October 9, 2008

Shell learn the lesson Quick- Wax Cartel Exposed

Shell , who was the ring leader in fixing the price of bitumen and was fined by the European commission earlier learnt the lesson quickly and acted like the informer and got the way out. May be Shell could not make much out of paraffin wax and has decided to expose the cartel , himself to the EU Commission.

Hungarian oil and gas company MOL was among nine companies fined a total of EUR 676 million last week for forming a cartel to fix prices of paraffin wax. The French oil giant Total was fined EUR 128 million and US company ExxonMobil was hit for EUR 83.5 million by the European Commission.

Other firms given fines were Repsol of Spain, Italy’s ENI, Tudapetrol, Hansen and Rosenthaland, German RWE. For its part in the market-distorting racket, MOL was fined EUR 23.7 million.

Shell was granted immunity from any penalty for being the first member of the cartel to snitch on its co-conspirators to the European Commission. The South African oil company Sasol got the largest fine, EUR 318 million, for acting as ringleader. This whopping penalty came was even after the sum was reduced considerably following the company’s cooperation with the Commission.

The price fixing in the paraffin wax sector is alleged to have taken place between 1992 and 2005. Paraffin waxes, a by-product of the petrochemical industry, are used in everything from candles, paper cups and packaging to ski lubricants and the coating of cheeses such as Edam.

“There is probably not a household or company in Europe that has not bought products affected by this paraffin mafia cartel, with all that implies in terms of paying over the odds, higher costs and economic damage,” said the EU Competition Commissioner Neelie Kroes when the Commission announced its penalty last Wednesday.

The companies involved controlled some 75% of the European market for paraffin wax for 13 years. The fines were the fourth largest ever imposed by the commission. In February this year the Commission fined Microsoft a record EUR 899 million for defying a 2004 antitrust ruling.

“MOL has yet to study the final decision and has a period of two months in which to reflect on the findings of the decision and in order to determine whether to lodge an appeal with the Court of First Instance in Luxembourg,” ran the company’s quickly drafted press release.

Exxon was slightly more self critical, though far from penitent, saying it “deeply regrets its involvement, although limited, in the infringement of competition laws through the participation of a few of the company’s former employees”.

October 4, 2008

Bitumen Production

Connacher Oil and Gas limited reports that bitumen production at its Great Divide Pod One steam-assisted gravity drainage (SAGD) oilsands plant continues to ramp up following a recently-completed mandated turnaround and recently reached 9,750 bbls per day.

This production level is within 250 bbls per day of the original design capacity of the plant and was achieved with 14 of 15 well pairs contributing to recorded volumes.

Steam is presently being injected into the 15th well pair and it is anticipated this well will also be placed onstream once critical down hole temperature conditions have been established in the related wellbores.

When combined with current conventional production of approximately 3,600 bbls of oil equivalent per day, Connacher said its total production has now surpassed 13,350 BOE a day, a record for the company.

Connacher also noted that an electrical submersible pump has also been installed in one of the 14 well pairs and following a monitoring period, additional pumping equipment may be installed in other well pairs. It is anticipated these installations will allow wells to produce with greater consistency at lower pressures and therefore lower steam/oil ratios. Lower SORS would contribute to the continued lowering of unit operating costs over time.

Thus far in the third quarter 2008, Connacher said it is experiencing strong cash flow from operations before changes in working capital as a result of the significant and growing contribution of its conventional production and its bitumen production at Pod One.

The impact of these volume increases in recent months has been reinforced by continuing reductions in related unit operating costs, especially for bitumen production. In August 2008, for example, these unit operating costs were estimated to have been reduced to under $20 per bbl, which were well below levels recorded during the earlier stages of the ramp-up at Pod One. Further unit operating cost improvements are anticipated as 2008 progresses, as recent volume ramp-up will spread associated fixed costs over a larger production base.

Unit operating costs for Connacher’s total production base, including conventional and bitumen production, were estimated to have been even lower at approximately $16 per BOE in August 2008. These lowering of costs, together with strong second half 2008 selling prices, have provided the basis for much improved wellhead or plant gate netbacks for bitumen and overall production and for resultant corporate cash flow from operations before working capital changes.

Connacher noted statements made last week by the ruling Conservative Party of Canada during the election campaign suggesting that a "re-elected Harper government will prohibit the exportation of bitumen outside of Canada for upgrading in order to take advantage of lower pollution or greenhouse gas emissions standards elsewhere."

