- Published: Thursday, 15 June 2017 15:52
There was some positive news to end the week in Saskatchewan's resource industries.
A group that advocates for the oil industry predicts the number of wells drilled in Saskatchewan will be way up this year.
The Petroleum Services Association of Canada (PSAC) issued an update to its drilling activity forecast, estimating 2,670 new wells will be drilled in Saskatchewan this year. That is up from 1,940 wells in the original forecast.
"That would be a significant increase over last year." enthused Dustin Duncan, Saskatchewan Minister of Energy and MLA for Weyburn-Big Muddy. "All of last year, we had just over 16 hundred new wells, So if this forecast actually does hold out, and certainly there's a lot of the year left, but if it does hold out, we're expecting a thousand new wells, more new wells, than just last year." Duncan told Discover Weyburn.
The cabinet minister has some faith that the PSAC forecast could come true."First three months of this year, we're at nearly 900 wells have already been drilled in the first three months, and that compares to just 400 wells last year in the first three months." said Duncan. "So, I think their numbers are pretty solid, you know, we're hopeful and optimistic that they're going to hold throughout the year."
Duncan also believes much of the forecast oil patch activity will be in the southeast. "Certainly, that's where a lot of the attention has been, especially on the land sales here, over the last number of months, and years, in fact." he added. "Companies have some time, number of years, to drill out those locations. I don't have a breakdown in the number, but I would expect a fair number would be here in the southeast."
Nationally, PSAC predicts 6,680 new wells to be drilled this year, an increase of 60 per cent from the original forecast released in November, 2016.
There was also some optimism coming from the province's potash industry.
Saskatoon-based Potash Corp of Saskatchewan announced the company's outlook for the year ahead is looking up.
The corporation says it expects to earn between 45 and 65 cents per share this year, about 25 per cent more than it thought in January.
* Canadian dollar at C$1.3185, or 75.84 U.S. cents * Loonie touches weakest since Feb. 7 at C$1.3210. * Bond prices higher across the yield curve By Fergal Smith TORONTO, Feb 22 The Canadian dollar weakened to a two-week low against its U.S. counterpart on Wednesday, pressured by falling oil prices and broader gains for the greenback along with the biggest drop in domestic retail sales in nine months. Canadian retail sales unexpectedly declined 0.5 percent in December as consumers bought fewer new cars and spent less during the holiday shopping season, data from Statistics Canada showed. Economists had expected retail sales to be unchanged. "It's generally soft data," said Andrew Kelvin, senior rates strategist at TD Securities. It reinforces the view that the Bank of Canada will not be following the Federal Reserve with interest rate hikes, he added. The chances of a Bank of Canada interest rate hike this year dipped to 25 percent from more than 30 percent before the retail sales report, data from the overnight index swaps market showed. U.S. crude prices were down 1.27 percent at $53.64 a barrel as the U.S. dollar , in which payments for crude are made, strengthened. Oil is one of Canada's major exports. The greenback climbed against a basket of major currencies ahead of minutes of the Fed's latest meeting, while Europe's political woes kept a bruised euro under pressure. At 9:28 a.m. ET (1428 GMT), the Canadian dollar was trading at C$1.3185 to the greenback, or 75.84 U.S. cents, weaker than Tuesday's close of C$1.3138, or 76.12 U.S. cents. The currency's strongest level of the session was C$1.3109, while it touched its weakest since Feb. 7 at C$1.3210. Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries and German Bunds. The two-year price rose 4 Canadian cents to yield 0.768 percent and the 10-year climbed 33 Canadian cents to yield 1.684 percent. Canada's inflation report for January is due on Friday, with economists expecting the annual rate to edge up to 1.6 percent. (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
An investigation into an oil spill on an aboriginal reserve in western Canada will include checks of leak-detection measures, Saskatchewan's energy minister said on Tuesday, as crews prepare to excavate the site to confirm the spill's source.
"We need to obviously as part of that investigation make that determination of when exactly the leak did take place and whether the monitoring system that the company employs is adequate enough," Dustin Duncan told reporters in Regina, the provincial capital.
