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CNRL to buy Chevron's Canadian oil sands, shale: Update

  • : Crude oil, Natural gas
  • 24/10/07

Canadian Natural Resources (CNRL) agreed to buy a 20pc stake in the Athabasca Oil Sands Project (AOSP) and 70pc interest in the Duvernay shale from Chevron for $6.5bn, extending its lead as Canada's top producer.

The all-cash transaction has an effective date retroactive to 1 September, the companies said Monday. Closing is expected during the fourth quarter.

The assets being sold accounted for about 84,000 b/d of oil equivalent (boe/d) of production, net of royalties, to Chevron last year.

Chevron last October announced plans to acquire US independent Hess for $53bn, pledging to sell $10bn-$15bn of assets by 2028. While the Hess deal has been delayed by a mid-2025 arbitration hearing, Chevron, the second-largest US oil producer, has increasingly focused its attention on the Permian shale basin of west Texas and southeastern New Mexico, as well as an expansion project in Kazakhstan.

CNRL's acquisition bolsters its position as Canada's largest petroleum producer after pumping out 1.29mn boe/d of oil and gas in the second quarter this year. About 72pc came from oil and natural gas liquids (NGLs), with the balance from natural gas.

CNRL anticipates the oil sands and Duvernay assets will lift the company's production profile by about 122,500 boe/d in 2025. About half, or 62,500 b/d, will come in the form of synthetic crude oil produced from AOSP's 320,000 b/d Scotford upgrader near Edmonton, Alberta. The upgrader is fed diluted bitumen piped from the Muskeg River and Jackpine mines in the oil sands region.

The deal would increase CNRL's stake in AOSP to 90pc. Calgary-based CNRL first made its foray into AOSP in 2017 when it bought a 70pc stake from Shell and Marathon Oil Canada for $9.75bn ($C$12.74bn).

Muskeg River and Jackpine are adjacent to the company's fully owned Horizon mine and upgrader, and the increase in ownership may allow for increased synergies between the two assets, according to executives.

"It allows for a little bit more ease in terms of governance on the asset," CNRL president Scott Stauth said Monday on an investor call. "I can see us utilizing the equipment more effectively between the two sites."

Undeveloped oil sands projects

Also included in Monday's deal are additional stakes in undeveloped oil sands leases that CNRL could tap as it works through its reserves. This includes a 20pc increase the Pierre River project that would provide CNRL with 90pc ownership; a 60pc increase in the Ells River project that would lift the company's stake to 90pc; a 33pc increase in the Saleski project, for 83pc; and a 6pc working interest in Namur that would reach 65pc.

Reserves from Pierre River could be used to extend the life of the Horizon project as the North Mine depletes. A standalone facility there is also possible, but would require a significant capital outlay, CNRL executives said.

CNRL in May said it was considering a massive 195,000 b/d increase to its Horizon production using two new technologies.

CNRL said production from the light oil and liquids rich assets in the Duvernay is expected to average 60,000 boe/d in 2025, half of which would be natural gas. CNRL anticipates pushing production to 70,000 boe/d by 2027 with more than 340 locations already identified as candidates for drilling.

With WTI above $70/bl, "this is a very attractive acquisition for us," CNRL chief financial officer Mark Stainthorpe said.

CNRL has been actively acquiring assets in recent years. The company purchased Canadian assets belonging to Painted Pony in 2020, Devon Energy in 2019, TotalEnergies in 2018 and Cenovus Energy in 2017, among other deals.


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24/11/03

Opec+ delays supply return for one month

Opec+ delays supply return for one month

London, 3 November (Argus) — Eight Opec+ members that were due to begin raising crude output from December have opted to delay the restart by one month, the Opec secretariat said today, 3 November. The eight ꟷ Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman ꟷ had already postponed, by two months, a plan to start returning supply, over concerns about worsening economic indicators, and in turn, weakening oil prices. With these concerns still very much live, the group has decided again to delay the start of a move that would have added 180,000 b/d to global supply in December. The eight "have agreed to extend the November 2023 voluntary production adjustments of 2.2mn b/d for one month until the end of December 2024," the Opec secretariat said. As was the case with the postponement in September, the secretariat did not give any explicit rationale for the move. This one month deferral means a decision about whether to start returning supply in January, or to delay again, will coincide with Opec and Opec+ group meetings that are scheduled to take place in early December. Delegate sources told Argus after the first postponement that its decision was also to allow some of the group's serial overproducers, namely Iraq, Russia and Kazakhstan, time to improve compliance with their pledged output targets. The secretariat today again made a point of underlining the wider group's "collective commitment to achieve full conformity," with a focus on those three countries. Benchmark North Sea Dated crude was assessed by Argus at $73.48/bl on Friday, 1 November, around $20/bl below where it was before Opec+ announced its initial output cut in October 2022. The alliance has reduced output by 4mn b/d since then, Argus estimates. Much of the oil price weakness is down to an increasingly gloomy demand outlook, primarily driven by worse-than-expected consumption growth in China. Global oil supply is also higher than Opec+ would prefer — including from its own overproducers — and is due to rise further, with the US, Guyana and Canada driving gains. The IEA forecasts a supply surplus of more than 1mn b/d in 2025, even in the absence of any increase from Opec+. By Nader Itayim and Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

