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    Tight Focus on Costs, Single Region Boosts Top Canada Oil Gainer (Wednesday, 13 December 2017)

    13 Dec 2017, 11:00 pm

    Since crude prices sank below $100/bbl three years ago, investors in oil stocks have been sending one clear message to companies: Stick to your knitting.

    Nowhere is this more apparent than in Canada, where the benchmark index’s top-performing, post-crash energy producer -- Parex Resources Inc. -- is a small company focused on extracting one commodity from one geographic region, Colombia. Parex is one of only four stocks in the 50-company S&P/TSX energy index that have gained since July 30, 2014, the last day oil closed above $100/bbl.

    The gain by Parex shows how investors have taken a liking to small producers who focus their operations in one region and aren’t too adventurous with their capital spending. While their diminutive size may seem like a disadvantage in a business dominated by behemoths, being small allows producers to provide investors with a clear picture of their plans and to wring out costs that larger operations can’t avoid.

    “They’re just more focused, more focused on costs,” said Ken Lin, an analyst at Paradigm Capital in Calgary. “In a lower price environment, the lower cost operator is the better operator.”

    @owi2018@

    Parex, based in Calgary, produces oil in Colombia through both new wells and by reactivating old fields using enhanced-recovery techniques. The company also held assets in Trinidad & Tobago when it was split off from Petro Andina in 2009, but sold them to focus on its more promising Colombian operations. The shares have gained 11% since oil slipped below $100. The broader energy index has slumped 33%.

    Driving Parex’s gain has been a debt-free balance sheet and an ability to increase its reserves and production entirely out of its cash flow, said Lin, who in a recent note nominated Parex as perhaps “the best oil and gas company in the universe.”

    CEO David Taylor said that the company will continue to focus on Colombia, rather than try to transport its expertise elsewhere.

    “We know how to do business here,” Taylor said in an interview from Bogota, where he spends four to six weeks a year. “We have a very strong team here, we understand the geology. Why would we change what we want to do?’’

    Prime land

    A similar story comes from Advantage Oil & Gas Ltd., the third-best-performing Canadian energy producer since the oil crash. Advantage owes its success to a concentration on producing natural gas from a prime land position in Alberta’s Montney shale formation and production costs that are among the lowest in the industry, CEO Andy Mah said in an interview. Advantage had corporate cash costs of 73 Canadian cents per thousand cubic feet of gas equivalent last quarter.

    Mah says the company was an early adopter of a philosophy that junior and intermediate energy companies need to structure themselves to be able to generate long-term profitability and corporate returns, rather than simply develop an asset and sell themselves to a major within five years. While shares of Calgary-based Advantage are down 7.8% since July 2014, that’s outperformed both the energy index and the price of natural gas, which has slid 23%.

    "Peaks and valleys"

    “There are probably going to be less of those peaks than valleys, and you have to be able to make money in the valleys,” Mah said in an interview. “At $100 oil, were a lot of companies doing everything they could to minimize their costs? I would say probably not.”

    Investors are tired of seeing oil and gas companies take cash flow that they are generating from one asset and plow it into other assets that don’t generate the same returns, said Justin Anderson, an analyst at Mawer Investment Management Ltd. Energy producers could attract investors who normally wouldn’t consider them by sticking only to a clearly defined set of assets and by paying only special dividends, instead of regular quarterly dividends, he says.

    “If you find some great new play, start a new company,” Anderson said. “And execute under that strategy and have investors invest under that new asset.”

    However, the big, diversified players haven’t fallen too far out of favor. Suncor Energy Inc., Canada’s largest oil company by market value, is the second best-performing producer in the energy index since the crash. Canadian Natural Resources Ltd., which produced more than a million barrels of oil equivalent a day last quarter, is the fourth.

    For many investors, more important than size or focus is how companies allocate capital, and on that front, Suncor and Canadian Natural both took advantage of the downturn to acquire billions of dollars of assets in deals that analysts have generally viewed as bargains.

    “Good management teams understand when to do land capture, when to build infrastructure, and then when to push on the pedal for growth,” Paradigm’s Lin said. “Very few teams are good on that.”

