Oil Field News

Heavy barrels hit widest discount in four years

CALGARY, Alberta (Reuters) - The discount on Canadian heavy crude slumped to its deepest level in four years on Tuesday, hurt by export pipeline outages and high storage inventories in western Canada.

Western Canada Select heavy blend crude for January delivery in Hardisty, Alberta, weakened to $26.50 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers, accelerating recent losses. On Monday WCS settled at $23 per barrel below WTI. 

The discount is the widest since December 2013 and a blow to Canadian producers who had been enjoying a rally in U.S. crude, which is trading near its highest level in two years.

The blow-out in differentials put the outright price of WCS at just under $31 a barrel. 

Pipeline company Enbridge Inc said on Monday there will be extra rationing of space in December on its Mainline network, which transports the bulk of Canadian crude to the United States, because of unplanned outages in the western part of its system.

Pipeline apportionment drives Canadian prices lower because it leads to a glut of crude building up in Alberta. Storage inventories in the oil sands province are already high after a nearly two-week shutdown of TransCanada Corp’s Keystone pipeline in November because of a spill in rural South Dakota.

The 590,000-bpd Keystone pipeline is running with pressure reduced by 20 percent on the orders of U.S. regulators, and TransCanada has not said when that will lift.

One Calgary-based crude trader said it was likely some market players were hitting position limits after the steep falls over the last week, and being forced to sell barrels to contain losses.

“The barrels are just backing up faster than they can be cleared right now even though everybody is scrambling to get supply on the rails,” said Martin King, an analyst with GMP FirstEnergy.

Crude-by-rail shipments are expected to rise next year as oil sands supply from new projects such as Suncor Energy’s Fort Hills increases and outpaces pipeline capacity.

King said he expected differentials to average around $15 a barrel below WTI in 2018 given the extra costs associated with rail, but the current deep discount was unlikely to last.

Light synthetic crude also fell sharply on the pipeline congestion, which comes as supply from an 80,000-bpd expansion at Canadian Natural Resources Ltd’s Horizon oil sands project ramps up.

Synthetic crude for January delivery traded at $3.00 per barrel below WTI, down from Monday’s settle of $2.30 per barrel below the benchmark.

Reporting by Nia Williams; Editing by Chizu Nomiyama and Susan Thomas

SOURCE: REUTERS

Canada’s Oil Capital Turns to Amazon and Airlines to Make Up for Price Plunge

Mark Craig didn’t worry much when oil plunged from $100 a barrel to less than $50 in late 2014. Having worked in the Canadian oil industry since high school, the Calgary resident had seen booms and busts before. His confidence seemed justified when, just months after taking a buyout at British oil giant BP Plc, he was hired to manage the IT department at Calgary-based Penn West Petroleum in April 2015. Then, four months later, Penn West cut half its staff, including Craig, in the midst of an accounting scandal. Oil had just begun to take another leg down, ultimately bottoming below $30 a barrel, and no one in the city that’s the epicenter of Canada’s oil and gas industry was hiring. Two years later, no one is hiring still. “After Penn West, I realized there were basically no jobs out there,” says Craig, 56. “It was a very harsh reality that slapped me in the face.” 

Most oil producers are operating under the assumption that the days of $100 crude are gone for good, and they’re planning to stay as lean as possible. As that realization sinks in, Craig—and Calgary—are retooling.

 

The unemployment rate in the province of Alberta, of which Calgary is the largest city with about 1.47 million residents, was 7.3 percent in November. That’s down from a peak of 9 percent a year earlier, but it’s still a full percentage point higher than the national average. The oil, gas and mining industries employed about 143,000 workers in the province at the end of last month, down almost 40,000 from July 2014, when oil prices began their long slide. 