TMX exports reach new record in October


24/11/01
24/11/01

TMX exports reach new record in October

Houston, 1 November (Argus) — Crude exported via the 590,000 b/d Trans Mountain Expansion (TMX) pipeline reached a new high in October at 413,000 b/d. TMX loadings out of Vancouver were up by 103,100 b/d from September and surpassed the previous record of 368,800 b/d in August by 12pc, according to data by analytics firm Vortexa. The exports loaded onto 24 Aframax tankers, up from an average 20 per month, according to Teekay Tankers in an earnings call. Of those 24 Aframaxes, nine went directly to Asia-Pacific ports while at least four went to the Pacific Area Lightering zone (PAL), where the vessels discharged onto very large crude carriers (VLCCs) for Asia-Pacific. The rest traveled to ports along the US west coast. China overtook the US west coast as the largest importer of TMX crude in October, increasing its loadings from 139,900 b/d in September to 208,300 b/d, or over 50pc of the total volume. A record amount of TMX crude still departed for the US west coast in October at 204,700 b/d, up 20pc from the prior month. Future imports into the region might be stifled in the short-term, with US independent refiner PBF planning to run less TMX crude during the fourth quarter amid higher prices and ongoing maintenance on equipment used to remove impurities from heavy sour crude, like the grades exported from TMX. Long-term, TMX transportation rates could become more economical for California refineries, PBF said in its third quarter earnings call. Canadian high-TAN crude fob Vancouver averaged a roughly $11.35/bl discount to December Ice Brent in August, when October cargoes were trading, while heavy sour Cold Lake averaged a roughly $10.60/bl discount. By Rachel McGuire Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexican hydrogen regulatory efforts gain ground


24/11/01
24/11/01

Mexican hydrogen regulatory efforts gain ground

Mexico City, 1 November (Argus) — The Mexican hydrogen association (AMH2) has made significant strides in recent discussions with regulators and officials, unveiling a comprehensive roadmap for industrial hydrogen adoption. The group's report estimates there will be demand for about 392,189 tonnes (t) of hydrogen per year across seven major industries during Mexico's pilot hydrogen development phase. This includes sector-specific hydrogen demands of 148,350 t/yr from oil refining through 10 potential applications; 107,325 t/yr for mining; 55,877 t/yr for hydrogen blending in natural gas; 23,932 t/yr in the metals industry; 35,040 t/yr tied to ammonia production; 15,265 t/yr for public transport; and 6,400 t/yr for methanol production. AMH2's strategy urges the administration of President Claudia Sheinbaum to designate a lead ministry for hydrogen development, prioritize green hydrogen production and introduce incentives for project financing, technology development and energy transition initiatives. Additionally, it calls for regulatory adaptations to facilitate hydrogen's integration into Mexico's natural gas infrastructure, including quality, transportation, distribution and safety standards, especially for industrial equipment. Legal reforms to support hydrogen development will also be needed, according to the report, targeting laws governing mining, water, hydrocarbons, nuclear energy, energy transition, environmental protection, electric power, bioenergy and geothermal power. For green hydrogen — generated with renewable energy — the focus would be on the latter five areas. These efforts align with Mexico's long-term energy plan (Prodesen 2023-2037), which envisions converting 12 combined cycle power plants, totaling 1.024GW, to operate on a 70pc natural gas and 30pc hydrogen blend between 2033 and 2036. AMH2 president Israel Hurtado said although Mexico's pipeline infrastructure could handle up to a 15pc green hydrogen blend, achieving a 30pc blend would require further technological advances expected over the next decade. Prodesen also identifies regions for hydrogen injection into pipeline networks, including Sonora, Sinaloa, Tamaulipas, Oaxaca, Veracruz, Baja California and the Yucatan peninsula. Yet new regulations will be crucial to establish a robust framework for hydrogen blending in existing infrastructure. The Sheinbaum's administration has committed to reducing carbon emissions and promoting clean energy, Hurtado said, with a $13.5bn investment pledge in renewables over six years and a target for 45pc of national power from renewables by 2030. AMH2 has built early connections with Sheinbaum's team, including Jorge Islas, her energy and climate advisor during the campaign, who now heads the energy ministry's (Sener) energy transition unit and supports green hydrogen initiatives. AMH2 leaders also recently met with energy regulator (CRE) president Leopoldo Melchi and commissioner Walter Jimenez, who expressed strong interest in hydrogen regulation. The association and CRE agreed to form a technical workgroup to develop clean hydrogen regulations collaboratively. Looking ahead, AMH2 plans to meet with energy minister Luz Elena Gonzalez and Mexico's economy ministry to further discuss the hydrogen strategy. But CRE's workgroup is on hold pending potential legislative reforms that could reorganize Mexico's energy regulators under Sener's supervision. Projects in development AMH2 has identified 16 hydrogen projects in Mexico, with eight in various development stages and eight announced. Primarily focused on green hydrogen, these projects represent an estimated $19bn investment. The largest, Helax, is a $10bn green hydrogen production facility in Oaxaca, connected to the Interoceanic Trans-Isthmus Corridor. AMH2 anticipates production to start within two years following initial permitting. The roadmap suggests that, even if only six projects are operational by 2030, the sector could generate 3.351GW and attract $1.8bn in investments. These projects are projected to bring in $2.5bn in revenue over six years and yield $1.9bn in tax contributions. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US job growth slumps in October, jobless rate at 4.1pc