    Source: www.worldoil.com

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    Oil Holds Steady on OPEC Oil-cuts Review, Increase in U.S. Rigs (Wednesday, 13 December 2017)

    13 Dec 2017, 8:00 pm

    Oil held steady as U.S. drilling expanded and two OPEC nations signaled the group may phase out production cuts if the market improves by the middle of the year.

    Futures were little changed in New York after climbing 2.5% the previous two sessions. Drillers boosted the rig count by two to 751, a three-month high, according to weekly Baker Hughes data Friday. Kuwait said Sunday that OPEC-led output curbs may end earlier than planned if the market balances by June.

    While oil has been lackluster this month, it’s heading for a second yearly gain as the Organization of Petroleum Exporting Countries and its allies including Russia extend supply cuts through the end of 2018. The group may draft a strategy in June to end the curbs if the market is no longer oversupplied by then, the UAE’s energy minister said Monday, while Kuwait indicated the cuts could end before 2019.

    @owi2018@

    “If inventories fall a lot now, then the chance increases of OPEC phasing out cuts earlier than they have recently said,” said Jens Pedersen, a senior analyst at Danske Bank A/S. “The market is figuring out which stance to take on this. That said, it’s still a long way until the June review meeting.”

    West Texas Intermediate for January delivery was at $57.52/bbl on the New York Mercantile Exchange, up 16 cents, at 9:19 a.m. local time. Total volume traded was about 15% below the 100-day average. Prices earlier spiked to $57.62 as news broke of an explosion in New York.

    Brent for February settlement gained 35 cents to $63.75/bbl on the London-based ICE Futures Europe exchange. Prices slid 0.5% last week. The global benchmark traded at a premium of $6.10 to February WTI.

    Russia is keen to end output cuts as early as possible, Issam Almarzooq, the Kuwaiti oil minister who was replaced on Monday, said in Kuwait City on Sunday. OPEC will study an exit strategy at its next meeting in June, and prices should remain near current levels in 2018, Almarzooq said.

    Source: www.worldoil.com

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    Putin Opens Russia’s $27bn Arctic LNG Plant (Wednesday, 13 December 2017)

    13 Dec 2017, 6:00 pm

    Russia has opened a liquefied natural gas (LNG) plant in the country’s northern region of Yamal. The first tanker with LNG was launched on Friday by Russian President Vladimir Putin.

    The ice-breaking tanker is named after the former CEO of Total Christophe de Margerie who died in a plane crash in Russia. The tanker can carry up to 173,000 cubic meters of LNG. Russia plans to build 15 tankers as big as the ‘Christophe de Margerie‘.

    @owi2018@

    Russia must accelerate work on development capacity to produce liquefied natural gas,” Putin said at the ceremony.

    The controlling stake in the enterprise belongs to Russian energy major Novatek. Twenty percent each is owned by Total, and China’s CNPC, and the remaining 9.9 percent belongs to the China-based Silk Road Fund.

    Costing $27 billion, the plant will have three production lines and a total capacity of 16.5 million tons of LNG per year.

    Almost 96 percent of the Yamal LNG plant’s production has already been contracted. The main customers will be the countries of the Asia-Pacific region, Novatek reported.

    Shareholders of the Novatek project - Total and CNPC - will purchase LNG on a long-term basis.

    WATCH MORE: Cold Rush. Drilling For Oil Amid Arctic Ice

    The ceremony was also attended by a member of Saudi Aramco’s board of directors. The kingdom is considering taking part in Novatek’s new project, Arctic LNG 2, according to Russian Energy Minister Aleksandr Novak.

    Source: www.rt.com

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    BREAKING: Forties Pipeline Shuts Down Costing North Sea Oil 20M Per Day (Wednesday, 13 December 2017)

    13 Dec 2017, 3:00 pm

    Exports of natural gas from one of the North Sea’s key fields have been halted for at least three weeks until early January, after the closure of Britain’s largest oil and gas pipeline, field operator Total said on Wednesday.

    Swiss-based chemicals company INEOS, which owns the Forties Pipeline System, said on Wednesday that it has not yet taken a decision on repairing a pipeline crack that materialized during a routine inspection of onshore infrastructure last week.

