Posts from Martin King

Sunday, 11/27/2022

Despite many challenges, natural gas production in Western Canada has been hitting record highs this year, powered by what seems to be the inexhaustible energy of the unconventional Montney formation. This immense resource remains the primary focus of most Canadian gas producers, and those that operate in the British Columbia portion of the Montney know they have their work cut out for them in the next few years if they are to meet the growing need for gas, especially when the LNG Canada export terminal comes online mid-decade. In today’s RBN blog, we update the Montney’s production and productivity trends in British Columbia and evaluate whether enough progress is being made.

Tuesday, 11/08/2022

Despite global energy insecurities, many countries continue to push forward with efforts to incentivize an energy transition and fulfill emission-reduction targets. Canada has been no exception, with its federal government earlier this year introducing detailed climate goals for each of its major economic sectors, with particular emphasis placed on oil and gas, the country’s largest emitter. With the aim of a 42% emissions reduction for this sector by 2030 versus 2019 levels, Canada has set a target that may well be beyond reach, raising the possibility that production cutbacks later this decade will be the only alternative. In today’s RBN blog, we examine this potentially disruptive prospect.

Monday, 10/24/2022

Capturing carbon dioxide (CO2) emissions from industrial and oil and gas activities is already a big challenge but having a safe, permanent place to store them is vital if the goal is to meet or exceed emission-reduction targets. To this end, Alberta, home to most of Canada’s oil and gas industry, including the vast oil sands, is steadily advancing plans to develop carbon sequestration hubs and underground reservoirs across the province in parallel with above-ground CO2 capture plants and pipelines. In separate announcements this year, the province gave the go ahead to 25 projects to develop sequestration hubs and determine if they can achieve commercial viability. In today’s blog, we consider Alberta’s latest efforts to push forward with its emissions capture and storage plans.

Wednesday, 10/05/2022

Lithium is in high demand worldwide for the production of rechargeable batteries used in the rapidly expanding electric vehicle (EV) and utility-scale energy storage markets, as well as a plethora of everyday mobile devices. The problem is, there are relatively few places on the planet that offer rock formations or naturally occurring underground brine reservoirs conducive to the economic production of lithium — and even there the concentrations of lithium in the rock and brine are measured in parts per million. Now, a handful of companies in Alberta and elsewhere are exploring the potential for “direct lithium extraction” from oil and gas well brine, an alternative technique that some view as a potential breakthrough. In today’s RBN blog, we discuss the promise — and potential pitfalls — of lithium production from oil and gas brine.

Thursday, 09/22/2022

There finally seems to be some momentum building for additional LNG export projects on Canada’s West Coast. Major pipeline and midstream operator Enbridge announced in late July that it was making an investment in Woodfibre LNG, a smaller-scale export project that has already come a long way in terms of approvals, pipeline connections, locking up gas supplies, and initial financing. With the Enbridge announcement — and the financial and technical clout the company brings to the table — it is now looking assured that the project will commence construction next year and be exporting LNG by 2027. In today’s blog, we take a detailed look at Woodfibre LNG.

Monday, 08/29/2022

Western Canada’s heavy oil producers have become all too familiar with fluctuating and often very wide price discounts for their product. Too often, the culprits have been insufficient pipeline export capacity and/or rapidly rising production. It might be easy to quickly dismiss the latest widening of the heavy oil price discount as being related to these well-known factors, but it turns out that other more international trends are at work, ranging from U.S. government-backed competition in the Gulf Coast to heavy discounting of competing barrels in other far-flung regions of the world. In today’s RBN blog, we look beyond the borders of Canada for an explanation of the latest pressures driving wider Canadian heavy oil price discounts.

Wednesday, 08/24/2022

We’ve seen this movie one too many times. Just when natural gas prices are rallying across the world to multi-year or historic highs, another monkey wrench gets thrown into the workings of the Western Canadian gas market, imploding its suite of price markers. Last week, gas prices in Western Canada collapsed to mere pennies and even went negative for a time due to an unfortunate combination of pipeline restrictions and record-high production — a situation that will cost the region’s gas industry billions if left unchecked. In today’s RBN blog, we examine the root cause of the latest price collapse and when a turnaround might be expected.

