OIL PRICES COLLAPSE
The collapse in crude prices will pinch Canada's long-term oil output growth by more than a million barrels a day, highlighting the lasting impact of energy companies' capital spending cuts, said an industry group in the world's fifth-largest producer.
The Canadian Association of Petroleum Producers estimates Canada will produce 5.3m b/d by 2030, down from a forecast of 6.4m b/d published a year ago, due to the "sharp drop in world oil prices over the past year".
The downgrade underscores how Canada's oil industry has reacted differently than the US in the face of oil prices 40 per cent lower than a year ago. Together, the two countries will be a bulwark of oil supply growth as global demand surpasses 100m b/d in the next decade.
Shale drillers in the US are more nimble in the face of oil price moves. The idling of hundreds of drilling rigs points to a decline in US production later this year.
In Canada, most production gains are coming from the Alberta oil sands, an expanse of tar-like bitumen that requires great upfront investment and pays back over decades. Once built, oil sands projects tend to run at full capacity.
Capp, based in Calgary, estimated Canadian oil production would rise by 151,000 b/d to 3.893m b/d in 2015, and top 4m b/d in 2016, a similar forecast to last year's.
Companies such as ExxonMobil-controlled Imperial Oil are completing projects begun years ago. This year, Imperial will double production capacity at its Kearl oil sands project to 220,000 b/d.
"The existing operations are very competitive, even under low oil price cycles," said Ryan Kubik, chief executive of Canadian Oil Sands, the largest shareholder in the Syncrude oil venture in Alberta. "Where you see the impact is more on future investments."
Oil sands producers have however deferred or cancelled billions of dollars worth of capital spending on new projects, delaying new supplies planned for late in the decade. Royal Dutch Shell, for example, withdrew its application to build a 200,000 b/d oil sands mine at Pierre River, Alberta.
"We're not investing in significant expansion in oil sands mining at this point in time," said Marvin Odum, Shell's head of exploration and production in the Americas.
Capp estimated total oil and natural gas industry capital spending at C$45bn (US$37bn) in 2015, down nearly 40 per cent from 2014. Oil sands capital spending will be 30 per cent lower at C$23bn.
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GAZPROM - The parties discussed relevant issues related to bilateral cooperation, including the Baltic LNG project. Emphasis was placed on the priority measures aimed at developing a joint design concept (pre-FEED).
BHGE - U.S. Rig Count is up 11 rigs from last week to 1,063, with oil rigs up 8 to 869, gas rigs up 4 to 193, and miscellaneous rigs down 1 to 1. Canada Rig Count is up 13 rigs from last week to 195, with oil rigs up 8 to 127 and gas rigs up 5 to 68.
REUTERS - Brent crude futures had risen $1.02 cents, or 1.3 percent, to $81.28 a barrel by 0637 GMT. The contract dropped 3.4 percent on Thursday following sharp falls in equity markets and indications that supply concerns have been overblown. U.S. West Texas Intermediate (WTI) crude futures were up 80 cents, or 1.1 percent, at $71.77 a barrel, after a 3 percent fall in the previous session. WTI is on track for a 3.5 percent drop this week.
EIA - Brent crude oil spot prices averaged $79 per barrel (b) in September, up $6/b from August. EIA expects Brent spot prices will average $74/b in 2018 and $75/b in 2019. EIA expects West Texas Intermediate (WTI) crude oil prices will average about $6/b lower than Brent prices in 2018 and in 2019.