    The pipeline carries 450,000 barrels per day (bpd) of Forties crude oil, roughly equivalent to a quarter of the daily output of the entire North Sea basin, and handles a third of Britain’s total offshore gas production.

    “A number of repair options are being considered and progressed,” INEOS said. “At this stage, it is still too early to say how quickly the repair will take, but it is expected to be a matter of weeks rather than days.”

    @owi2018@

    INEOS told clients on Tuesday it expected any repair work to last at least two weeks. Total said in a market notice that it expected gas exports from its Elgin-Franklin platform to stop until Jan. 2.

    It said the unplanned outage at the site, which has capacity of 10 million cubic meters per day of gas, started on Dec. 12.

    Total also produces about 55,000 bpd of oil from the field.

    UK natural gas prices have surged to their highest since 2013 after the closure of the pipeline that carries roughly a third of the country’s offshore gas output.

    Oil prices briefly touched their highest since mid-2015 at about $65 a barrel after the shutdown, which has cut off supply of the largest North Sea crude stream.

    Forties crude is sent through the pipeline to the Scottish coast and is loaded directly onto oil tankers at Hound Point to be sent to storage tanks in Dalmeny or piped to INEOS’s 200,000 bpd Grangemouth refinery.

    One trading source said late on Tuesday that a tanker at Hound Point had not been able to take on all of its scheduled load of crude oil because the system was “running dry”.

    Source: Reuters

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    BREAKING: Forties Pipeline Shuts Down Costing North Sea Oil 20M Per Day (Wednesday, 13 December 2017)

    13 Dec 2017, 3:00 pm

    Exports of natural gas from one of the North Sea’s key fields have been halted for at least three weeks until early January, after the closure of Britain’s largest oil and gas pipeline, field operator Total said on Wednesday.

    Swiss-based chemicals company INEOS, which owns the Forties Pipeline System, said on Wednesday that it has not yet taken a decision on repairing a pipeline crack that materialized during a routine inspection of onshore infrastructure last week.

    The pipeline carries 450,000 barrels per day (bpd) of Forties crude oil, roughly equivalent to a quarter of the daily output of the entire North Sea basin, and handles a third of Britain’s total offshore gas production.

    “A number of repair options are being considered and progressed,” INEOS said. “At this stage, it is still too early to say how quickly the repair will take, but it is expected to be a matter of weeks rather than days.”

    @owi2018@

    INEOS told clients on Tuesday it expected any repair work to last at least two weeks. Total said in a market notice that it expected gas exports from its Elgin-Franklin platform to stop until Jan. 2.

    It said the unplanned outage at the site, which has capacity of 10 million cubic meters per day of gas, started on Dec. 12.

    Total also produces about 55,000 bpd of oil from the field.

    UK natural gas prices have surged to their highest since 2013 after the closure of the pipeline that carries roughly a third of the country’s offshore gas output.

    Oil prices briefly touched their highest since mid-2015 at about $65 a barrel after the shutdown, which has cut off supply of the largest North Sea crude stream.

    Forties crude is sent through the pipeline to the Scottish coast and is loaded directly onto oil tankers at Hound Point to be sent to storage tanks in Dalmeny or piped to INEOS’s 200,000 bpd Grangemouth refinery.

    One trading source said late on Tuesday that a tanker at Hound Point had not been able to take on all of its scheduled load of crude oil because the system was “running dry”.

    Source: Reuters

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    Workers Sent Ashore From Flotel at Mariner Field (Wednesday, 13 December 2017)

    13 Dec 2017, 2:00 pm

    Offshore accommodation provider Prosafe said today that it had sent 14 workers ashore for not taking part in an emergency drill.

    Cyprus-headquartered Prosafe said the matter would be investigated further and that the individuals would return to their respective employers.

    The workers were on board Prosafe’s Safe Boreas flotel, which is currently stationed at the Statoil-operated Mariner field east of Shetland.

    @owi2018@

    An offshore worker claimed a number of people had raised concerns about the lifeboats on Safe Boreas and had refused to board them during muster.

    A spokeswoman for Oslo-listed Prosafe said all the lifeboats were checked at regular intervals and that all safety equipment was in place.

