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TMX spurs oil sands to find ways to boost output

  • : Crude oil
  • 24/08/16

Access to Asia-Pacific markets has driven oils sands production higher, but more pipeline capacity will be needed for further growth, writes Brett Holmes

Canada's oil sands are growing again as producers increase output, incentivised by new market opportunities created by the start-up in May of the 590,000 b/d Trans Mountain Expansion (TMX) pipeline to the country's Pacific coast.

Output from the big four producers in Alberta's oil sands — Canadian Natural Resources (CNRL), Cenovus, Suncor and Imperial Oil — rose by 8pc in the second quarter compared with a year earlier to a combined 3.26mn b/d of oil equivalent (boe/d). Key to this improvement was an aggressive approach to maintenance aimed at minimising operational downtime and maximising productivity gains.

Suncor, CNRL and Imperial each trimmed the number of days that major assets were off line during the quarter. Imperial completed the now annual turnaround at its Kearl mine in just 19 days, down from 35 days and a previous annual programme of two 35-day stoppages, while Suncor cut downtime at its Base Plant and Syncrude upgraders by a combined 12 days, partly through reducing the scope of work and partly through innovations such as using drones to carry out inspections that would have previously needed scaffolding.

Operators will see the biggest productivity benefits "if we can just simply extend the intervals on entire turnarounds", Suncor chief executive Rich Kruger says. CNRL is taking that approach at its Horizon upgrader, shifting turnarounds from annually to once every two years, in a move it believes will add 14,000 b/d to its synthetic oil output. Imperial sees its maintenance rescheduling at Kearl boosting the mine's output by 20,000 b/d to 300,000 b/d.

Oil sands producers now have an extra incentive to boost output, given the enhanced access to lucrative Asia-Pacific markets provided by TMX, which is having some impact on prices and differentials, executives say. Heavy sour Western Canadian Select in Alberta averaged about $67/bl in the second quarter, up from about $59/bl in the same period a year earlier.

The improved market access has boosted profits and sentiment for Canadian producers, and further infrastructure expansion may be coming. Canadian midstream firm Enbridge is considering a further expansion of its 3.1mn b/d Mainline system running from Edmonton to the US midcontinent, which it could optimise to accommodate another 150,000 b/d of throughput by the end of 2027.

Appetite for construction

There is likely to be demand for this additional capacity. The Alberta Energy Regulator says it expects oil sands production to increase by 500,000 b/d over the next 10 years from 3.41mn b/d last year. And further additions may emerge if progress can be made on the issue of carbon capture and storage (CCS) to deal with associated emissions.

CNRL is looking at a massive 195,000 b/d expansion of its 250,000 b/d Horizon project, but has said that an attractive fiscal and regulatory climate is "absolutely key" before it commits to any expansion of that size. That specifically means government support for the Pathways Alliance, a consortium of CNRL and five other oil sands producers which is proposing a C$16.5bn ($12bn) CCS project that would initially connect 14 oil sands facilities, with the aim of cutting CO2 emissions by 10mn-22mn t/yr by 2030.

A green light for Pathways and other CCS schemes would be likely to act as a trigger for further investment in Alberta's oil sands. Shell and Strathcona have already announced that they are advancing separate CCS projects after they secured new investment tax credits, but the industry's focus will be heavily on a final investment decision for Pathways, which the Alberta government says is expected next year.