The job loss is visible in Calgary’s downtown, where the vacancy rate for office space sits at about 27 percent, near a record high, according to brokerage CBRE Group Inc. By contrast, only about 10 percent was empty in 2014. Landlords are now so desperate for tenants that the average rent they’re charging for the highest-quality space is cheaper than the lowest-quality space was in 2008, CBRE says.

“I love roller coasters, but this was a bit too much,” says Mayor Naheed Nenshi, who says he has watched the city’s attempts to diversify beyond hydrocarbons ever since the early 1990s, when he was a student at the University of Calgary and the industry accounted for about half the city’s economic activity. (It’s closer to 30 percent now.)  

The drive has continued under Nenshi, who’s serving his third term since he was first elected in 2010. Rather than trying to set up new industries from scratch, his administration has concentrated on building out those in which the city already has a toehold, such as transportation and logistics, agribusiness, renewable energy, financial services, manufacturing, and creative industries such as film and television. “We need to ensure that we are taking advantage of the downturn to attract different kinds of businesses, to create a more resilient economy, to create an economy with shock absorbers, so that we are better suited to manage the ups and downs of world commodity prices,” he says. 

His administration can claim a few successes so far. Amazon.com Inc. announced in October that it will be opening a fulfillment center in the city that will eventually employ more than 750 full-time workers. Another major victory was WestJet Airlines Ltd.’s decision in September to base its new low-fare carrier, dubbed Swoop, in Calgary. While WestJet’s headquarters are in the city, the company says it was aggressively wooed by two other Canadian cities it would not identify, and there was no guarantee it would choose its hometown. 

Incentives offered by Calgary and Alberta helped clinch the deal, according to Bob Cummings, WestJet's executive vice president for strategy and head of the Swoop startup. With the prize of more than 500 jobs hanging in the balance, all of the stakeholder groups involved in the process showed they were “hungry” for the development, helping sway WestJet’s decision, says Cummings, adding. “I’m not sure Calgary was quite at that level five to six years ago, when oil was at $100.”  

Looking ahead, Mayor Nenshi is confident that the city’s long-shot bid to host Amazon’s second headquarters will have the effect of luring additional tech businesses to the city. The campaign has grabbed media attention with ads featuring a glowering, bearded man and the tagline “Hey, Amazon. Not saying we’d fight a bear for you ... but we totally would.” 

While Calgary’s boosters see the city’s oil and gas heritage as an advantage, the industry is often viewed as stodgy and old-fashioned by those in other lines of business. Persuading outsiders that the local workforce has skills that can be deployed in other lines of work is challenging and frustrating, says Mary Moran, president and chief executive officer of Calgary Economic Development. “The ability to drill 5 kilometers down and 3 kilometers across to hit a bathtub-sized target—that’s innovation,” says Moran, describing the expertise required to extract oil from slabs of rock deep underground. “We didn’t invent Tinder, we didn’t invent Shopify, but there’s still pretty intricate and sophisticated technology that’s happening here.”

Calgary may one day be able to tout startup success stories like Shopify, an Ottawa-based e-commerce company with 1,500 employees. RocketSpace, a San Francisco-based tech accelerator, announced plans in May to open its first Canadian campus in downtown Calgary early next year. While the operation will employ fewer than a dozen people, the company has leased 75,000 square feet of office space, most of which will be occupied by fledgling companies. 

Moran is quick to say that no one expects the energy industry to disappear from the city entirely, but as its footprint shrinks, locals will have to make some adjustments. “People are having to make a mindset shift, because if you’re going to work in a smaller company, you’re going to have to grind it out a little bit more,” she says. “You won’t make as much money, you won’t have as short hours, you won’t have Fridays off.”

Craig, the industry veteran, says he can live with that—and many people in his situation feel the same way, he says. To help his peers get back on their feet, Craig created a nonprofit late last year, the GoldMind Project. The group is run entirely by volunteers and holds events to help unemployed workers revamp their résumés, decide whether they want to be entrepreneurs, or just get motivated. At a recent event downtown, a local career consultant gave an hourlong talk on networking and answered questions from the 50 attendees, ranging from how to use LinkedIn to when to slip a new contact your business card.

