Difficulty of Alberta oil sands serious threat to the national economy

Je vous propose 4 articles sur le pétrole albertains et la problématique de l’exploitation et les conséquences économiques négatives dû en grande partie au manque de visions de nos politiciens.

PIPELINE EXPANSION IS A NATIONAL PRIORITYCe n’est pas pour rien que nous avions initialement créé Pétro-Canada en 1970, même si elle a été privatisée en 1995, car souvent les intérêts des multinationales ne suivent pas nécessairement la même trajectoire que les intérêts nationaux.

Un article de Financial Post que j’avais publié en novembre 2011 me revient à l’esprit, qui est tout à fait pertinent dans notre actualité actuelle, que j’ai inclus dans ces 4 articles.

Nous avons besoins de leaders politiques qui sont solides et qui pensent à long terme, non seulement pour faire du bruit mais de solutionner les problèmes fondamentaux.

Pour les années à venir, l’économie réel va souffrir par la création gigantesque de la masse monétaire par les banques centraux pour créer une fausse compétitivité en dévaluant leurs monnaies ou pour racheter leurs propres obligations, parce qu’il n’y a plus de preneur.

Nous avons besoin de politicien ayant du leadership et de la vision, si on veut s’en sortir sans trop souffrir, et le cas du pétrole albertain, va demander des politiques canadiennes rigoureuses pour rétablir la situation.

«All it takes is vision, capital, know-how, tenacity and chutzpah.
And a big bold plan »

Bonne lecture.

Extrait de: Stalled pipelines cast shadow over Canada's economy, David Parkinson, The Globe and Mail, Dec. 28 2012

Canadian energy policy-makers may look back on 2012 with fond nostalgia. As difficult as their job was this year, it could look like a day at the beach compared with the challenges that are coming to a head as we enter 2013.

While 2012 marked some controversial policy decisions from Ottawa on foreign investing in Canada’s oil and gas sector, 2013 will shift the focus to an issue that threatens the industry in a more fundamental way. The country faces a critical shortage of transportation infrastructure to get its oil to key markets – and it’s threatening to cut down Canada’s energy companies at the knees.

“Western Canada’s oil industry faces faces a serious challenge to its long-term growth,” Toronto-Dominion Bank said in a report this month. “Production growth will become constrained unless new pipeline capacity is built to access new markets.”

The flood of :

1.      New shale oil supplies coming on stream in the United States.

2.      Combined with inadequate pipeline capacity to move Canadian oil to the markets that most need it,

Has left Western Canada (and the Alberta oil sands in particular) with a glut of oil that has gutted prices. The Western Canada Select oil grade – the benchmark for oil sands crude – was trading last week at a 40-per-cent discount to the U.S. benchmark West Texas Intermediate grade, and was selling for just half the price of Brent crude, the European standard.

Nomura Securities International Inc. economist Charles St-Arnaud estimated that this gaping price chasm is costing Canadian producers a collective $2.5-billion a month in lost revenues, relative to what they would get under more traditional spreads to Brent of about $10-$15 (U.S.) a barrel (the current spread is about $55).

Share values are suffering as a result. As of Dec. 19, the stock prices of the top six producers in the oil sands were down, on average, 5.5 per cent this year, compared with a 4-per-cent rise in the S&P 500’s energy subindex; the median price-to-earnings valuation of those companies was barely over 10 – or 1.5 multiples lower than that of the S&P 500 energy group.

Alberta Crude Oil priceNorth American pipelines are already running at very nearly full capacity, while the volume of oil being pumped out of the ground is growing rapidly, and could explode in the next decade or so. A report from bond-rating agency DBRS projected that output from the oil sands will more than double by 2025, to 4.5 million barrels a day (b/d) from two million.

At the same time, output from the booming Bakken shale oil field straddling the North Dakota-Saskatchewan border – which is about $20 a barrel cheaper to produce than the oil sands, and which increasingly competes with the oil sands for pipeline space – is seen soaring to 1.7 million b/d by 2025 from the current 700,000 b/d.

But it won’t happen unless there’s somewhere for the oil to go. Bakken and the oil sands are relatively high-cost supplies to produce;

1.      without sufficient transportation capacity to clear up the gluts and

2.      restore decent prices,

It simply won’t be economical for companies to invest in more output.

“Production growth cannot occur unless some of the planned pipeline projects out of the Western Canadian Sedimentary Basin go ahead,” the TD report said.

This would include a couple of proposed major projects that are hopelessly bogged down in environmental disputes and political wrangling: Keystone XL, which would deliver Canadian oil sands crude to feed the expansive refining capacity for heavy oil on the U.S. Gulf Coast; and Northern Gateway, which would send oil to the B.C. coast for export across the Pacific.

While the oil patch’s troubles don’t often garner much sympathy across Canada’s broader citizenry, TD noted that the transportation woes are more than just a problem for oil producers and investment in the sector.

They are a serious threat to the national economy.

TD calculated that investment in Canada’s oil and gas sector

·         Was responsible for 20 per cent of the country’s economic growth in 2010 and 2011.

