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Frontera shuts Peru oil wells on pipeline outage

  • Spanish Market: Crude oil
  • 03/12/18

Canada's Frontera Energy is starting to shut in crude production in Peru because of delays in repairing a severed pipeline in the northern jungle.

Protesters in a small indigenous community cut the 100,000 b/d northern oil pipeline on 26 November. The pipeline owner, state-owned PetroPeru, has been blocked by the community from reaching the remote site in Loreto state, and estimates that at least 8,000 bl may have spilled.

Frontera had been increasing production from block 192 in recent months, reaching 11,430 b/d in November from a year-to-date average of close to 9,000 b/d, according to data from hydrocarbons regulator PeruPetro. The block is located more than 200km from the site of the incident at km 193 in the Morona district.

"It is expected that once access is granted, (pipeline) repairs will be completed in a short time…The Company will provide an update to the market once production from the block resumes," Frontera said this morning in announcing the production cuts in response to the pipeline force majeure declaration by PetroPeru.

The incident coincided with Canadian independent PetroTal's announcement that it will develop block 95, also in the Loreto. The company will need the pipeline to evacuate its future production.

PetroPeru pipeline manager Manuel Ugaz calculated last week that the cost of shutting in production at block 192 is $200,000 a day. The block accounts for around a fifth of Peru´s overall crude production.

Because of the remote location and rough terrain surrounding block 192, moving crude by truck -- which Frontera and other companies do in neighboring Colombia when pipelines are out of service -- is not an option. No other oil companies are affected by the pipeline outage.

The pipeline was initially closed on 17 November, when residents in the Mayuriaga indigenous community kidnapped 20 oil workers, four from PetroPeru and 16 from contract companies, according to the Peruvian police. The perpetrators threatened to set fire to the nearby Morona pumping station. The hostages were released after four days.

"This is not only an environmental crime, but an economic crime. We have been forced to close the pipeline, which harms all Peruvians," said Beatriz Hart, PetroPeru's manager of community relations.

Ugaz described the attack as well-planned and premeditated. He said aerial photos show the spill is not close to any waterways, suggesting that the perpetrators did not want to contaminate local water supply.

The attack is not directly related to PetroPeru – unlike a spill in the community two years ago – but was orchestrated to protest alleged fraud in 7 October municipal elections. The national election board dismissed the allegations.

Protests leaders were unavailable for comment. The community is on its own with the protest, as the indigenous federation grouping Wampi native communities has refused to back the partisan protest. Neighboring communities have also kept silent.

PetroPeru has registered 26 incidents along the aging 1,100km pipeline since early 2016, with 19 caused by some form of sabotage.

Ugaz said most of the incidents have been provoked by residents seeking jobs in remediation, with PetroPeru paying upward to $30/day for labor, much higher than average wages. "It's a perverse way of trying to make money," he said.


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01/11/24

TMX exports reach new record in October

TMX exports reach new record in October

Houston, 1 November (Argus) — Crude exported via the 590,000 b/d Trans Mountain Expansion (TMX) pipeline reached a new high in October at 413,000 b/d. TMX loadings out of Vancouver were up by 103,100 b/d from September and surpassed the previous record of 368,800 b/d in August by 12pc, according to data by analytics firm Vortexa. The exports loaded onto 24 Aframax tankers, up from an average 20 per month, according to Teekay Tankers in an earnings call. Of those 24 Aframaxes, nine went directly to Asia-Pacific ports while at least four went to the Pacific Area Lightering zone (PAL), where the vessels discharged onto very large crude carriers (VLCCs) for Asia-Pacific. The rest traveled to ports along the US west coast. China overtook the US west coast as the largest importer of TMX crude in October, increasing its loadings from 139,900 b/d in September to 208,300 b/d, or over 50pc of the total volume. A record amount of TMX crude still departed for the US west coast in October at 204,700 b/d, up 20pc from the prior month. Future imports into the region might be stifled in the short-term, with US independent refiner PBF planning to run less TMX crude during the fourth quarter amid higher prices and ongoing maintenance on equipment used to remove impurities from heavy sour crude, like the grades exported from TMX. Long-term, TMX transportation rates could become more economical for California refineries, PBF said in its third quarter earnings call. Canadian high-TAN crude fob Vancouver averaged a roughly $11.35/bl discount to December Ice Brent in August, when October cargoes were trading, while heavy sour Cold Lake averaged a roughly $10.60/bl discount. By Rachel McGuire Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Lyondell Houston refinery closure to begin in January


01/11/24
01/11/24

Lyondell Houston refinery closure to begin in January

Houston, 1 November (Argus) — LyondellBasell's 264,000 b/d Houston, Texas, refinery will begin shutting units in January and complete its previously-announced exit from the crude refining business by the end of the first quarter 2025. The Houston plant will shut a crude distillation unit (CDU) and coking unit in January followed by a secondary CDU, coking unit and the refinery's fluid catalytic cracking unit (FCC) in February, the company said in an earnings presentation today. The February unit shutdowns will include the closure of "ancillary units", LyondellBasell said. The company today re-iterated its time line of exiting the refining business by the end of the first quarter and continues to evaluate an advanced recycling or renewable fuels conversion at the plant. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

