CNRL sneaks to top Canadian natural gas spot with shopping spree

July 18, 2016 (Source: Globe & Mail) Canadian Natural Resources Ltd has quietly bought up about 12,000 natural gas wells across Alberta over the last two years, a Reuters analysis of regulatory data shows, becoming the country’s largest natural gas producer as rivals sold assets or held steady in a tough market.

The counter-cyclical shopping spree helped CNRL push its Alberta well count up 60 per cent between the end of 2013 and the end of 2015, building a dominant position in the province and overtaking Encana Corp to become Canada’s top producer.

The purchases – some for less than $1.00 per well – came as the company grappled with the biggest oil price slump in a generation, selling land to pay down debt. While CNRL has bought assets during previous downturns, it has never before acquired so many wells, so quickly. The expanded footprint not only increases production, but also gives the company a strategic advantage that will pay off for years to come if the natural gas market improves.

With an extensive network of wells and the gathering pipelines that connect them, it can turn a profit from wells that might lose money in the hands of a smaller producer.

“All these new wells have low production, but they were bought for pennies for the dollar,” said Ramond James analyst Chris Cox, noting the wells are in adjacent properties which offers cost synergies, and “if you are expecting pricing to improve then you get an additional uplift.”

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Mexico’s Demand for Natural Gas Spurs Pipelines, Disputes

July 15 (Source: Bloomberg) — More than 700 miles of new pipelines in Texas are being built to ship more of the state’s natural gas to Mexico, raising concerns from U.S. environmentalists who want to see low-carbon renewable energy grow instead.

Exports of gas to Mexico are expected to grow dramatically by the end of the decade. While the U.S. has a long history of pipeline exports to Mexico, the explosion of new pipeline construction is raising environmental concerns about wild landscapes, an expected expansion of hydraulic fracturing, and greater use of natural gas instead of other sources of energy such as solar and wind.

But Texas, with bountiful supplies as a result of the shale boom, sees opportunity for exports south of the border.

“Having an opportunity like the Mexican market does help Texas producers and the industry, especially in a time when prices are lower here and demand is lower,” said Brian Kalinec, an independent geophysicist in Houston. “You are basically filling in demand if an opportunity exists and I think that any Texas producer close to the border would consider these possibilities.”

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Natural Gas Makes Largest Gains Since June

Natural gas prices burst back above $4 with their largest day of gains since mid-June as a rush of early winter cold has traders expecting rising demand for the fuel.

Cool Canadian air is likely to spill over everything east of the Rockies by week’s end, creating the first jolt of heating demand for what had been a tepid market, weather forecasters and analysts said.

Traders responded to updated weather forecasts by buying up contracts as soon as off-hours trading began Sunday evening.

“What that tells me is people were freaked out,” said Todd Gross, chief investment officer at QERI LLC.

Natural gas is a notoriously volatile market, heightened now by competing pressure from record supply and winter worries. An onslaught of gas from U.S. shale drilling has pushed the fuel’s price low enough to make it competitive with coal and has several bank analysts expecting a glut by the spring. But with winter only weeks away, many traders are thinking of last winter’s record cold and demand spikes that pushed prices above $6 a million British thermal units.

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Time to seize a prosperous future fuelled by natural gas

Compared with coal, natural gas produces half the carbon dioxide, less than a third of the nitrogen oxide and just one per cent of the sulphur dioxide, with virtually no particulates. That China is looking to import LNG from B.C.’s shale gas is good news for both Canada and for the Earth’s atmosphere. But LNG will only slow China’s massive coal-fired power growth. Here’s the really good news. According to the U.S. Energy Information Administration (EIA), China possesses the world’s largest technically recoverable shale gas reserves that, at 1,115 trillion cubic feet, are almost twice as large as Canada’s. These vast resources remain undeveloped due to the early stage of Chinese recovery technology. That’s why the University of Calgary’s announcement of a new Canadian/Chinese Research Centre aimed at unlocking that potential is so newsworthy. At the signing ceremony in Beijing on October 23, U of C President Elizabeth Cannon stated that the project “will help China move from a coal economy over to gas.”