In addition to GoldMind, Craig has started a one-man tech-consulting business. A current project involves designing a case-management system for a local law firm. He hasn’t quit looking for full-time work—though he’s resigned to the knowledge that any position he lands will be less cushy than his last one. “There’s no longer that job that people wanted to have into retirement, with a pension and all of that,” he says. “That’s started to sink in for a lot of people.” —With Katia Dmitrieva

SOURCE: BLOOMBERG

CANADA FX DEBT-C$ hits 4-week low as oil prices gyrate on OPEC decision

(Adds analyst quotes and details throughout, updates prices) * Canadian dollar at C$1.2902, or 77.51 U.S. cents * Loonie touches its weakest since Nov. 1 at C$1.2909 * Bond prices mixed across the yield curve * Canada-U.S. 2-year spread hits widest since June 27 By Fergal Smith TORONTO, Nov 30 (Reuters) - The Canadian dollar weakened to a four-week low against its U.S. counterpart on Thursday as oil prices gyrated and data showed a widening in the country's current account deficit. Canada's current account deficit swelled in the third quarter to C$19.35 billion, the third largest in history, as the country's international trade gap in goods continued to expand. "The current account numbers were a reminder of a long term headwind for the Canadian economy," said Adam Button, currency analyst at ForexLive in Montreal. "The Canadian dollar was whipped around by uncertainty on the OPEC decision and the U.S. tax bill," Button said. U.S. crude prices clawed back earlier losses to settle up 0.2 percent at C$57.40 a barrel after OPEC and non-OPEC producers led by Russia agreed to extend output cuts until the end of 2018. Oil is one of Canada's major exports. U.S. Treasury yields rose on optimism about U.S. tax overhaul efforts, but the greenback pared some of this week's gains against a basket of major currencies. At 4 p.m. (2100 GMT), the Canadian dollar was trading at C$1.2902 to the greenback, or 77.51 U.S. cents, down 0.3 percent. The currency's strongest level of the session was C$1.2851, while it touched its weakest since Nov. 1 at C$1.2909. For the month, the loonie dipped 0.1 percent. Separate domestic data showed that Canadian average weekly earnings rose 1 percent in September from August. Data on Canada's jobs for November and gross domestic product for the quarter will be released on Friday. That could help guide expectations for next week's interest rate decision by the Bank of Canada. The central bank raised rates in July and September for the first time in seven years but has since turned more cautious on the outlook for the economy. Canadian government bond prices were mixed across the yield curve, with the two-year up 1 Canadian cent to yield 1.431 percent and the 10-year falling 7 Canadian cents to yield 1.889 percent. The gap between Canada's 2-year yield and its U.S. equivalent widened by 3.3 basis points to a spread of -35.9 basis points, its widest since June 27. (Reporting by Fergal Smith; Editing by Meredith Mazzilli and Peter Cooney)

SOURCE: REUTERS

Canadian dollar hits one-week low against stronger greenback as oil dips

TORONTO (Reuters) - The Canadian dollar weakened to a one-week low against its U.S. counterpart on Tuesday as oil prices dipped and the greenback broadly climbed. The U.S. dollar .DXY rose against a basket of major currencies, boosted by a 17-year high for U.S. consumer confidence in November and the prospect of tax cuts.

 “We have had progress on the U.S. tax reform agenda,” said Eric Theoret, currency strategist at Scotiabank. “It’s a broad rally in the U.S. dollar on this optimism.” 

Prices of oil, one of Canada’s major exports, were weighed by uncertainty over the outcome of an OPEC meeting this week at which an extension to its price-supporting output cuts will be discussed.

U.S. crude oil futures CLc1 settled 0.2 percent lower at $57.99 a barrel.