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25/01/23

Fewer, smaller shale deals in 2025: Enverus

Fewer, smaller shale deals in 2025: Enverus

New York, 23 January (Argus) — After $300bn of consolidation in the US oil and gas industry over the past two years, deal making is set to fall in 2025 while breakeven prices for acquired inventory will likely rise, according to consultancy Enverus. The rapid pace of mergers and acquisitions targeting shale-based assets has led to many of the best targets having been snapped up. As a result, the quality of newly acquired inventory is declining, averaging a $50/bl breakeven price in 2024, up from $45/bl in 2022-23, Enverus calculates. "The pool of available remaining private equity assets is largely smaller, higher on the cost curve or both," Enverus said in its annual outlook. Yet a pressing need for scale and future of location inventory will encourage smaller producers to embark upon more deals. And improved efficiencies — such as drilling longer lateral wells — will be key in boosting economics on more marginal acreage. Mergers involving public companies will ease up in 2025 from a recent average of five a year, according to Enverus. While deals involving smaller producers may offer suppressed valuations relative to private opportunities, a potential lack of a strategic fit and agreement on future management teams may pose obstacles. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump tariffs could stall Mexico’s growth: Fitch


25/01/23
25/01/23

Trump tariffs could stall Mexico’s growth: Fitch

Mexico City, 23 January (Argus) — US President Donald Trump's threat to impose tariffs on imports from Mexico could have a serious impact on Mexico's already sluggish economic growth in 2025, Fitch Ratings said. "Our assumption is that Trump will follow through on some tariff threats," said Todd Martinez, senior director of sovereigns at Fitch Ratings, during a webinar. But potential 25pc tariffs would likely apply only to durable goods, which account for about 10pc of Mexico's exports to the US, thanks to protections under the US-Mexico-Canada (USMCA) trade agreement that are likely to protect oil exports, he added. Fitch forecasts Mexico's economy to grow by just 1.1pc in 2025. But this estimate does not include the potential impact of tariffs, even if limited. Should they be implemented, these tariffs could shave 0.8 percentage points off GDP growth, potentially pushing the economy into near-zero growth or a contraction, Martinez said. The uncertainty surrounding the scope, timing, and duration of the tariffs adds to the economic risks. "These tariffs may also serve as a negotiation tool for broader bilateral issues," noted Shelly Shetty, managing director of sovereigns at Fitch Ratings. Exports to the US represent over 25pc of Mexico's annual GDP growth. Additionally, Mexico is home to the largest undocumented population in the US, at around 4.8mn individuals, according to Fitch. While Trump's return to the White House could disrupt Mexico's economy, domestic challenges also threaten growth. Martinez highlighted the judicial reform passed late last year, which will overhaul the judiciary by introducing popular elections for judges and supreme court justices between 2025 and 2027. This reform has already raised concerns among global investors. Mexico's governance index has worsened between 2012 and 2023, according to the World Bank. Fitch also noted that the ruling party Morena's supermajority in congress could further alarm international investors by introducing policies perceived as unfavorable to business. Fitch currently has Mexico's sovereign credit rating at BBB-, its lower medium investment grade, with a stable outlook. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Venezuela loses appeal of $8.5bn ConocoPhillips award


25/01/23
25/01/23

Venezuela loses appeal of $8.5bn ConocoPhillips award

Houston, 23 January (Argus) — An international arbitration court has rejected Venezuela's appeal of an $8.5bn award given to ConocoPhillips related to Venezuela's expropriation of its crude assets in 2007. The World Bank's International Centre for the Settlement of Investment Disputes (Icsid) dismissed Venezuela's appeal, which was based on multiple arguments over the costs awarded. Icsid also ordered Venezuela to pay $6.46mn in ConocoPhillip's legal fees and $1.35mn in other court costs for the proceedings. "The decision upholds the principle that governments cannot unlawfully expropriate private investments without paying compensation," ConocoPhillips said of the ruling. Venezuela's latest appeal with Icsid came after a US federal court in 2022 cleared ConocoPhillips to try to collect the $8.5bn award, which has an annually compounded interest rate of 5.5pc. Venezuela's government did not immediately respond to a request for comment. ConocoPhillips first filed the case with Icsid after Caracas expropriated its Petrozuata and Hamaca crude upgrading assets and its offshore Corocor light to medium-grade crude production project as part of deceased former-president Hugo Chavez's nationalistic energy drive. But collection will still be difficult given that there are multiple claims in international courts totaling more than $60bn against Venezuela, which has dwindling international assets in the face of sanctions against the government of President Nicolas Maduro. A process to sell US refiner Citgo, Venezuela's main foreign oil asset, to satisfy some of these creditors has faced multiple delays. By Carla Bass Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Poland says EU 2040 climate target a 'challenge'