    A spokeswoman said: “Prosafe confirms that 14 persons chose not to participate in an emergency response muster drill on the accommodation vessel Safe Boreas yesterday morning.

    “To investigate the matter further, and in agreement with onboard management, it was decided that the individuals were to be transferred onshore for follow up with their respective employing companies.

    “The safety of all persons onboard is, and always will be, the top priority for Prosafe.

    “The Safe Boreas is operating in the Mariner field, offering accommodation support to Statoil’s Mariner A operations.”

    Prosafe’s spokeswoman later added: “All lifeboats on the Safe Boreas are checked at regular intervals, even more regularly during and after bad weather, and all safety equipment and interlocks were in place to allow the lifeboats to be safely boarded.”

    Unite regional officer Tommy Campbell said: “It’s always important that workers who are in the middle of a job or training should decide whether something is safe or not.

    “The fact that 14 people spoke up shows the job was unsafe.

    “They should not be punished for doing the right thing, which is speaking up for their own and other people’s safety.”

    Last week, Statoil said 36 workers had to be transferred by helicopter from the Noble Lloyd Noble rig, which is also at the Mariner site, to Safe Boreas, after a gangway between installations disconnected.

    Mariner is expected to yield 250million barrels of oil over its 30-year production life, and create 700 long-term jobs.

    First oil from the £4.5billion project is expected in 2018.

    Hook-up and commissioning work is currently being carried out.

    Source: oilandgasvision.com

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    North Sea Pipeline Repairs 'Could Take Three Weeks' (Wednesday, 13 December 2017)

    13 Dec 2017, 12:00 pm

    Repairs to the Forties Pipeline, which carries 40% of North Sea oil and gas, could take up to three weeks, operators have said.

    The pipeline has been shut to repair a crack discovered last week during a routine inspection south of Aberdeen.

    Operators Ineos said the repair would be more complicated than first thought as the crack was spreading.

    @owi2018@

    It said the impact for customers would be very significant but the domestic market was not likely to be much affected.

    Chief executive Andrew Gardner said workers found a hairline crack in the pipe last Wednesday, which then started to grow despite efforts to repair it.

    He said: "Over the weekend we noticed the crack starting to develop and grow further.

    "It was about 10cm and it grew another couple of centimetres.

    "We reduced the pressure further and then at that point the crack still grew so the only safe option was to take the system down so we could be convinced that we could stop the growth of the crack and get in and do a proper permanent repair."

    He added: "It was a straightforward process when the crack was not moving.

    "Now that the crack is propagating we need to be very careful that whatever repair isn't just masking a crack underneath so it will probably be a little bit more complicated than what we thought it was going to be, hence why we need to take the system down."

    Asked how long the system was likely to be down he said: "We're estimating just now between two and three weeks.

    "Overnight the system has come down, we've been making it safe and now we need to get in and inspect further and the results of that inspection now that the system is safe will obviously determine the repair mechanism."

    Some residents have been placed in temporary accommodation while the repairs take place.

    Ineos only recently bought the pipeline, which takes mainly oil to the company's refinery at Grangemouth.

    Mr Gardner said the impact of the shutdown would be "very significant" for Ineos customers and apologised to them.

    Source: stv.tv/

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    Iraq Boosts Output Capacity at Kirkuk Oil Refinery (Wednesday, 13 December 2017)

    13 Dec 2017, 10:00 am

    Iraq’s Oil Ministry has added a new processing unit to the Kirkuk oil refinery, increasing the plant’s capacity to 56,000 barrels per day, the ministry said in a statement on Monday.

    The new production unit can process 13,000 barrels per day of crude, the statement said, citing Oil Minister Jabar al-Luaibi.

    The new upgraded production capacity will meet most of the domestic need of the northern oil city of Kirkuk and nearby provinces and “save hard currency as a result of cutting fuel imports”, it said.

    @tailored@

    Iraq is working to divert most future output from Kirkuk oilfield to local refineries due to an ongoing conflict with Kurdish regional authorities over the use of an export pipeline to Turkey.

    Production from Kirkuk stopped in mid-October after Iraqi forces dislodged Kurdish fighters and took over the northern region’s oilfields.

    Source: www.reuters.com

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