Some 200,000 liters (52,834 gallons) of oil leaked last week onto the Ocean Man First Nation, 140 km (87 miles) southeast of Regina.
Vacuum trucks are on site to remove oil and contaminated soil, with excavation expected to begin on Wednesday.
Authorities were notified of the leak on Friday, when an area resident who had smelled the scent of oil for a week located the spill and alerted the band's chief, who notified Tundra Energy Marketing Ltd.
Tundra has a line adjacent to the spill and is leading cleanup efforts, but has not publicly confirmed its pipeline as the source of the leak.
Crescent Point Energy Corp (CPG.TO), which also has assets in the area, said Tundra notified them on Friday of a "suspected anomaly on a portion of their system".
If the problem persists, Crescent Point may have to divert around 1,000 barrels a day of its crude heading to facilities in neighboring Manitoba, spokesman Trent Stangl said.
Tundra, part of Canadian grain trading and energy conglomerate James Richardson and Sons Ltd, said late on Monday it is cooperating with all levels of government and will ensure "the affected land is restored appropriately."
"There has to be a time frame set that they follow up every week, every month, every season depending on what the weather can cause, and every year, until Ocean Man is satisfied that yes, everything is okay," Chief Connie Big Eagle said.
No residences are close to the spill site but it is near a cemetery which is considered sacred land by the band.
Pipelines are viewed by the oil-rich provinces of Alberta and Saskatchewan as critical lifelines, but draw fierce opposition from environmental and indigenous groups.
"It just raises the issue yet again, that if you are going to build these pipelines, you're going to be placing communities and water and land at risk," said Gretchen Fitzgerald, national program director at the Sierra Club Canada Foundation.
* Canadian dollar at C$1.3148, or 76.06 U.S. cents * Bond prices higher across the yield curve TORONTO, Jan 16 The Canadian dollar weakened against its U.S. counterpart on Monday, paring some recent gains ahead of a Bank of Canada interest rate decision midweek as oil dipped and the greenback rebounded against a basket of major currencies. The U.S. dollar rose after suffering its worst week since November. It was hit last week by a lack of clarity over what U.S. President-elect Donald Trump, whose inauguration is on Friday, will do once he assumes office. Prices of oil, one of Canada's major exports, slipped amid doubts that large oil producers will reduce production as promised and on expectations that U.S. production would increase again this year. U.S. crude prices were down 0.10 percent at $52.32 a barrel. At 9:23 a.m. ET (1423 GMT), the Canadian dollar was trading at C$1.3148 to the greenback, or 76.06 U.S. cents, weaker than Friday's close of C$1.3126, or 76.18 U.S. cents. The currency's strongest level of the session was C$1.3102, while its weakest was C$1.3163. U.S. markets are closed on Monday for Martin Luther King Jr. Day, which will lower liquidity. Analysts expect the Bank of Canada to leave its policy rate on hold at 0.5 percent at Wednesday's announcement. As recently as October, the central bank said it had considered easing rates as it downgraded its economic outlook. But recent data showed a surge in jobs in December and the first trade surplus in more than two years in November, while a Bank of Canada survey last week pointed to improving business conditions. On Thursday, the loonie had touched a near 3-month high at C$1.3028. Speculators have raised bearish bets on the Canadian dollar. Net short Canadian dollar positions rose to 7,935 contracts as of Jan. 10 from 3,871 a week earlier, data from the Commodity Futures Trading Commission and Reuters calculations showed on Friday. Canadian government bond prices were higher across the yield curve as investors sought shelter in safe haven assets as uncertainty over Britain's departure from the European Union and the policies of Trump curbed appetite for risk. The two-year price rose 0.5 Canadian cent to yield 0.797 percent and the 10-year climbed 20 Canadian cents to yield 1.691 percent.
Of the outstanding exploration licenses, Imperial’s were acquired at the highest cost -- C$1.8 billion in work bid commitments. Imperial said last month it had previously sought extensions for exploration licenses “to ensure future oil and gas activities are conducted in an appropriately paced, safe and environmentally responsible manner.” The company didn’t respond to a request for further comment.
