Showing posts with label b. Show all posts
Showing posts with label b. Show all posts

March 18, 2010

Turning Bitumen into Light Crude - at What Price ?

BP Plc will pick up a majority stake in ailing Canadian oil sands company Value Creation Inc, a property for which Reliance Industries too was said to be in race.

Earlier, it was reported that RIL had made a $2 billion bid for majority stake in Value Creation. Though, the company spokesperson declined to confirm if it had actually put in a bid.

Canada's oil sands has the largest crude reserves outside the Middle East.
The news comes within days of RIL's takeover bid for bankrupt chemical maker LyondellBassel being snubbed by its management.

RIL, flush with cash from sale of natural gas from its eastern offshore KG-D6 field, was said to be in negotiations to buy a majority stake in Alberta-based oil sands minnow.

Value Creation is a privately-held company that owns 430 square miles of leases in the oil sands region of Alberta.

The largest block of leases, Terre de Grace, covers around 290 square miles in the western part of the Athabasca region. The company, which is reported to be in financial difficulties, also owns proprietary upgrading technologies to turn bitumen into refinery-ready light crudes.
London-based BP was said to have initially made a lower $1.2 billion bid but Value Creation did not disclose what was final acquisition price.

Value Creation said BP will make "significant capital contributions" to the Terre De Grace project, that lies about 300 miles north of Calgary, but any final price will be determined after further exploration and drilling defines the size of reserves on the property.

BP, which sold a half interest in its Kirby oil sands property to Devon Energy recently, also holds a half share in a oil sands and refining venture with Husky Energy.

The Terre de Grace property is expected to be developed with in-situ thermal technology, which pumps steam into the ground to liquefy deposits of tar-like bitumen so it can flow to the surface.

"This partnership blends a strong asset, world-class operator, high caliber talents and market security, besides financial stability," said Value Creation chief executive officer Columba Yeung in the statement.

The Terre de Grace field is expected to start production of oil in 2011 and has the potential to yield over 300,000 barrels of oil a day, Value Creation says on its Web site.
"This transaction provides Value Creation with a clean, debt-free balance sheet," the company statement said.

Value Creation retains 100 per cent control over its other significant oilsands leases (including the large Tristar block, south of Fort McMurray), Heartland Upgrader assets and patented proprietary technologies.

Soruce- Press Trust of India

September 1, 2009

Petro China's another Petro Industry Buy

PetroChina International Investment Company Ltd. (PTR-N109.75-3.44-3.04%) will buy a 60 per cent stake in privately-owned oil sands firm Athabasca Oil Sands Corp. in a deal that oil patch insiders see as a key vote of confidence in Alberta's massive bitumen reserves.

The $1.9-billion deal will give PetroChina a large stake in a company whose assets contain about five-billion barrels of bitumen.

“Oil sands projects are very capital-intensive long-term investments and difficult to fully finance in the traditional equity market,” Athabasca chairman Bill Gallacher said in a release. Athabasca “therefore decided to look for joint venture partners, and these strategic joint venture arrangements with PetroChina, one of the world's largest energy companies, can ensure that the MacKay River and Dover projects will be developed in timely manner, which is excellent news for Alberta and the rest of Canada.”

Rumours of the impending deal pushed up shares in several small junior oil sands companies, including UTS Energy Corp. (UTS-T1.790.1710.49%) and Connacher Oil and Gas Ltd. (CLL-T1.00----%) , on a belief that major outside investment interests are once again prepared to invest in the oil sands.

“It's great news for the oil sands business. It shows that there are still large, sophisticated, deep-pocketed companies out there prepared to write big cheques,” said one Calgary banker.

Athabasca calls itself the largest leaseholder in the Athabasca region of the oil sands, with 526,000 hectares of net land.

Sveinung Svarte, the president and chief executive of Athabasca, was not immediately available Monday morning. However, in an interview this May, he said the company had spent months searching for joint venture partners.

