HOUSTON ? Brian Ferguson was among the oil executives in a global energy conference here listening intently this week to Saudi oil minister Ali Al-Naimi’s warning to high-cost producers to exit the market. But he remains unmoved.
Good news, oilsands growth is unstoppable. The bad news, it’s unstoppable
Claudia Cattaneo: Canada will keep churning out more oil, at least until 2020, but it’s exactly that long-term horizon that may be our undoing in a volatile future
Read more
“Part of the items (OPEC is) attempting to do is create uncertainty about price, so longer-lead projects would be very difficult,” the CEO of Calgary-based Cenovus Energy Inc. said in an interview around the sidelines of an IHS CERA event that attracted a couple of,800 energy industry executives and government officials, as well as a strong contingent from Canada.
While U.S. shale producers attract a lot of OPEC’s ire, the Saudi oil minister also named the Canadian oilsands among those who had prospered in the past decade as OPEC “subsidized” them, however it will let free markets take over.
The OPEC-orchestrated free-for-all has sent oil prices reeling to a decade-low, leaving thousands in Calgary, Houston and elsewhere unemployed, with expected capital spending in the oilsands set to shrink to $16 billion this year from $28 billion in 2014, based on Peters & Co.
“A very real and troubling impact of low oil prices includes reduced employment inside our companies and throughout the logistics, including transportation, manufacturing and tech,” said Steve Williams, CEO of Suncor Energy Inc. inside a speech at the Houston event.
There is really a strong sense in the industry that this is really a structural, perplexing downturn.
Related
- Canada’s oil industry faces rising threat from the own backyard, IEA warnsCut costs, borrow cash or liquidate: Saudis deliver harsh message with other oil producers
-
-
-
“Few people let you know what’s happening in oil markets, however i will attempt,” said an exasperated OPEC Secretary-General Abdalla Salem El-Badri, as he blamed just-in-time U.S. shale output for that market glut.
Canadian oil companies haven’t much here we are at OPEC’s machinations.
“I can’t make my investment decision on which OPEC might do,” said Ferguson.
Cenvous plans to raise production by 100,000 barrels per day this season, area of the 800,000 bpd of Canadian oil likely to enter the market throughout the next 5 years, International Energy Agency estimates.
But Suncor’s Williams said the will have to “rethink” the way it operates and make use of the oilsands unique attributes.
“We are almost not part of the oil industry- because a large amount of the characteristics in our business are extremely different,” William said. “We have vast amounts of resource easily available and our clients are not just one of exploration, development and production. It’s largely capital investment- and incredibly efficient manufacturing.”
Canadian producers will also be facing a unique domestic crisis, as not one other major oil-producing country in the world has such a schizophrenic relationship using its resources.
Despite being the place to find the biggest coastline on the planet to its east and west, Canada has a solitary, choked-full 300,000-barrels-per-day Trans Mountain pipeline to gain access to markets other than the United States. Plans for brand new conduits have been delayed, denied and disparaged as climate change issues involves the fore.
The newly elected Liberal government considers moving natural resources to markets a “national goal,” but Natural Resources Minister Jim Carr is careful to not cheer-lead the sector, instead concentrating on investing in place a strong procedure that garners public confidence.
“Everybody knows that there has to be regulatory reform to ensure that major projects to be approved,” Carr said in an interview in Houston.
The industry does not seem to be awaiting either OPEC or even the Canadian government. Cenovus spend less by 30 percent this past year and expects more reductions this year, as it aims to lower your turnaround time for large-scale projects and rein in steam-to-oil ratios.
Companies are also aiming to reduce their carbon emissions to make sure they remain within Alberta’s new 100-metric-tonne-per-year cap, without sacrificing growth.
“If you believe the emissions cap is going to get in the way of future growth, you are either incredibly bullish on prices or incredibly bearish on technology, and I would say we want the opposite of this to achieve success,” said Andrew Leach, who spearheaded the weather change review panel set up through the NDP government in Alberta.
For its new projects, Suncor is likely to design a plan once and replicate it 10 times to produce economic savings that spend less up to Half and soften its effect on the environment.
“My feeling is technology can make a real impact on the environmental impact and the cost base,” Williams said. “ those activities over the following four or five years come off in certain scale.”
yhussain@nationalpost.com
twitter.com/YAD_FPEnergy
