Cenovus at full contracted rates on TMX pipeline

: Crude oil
24/10/31

Canada's Trans Mountain Expansion (TMX) pipeline is driving competition on the country's west coast and supporting domestic prices, according to oil sands giant Cenovus Energy, which has already filled its own capacity on the line.

"TMX shipments have gone well and we have successfully ramped up to full contracted rates," Cenovus chief executive Jon McKenzie said on Thursday, only six months after the 590,000 b/d expansion was put into service on 1 May.

The line nearly tripled capacity of the existing 300,000 b/d system linking Alberta crude producers with the docks at Burnaby, British Columbia, providing access to more customers and higher prices.

"We continue to see really robust competition at the dock," said Cenovus' commercial executive vice-president Geoff Murray, adding that pricing realized has been reflective of global value.

Murray envisions a time when the uplift in prices covers not only the variable costs but also the fixed costs of being a committed shipper on the line, of which Cenovus has about 144,000 b/d of capacity.

"We're seeing things that are covering our costs of full investment in the very near future," said Murray, who says the operational performance of Trans Mountain has been "really solid".

Those fixed tolls are still being determined with shippers and Trans Mountain scheduled for a regulator-led hearing in May 2025. Interim tolls in place have the fixed costs for a heavy crude shipper moving 75,000 b/d or more over a 20-year term at about C$9.54 ($6.84)/bl.

Demand for the line will surely remain robust, with McKenzie anticipating "material growth" in the oil sands business over the next two years because of development activities at the company's Sunrise and Foster Creek steam-assisted gravity drainage (SAGD) assets. They could boost production by 20,000 b/d and 30,000 b/d, respectively.

Elsewhere in the oil sands, the 17 kilometre (11 mile) Narrows Lake tie-back to Christina Lake is now 93pc complete and will add 20,000 b/d of output to Cenovus' production profile, starting in mid-2025.

Cenovus executives still anticipate local heavy crude differentials to start to widen in "the next two to three years," which would coincide with when Trans Mountain may reach capacity.

Cenovus produced 771,300 b/d of oil equivalent (boe/d) in the third quarter, down from 797,000 boe/d in the same quarter 2023.

By Brett Holmes

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

24/10/31

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.

PBF to run under 20,000 b/d of TMX in 4Q

24/10/31

PBF to run under 20,000 b/d of TMX in 4Q

Houston, 31 October (Argus) — US independent refiner PBF processed 20,000 b/d of Canadian crude from the expanded Trans Mountain (TMX) pipeline in the third quarter but expects to run less than that in the fourth quarter, the company said on an earnings call today. The company can run up to 50,000 b/d of the heavy crude grade from western Canada at its Torrance and Martinez refineries in California, which have a combined 316,000 b/d of capacity. A higher relative price for the TMX barrels driven by Asian demand and ongoing maintenance on equipment used to remove impurities from heavier crude grades at one of its refineries has led PBF to run less of the Canadian oil. Longer-term, PBF expects California refineries to run "significantly" more barrels from TMX as they have the lowest logistical cost to transport. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: EU-GCC eye alliance anchored in energy, security