“That has always been our philosophy to finance our projects,” he said then. “We are talking about quite a few billion dollars [in] long-term [capital requirements], and to have a partner coming in and finance a large part of that has been our model.”

At the time, he said even with low oil prices, large oil sands properties continued to attract “a lot of interest.”

“Even in this market. I would say maybe even more in this market, because I think the buyers have recognized that it's easy to make a deal today,” he said. “Because the sellers are a bit more, what shall I say, they expect a bit less than with the price at $147 oil.”

Chinese interest have taken an increasingly large stake in the oil sands. China National Petroleum Corp. made a $449-million deal for Verenex Energy Inc. in February – although that deal has had troubles proceeding thanks to difficulties in acquiring permission from authorities in Libya, where Verenex has the bulk of its holdings. And late last year, Sinopec paid about $2-billion for another Calgary company, Tanganyika Oil, which has production-sharing agreements in Syria.

The Athabasca deal shows “that major international companies are game to put up big dough for Canadian oil sands projects.

“So I'm sure people are looking at that and saying another potentially ready-to-go project is obviously Fort Hills,” said another Calgary investment source. “So UTS could be a beneficiary of that.”

UTS holds a 20 per cent stake in the proposed Fort Hills oil sands mine, which is majority owned by Suncor Energy Inc. after its acquisition of Petro-Canada. UTS rebuffed a bid by French energy giant Total S.A. to buy that share earlier this year.

Athabasca made an application last year to build two pilot oil sands projects that will use technology known as “steam-assisted gravity drainage” to exploit the crude on its lands. Unlike oil sands mines, SAGD operators use underground injections of high-pressure steam to coax the thick bitumen to the surface.

The company plans to apply for its first commercial project, a 150,000 barrel-per-day development in MacKay River, near the end of this year. It expects to begin production of a first, 35,000 barrel-per-day, phase in 2014.
source - http://www.theglobeandmail.com/globe-investor/petrochina-buys-60-stake-in-oil-sands-project/article1270720/

July 8, 2009

High Interest for Nigerian Bitumen Blocks


Sixteen investors from Nigeria, China, United States, Canada and South Africa, yesterday put in Expressions of Interest for the existing bitumen blocks in the country.

Minister of Mines and Steel Development, Mrs Deziani Alison-Madueke, while speaking in Abuja, at a news briefing on outcome of opening of bids at the end of a bidding round concluded last week, also promised that millions of jobs would be created from the bitumen industry when it is fully operational.
She said the companies were very pleased, because "that is quite a robust selection in terms of expression of interest.

Alison-Madueke said the next stage in the bidding process would be evaluation of documents during which they would select the credible ones, which will go forward and then would be invited to formally submit their bids for the blocks, adding that the entire bidding process should be completed by the end of this year.
She said,“we have put out three blocks as I said - Blocks A, B and C. Or we created three blocks. Block A is approximately 4,170 square kilometres, Block C is approximately 3,707 square kilometers. At this time, Block B has not been put forward. It will put forward at a later date.

She said the current bidding process began on June 1, 2009, and closed July 2, after the advertisement was placed in four national daily papers. THISDAY, Vanguard, PUNCH and Daily Trust, as well as the Financial Times of London.
“A whole deal of job opportunities are going to rise up around the entire bitumen bidding process,” Alison-Madueke said.

Millions of jobs in terms of employment generation, and poverty alleviation are going to be created the moment mobilisation starts for these blocks. The moment mobilisation starts, all sorts of service companies will crop up around the area of exploration and exploitation, he said.

Source- Thisday.com

June 30, 2008

Bitumen Supply & Demand

The Soaring Oil prices although justifies the fluctuation in the pricing of bitumen, there is not an established mechanism to derive the bitumen price till date. The bitumen market is getting mature and liquid. The majority of the exporting nations include Singapore, Iran, Saudi Arabia, Egypt, Thailand in this region has different inputs and the range varies significantly.