While this is not yet official policy as the outcome of the election remains to be determined and is seemingly focused on bitumen sales to markets outside North America, Connacher said it anticipates selling little, if any, raw bitumen anywhere and that virtually all of its current sales, which primarily consist of diluted bitumen, have been made and are being made in Canada, primarily to Canadian purchasers which are also operators of integrated upgrading facilities in the general vicinity of Connacher's Pod One operations.

Furthermore, Connacher currently purchases Bow River heavy crude oil produced in southern Canada for its refinery at Great Falls, Montana. The refinery operates effectively and safely within the framework of very strict environmental standards as established by U.S. federal and Montana state agencies.

Connacher is conducting front-end engineering and design studies relating to a potential expansion over several years of the daily throughput capacity of its Montana refinery from approximately 9,500 bbls a day to approximately 35,000 bbls per day. This study is now scheduled to be completed sometime in 2009, at which time Connacher's management will assess the merits of such an expansion in the context of anticipated costs, anticipated investment returns, together with prevailing and anticipated conditions for both financial markets and product markets.

If warranted, the matter would then be brought forward for consideration by the company's board of directors. A final decision whether or not to proceed will depend upon these and other factors, which will be assessed at the appropriate time, which remains solely within Connacher's determination as it owns 100% of the refinery as well as most of its upstream operations.

Connacher said it also continues to examine various pipeline alternatives as a longer-term solution to the requirement of transporting growing Great Divide dilbit production to available markets. Presently Connacher trucks its dilbit to available markets.

A decision on which alternative to pursue will likely be arrived at after construction is initiated at the company's second 10,000 bbl per day Great Divide project at Algar, for which regulatory approval is believed to be imminent. Once the regulatory approval is issued by Alberta's Energy Resources Conservation Board, further formal approval by the Alberta Cabinet through the issuance of an Order-in-Council is required. It is anticipated this should happen as quickly as the item can reach the cabinet's agenda, following which Connacher will be authorized to proceed with field construction.

© 2008 Nickle’s Energy Group.

October 2, 2008

Canadian Bitumen- NO to USA

The Canadian government, with co-operation from the province, should heavily restrict the export of raw bitumen to the United States, the federal and provincial NDP said today.

Huge 400-tonne trucks haul bitumen at Syncrude's North Mine about 40 kilometres north of Fort McMurray.

"We should say we're no longer going to ship bitumen to the United States and with it the high-priced, value-added jobs," said Ray Martin, the federal NDP candidate in Edmonton East.
Martin was joined at the press conference by Brian Mason, the leader of the provincial NDP. Mason said building trades unions are telling him there will be unemployment this winter if more upgrader projects are mothballed.

Last week, construction on a $5-billion BA Energy Heartland bitumen upgrader was cancelled.
"Both (Prime Minister Stephen) Harper and Stelmach are complicit in the export of these jobs," Mason said.

Harper last week pledged to limit the export of bitumen to countries with lower environmental standards than Canada. Martin called that commitment a "red herring," since Canada's greenhouse gas legislation is so weak. Martin added that Harper's pledge shows the federal government does have the ability to regulate the country's exports.

Courtesy - Archie McLean- Edmont Journal

Bitumen Supply Scam in India

Bitumen supply scam may run into crores
The total damages the state government is expected to suffer as a result of the bitumen supply scam of 2007-08 might run into crores of rupees.

The state PWD is under the scanner of the State Anti-Corruption and Vigilance Bureau in the scam in which supply of thousands of litres of bitumen from the Panipat refineries was delayed, later resulting in shortage of stock.

Besides the investigation into the extent of the involvement of officials and staff of the PWD in the scam and the role of Him Agro Industries Corporation that was the nodal agency for procuring supplies, the role of the transporter companies would also be assessed.
The four transporter companies involved were awarded tender for transportation of bitumen from refineries of Indian Oil Corporation Limited and Hindustan Petroleum Limited at Panipat to several destinations in the state. Preliminary inquiries reveal that though the condition on the tender called for transporting all supplies within five days after which a fine of Rs 10 per day was to be imposed on the transporters, the nodal agency appointed by the PWD did not take any action for the delay, even as in many cases the delay is of over six months.

The State Vigilance and Anti-Corruption Bureau has called in records of 25 PWD divisions for detailed scrutiny on the basis of which a preliminary report would be prepared and sent to the state government to decide the further course of action. During the previous months, the Vigilance had conducted raids at 22 PWD divisions to check the stock registers in the stores, in which gross violations were found, signalling largescale bungling in the supply of bitumen.
Sources in the Vigilance say the later stages of the detailed investigation would involve questioning of many officials, right from junior engineers to the engineer-in-chief.

Courtesy - Express India