At 4 p.m. ET (2100 GMT), the Canadian dollar CAD=D4 was trading at C$1.2815 to the greenback, or 78.03 U.S. cents, down 0.4 percent.

The currency’s strongest level of the session was C$1.2756, while it touched its weakest since Nov. 21 at C$1.2825.

Vulnerabilities created by Canada’s high household debt and hot housing market remain elevated but should ease over time as a stronger economy and tighter mortgage requirements help improve conditions, the Bank of Canada said.

Canadian government bond prices were higher across a flatter yield curve, with the two-year CA2YT=RR up 4 Canadian cents to yield 1.419 percent and the 10-year CA10YT=RR rising 41 Canadian cents to yield 1.84 percent. The 10-year yield touched its lowest since Aug. 29 at 1.805 percent, while the gap between the 10-year yield and its U.S. equivalent widened by 4.9 basis points to a spread of -48.8 basis points.

Data will be released Friday on Canada’s jobs for November and gross domestic product for the quarter.

Reporting by Fergal Smith; Editing by Bernadette Baum

SOURCE: REUTERS

CANADA FX DEBT-C$ weaker as oil falls, investors weigh NAFTA talks

(Adds strategist comment, updates pricing) * Canadian dollar at C$1.2808, or 78.08 U.S. cents * Oil falls 0.8 percent * Bond prices lower across the yield curve By Alastair Sharp TORONTO, Nov 20 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday as oil prices fell and investors focused on negotiations to update the North American Free Trade Agreement (NAFTA). Oil, one of Canada's major exports, eased as traders were wary of betting too heavily on which way prices might move ahead of next week's meeting of the Organization of the Petroleum Exporting Countries. "The market may be shifting its collective attention more toward developments in crude prices," said Mazen Issa, senior foreign exchange strategist at TD Securities. Oil prices fell 0.8 percent. At 4 p.m. EST (2100 GMT), the Canadian dollar was down 0.3 percent at C$1.2808 to the greenback, or 78.08 U.S. cents. The currency traded in a narrow range of C$1.2756 to C$1.2816. "The other factor that will be pretty important will be retail sales later this week," Issa said. The Bank of Canada has said it will closely watch economic indicators when deciding next steps in monetary policy after raising interest rates twice so far this year. On Friday, the loonie touched a two-week low at C$1.2824 after tame inflation data tempered prospects the central bank would raise rates in the first quarter of 2018. People familiar with talks to update the 23-year-old NAFTA trade deal said Canada and Mexico planned on Monday to question U.S. demands around automotive content, underlining scant progress in the fifth of seven planned rounds of talks. "I don't think the currency is adequately reflecting that (NAFTA) risk," TD's Issa said. Speculators have cut bullish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Tuesday, net long positions had slipped to 47,335 contracts from 50,889 a week earlier. In October, bullish bets had reached 76,392 contracts, their highest in five years. Canadian government bond prices were lower across the yield curve, with the two-year down 3.5 Canadian cents to yield 1.475 percent and the 10-year falling 15 Canadian cents to yield 1.956 percent. Canadian wholesale trade for September is due on Tuesday, and retail sales data for that month is set for release on Thursday. (Additional reporting by Fergal Smith Editing by Sandra Maler)

SOURCE: REUTERS

Keystone pipeline spill pushes oil higher, fuels TransCanada opponents

CALGARY, Alberta/LINCOLN, Neb. (Reuters) - A major oil spill on the Keystone pipeline in South Dakota helped push U.S. crude prices higher on Friday, while fueling opposition to another pipeline project by owner TransCanada Corp that faces a crunch decision in Nebraska next week.

The climb in U.S crude futures and slide in Canadian heavy crude prices, as well as TransCanada Corp shares, came the day after the 5,000 barrel spill, tied for this year’s largest pipeline leak in the United States.

No date has been set for reopening Keystone, TransCanada said, adding that a media report that had identified a restart date was incorrect.