Recently the Cartel led by Shell was exposed by the European regulators and the was fined to the tune of price fixing on various petroleum products.

For Bitumen, there are no posted prices except for some compiled prices from some paid subscription services ; marketers rely on a number of pricing formulas that reference various posted crude qualities.

Market pricing is seasonal with higher prices during peak season like summer being the norm due to higher demand for bitumen and other bitumen derived products.

Saudi arabia has almost banned the export of Bitumen 60/70 , which considered as the raw material, obtained from the fractional distillation process, from Saudi Aramco . The penetration grade bitumen 80/100, prepared from the aforesaid raw material by adding additives, is the value added , before being exported. The price sensitive Saudi bitumen industry, an unorganized industry, commands the most market value among the third world countries including India, Pakistan and Bagladesh.

On the Other hand, Iran is trying to sell the bitumen through Iran Mercantile Exchange, as a commodity and the pricing currency is being slowly shifting in favrour of Euro.

Singapore, Malaysia, Thailand, although except for Singapore, the rest of the regional economies , being net importer, the pricing is closely followed with each other, and which is not affordable for re-export for the developing nations.

June 19, 2008

Bitumen Price and Methodology


The Soaring Oil prices although justifies the fluctuation in the pricing of bitumen, there is not an established mechanism to derive the bitumen price till date. The bitumen market is getting mature and liquid. The majority of the exporting nations include Singapore, Iran, Saudi Arabia, Egypt, Thailand in this region has different inputs and the range varies significantly.


Recently the Cartel led by Shell was exposed by the European regulators and the was fined to the tune of price fixing on various petroleum products.

For Bitumen, there are no posted prices except for some compiled prices from some paid subscription services ; marketers rely on a number of pricing formulas that reference various posted crude qualities.
Market pricing is seasonal with higher prices during peak season like summer being the norm due to higher demand for bitumen and other bitumen derived products.

By necessity, bitumen is regularly blended with diluent (typically in the form of C5+or synthetic light crude) in order to facilitate its transportation via pipeline to tankers.

As such, the effective field price for bitumen is also directly impacted by the input cost of the diluent required, the demand and price of which is also seasonal in nature (in winter as colder temperatures necessitate more diluent for transportation).

Consequently, bitumen pricing is notoriously high in summer and during major shutdown by the refineries and not reflective of the annual average realized price or the economics of the business overall.
The strong bitumen demand disturbs the effective field prices during peak season for a variety of reasons. In addition to the usual seasonal issues, increase in bitumen demand and the premium for diluent was significant as a consequence of various events such as production interruptions at a regional refinery.

The absence of a generally recognized approach to the determination of appropriate bitumen pricing, coupled with the pricing seasonality (which has not been sufficiently addressed ) meant that any number of interpretations existed as to how year-end bitumen prices should be determined, for the purpose of filing to the regulatory authorities, as well.

With billions of barrels of potential and billions of dollars of planned capitalinvestment, the bitumen resources are widely understood to be a cornerstone of future energy requirements and are attracting notable attention from overseas jurisdictions as well.

It is in the best interest to all stakeholders (investors, capital markets, regulatory bodies, producers and the public at large) that a year-round bitumen pricing methodology be established that reasonably reflects the general market conditions and is not unduly influenced by seasonal demand, weather-driven or cataclysmic price movements.

In fact, the adoption of the proposed methodology for all crude qualities would have little or no effect on reported proved reserve quantities for all categories, bitumen excepted. For no other reason than bitumen alone is subject to the extreme seasonality in realized prices around calendar.


Some industry watchers propose to determine the constant price for bitumen by using, for the benchmark reference price, the published price for the crude oil after applying historical adjustments (meaning the average of the adjustments for the 12 months preceding the date of the estimate) for transportation and for quality, which create the price differential between crude oil and bitumen.