Wednesday, 07/20/2022

Western Canada’s propane market has been rapidly evolving in the past few years. Rising Canadian demand for propane and direct exports to Asia from British Columbia’s (BC) two export terminals have been jockeying for supremacy with railed propane exports to the U.S. Those exports to Asia and the U.S. will soon be facing another challenge: the pending startup of Inter Pipeline’s Heartland Petrochemical Complex, which will increase propane demand in Western Canada by a hefty 22 Mb/d in the coming weeks. In today’s RBN blog, we look at what it could mean for propane exports to the U.S., which has traditionally depended on an assist from Canadian volumes.

Wednesday, 06/29/2022

Canadian gas storage levels concluded the most recent heating season at multi-year lows, especially in the western half of the nation, which hit a 16-year low at the end of March. Though storage sites have been refilling at a steady rate so far this summer, storage in the west, a region vitally important for balancing the North American gas market during high winter demand, remains unusually low for this time of year. In today’s RBN blog, we examine the latest developments in Canadian natural gas storage and explain why storage levels in Western Canada may start the next heating season at critically low levels.

Wednesday, 04/20/2022

Increasing global LNG supplies has become of paramount importance given Europe’s decision to move away from pipelined imports of Russian natural gas. As such, any and all LNG export projects — from the expansion of existing sites to proposals for greenfield terminals — are getting a fresh look. As always, though, only the projects that make the most economic sense are likely to advance to a final investment decision (FID), construction and operation. Which raises the question, where do things stand with the handful of LNG export terminals proposed for Eastern Canada, which offers the shortest, most direct access to Europe? In today’s RBN blog, we conclude our series on Canada’s LNG export potential by assessing several greenfield export sites on its East Coast.

Tuesday, 03/22/2022

The European natural gas market has been in crisis this winter, with prices skyrocketing north of $100/MMBtu recently. Tight supplies, low storage levels, and a new gas-supply-security issue sparked by the war in Ukraine has many European nations, especially Germany, embarking on a crash course to increase supplies and diversify away from Russian gas imports. In this quest, increasing gas supplies in both the short- and long-term is a top priority and will require substantially more LNG capacity to replace — and eliminate the need for — Russian gas. With Europe’s gas-supply urgency on the rise, long-dormant prospects for exporting LNG from Canada’s East Coast are being re-examined. In today’s RBN blog, we look at the potential for repurposing the region’s only LNG import terminal into one that is geared toward exports.

Sunday, 02/27/2022

Global LNG markets have been in overdrive this winter — it seems the world just can’t get enough of the super-cooled natural gas. Moreover, with long-term LNG demand growth in Asia appearing robust well into the next decade, the time would seem ripe to reconsider expanded export opportunities from Canada’s West Coast, one of the closest and potentially largest sources of LNG for Asian buyers. With one major LNG export project already under construction, at least one more awaiting the final go-ahead, and two more serious proposals having emerged last year, Canada’s outlook for additional LNG sales to Asia is clearly bright. In today’s RBN blog, we discuss recent developments regarding Canadian LNG projects.

Wednesday, 02/23/2022

It seems that, once again, Canada is struggling to build crude oil pipeline export capacity fast enough to keep pace with production growth. The latest setback came with the announcement that completion of the Canadian government-owned Trans Mountain Expansion (TMX) will be delayed until the third quarter of 2023 and that the 590-Mb/d project will cost almost twice as much as previously estimated. The latest six-to-nine-month delay appears to set the Canadian oil industry on a path to exhausting its spare export capacity by later this year. And that’s not good news for producers. In today’s RBN blog, we consider this latest TMX announcement and what it might mean for pipeline constraints and heavy oil price differentials.

Wednesday, 02/16/2022

The gradual increase in Western Canada’s natural gas production in recent years has been powered by the highly prolific Montney formation, a vast unconventional resource that straddles the Alberta/British Columbia border. With Western Canadian gas price benchmarks at multi-year highs and producers enjoying their best financial position in ages, it would seem logical to expect more gas production growth from the Montney in the future. However, a recent ruling by the BC Supreme Court could negatively affect the pace of well developments and jeopardize future growth in the Montney formation. In today’s RBN blog, we consider this possibility.

Sunday, 02/06/2022

Oil sands, the workhorse of Alberta’s — and Canada’s — crude oil production growth, achieved a record production year in 2021. A steady turnaround in crude oil prices, improved market access, and the tried-and-true resilience of oil sands producers combined to drive the increase in output. With 2022 barely out of the starting blocks, the oil sands players have provided production guidance for this year that, if fulfilled, could set the oil sands on track for another year of record output. In today’s RBN blog, we consider the latest production guidance estimates and what these could mean for the availability of oil pipeline export capacity from Western Canada.