The spill gave further ammunition to environmental groups and other U.S. opponents of another pipeline the company has proposed, the long-delayed Keystone XL.

 Keystone carries 590,000 barrels per day of crude from Alberta’s oil sands to markets in the United States. The state of Nebraska was set to decide on Monday whether to approve Keystone XL.

On Thursday, Calgary, Alberta-based TransCanada said it had contained the leak in the town of Amherst, South Dakota, and was investigating the cause. It said the pipeline will be shut until it gets approval to restart from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA).

“It’s not a tiny spill by any means,” said Kim McIntosh, environmental scientist manager at the South Dakota Department of Environment and Natural Resources. McIntosh said it may take longer than usual for the company to determine the extent of contamination, a process that usually takes days.

The last Keystone pipeline spill recorded was about 400 barrels of oil in Hutchinson County, South Dakota, in April 2016. “The 2016 release took around 10 months to clean up; this will take longer,” said McIntosh. “I can’t predict whether it will take 20 months or 12 months.”

In Nebraska, Keystone XL opponents seized on the spill as an example of its environmental risks.

“Pipelines are basically plumbing; and plumbing leaks. It comes as no surprise,” said Tom Genung, who lives near the proposed Keystone XL route in Holt County, Nebraska.

The Nebraska Public Service Commission, or PSC, is scheduled to announce a decision on Monday on Keystone XL. Its decision focuses narrowly on whether the pipeline is in the public interest, and not on environmental issues, which it is not allowed to consider.

Art Tanderup’s family farm in Neligh, Nebraska, lies in the path of the 830,000 bpd Keystone XL project. He said the proposed XL pipeline would be built over huge swaths of porous, sand-like soil atop the Ogallala aquifer, putting farmers and ranchers at risk of water contamination if a spill occurs.

”We would have so much crud and chemicals in the Ogallala aquifer that we could never clean up,” he said.

TransCanada shares closed down 0.9 percent on the Toronto Stock Exchange at C$62.54.

The South Dakota spill ties with January’s spill from the Seaway pipeline near Trenton, Texas, for the largest U.S. crude oil pipeline spill in 2017, U.S. data showed.

TransCanada spokesman Terry Cunha said the company is assisting with the storage of crude in Hardisty, where Keystone originates, and that it regrets the impact caused to customers.

U.S. West Texas Intermediate crude ended up $1.41, or 2.6 percent, at $56.55 a barrel. Traders said the shut-in would add to bullish sentiment due to fewer barrels going into Cushing, Oklahoma, the delivery point of the WTI contract. The WTI prompt spread (CLc1-CLc2) narrowed by as much as 8 cents.

If the pipeline is shut for a week, it would affect at least 2 million barrels of crude going into Cushing, according to estimates by traders. The pipeline also brings oil into Patoka, Illinois.

Export pipeline shutdowns also pressure the price of Canadian crude because barrels get bottle-necked in Alberta.

The discount for Western Canada Select for January delivery in Hardisty, Alberta, widened to $16.00 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers. On Thursday, January barrels settled at $15.50 per barrel below U.S. crude.

Additional reporting by Ethan Lou in Calgary, Alberta, Valerie Volcovici in Washington and Catherine Ngai in New York; Editing by David Gregorio