It noted that a study this year from the Canadian Energy Research Institute estimated that if current proposed major pipeline expansions don’t proceed, “Canada could forgo as much as $1.3-trillion of GDP … and $276-billion in taxes from 2011 to 2035” as a result of the constrained activity in the oil patch.

If this isn’t a call to action on a national energy policy, I don’t know what is. Unless Ottawa develops the political will to kick-start a major renewal of pipeline infrastructure in this country, and fast, one of Canada’s biggest economic engines could be left lying on the road.

Extrait de: How big is Canada’s oil subsidy to the U.S.?,  Jeff Rubin, The Globe and Mail, Jan. 07 2013, 6:54 AM EST

Consider the tale of Suncor Energy Inc. and Canadian Natural Resources Ltd., two of the largest oil sands producers in Alberta. Outwardly, they may appear quite similar. Each produces hundreds of thousands of barrels a day from the oil sands. And most of that oil eventually ends up in the same place–gas tanks across the continent. The path it takes to get there, however, is another story. The difference is a microcosm of the predicament Canada’s energy industry currently faces.

Over the last few years, Suncor’s emphasis has shifted from exponential production growth to milking the full value of what it digs out of the ground.

1.      Fortunately for Suncor, it processes nearly all of the bitumen it pulls from the oil sands in its own refineries.

2.      On the other hand, CNRL, like most oil sands producers, exports raw bitumen to the United States. In so doing, however, the company also transfers an enormous amount of wealth from its Canadian operations to American refiners in the Midwest.

Alberta cost of shipping Canada Oil refinery

In the refining business, the difference between what a refinery pays for its inputs (like crude or bitumen) and the price it gets for finished products (like gasoline or diesel) is known as a crack spread.

The glut of oil coming from Canadian producers means Midwest refineries are enjoying crack spreads up to five times larger than those seen by American coastal refineries, which pay world prices for their feedstock.

Investors have certainly noticed what such large crack spreads mean for the bottom line. CNRL, which lacks its own refineries, is forced to sell its raw product at a heavy discount, thereby missing out on those juicy refining margins. Suncor, on the other hand, is able to capture the huge crack spreads through its downstream refining operations. In 2012, CNRL’s stock fell more than 20 per cent, while Suncor’s gained more than 10 per cent.

The issue is writ large in the price differential between West Texas Intermediate (WTI) and Brent crude. Although WTI is often quoted in North America as the price of oil, Brent is actually the global benchmark for crude. Unfortunately for Canadian producers, lately the spot price of Brent has been as much as $25 a barrel higher than that of WTI.

While Canadian oil sands producers are the main victims of this price gap, they’re also, somewhat ironically, its principal cause. Without more pipeline infrastructure to offload oil to other markets, oil sands crude, as well as shale oil from the Bakken play in North Dakota, has no where else to go. More production from these places only boosts supply, further lowering the price of WTI.

Aside from a few hundred thousand barrels a day from wells offshore Newfoundland that get Brent prices, virtually all of Canada’s 2.4 million barrels a day are priced off WTI.

An even bigger concern for Canadian oil producers than the discount between WTI and Brent is the price differential between WTI and Western Canadian Select–the benchmark price for western Canadian oil exports to the U.S. It’s trading around $60 a barrel, a third less than WTI and 45 per cent lower than Brent.

Do the math on some 2 million barrels a day of heavily discounted oil exports and suddenly you’re talking about an enormous wealth transfer from Canadian oil producers to American refineries.

(Note, the subsidy is pocketed by U.S. refiners, not motorists, who don’t see the Canadian discount when filling up at the pumps.) What if Canadian oil was getting world prices? At the current Brent-Western Canadian Select spread of roughly $50 a barrel, you’re in the neighbourhood of $100-million a day. That equates to foregone revenues of more than $35-billion over the course of a year.

It’s not just shareholders of companies like CNRL who are getting squeezed by this wealth transfer. The Alberta government loses royalties, while Ottawa (and the rest of Canada by extension) misses out on cash from corporate income taxes.

The rest of the oil sands industry may need to take a page from Suncor’s playbook.

Before rushing ahead to double oil sands production to 3 million barrels a day

1.      And sending billions more in de facto energy subsidies to U.S. refiners

2.      Investors and the Canadian economy may be better off if producers figure out how to capture more value from what they’re already digging out of the ground.

Jeff Rubin is the former chief economist of CIBC World Markets and the author of the award-winning Why Your World Is About To Get A Whole Lot Smaller. His recent best seller is The End of Growth .

Extrait de : La production de pétrole américaine talonne et dépasse celle de l'Arabie Saoudite, Contrepoints, 19/12/2012

Je tombe sur cette petite nouvelle (que je vous encourage à aller lire) et qu'il est toujours intéressant de relayer : les États-Unis ont probablement dépassé l'Arabie Saoudite comme premier producteur de pétrole dans le courant de la première semaine de Décembre 2012. On apprend en effet dans une communication de l'Arabie Saoudite elle-même vers l'OPEP que le royaume a moins produit en Novembre, à 9.49 millions de barils, soit 550.000 barils de moins qu'en Août.