24/11/01
24/11/01

US job growth slumps in October, jobless rate at 4.1pc

Houston, 1 November (Argus) — The US added only 12,000 nonfarm jobs in October, reflecting the impacts of two hurricanes, a strike at aircraft manufacturer Boeing and a slowing trend in hiring prompted by high borrowing costs. The unemployment rate remained unchanged at 4.1pc, still close to a five-decade low of 3.4pc reached in early 2023, the Labor Department reported today. Last month's gains were far fewer than the 113,000 forecast by analysts surveyed by Trading Economics. Job gains for the prior two months were revised down by a combined 112,000 jobs, leaving September with a still robust 233,000 and August with 78,000 jobs. A Labor Department report earlier this week showed job openings in September were at their lowest since January 2021. Still, job gains for the 12 months through October averaged 194,000, a little higher than the 12-month period before Covid-19 struck the US beginning in early 2020, causing millions of job losses and a sharp but short recession. Today's employment report, the last before next week's US presidential election, cements odds of a quarter point cut in the Federal Reserve's target rate next week to nearly 100pc from about 96pc Thursday, according to CME's FedWatch tool. The Fed cut its rate by half a point in late September, the first cut since 2020, as it is just beginning to loosen monetary policy after the sharpest tightening in decades to battle surging price gains. Inflation has since moved close to its 2pc target and job gains have gradually slowed, even as the economy remains robust, growing by nearly 3pc in the second and third quarters of the year. Hurricane Helene made landfall in northern Florida in late September and slammed northwards into Georgia, the Carolinas and Virginia, leaving major damage in its wake. Hurricane Milton struck Florida on 9 October, within the period of both surveys used for the job report. About 32,000 unionized workers at Boeing have been on strike since early September. Job growth trended up in government and in health care and social services, which added 40,000 and 51,000, respectively, while manufacturing declined by 46,000, partly due to strikes. Construction added 8,000 jobs. Average hourly earnings edged up to an annual 4pc from 3.9pc. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Lyondell Houston refinery closure to begin in January


24/11/01
24/11/01

Lyondell Houston refinery closure to begin in January

Houston, 1 November (Argus) — LyondellBasell's 264,000 b/d Houston, Texas, refinery will begin shutting units in January and complete its previously-announced exit from the crude refining business by the end of the first quarter 2025. The Houston plant will shut a crude distillation unit (CDU) and coking unit in January followed by a secondary CDU, coking unit and the refinery's fluid catalytic cracking unit (FCC) in February, the company said in an earnings presentation today. The February unit shutdowns will include the closure of "ancillary units", LyondellBasell said. The company today re-iterated its time line of exiting the refining business by the end of the first quarter and continues to evaluate an advanced recycling or renewable fuels conversion at the plant. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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