July 18, 2016 (Source: Globe & Mail) Canadian Natural Resources Ltd has quietly bought up about 12,000 natural gas wells across Alberta over the last two years, a Reuters analysis of regulatory data shows, becoming the country’s largest natural gas producer as rivals sold assets or held steady in a tough market.
The counter-cyclical shopping spree helped CNRL push its Alberta well count up 60 per cent between the end of 2013 and the end of 2015, building a dominant position in the province and overtaking Encana Corp to become Canada’s top producer.
The purchases – some for less than $1.00 per well – came as the company grappled with the biggest oil price slump in a generation, selling land to pay down debt. While CNRL has bought assets during previous downturns, it has never before acquired so many wells, so quickly. The expanded footprint not only increases production, but also gives the company a strategic advantage that will pay off for years to come if the natural gas market improves.
With an extensive network of wells and the gathering pipelines that connect them, it can turn a profit from wells that might lose money in the hands of a smaller producer.
“All these new wells have low production, but they were bought for pennies for the dollar,” said Ramond James analyst Chris Cox, noting the wells are in adjacent properties which offers cost synergies, and “if you are expecting pricing to improve then you get an additional uplift.”
July 15 (Source: Bloomberg) — More than 700 miles of new pipelines in Texas are being built to ship more of the state’s natural gas to Mexico, raising concerns from U.S. environmentalists who want to see low-carbon renewable energy grow instead.
Exports of gas to Mexico are expected to grow dramatically by the end of the decade. While the U.S. has a long history of pipeline exports to Mexico, the explosion of new pipeline construction is raising environmental concerns about wild landscapes, an expected expansion of hydraulic fracturing, and greater use of natural gas instead of other sources of energy such as solar and wind.
But Texas, with bountiful supplies as a result of the shale boom, sees opportunity for exports south of the border.
“Having an opportunity like the Mexican market does help Texas producers and the industry, especially in a time when prices are lower here and demand is lower,” said Brian Kalinec, an independent geophysicist in Houston. “You are basically filling in demand if an opportunity exists and I think that any Texas producer close to the border would consider these possibilities.”
Its unfortunate that Duke Energy scrapped plans for a $24-billion nuclear project in central Florida citing the boom in shale gas as the reason for the cancellation. This short sited view will only result in a the project re-emerging at a later date at a substantially higher cost. Though the Horn River News has long been supportive of the opportunity presented by the boom in shale gas globally, and called it as being the most important energy source of the next century, it is important to realize that no one single source can meet growing global clean energy needs. Nuclear will play a critical role in developing a sustainable, low emission energy mix.
(Source) North America’s nuclear industry received more bad news last week when Duke Energy scuttled a planned $24-billion nuclear project in central Florida, as competition from low-cost gas has cast a pall over a long-promised renaissance.
Duke is only the latest in a list of companies that have either cancelled construction plans or announced closure of reactors that had been scheduled for costly overhauls.
The industry has run into a number of problems including weak power demand and cost over-runs. But it has also become hard to justify new nuclear in the face of a shale gas boom that not only has brought low prices, but is expected to keep a lid on the fuel costs for decades to come.
Ontario is currently redrawing its long-term energy plan, and will be reviewing proposals from Westinghouse and Candu Energy to build two reactors to make up for the loss of capacity when older ones reach end of life in the next decade.
Full Article: Globe & Mail; Florida nuclear project cancelled in face of shale gas boom
This week marks the fifth anniversary of the announcement of the Pickens Plan. Mr. T. Boone Pickens has launched a video celebrating and summarizing all of the accomplishments of the Pickens Plan and an op-ed that he wrote which was published in the Dallas Morning News.
Congratulations on five successful years T.Boone! Here’s to five more.
Photo: AP Photo/Charles Dharapak
In a speech yesterday in President Barack Obama stated the Keystone XL pipeline will be rejected unless it’s clear that it won’t exacerbate global warming.
“Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interests,” the President said, adding “our national interest would be served only if this project does not significantly exacerbate the problem of carbon pollution.”
President Obama has appeased the opposition while setting Keystone up for approval later this year because Keystone will easily meet the stated requirements.
First, with or without the Keystone pipeline the Alberta oil-sands will increase production over the coming years. The pipeline will not have an impact on this growth or the carbon emissions from the oil-sands production.
Second, the increased shipment of Alberta oil-sands product via the Keystone is intended to replcace heavy oil from Venezuala and other suppliers. So again, the keystone pipeline will not result in a net increase in emissions.
In fact, if the Keystone is not built there will be an increase in emissions as oil-sand bitumen will be shipped to the USA from Alberta buy diesel powered locomotives and also have an increased risk profile compared to shipping via pipeline.