* Canadian dollar at C$1.3287, or 75.26 U.S. cents * Loonie touches its strongest since Dec. 14 at C$1.3255. * Bond prices higher across the yield curve
TORONTO, Jan 5
The Canadian dollar strengthened to a three-week high against its U.S. counterpart on Thursday as oil prices rose and the greenback lost ground against a basket of major currencies. Some of the biggest gains on record for China's yuan sent currency markets spinning, driving the U.S. dollar broadly lower and threatening to quash one of the central bets of global investors for 2017. Prices of oil, one of Canada's major exports, rose after Saudi Arabia started talks with customers about a reduction in crude sales to support a plan by OPEC to reduce global supply. U.S. crude prices were up 0.71 percent at $53.64 a barrel. At 9:15 a.m. ET (1415 GMT), the Canadian dollar was trading at C$1.3287 to the greenback, or 75.26 U.S. cents, stronger than Wednesday's close of C$1.3308, or 75.14 U.S. cents. The currency's weakest level of the session was C$1.3312, while it touched its strongest since Dec. 14 at C$1.3255. The move follows a 3 percent gain for the currency in 2016, its first annual advance since 2012, as oil rebounded from its February trough. Canadian producer prices rose 0.3 percent in November from October on higher prices for motorized and recreational vehicles and primary non-ferrous metal products, Statistics Canada said. Canadian government bond prices were higher across the yield curve, with the two-year price up 1.5 Canadian cents to yield 0.748 percent and the 10-year rising 5 Canadian cents to yield 1.705 percent. The gap between Canada's 5-year yield and its U.S. equivalent narrowed by 3.3 basis points to -79.6 basis points, as U.S. Treasuries outperformed after data showed the U.S. economy created fewer private-sector jobs in December than market expectations. Canada's trade report for November and employment report for December are due on Friday. (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
Grafton Asset Management Inc., a firm that has brought foreign investment into Canada’s oil and gas industry, is looking to add alternative energy to its portfolio for the first time as it positions itself for the decline of fossil fuels.
“I’m worried about the future of the industry in general,” Geeta Sankappanavar, president and chief operating officer of the Calgary-based investment firm, said in a phone interview on Tuesday. “It’s going to be a great business for a period of time, but I do look at it as a sun-setting business -- one where we’ll see competition and disruption from outside our industry.”
Oil and gas companies have had to cut investment and fire workers to weather the worst price crash in a generation. As crude rebounds after the Organization of the Petroleum Exporting Countries and other major exporters pledged to cut output, some producers like Cenovus Energy Inc.are resuming expansion plans. But prices are still half their peak level in mid-2014.
Sankappanavar expects the oil and gas industry’s recovery to be muted compared with previous cycles and is looking at financing more environmentally friendly and renewable power projects across Canada, including natural gas plants and biomass facilities. The company plans to attract capital from global investors to diversify its asset base. A majority of Grafton’s capital comes from the Middle East, Europe and the U.S.
Grafton has about C$1 billion ($750 million) in assets under management, of which C$900 million is focused on direct investments in the Canadian oil and gas sector and the remaining C$100 million is invested through its Grafton Energy Opportunities equity fund. The fund returned 65 percent last year through November, according to preliminary, unaudited figures from the company. That’s more than double the 30 percent gain for the S&P/TSX energy sector index over the same span.
The firm’s equity portfolio includes oilfield services provider Canyon Services Group Inc. and producers Kelt Exploration Ltd. and Seven Generations Energy Ltd. Seven Generations more than doubled last year, while Canyon and Kelt rose 73 percent and 60 percent, respectively.
Canyon fell 0.3 percent to C$7.37 at 11:23 a.m. in Toronto. Kelt gained 4.1 percent, while Seven Generations dropped 2.5 percent.
