities, along with the Cardium play in central Alberta.
Complete story here.