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‘No LNG exports, no growth’ in Western Canada

Experts warn that without a LNG export market on the British Columbia’s west coast, there will be no growth in the industry.

Forecasts have Western Canada’s natural gas production growing by 5 billion cubic feet (Bcf) per day by 2022. However, the forecast includes that amount as being attributed to LNG exports. Without the exports there will simply be now growth in market where competition is growing on a global basis. With no LNG export terminal, Canada’s only customer would be the USA who is now the largest producer of natural gas on the planet.

In a recent report, Simon Mauger, Director of Natural Gas & Economics at Ziff Energy:

“Growth in Western Canada will depend on market growth, first and foremost. So no LNG exports, no growth. With the LNG exports, we expect to see quite some growth — from about 14 bcf a day today up to 19 bcf a day in 2022.”

Recently Apache Energy dropped out of the Kitimat LNG project in BC. Kitimat LNG is considered by many as being the most advanced of the 15 LNG projects under consideration. Likely only two, perhaps three we be built. Chevron Canada the remaining partner in the project is looking for another suitable partner to replace Apache.

Read More:“No LNG exports, no growth’ in Western Canada’s natural gas industry: expert”

Read More: “Apache Energy, under investor pressure, exiting Kitimat LNG project”

 

Polish auditors slam government for slow pace of shale gas development

Its always interesting to read the progress other countries are making with shale gas development. In the case of Poland, their national auditing agency criticized the Polish government for the slow pace at which they are developing out the industry. Poland is in a unique situation whereby it great shale gas potential and currently depends on Russia for about 70% of its natural gas needs. In addition, Poland is building a LNG facility on their northeast coast to import natural gas for domestic consumption and potential transport to Ukraine – another Russian natural gas dependent.

Article: Polish auditors slam government for slow pace of shale gas development

 

National Energy Board approves four more LNG licenses in British Columbia – no time to waste

Four more proposed liquefied natural gas (“LNG”) projects in British Columbia have received approvals for export licences from the National Energy Board, bringing the total number of licenced projects to seven. Three of the four projects have major backers and include These four projects include: BG Group’s Prince Rupert LNG Exports Ltd., the Petronas-led Pacific NorthWest LNG Ltd. and Exxon Mobil Corp.’s West Coast Canada LNG Ltd. The fourth project is a smaller venture called Woodfibre LNG Export, planned for the Squamish area north of Vancouver. The NEB is reportedly reviewing an additional four applications on top of these seven granted licences.

None of the approved projects, however, are in the terminal construction stage because the proponents say they first need to learn details of the B.C. government’s plans for taxation of the LNG industry and internal assessments still must be conducted on the economics of proceeding.

Apparently none of the approved projects are in the construction stage. One of the reasons construction has not started is that the various proponents need to understand the BC governments taxation plans for the LNG industry. With the NEB doing their part the BC government can ill afford to delay the process as perhaps the entire Canadian natural gas industry is in jeopardy.

Just the day before the NEB announced their license approvals, the Energy Information Administration released their Annual Energy Outlook that forecasts the frack induced boom in natural gas and oil production will continue through to 2040. Natural gas production is forecast to rise a staggering 56% from 2012 to 2040 and will reach 37.6 trillion cubic feet (Tcf) and the report also predicts that the U.S. surpass Saudi Arabia as the world’s biggest oil-producer in 2015. Truly an amazing turn of events. So it is quite clear that the U.S. will not be needing Canadian natural gas any time soon, and Canada better move fast to save the Canadian natural gas industry.

If Canadians want to retain the billions of dollars generated and the thousand of jobs created by the Canadian natural gas industry, it is absolutely imperative that the pipelines to carry gas to the BC coast, and LNG facilities to process it for export must be approved and built as soon as possible. There is no time to waste. The U.S. once our largest customer is now our largest competitor and will not revert back to being a customer till at sometime after 2040. By 2040, a robust global LNG distribution network will be in place making LNG distribution worldwide efficient and cost effective. In order for Canada to compete effectively it is apparent a domestic distribution system that plugs into the global network must be in place.