While a rebound in oil prices is helping producers emerge from the downturn, selling Alberta’s energy sector to the world remains tricky as the high-cost operations struggle to remain competitive, she said. Uncertainty over Alberta’s tax regime and carbon pricing also deter foreign investors, she said.
“In Alberta, I think we’re going to get the rising tide effect from higher oil prices, but we need to figure out a way to differentiate ourselves in order to attract that investment,” Sankappanavar, 42, said.
Grafton has stayed away from investing in assets that are already producing. Instead, the firm’s strategy is to look for those that look promising for what they hold below ground, even if projects face challenges and would take three to five years to start output.
The company has a partnership with Tourmaline Oil Corp. and owns 25 percent of the producer’s Peace River High project. It also has a joint venture with Bellatrix Exploration Ltd. and holds assets in the Montney, a shale formation straddling Alberta and British Columbia.
“We’re still in the first inning of a nine-inning game,” Sankappanavar said. "I’m positive on the outlook of capital and the industry for the next 12 months, but you take a little bit longer and you start to worry."
Canadian stocks fell the most in two weeks, as energy companies are mired in a losing streak with talks among producers continuing ahead of the OPEC summit in Vienna this week.
The S&P/TSX Composite Index fell 0.4 percent to 15,015.36 at 4 p.m. in Toronto, the most since Nov. 11. Trading volume in the Canadian equity benchmark was 11 percent lower than the 30-day average. The index remains up 15 percent in 2016, the top performer among developed markets tracked by Bloomberg.
Energy producers led the index lower, falling 1.4 percent as a group for a third day of losses, the longest losing streak since Nov. 4. Seven of 11 industries in the S&P/TSX were lower. Canadian National Railway Co. and Canadian Pacific Railway Ltd. retreated as industrial stocks also declined.
Medical marijuana producer Canopy Growth Corp. jumped 5.9 percent after agreeing to buy German pharmaceutical distributor MedCann GmbH Pharma and Nutraceuticals. The Canadian government, meanwhile, is preparing to review a task force report on recreational legalization.
Among other moves:
Oil prices settled more than 1 percent lower on Thursday as markets recovered from shock over U.S. President-elect Donald Trump's victory and focused on oversupply concerns, as well as whether OPEC will decide later this month to cut production.
Most markets shook off post-election losses and bounced back on Thursday, but oil still faces a glut that has kept prices under pressure for much of the past two years.
The Organization of the Petroleum Exporting Countries (OPEC) meets in Vienna on Nov. 30 for talks on output cuts. It has sought cooperation from non-members, including Russia, but doubts remain over whether they can come to an agreement.
Brent crude settled down 54 cents, or 1.1 percent, at $45.84 a barrel. U.S. West Texas Intermediate crude ended 61 cents, or 1.4 percent, lower at $44.66.
WTI's front-month discount to the second-month, or contango, hit its widest in nearly three months on concerns about domestic oversupply as data shows rising stockpiles, traders said.
The U.S. Energy Information Administration on Wednesday reported a 2.4 million-barrel rise in domestic crude inventories to 485 million barrels last week.
"When the physical markets are weak, that influences people to hedge their cargos, and that results in selling," said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina.
The market was under pressure even as stockpiles at the U.S. delivery hub for crude futures in Cushing, Oklahoma dropped by 663,916 barrels for the week to Nov. 8, according to traders, citing energy monitoring service Genscape.
The International Energy Agency (IEA) said the global market will remain in surplus unless OPEC can reach an agreement at its Nov. 30 meeting.
"If the supply surplus persists in 2017, there must be some risk of prices falling back," the IEA said in its monthly report.
Prices will likely rebound, at least temporarily, in the coming days and may go above $50 a barrel as traders cling to the hope of an OPEC deal, said Fawad Razaqzada, analyst at Forex.com.
"Although there is so much doubt about the prospects of a production cut or freeze deal between the OPEC and Russia, an agreement is still possible," he said.
Russian Energy Minister Alexander Novak said he saw higher chances of reaching a deal than before, and that global crude output could be frozen at November levels if an agreement is reached.
(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Will Dunham)