Canadian oil producers change strategies in face of oil supply certainty
A change in tellurian oil markets view is underneath way, replacing decades of nonesuch fears with certainty in surpluses, capping oil prices and forcing changes in a approach a attention works, observers say.
“We’re relocating from a mindset where oil was deliberate a wanting apparatus to one now where it’s some-more of a abundant resource,” pronounced Steve Reynish, executive vice-president of plan and corporate enlargement during Suncor Energy Inc., vocalization during a discussion in Calgary final week.
“What we’re saying is a outrageous reorder worldwide and it’s all about how can we contest in a some-more abundant universe and that unequivocally takes us to competitiveness, cost-cutting, collateral discipline.”
Reynish pronounced Canada has depressed behind a U.S. in tube and vital apparatus plan construction and needs to redo regulatory, domestic and environmental priorities. As an example, he reiterated a call by Suncor CEO Steve Williams final year to refurbish Alberta charge manners to concede oilsands producers to leave a many dear and carbon-intensive portions of a apparatus untapped.
U.S. production
The world’s stream oil oversupply has been mostly driven by U.S. shale oil and gas plays, Reynish said. According to a U.S. Energy Information Administration, Canada’s largest appetite patron has increased domestic oil prolongation from reduction than 4 million barrels per day in 2008 to 9.2 million bpd now, while gas outlay has risen from 67 million cubic feet per day to 89 million cf/d.
The prolongation over-abundance that put oil prices in a despondency starting in mid-2014 has pushed intensity investors to a sidelines, experts say.
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Energy researcher Nick Lupick of AltaCorp Capital pronounced a new fortitude in benchmark U.S. West Texas Intermediate prices has speedy some investors to put oil and gas bonds behind in their portfolios again though a marketplace is “skittish” and could simply be derailed by sensitivity in oil prices. Most supports sojourn subsequent marketplace weighting in oil and gas securities, he said.
“Between $50 US and $53 WTI (per barrel) is perfect,” he pronounced in an interview.
“If we can lay there for a rest of a year, fundamentals are display better, shopping will approaching continue, and a weightings will come up. What we don’t wish to see is volatility.”
WTI was trade during above $51 US on Friday.
Oilsands demand
Oilsands prolongation is approaching to arise early subsequent year as Suncor’s Fort Hills cave adds 194,000 bpd and Canadian Natural Resources Ltd. brings on a 80,000-bpd Horizon cave expansion.
Lupick pronounced there’s copiousness of direct in a universe for that complicated oil though a miss of tube space means higher-priced railway cars will have to be employed to move new barrels to marketplace in a brief term.
Adam Waterous, who left Scotiabank to start investment organisation Waterous Energy Fund early this year, pronounced he stays assured that this is a ideal time to deposit in oil and gas after 4 decades of “lousy” 6 to 8 per cent earnings from a sector.
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He pronounced a “age of scarcity” began with a Arab oil embargo on a U.S. in 1973 and has ever given stirred poorly-considered appetite projects in Canada formed on overly confident commodity cost forecasts.
“Optimism is a rivalry of a investor,” he said. “I’m a customer right now. we adore disastrous headlines.”
The Waterous account was combined with a idea to deposit $200 million- to $400-million in oil and gas companies — it bought two-thirds of a shares in Northern Blizzard Resources (since renamed Cona Resources Ltd.) progressing this year for about $244 million.
Conservative budgets
Suncor will be one of a initial vital Canadian oil and gas companies to news a third-quarter financial formula on Oct. 25.
Analysts contend few surprises are approaching as companies continue to scapegoat enlargement in foster of regressive budgets that keep spending to reduction than money upsurge (the disproportion between income and expenses).
Companies with refinery resources such as Suncor, Imperial Oil Ltd., Husky Energy Inc. and Cenovus Energy Inc. are approaching to do good as refinery distinction margins rose when competing Gulf Coast refineries were sealed due to flooding caused by whirly Harvey.
However, a six-cent US benefit in a normal value of a Canadian dollar in a third entertain compared with a second is approaching to harm producers’ satisfied oil and gas prices, dampening third-quarter profits.
Article source: http://www.cbc.ca/news/canada/calgary/canada-oil-suppliers-strategy-1.4355822?cmp=rss