D'un côté, l'Arabie Saoudite semble donc avoir diminué sa production à 11.2 millions de barils par jour dans la dernière semaine de Novembre (afin de conserver un prix du pétrole élevé, en raison de l'augmentation de production des États-Unis et de l’Irak). Les États-Unis ont augmenté leur production de pétrole (brut, gaz naturel liquide, éthanol et autres, avec des gains dans les processus de raffinement) pour dépasser celle de l'Arabie Saoudite dans la première semaine de Décembre (à 11.3 millions de barils par jour). Les États-Unis ont ainsi ajouté 660.000 barils par jours depuis Août.

Production of crude oil

Dans les dernières semaines, les USA ont ajouté 35.000 barils par jour à leur production de brut, et 99.000 barils par jour de gaz naturel liquide et de renouvelables ; la production de brut est à son plus haut niveau depuis 18 ans, et en augmentation de plus d'un million de barils par jour par rapport à la même période l'année dernière.

Production of crude oil - 2

À présent, pour que les USA produisent plus que l'Arabie Saoudite sans tenir compte des gains de raffinement, cela reviendrait à ce que les Américains augmentent à nouveau leur production de 1.1 millions de barils par jour, c'est-à-dire répéter la croissance observée en 2012. Enfin, signalons que si la demande mondiale continue à être faible comme actuellement, et si l’Irak continue d'augmenter sa production de 400.000 barils par jours, l'Arabie Saoudite pourrait choisir de réduire la sienne à 8 millions de barils par jour pour conserver des rangs de prix jugés acceptables par le Royaume.

Pendant ce temps, en France, on s'est très proprement interdit l'exploitation des Gaz de Schistes, des fois qu'on devienne indépendants énergétiquement et que ça fasse baisser notre facture énergétique.

Extrait de : Instead of pipelines, build refineries here, By Susan McArthur, Financial Post, Nov 4, 2011

$100-billion ­investment needed over 20 years

The continuing controversy in the U.S. surrounding TransCanada’s proposed Keystone pipeline may just be the best thing that ever happened to Canada. Perhaps it will force us to finally just say no to being hewers of wood and drawers of water. While Keystone’s success is important, it’s time Canada comes of age and:

Starts to transform more of its resources
into value-added products at home.

When it comes to our oil resources, this is no small undertaking. The price tag to build the infrastructure and refining complex scaled for our vast oil reserves could be as much as $100-billion and could take 20 years.

·         we have the resources,

·         the natural proximity to ports,

·         rail infrastructure and voracious customers south of the border and within 36 hours of our export terminals.

All it takes is vision, capital, know-how, tenacity and chutzpah.
And a big bold plan.

We don’t need to look very far for vision.

Northwest Red Water Partnership (NRWP) is a perfect example. Founded by Ian Macgregor’s Northwest Upgrading and in partnership with Canadian Natural Resources Ltd. and the Alberta government, NRWP is the first new refinery to be built in North America in 30 years. The $15-billion project is the stuff legends are made of. Alberta decided it wanted its share of the higher, less-volatile margins that come from converting bitumen to refined products. NWRP won the government’s tender and as a result a new refinery is being built at home, which will process a portion of Alberta’s royalty production.

Alberta and CNRL have committed a total of 50,000 barrels a day to the project for the first of three phases. The returns to the province are enormous — jobs, taxes and a share in the refining margins, which to date have accrued to large multinational oil companies (i.e. not Canadians). If Phase 1 of the refinery had been in operation last year, the province would have raked in an additional $500-million on its royalties.

A refining complex in Canada would also be better for the environment.

·         Refined products are roughly half the volume of raw bitumen and Canadian environmental standards are the highest in the world.

The NRWP refinery will be the first refinery in the world with an integrated CO2 solution.

Canada is awash in capital. Our pension funds are scouring the planet for long-term yield-generating assets to offset their liabilities. We are investing our retirement funds all over the world. For example, the $150-billion Canada Pension Plan portfolio has only 14% invested in Canadian equity. Approximately 40% of CPP’s portfolio is invested in foreign equities and the balance in debt, real estate and infrastructure, a large portion of which is offshore. CPP, along with the other large Canadian pension funds, have invested in foreign infrastructure projects partly due to a lack of opportunities at home.

Canada is the new hot spot for educated professionals. We have so much to offer with respect to lifestyle, security and opportunity.

1.      We can develop an entire generation of professional expertise around oil-refining processes.

2.      We can set the agenda re R&D for greener, cleaner refining practices and become a global leader in energy.

All of this made in Canada.

As for chutzpah … well, we are Canadians, after all. We built the railways and discovered insulin. What’s a mere $100-billion, 20-year plan to keep investment, jobs and control over our resources at home?

Plan B for our oil resources shouldn’t be exporting bitumen barrels to China versus the U.S. Gulf Coast.

It should be exporting value-added petroleum products to the world.