25/01/23
25/01/23

Poland says EU 2040 climate target a 'challenge'

Edinburgh, 23 January (Argus) — Setting the bloc's climate target for 2040 as well as agreeing additional environmental and climate laws is a "challenge" for the six-month Polish EU presidency, Poland's environment minister Paulina Henning-Kloska said, as there is "no unified position". Speaking to the European Parliament's environment committee, Henning-Kloska, who chairs meetings of both environment and energy ministers, made clear that member state adoption of the bloc's 2040 target for cutting greenhouse gas (GHG) emissions will be difficult. "We had a discussion on this in the council [of ministers] last December," she said. "What is clear is that there is no unified position," she added, as some member states wants greater flexibility in reducing emissions between 2030 and 2050. Difficult discussions between EU states and in the European parliament will likely push the submission of the bloc's nationally determined contribution (NDC) — climate plan — to the UN Framework Convention on Climate Change (UNFCCC) beyond the 10 February deadline. The European Climate Law requires the European Commission to propose a 2040 climate target "at the latest within six months of the first global stocktake". The global stocktake was completed during the UN Cop 28 climate summit in Dubai, in 2023. It gauged countries' progress against the Paris Agreement and proposed measures to keep to its goals — including keeping warming preferably below 1.5°C. EU officials note that the 2040 target will "inform" the decision on the EU's next NDC. Even if the EU's NDC submission does not require a separate law, officials also "expect" to receive a political mandate from member states before the NDC submission by the European Commission and the EU's presidency, led by Poland until the end of June. Despite the threat to a speedy timeline, the commission maintains it will continue to be a "leading" voice for international climate action and aims to submit the EU's next NDC "well ahead" of the Cop 30 climate talks in Belem, Brazil in November. But German member Peter Liese thinks the EU is in "deadlock" on its 2040 target. "We may like it or not, it's very ambitious," he said. "And I don't see enough support for that target." A member of parliament's largest centre-right EPP group, Liese also picked up on Polish prime minister Donald Tusk's and Henning-Kloska's call for changes or delay to the bloc's specific emissions trading system for road transport and heating fuels (ETS2). "I don't see — without the ETS2 — member states have any plan to get to their target," said Liese, who has previously helped draft legislative revisions to the ETS. "I don't think abolishing is a solution. Postponement is also [not] the best solution," Liese said. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Brazil real recovers ground on US dollar


25/01/22
25/01/22

Brazil real recovers ground on US dollar

Sao Paulo, 22 January (Argus) — The Brazilian real continued to strengthen against the US dollar today thanks to increased investor confidence domestically and an easing in the dollar globally in recent days after the real tumbled in the last weeks of 2024 on fiscal concerns. The exchange rate ended the session at R5.946/$1, as the real appreciated by 1.4pc on the day. The real has strengthened by about 7.8pc to the dollar from an intradday low of R6.4/$1 on 25 December. The last time the exchange rate between the two currencies ended the day below the R6/$1 threshold was on 11 December, when it stood at R5.989/$1. The real's recent appreciation took place as domestic investors are more confident about the country's spending cut plans, according to Sidney Lima, an analyst at Ouro Preto Investimentos, an investment management firm. But it is hard to say whether the recent appreciating trend will continue in the future, he said. That will "depend on the continuity of fiscal reforms in Brazil and global economic conditions," he added. At the same time, the US dollar index, which tracks the dollar against six main trading partner currencies, has fallen from a more-than two-year high on 12 January on uncertainty over whether US president Donald Trump will follow through on his tariff threats. Still, the Brazilian real has depreciated by around 20pc to US dollar since 22 January 2024. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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