24/10/31

Q&A: EU-GCC eye alliance anchored in energy, security

Dubai, 31 October (Argus) — Russia's invasion of Ukraine in 2022, and the start of the war in Gaza last year hastened the strengthening of relations between the EU and the Gulf Co-operation Council (GCC) ꟷ something both blocs had long been striving for. Argus sat down with the EU's special representative for the Gulf region and former Italian foreign minister Luigi di Maio at the Future Investment Initiative in Riyadh this week to discuss his hopes for the future of the relationship. You spoke at the conference about a comprehensive EU-GCC trade agreement. Such a thing has been on the table for a while without really moving forward. Could the first ever EU-GCC summit two weeks ago in Brussels provide the push needed for it to happen? The final statement of the summit clearly emphasised the importance of finalising the negotiation in a positive way, and reaching the free trade agreement at a regional level as soon as possible. Then we can start tailor-made negotiations on trade and investments. This can work in complementarity with the free trade agreement, for instance, on investments and energy co-operation bilaterally. This doesn't mean we are going to kill the free trade agreement at the regional level, but there are some sectorial co-operations that we can implement. This is a very good starting point. I would say the summit was ‘the message' because although our co-operation agreement dates back to the late 1980s, it was the first ever summit. Of course, that also testifies to the gap that we have to fill. This is why the EU approved the new strategy and why there is a special representative to implement this strategy. And why we are working with the Gulf countries to negotiate and implement [it] as soon as possible. Riyadh is where we opened the first ever European Chamber of Commerce in the GCC. The EU and Saudi Arabia are going to sign an energy co-operation MoU by the end of the year. The text has been discussed, and now we will work for the signature. What are the elements of this energy agreement with Saudi Arabia? It is a new framework to co-operate, particularly, on renewables, hydrogen, and technologies linked to renewables. This is very important, and currently in the hands of the EU commissioner for energy, Kadri Simson, and Prince Abdulaziz bin Salman, the energy minister of Saudi Arabia. Speaking of hydrogen, Prince Abdulaziz spoke here about Saudi Arabia being one of the lowest-cost producers of hydrogen. We also know that hydrogen is a major element of the India-Middle East-Europe Economic Corridor [IMEC] agreement signed at the G20 summit in New Delhi. Is the IMEC project still on the table? And is this growing hydrogen relationship between the EU and the GCC part of it? First, the lesson we, the EU, learned is diversification. So, it's very important to implement our diversification policy on any kind of energy source. It is not only linked to oil, gas or hydrogen, or in general, technologies, raw materials and production. Then there is the issue of how much we can count on the suppliers. The Gulf countries like Saudi Arabia, the UAE, Qatar and others have always been reliable partners. This is why we see the energy co-operation as a pillar of our partnership. On hydrogen, there is a mutual interest to meet our ambitions. Our ambition, according to the European Commission's REPowerEU proposal, is for the EU to produce 10mn t of hydrogen on its soil by 2030, and import another 10 mn t. Saudi Arabia, the UAE and Oman are working with our companies and member states to export hydrogen to Europe. And I think the development of technologies and new projects around that will be at the core of our future co-operation. If you look at Vision 2030, here in Saudi Arabia, but even in the UAE and in the other countries, many of the goals are in line with our REPowerEU, NextGenerationEU, or the European Green Deal proposals. So there is momentum, and we are taking it. We are trying to fill the gap of the past. And the very important thing, not only about hydrogen, but even about the climate co-operation that is in our final statement [of the EU-GCC summit], is that it's not an "Una tantum" [one-off] event. We are working to have the ministerial foreign ministers' meeting in Kuwait next year and the next EU-GCC summit in Saudi Arabia in 2026. We have a long road ahead to implement the deliverables of the last summit, but also to improve our co-operation on renewables. There was a significant breakthrough at Cop 28 with the mention of fossil fuels in the final declaration. Do you see the growing EU-GCC relationship as a leverage to push GCC countries on their climate agendas and goals? The approach should not be that we push them on their climate agendas. We are working together. And thanks to the multilateral relations, ambitions and policies that we have, we can, even in view of Cop 29, co-ordinate in the same way we did at Cop 28. This is very important, because thanks to their influential foreign policy, on Africa, on central Asia, even sometimes on Latin America, and our ambitions and partners around the world, we can merge our relations to take another step forward on climate policy. But as you said, Cop 28 was historic, as consensus was the most ambitious result of the UN climate Cops, and I think we have to continue on this path together. It is not a matter of pushing someone. It's a matter of co-operation. Our level of partnership with GCC has to switch at a strategic level. We want to create a strategic partnership on peace and prosperity. This is our agreed ambition on both sides. Speaking of peace and prosperity, Iran is involved indirectly in the Russia-Ukraine conflict, and its direct confrontation with Israel leaves the GCC sandwiched in the middle. How do you see the EU working with the GCC to attain peace and prosperity, given the increased insecurity in the region? We share with the GCC the interest of peace, prosperity and stability of the region. Because if you look at these countries, what are they doing on Ukraine, like returning children and prisoner exchanges… They are very active, and we appreciate their efforts. So my perception is that the more we work with the GCC on regional stability, the more we will achieve results, because we have a common agenda. They will be very important for the future of the two-state solution, but also for the stability of Lebanon. Even for conveying messages of de-escalation to Iran. The channels with Iran have to be open… to convey messages about nuclear, ballistic missiles, about weapons to Russia for use against Ukraine, and the ‘Axis of Resistance' policy in the region, about the Red Sea and the freedom of navigation. We have to use all the channels we have and the channels the GCC have are precious because of the normalisation processes in the region, just like the Iran-Saudi Arabia one. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