TMX adds to ‘pulse’ of 4Q freight market: Teekay


31/10/24
31/10/24

TMX adds to ‘pulse’ of 4Q freight market: Teekay

Houston, 31 October (Argus) — An increase in monthly Aframax crude tanker loadings in Vancouver, British Columbia, is poised to add a new dynamic to the tanker market this winter, Teekay Tankers chief executive Kenneth Hvid said. So far, tanker rates in the fourth quarter, often the strongest time of year for the market, have lagged the trajectory of fourth quarter 2023. But it is too early in the quarter to assume a rally will not happen, Hvid said. "It feels like the market has called the winter over before it started," he said. "But there is absolutely a pulse in the markets." Part of the support for tanker rates likely will come from heightened demand on Canada's Pacific coast, where exports in Vancouver are continuing to rise following the Trans Mountain Expansion (TMX). In October, 24 Aframaxes loaded in Vancouver, Hvid said. That marks a new high since TMX began operations in May, with the monthly average at around 20 loadings from June through September, according to Teekay. Nine of the 24 cargoes went directly to Asia-Pacific ports and at least four went to the Pacific Area Lightering zone (PAL), where the vessels discharged onto very large crude carriers (VLCCs) for shipment across the Pacific. An increase in direct shipments from Vancouver to Asia-Pacific can clear out available tonnage on the west coast of North America and pressure rates higher, which lifted rates in September . Teekay profits down on year Teekay reported a profit of $58.8mn in the third quarter, down from $81.4mn in the third quarter of 2023, with rates under pressure from lower Chinese crude oil imports. The tanker company expects rates to climb in the fourth quarter on seasonally higher oil demand. Teekay has a fleet of 42 tankers, including 24 Suezmaxes and 18 Aframax/long range 2 tankers, with six additional vessels on time charter. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

CNRL 3Q oil and gas output dips


31/10/24
31/10/24

CNRL 3Q oil and gas output dips

Calgary, 31 October (Argus) — Canadian Natural Resources' (CNRL) crude, natural gas and natural gas liquids (NGL) output decreased by 2.2pc in the third quarter. The Calgary-based integrated oil and gas company produced 1.36mn b/d of oil equivalent (boe/d) during the third quarter, down slightly from 1.39mn boe/d in the same quarter last year, the company said Thursday. CNRL's upgraders produced 498,000 b/d of synthetic crude, up from 491,000 b/d in the same quarter last year as the Athabasca Oil Sands Project's (AOSP) Scotford upgrader produced stronger than expected volumes and completed a planned turnaround nine days ahead of schedule. The impact of planned turnarounds to CNRL's annual synthetic crude output was reduced to 5,400 b/d, down from the company's initial forecast of 11,000 b/d. The company also acquired Chevron's Canadian oil sands and Duvernay shale production for $6.5bn in the quarter, increasing CNRL's annual synthetic crude production by 62,500 b/d and its stake in AOSP to 90pc. Bitumen production at CNRL's thermal in-situ projects was 272,000 b/d, up from 269,000 b/d in the same quarter of 2023 as output at Jackfish reached 128,000 b/d, a new quarterly record. The company's crude and NGL output, excluding thermal in-situ, was 228,000 b/d, down from 232,000 b/d in the same quarter last year. CNRL will also increase its committed capacity on the 590,000 b/d Trans Mountain Expansion (TMX) by 75,000 b/d to 169,000 b/d, allowing the company to secure almost one third of the line's committed capacity after PetroChina Canada offloaded its capacity on 10 October. The newly expanded pipeline has provided Canadian producers with more meaningful access to global buyers, reducing Canadian heavy crude price volatility and adding significant egress capacity out of Alberta. Yet, it is uncertain how long unconstrained egress in Alberta can be sustained with oil sands production expected to grow. "It certainly helps secure those barrels which would otherwise be potentially in an egress constrained situation," said CNRL president Scott Stauth on Thursday, adding stronger pricing is now possible by aiming volumes at California or Asia. CNRL posted a profit of C$2.27bn ($1.63bn) in the quarter, down from a C$2.34bn profit during the third quarter of 2023. By Kyle Tsang Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

CNRL’s upsized TMX commitment to start in December


31/10/24
31/10/24

CNRL’s upsized TMX commitment to start in December

Calgary, 31 October (Argus) — Canadian Natural Resources (CNRL) will have 80pc more space on the 590,000 b/d Trans Mountain Expansion (TMX) crude pipeline at its disposal in about a month's time, executives said today. The country's largest oil and gas producer will push its contracted capacity on the country's newest export pipeline to 169,000 b/d starting on 1 December, up from 94,000 b/d. Ensuring the continuously growing company would be able to place additional volumes was top of mind for executives. "It certainly helps secure those barrels which would otherwise be potentially in an egress constrained situation," said CNRL president Scott Stauth on Thursday, adding stronger pricing is now possible by aiming volumes at California or Asia. CNRL will then hold about one-third of TMX's roughly 472,000 b/d of contracted space for the line, which moves crude from Edmonton, Alberta, to the docks at Burnaby, British Columbia. The remaining 20pc, about 118,000 b/d, is set aside for uncommitted shippers. "When you take a look at the opportunities off the west coast to further expand and diversify to additional refining destinations, that provides a significant forward opportunity for us," said Stauth. TMX has stabilized the Canadian market "more so than it ever was before," he said. PetroChina Canada on 10 October said it had offloaded its TMX capacity in a letter to the federal pipeline regulator, with some market participants suggesting CNRL was the other party in that deal. TMX roughly tripled the capacity of the existing 300,000 b/d line when it went into service on 1 May. CNRL is known for pushing production higher through acquisitions in the Western Canadian Sedimentary Basin (WCSB) and struck another major deal earlier this month. The Calgary-based company is buying Chevron's oil sands and Duvernay shale production for $6.5bn with the acquisition expected to close in the fourth quarter, but be effective for 1 September. CNRL produced 997,000 b/d of crude and natural gas liquids (NGL) in the third quarter, down slightly from 1.01mn b/d in the same quarter 2023. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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