President Obama has set the criteria know that it will be achieved and when approved will be able to defend his decision.
The alternative solution would be to build refining capacity in Canada and ship end products rather then raw bitumen to the USA. The Americans would happily buy it and it would create all those jobs in Canada rather then the USA (apparently they don’t want the jobs or don’t need them in the USA!)
Keystone XL will get built, and so will the Northern Gateway pipeline which will open a secondary market for Canadian oil and gas in Asia as it will also meet the same criteria. It is not good business to be dependent on just one customer just as the USA is not dependent on one supplier.
Oil and gas production from tight shale formations clearly is a long-term phenomenon and not a short-term trend, Deloitte LLP officials told reporters. The financial services company found growing confidence in unconventional energy resources in a survey it conducted last year, said John England, a vice-chairman and leader of its oil and gas practice.
“Huge investments are flowing into this sector from previously unheard from sources,” he said on May 21 during Deloitte’s 2013 Washington Energy Conference at nearby National Harbor, Md. “It’s a reason so many foreign companies have come into the US. Investment recently has flowed to midstream infrastructure, but there’s still strong interest upstream.”
More natural gas liquids are being recovered along with the shale gas, and that’s attracting investments too, he observed. “It’s interesting that we’re having this debate about authorizing more [LNG] exports when we’re already export significant amounts of NGLs,” England said.
Growing tight oil development also is generating more investments, he continued. “Even in the Eagle Ford and Bakken formations, recovery rates are still quite low so there’s a real technology opportunity,” he said.
Joseph A. Stanislaw, Deloitte’s independent senior energy and sustainability advisor, said the whole global energy equation is changing because of what North America is doing with shales. “This new fossil energy abundance could benefit alternatives if we use it not as an end, but a means,” he suggested. Read more…
(Source: Blomberg) According to a commission report prepared for a summit of EU leaders, shale gas production has contributed to a widening gap between U.S. and EU industrial prices for energy. The increase in European energy prices is linked to the inconsistency of EU policies to boost the share of renewable energy, increase energy efficiency and cut greenhouse gases, as well as to national policies that distort the internal market, according to a study.
Bloomberg: “EU Seeks Energy Integration as U.S. Shale Gas Widens Price Gap”
According to a recent report by the Institute of Directors, shale gas could be the “new North Sea” for Great Britain providing tens of thousands of jobs, and supply valuable energy resources .
The Telegraph: “Shale gas ‘could be a new North Sea for Britain’”
The Conference Board of Canada published an analysis Monday that expects Canada’s natural gas industry to add more than $1 trillion to Canada’s economy over the next 24 years and support an average of 260,000 jobs a year over that time frame. At HRN we completely agree!
The ambitious projection factors in all the direct investment, but also ancillary spinoffs down the supply chain and figures all regions of the country stand to benefit, even those provinces without any large natural gas holdings.
Read more: Canada’s natural gas industry could be worth $1 trillion
According to GE CEO Jeff Immelt the success of shale gas industry has produced a global adundance of cheap natural gas that has made nuclear power hard to junstify. He is quoted in a Financial Times interview as stating:
“They’re finding more gas all the time. It’s just hard to justify nuclear. Gas is so cheap and at some point, economics rule”.
Here on HRN we support the shale gas industry and its potential to represent a larger part of the overall energy mix in many countries. However, it will never fully displace any other energy source. The world will need all sources of power, to meet growing, sustainable long term demand.
A long term approach must be taken with nuclear power and not economics based on the spot price or projected price of natural gas. Nuclear power is needed, and should be employed with the world’s leading technologies, and built away from earth quake faults, and tsunami zones.
Human nature and price economics will dictate that consumers gravitate towards lowest cost supply. We are finally seeing the number of users of natural gas increasing as trillions of cubic meters of natural gas are unlocked from vast shale gas resources. Coal plants are converting to natural gas and large commercial vehicle fleets in the US are switching to the low carbon, affordability of natural gas vehicles.
There is great opportunity in natural gas globally. However it can not be the sole energy source and will not completely displace or replace other energy sources. No country should bet their future entirely on one energy source but using more natural gas produced from shale gas as a bridge to a more sustainable greener energy future makes more sense. Nuclear is part of that energy future but in order for it to succeed, new generation nuclear reactors need to be built in order to replace existing, aging reactors, and new ones for future demand. It will take visionary leadership, rather then immediate profit considerations and short sightedness that has become common place in deferring problems to future generations.
Reuters: “Nuclear power hard to justify in cheap gas world: GE“