TMX tanks to be completed in 4Q: Gibson

24/10/30

TMX tanks to be completed in 4Q: Gibson

Calgary, 30 October (Argus) — Storage capacity near the origin of the Trans Mountain's crude pipeline system is on track to grow by 870,000 bl in the fourth quarter, Gibson Energy said today. The Calgary-based midstream company is in the final stages of constructing two 435,000 bl tanks at its Edmonton Terminal that can be used to stage crude for shipping on the 890,000 b/d Trans Mountain system. This includes the recently started 590,000 b/d Trans Mountain Expansion (TMX) that was put into service on 1 May and has been a boon for Canadian producers seeking a stronger connection with customers on the Pacific Rim. "We would agree with industry in general that TMX seems to have gone very well thus far," said Gibson's chief financial officer Sean Brown on Wednesday. "As we look at our terminal, we continue to see a very compelling service offering as it relates to new tankage demand there." The expanded 1,180-kilometer Trans Mountain system connects Edmonton, Alberta, to the docks at Burnaby, British Columbia, and has allowed shippers to better target refiners in California, China, Korea, India and Japan. The two new tanks will be used by oil sands producer Cenovus and is underpinned by a 15-year contract, according to Gibson. The new tanks will add to the 2.1mn bl of capacity Gibson already has at Edmonton, with the company noting it has room to expand by another 1mn bl. Volumes from the tanks would be pumped over to Trans Mountain's Edmonton Terminal which has 39 tanks and a total capacity of 9mn bl of its own. TMX has helped to drive company-wide throughputs higher by 5pc in the third quarter, as has Gibson's 1mn b/d South Texas Gateway crude terminal (SGT) in Ingleside, Texas, which it acquired for $1.1bn in August 2023. SGT can accommodate very large crude carriers (VLCCs) and is directly connected to the Permian and Eagle Ford basins via pipelines. Gibson plans to tap into another 670,000 b/d of Permian production with its Cactus II connection, expected to be completed in the third quarter of 2025. Cactus II is a joint venture between Enbridge and Plains that moves crude from Wink to Corpus Christi, Texas. Throughputs on Gibson's entire network averaged 1.82mn b/d in the third quarter, up from 1.74mn b/d in the same period 2023. Gibson Energy posted a profit of C$54mn ($40mn) on the quarter, up from a C$21mn profit during the same quarter of 2023. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LatAm-China energy ties lurk for next US leader

24/10/30

LatAm-China energy ties lurk for next US leader

Sao Paulo, 30 October (Argus) — China's growing economic reach into Latin America's energy and commodities has figured little in the latest US presidential campaign, but either Kamala Harris or Donald Trump may eventually have to face the topic. China began formally trying to increase its reach into Latin America in 2018, when it invited the region to be a "natural extension" of its Belt and Road Initiative (BRI). The effort has brought mixed results. So far, 22 countries in Latin America and the Caribbean have joined the massive Chinese infrastructure initiative, but hydrocarbons producers such as Colombia and regional powerhouse Brazil have not. The latter wants to "take the relationship with China to a new level without having to sign an accession contract," the Brazilian special presidential adviser for international affairs Celso Amorim said on 28 October. This came after agriculture minister Carlos Favaro said earlier that joining the BIR would be "positive" for the country. "There are projects that Brazil has defined as a priority and that may or may not be accepted [by Beijing]," Amorim said. Still, China has found other ways of increasing its grasp in Brazil, such as increasing exports of electric vehicles — with automaker BYD setting a R5.5bn ($1.1bn) investment plan in the country — and crude . But China is a major trade partner for all of Latin America. Exports of all goods from Latin America and the Caribbean to China reached a record $208bn in 2023, with Chinese imports into those regions hitting $242bn, according to Boston University Global Development Policy Center. Around 70pc of those exports are of copper, soybeans and crude — the two latter mainly coming from Brazil — while another 20pc comprise of beef and livestock. With or without the BRI, China's larger grasp in Latin America is seen as problematic in the US by both sides of the political spectrum. "The discourse of competition between the US and China has crossed party lines," according to Conrado Baggio, an international relations professor in Cruzeiro do Sul University. "Any candidate for president needs to present a firm and combative rhetoric towards Beijing." Chinese efforts de-dollarize the world economy also concern Washington, but mildly. China along with the other Brics countries — Brazil, Russia, India and South Africa — have led efforts to reduce the world's economy dependence on the US dollar and are working on an independent crossborder payment settlement platform to "minimize trade barriers." But results have been mixed as well. For instance, the Chinese yuan surpassed the dollar as the main currency in bilateral trades between Brazil and China in April-June 2023. But the American currency is still the main coin on over 80pc of Brazilian trade with other countries. "De-dollarization initiatives have hardly gone beyond rhetoric," Baggio said. Harris and Trump have opposing views on many topics and their approach to China is no different. Trump is likely to take a more confrontational stance on China, including higher tariffs and sanctions. That could naturally increase trade between Latin America and China, according to Fernando Galvao, a Brazilian economic analyst. On the other side of the aisle, Harris might choose a more diplomatic strategy. "Harris may prioritize rebuilding international alliances and strengthening multilateral institutions," Galvao added. Still, a Harris administration is more likely to emphasize environmental and human rights issues, which could pressure Latin America to adopt more sustainable policies. Failure to do so could lead to more trade with China, he added. But although the US will certainly keep an eye on China's relationship with Latin America, that is hardly the main concern within the US' foreign relations scope. "Given Washington's increasing involvement in Europe, with Russia and Ukraine, and in the Middle East, with Iran and Israel, Latin America may occupy a secondary position within the US' concerns," according to Baggio. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more