SOURCE: REUTERS

CANADA FX DEBT-C$ drops to one-week low as oil and stocks slide

* Canadian dollar at C$1.2765, or 78.34 U.S. cents * Loonie touches its weakest since Nov. 7 at C$1.2789 * Oil falls for fourth straight day * Bond prices higher across a flatter yield curve By Alastair Sharp TORONTO, Nov 15 (Reuters) - The Canadian dollar weakened to a one-week low against its U.S. counterpart on Wednesday as oil and stocks fell and investors weighed trade uncertainties ahead of fresh NAFTA talks. At 4 p.m. ET (2100 GMT), the Canadian dollar was trading at C$1.2765 to the greenback, or 78.34 U.S. cents, down 0.3 percent. "There was modest Canadian dollar weakness on the day," said Eric Theoret, currency strategist at Scotiabank, citing nervousness in the market ahead of the latest round of NAFTA negotiations. The Mexican peso meanwhile hit its weakest against the greenback since March before paring some losses. On Tuesday, Canada launched a NAFTA challenge of a U.S. decision earlier this month to impose duties on softwood lumber exports from its northern neighbor. NAFTA working groups are due to begin meeting from Wednesday in Mexico. Talks will begin on Friday and continue through Nov. 21. The Canadian currency's strongest level of the session was C$1.2714, while it touched its weakest since Nov. 7 at C$1.2789. Prices of oil, one of Canada's major exports, slipped for a fourth day on a gloomy outlook for oil demand growth from the International Energy Agency. World stocks registered their longest losing streak in eight months, while the U.S. dollar recovered early losses against a basket of major currencies as U.S. data boosted expectations for further Federal Reserve interest rate hikes. "For us, it's still a spread story rather than a commodity story," Theoret said, pointing to a widening gap between higher yields on U.S. two-years bonds versus their Canadian equivalents. Less stimulus will be required over time but the Bank of Canada will remain cautious as it considers future interest rate moves, Senior Deputy Governor Carolyn Wilkins said, reiterating the central bank's recent dovish tone. Wilkins will speak about monetary policy amid uncertainty on Wednesday evening in New York. Canada's manufacturing sales data for September is due on Thursday and an October inflation report will be released on Friday. "For Canada, the vulnerability would be to an upward surprise" in inflation, Theoret said, given the weakening trend in the currency since September's surprise Bank of Canada decision to hike rates. Canadian government bond prices were higher across the yield curve, with the two-year rising 2.5 Canadian cents to yield 1.448 percent and the 10-year up 31 Canadian cents to yield 1.914 percent. In domestic data, resales of Canadian homes rose 0.9 percent in October from September, the third straight monthly rise. (Additional reporting by Fergal Smith; Editing by Bernadette Baum and James Dalgleish)

SOURCE: REUTERS

CANADA STOCKS-TSX falls as lower oil prices weigh on energy stocks

* TSX down 86.41 points, or 0.54 percent, to 15,939.85

* Nine of the TSX’s 10 main groups move lower

TORONTO, Nov 14 (Reuters) - Canada’s main stock index fell on Tuesday, as a third day of falling oil prices put pressure on the heavyweight energy sector, while financial and mining stocks also pulled the index further from the all-time high it hit earlier this month.

The energy group retreated 1.4 percent as rising U.S. output pushed oil prices down, with Canadian Natural Resources Ltd losing 1.8 percent to C$45.05 and Suncor Energy Inc off 0.9 percent at C$45.81.

Cenovus Energy Inc, which said on Monday it had reached a deal to sell its Weyburn oil facility for C$940 million ($737 million), fell 1.7 percent to C$13.70.

At 10:06 a.m. ET (1506 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 86.41 points, or 0.54 percent, at 15,939.85. Nine of the index’s 10 main groups were in negative territory, with three decliners for every advancer.

Premium Brands Holdings Corp shed 7.3 percent to C$94.38 after it reported earnings and revenue that missed expectations and reduced its 2017 organic volume growth forecast.

On the other side of the ledger, Bombardier Inc advanced 2.3 percent to C$3.13 after saying it expects to finalize two recently-announced orders for its CSeries jets by the end of the year.

DHX Media Ltd rose 7.2 percent to C$4.19 after the media content company’s earnings beat expectations.

The financials group lost 0.4 percent, with Brookfield Asset Management Inc down 2.5 percent at C$52.40.

The materials group, which includes precious and base metals miners and fertilizer companies, lost 0.3 percent. Diversified miner Teck Resources Ltd fell 2.3 percent to C$27.17.