While Ottawa reviews the licenses, BC debates tax schemes, and Canadians debate about pipelines and LNG distribution systems, other countries around the world are building out their distribution facilities and moving forward in being first to market, and first to service the energy hungry markets in Asia. The opportunity is there for Canada to seize but there is no time to waste.

Update: Today, the Northern Gateway Pipeline review will be released.

Read more @ The Globe & Mail: NEB Approves four more LNG license in BC, but await Ottawa’s blessing

Florida nuclear project cancelled in face of shale gas boom

Its unfortunate that Duke Energy scrapped plans for a $24-billion nuclear project in central Florida citing the boom in shale gas as the reason for the cancellation. This short sited view will only result in a the project re-emerging at a later date at a substantially higher cost. Though the Horn River News has long been supportive of the opportunity presented by the boom in shale gas globally, and called it as being the most important energy source of the next century, it is important to realize that no one single source can meet growing global clean energy needs. Nuclear will play a critical role in developing a sustainable, low emission energy mix.

HRN

(Source) North America’s nuclear industry received more bad news last week when Duke Energy scuttled a planned $24-billion nuclear project in central Florida, as competition from low-cost gas has cast a pall over a long-promised renaissance.

Duke is only the latest in a list of companies that have either cancelled construction plans or announced closure of reactors that had been scheduled for costly overhauls.

The industry has run into a number of problems including weak power demand and cost over-runs. But it has also become hard to justify new nuclear in the face of a shale gas boom that not only has brought low prices, but is expected to keep a lid on the fuel costs for decades to come.

Ontario is currently redrawing its long-term energy plan, and will be reviewing proposals from Westinghouse and Candu Energy to build two reactors to make up for the loss of capacity when older ones reach end of life in the next decade.

Full Article: Globe & Mail; Florida nuclear project cancelled in face of shale gas boom

Happy Birthday to the Pickens’ Plan

Pickens-Plan-LogoThis week marks the fifth anniversary of the announcement of the Pickens Plan. Mr. T. Boone Pickens has launched a video celebrating and summarizing all of the accomplishments of the Pickens Plan and an op-ed that he wrote which was published in the Dallas Morning News.

Congratulations on five successful years T.Boone! Here’s to five more.

Obama sets stage for Keystone XL approval

Photo: AP Photo/Charles Dharapak

Photo: AP Photo/Charles Dharapak

In a speech yesterday in President Barack Obama stated the Keystone XL pipeline will be rejected unless it’s clear that it won’t exacerbate global warming.

“Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interests,” the President said, adding “our national interest would be served only if this project does not significantly exacerbate the problem of carbon pollution.”

President Obama has appeased the opposition while setting Keystone up for approval later this year because Keystone will easily meet the stated requirements.

First, with or without the Keystone pipeline the Alberta oil-sands will increase production over the coming years. The pipeline will not have an impact on this growth or the carbon emissions from the oil-sands production.

Second, the increased shipment of Alberta oil-sands product via the Keystone is intended to replcace heavy oil from Venezuala and other suppliers. So again, the keystone pipeline will not result in a net increase in emissions.

In fact, if the Keystone is not built there will be an increase in emissions as oil-sand bitumen will be shipped to the USA from Alberta buy diesel powered locomotives and also have an increased risk profile compared to shipping via pipeline.

President Obama has set the criteria know that it will be achieved and when approved will be able to defend his decision.

The alternative solution would be to build refining capacity in Canada and ship end products rather then raw bitumen to the USA. The Americans would happily buy it and it would create all those jobs in Canada rather then the USA (apparently they don’t want the jobs or don’t need them in the USA!)

Keystone XL will get built, and so will the Northern Gateway pipeline which will open a secondary market for Canadian oil and gas in Asia as it will also meet the same criteria. It is not good business to be dependent on just one customer just as the USA is not dependent on one supplier.