U.S. crude prices lost 1.6 percent to $55.84 a barrel, while Brent lost 1.7 percent to $62.09.

Gold futures were little changed while copper prices declined 1.9 percent to $6,762 a tonne.

SOURCE: REUTERS

UPDATE 1-Cenovus posts smaller loss as production more than doubles

Nov 2 (Reuters) - Canadian oil producer Cenovus Energy Inc reported a smaller third-quarter loss on Thursday as its purchase of ConocoPhillips' Canadian oil-sands assets more than doubled production.

Total production rose to 590,851 barrels of oil equivalent per day from 273,405 boed a year earlier.

Cenovus paid $13.3 billion in March to buy ConocoPhillips' Canadian oil sands assets. The company trimmed its full-year spending by C$100 million, saying it would not impact production in its core areas.

Cenovus said it continues to target C$4 billion to C$5 billion in asset sales in 2017.

Net loss narrowed to C$69 million ($53.76 million), or 6 Canadian cents per share, in the quarter ended Sept 30 from a loss of C$251 million, or 30 Canadian cents per share, a year earlier.

Third-quarter loss includes a charge of C$440 million related to the sale of its Pelican Lake assets. ($1 = 1.2836 Canadian dollars) (Reporting by John Benny in Bengaluru; Editing by Anil D'Silva)

SOURCE: REUTERS

UPDATE 2-Canadian Natural commits to shipping more crude on Keystone XL pipeline

CALGARY, Alberta, Nov 2 (Reuters) - Canadian Natural Resources Ltd has increased its volume commitment on TransCanada Corp’s Keystone XL pipeline by about 46 percent to 175,000 barrels per day (bpd), Canadian Natural President Steve Laut told Reuters on Thursday.

The bigger commitment from one of Canada’s largest oil and gas producers will be a boon to TransCanada, at a time when Canadian pipeline companies are trying to push through new projects in the face of fierce environmental opposition and concerns about slowing oil sands growth.

TransCanada’s open season to gauge interest from producers wanting to ship on the 830,000 bpd pipeline ended last week.

The company has not released the results or said what volumes it would need to push ahead with the project. Canada’s two other biggest energy producers Suncor Energy and Cenovus Energy have said they are committed shippers on Keystone XL, without disclosing contracted volumes.

Canadian Natural is growing its oil sands operations after completing an expansion at its Horizon project in northern Alberta, which will add 80,000 bpd of production.

Keystone XL would transport crude from Alberta to the U.S. Midwest but has been delayed for eight years by regulatory hurdles. U.S. President Donald Trump this year granted a presidential permit for the pipeline, reversing a rejection by the Obama administration.

Oil prices have been in a deep slump since 2014, prompting Canadian producers to scale back plans for growth and fuelling speculation that TransCanada could struggle to get enough shippers to support Keystone XL.

TransCanada Chief Executive Officer Russ Girling said in May that lower oil prices and alternative export routes were complicating shipper negotiations.

Bloomberg, citing sources, reported on Thursday that TransCanada had asked the Alberta government to buy capacity on the pipeline.

TransCanada spokesman Terry Cunha declined to comment on the Bloomberg report, adding that it “will spend the fourth quarter reviewing the commercial support of the project.”

Alberta government spokesman Mike McKinnon did not comment on the Bloomberg report but said the government supported all pipeline projects and had not ruled out any options.

“We make decisions on a project-by-project basis, weighing all economic considerations,” McKinnon added.

Last month TransCanada scrapped its proposed 1.1 million bpd Energy East pipeline from Alberta to Canada’s east coast amid mounting regulatory hurdles.

The Alberta government receives royalties in the form of barrels of bitumen from some producers and had been signed up to ship 100,000 bpd on Energy East. (Reporting by Nia Williams; Editing by Andrew Hay, Meredith Mazzilli and David Gregorio)

SOURCE: REUTERS

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