2015 4Q

Canadian Oil Sands urges shareholders to reject Suncor bid (30 December 2015): Canadian Oil Sands Ltd.’s board sent a letter to its shareholders Tuesday urging them once again to reject the hostile bid by Suncor Energy Inc. ahead of the offer’s deadline next week. The Calgary-based Canadian Oil Sands said the C$4.5-billion ($3.2-billion) offer was an “undervalued and opportunistic bid.” Suncor has offered 0.25 of its own shares to Canadian Oil Sands’ investors in a tender offer that expires on Jan. 8.

Nigerian gas plant explosion leaves at least eight people dead (27 December 2015): An explosion at a gas plant in the southeastern Nigerian state of Anambra killed at least eight people on Thursday and left several injured, according to the state governor’s spokesman. The preliminary investigation showed the blast at Nnewi, an industrial city situated in the south of Anambra, happened as butane gas used for cooking was being offloaded to customers, according to James Eze, a spokesman Willie Obiano.

US gas market heads for biggest weekly gain since February 2014 (24 December 2015): Natural gas futures are staging the biggest rebound this week since February 2014 on speculation that a seasonally cool start to January will stoke demand after an unusually mild December. The Northeast and Midwest will see seasonal temperatures Jan. 3 through Jan. 7 following an unusually warm December, said Commodity Weather Group. Manhattan’s high on Thursday set a record when it passed 63 Fahrenheit (17 Celsius) and may reach 73 degrees, 33 above normal, before sliding to 37 on Jan. 6, AccuWeather said.

UK offers explorers 159 onshore blocks in latest licensing round (17 December 2015): LONDON, The Oil & Gas Authority (OGA) the UK’s oil and gas regulator, announced Thursday that 159 onshore blocks under the 14th Onshore Oil and Gas Licensing Round are being formally offered to successful applicants. These blocks will be incorporated into 93 onshore licenses. A Petroleum Exploration and Development Licence (PEDL) does not itself give any direct permission for operations to begin. A PEDL grants the licensee exclusivity over an area of land for onshore hydrocarbon exploration, appraisal and extraction. The exclusivity applies to both conventional and unconventional operations.

LNG analysts predict resurgence in US gas prices by 2018, 2019 (17 December 2015): Record-breaking warm temperatures for this time of year may have pushed US gas prices for delivery next month to the lowest level in 16 years, but prices for the fuel for 2018 and 2019 delivery have hardly budged. In fact, the cost of securing supplies for December 2018 was $1.271/MMBtu more than for this January’s contract, its biggest premium in data going back to 2008. Gas prices are heading for the biggest loss this year since 2006 as booming output from shale formations fills storage caverns across the US. But new sources of demand, including liquefied natural gas (LNG) exports, deliveries to Mexico and chemical plants that use gas as a feedstock, will help soak up excess supply over the next three years, according to BNP Paribas. Gas futures for January delivery sank 3.2 cents, or 1.8%, on the New York Mercantile Exchange Wednesday to $1.79, the lowest settlement since March 24, 1999. The December 2018 contract rose 1% to $3.061. January gas gained 2.1% to trade at $1.828 at 9:13 a.m. Thursday.

MARKET WATCH: NYMEX, Brent crude oil prices stabilize after steep drops (9 December 2015): Brent crude oil prices dipped below $40/bbl before closing at $40.26/bbl on the London market Dec. 8 in a volatile trading session while light, sweet crude oil prices settled under $38/bbl on the New York market. Recently, both Brent and US light, sweet crude contracts have dropped steeply to trade at lows last experienced in February 2009. Analysts noted on Dec. 9 that US crude oil contracts appeared to have stabilized somewhat pending release of a weekly government inventory report.

Technip, FMC Technologies said to be in advanced merger talks (9 December 2015): Technip SA, Europe’s largest oilfield-services provider, is in talks to merge with U.S. peer FMC Technologies Inc., people familiar with the matter said. Negotiations between the two companies, who formed a joint venture earlier this year, are at an advanced stage and a transaction may be announced before the end of 2015, the people said, asking not to be identified as the information is private. No final deal has been reached and talks may still fall apart, they said.

Fluor to acquire Dutch industrial services provider Stork for $755 million (7 December 2015): Stork is a global provider of maintenance, modification and asset integrity services associated with large existing industrial facilities in the oil and gas, petrochemicals, industrial and power markets. Fluor has signed an agreement with UK-based private equity firm Arle Capital Partners to acquire 100% of Stork Holding B.V., based in the Netherlands, for an investment of approximately €695 million ($755 million). Stork is a global provider of maintenance, modification and asset integrity services associated with large existing industrial facilities in the oil and gas, chemicals, petrochemicals, industrial and power markets.

China cuts gas prices for industrial users amid fuel reforms (19 November 2015): China cut natural gas prices for business and industrial users as the world’s second-largest economy seeks to boost use of the fuel in its energy mix and reduce pollution. The cuts vary by city, with a 26% reduction for Beijing and 24% declines for both Shanghai and Guangdong, the National Development and Reform Commission, the country’s economic planner, said in a statement on Wednesday. New prices go into effect Nov. 20 and will save buyers such as power generators and factories an estimated 43 billion yuan ($6.7 billion) on about 60 billion cubic meters of natural gas, the NDRC said.

Magnolia LNG Lake Charles project advances (16 November 2015): Magnolia LNG LLC (MLNG) has signed an engineering, procurement, and construction contract for its four-train, 8-million-tonne/year (tpy) natural gas liquefaction plant in Lake Charles, La., and received the final environmental impact statement for the project from the Federal Energy Regulatory Commission. MLNG’s lump-sum, turnkey EPC contract, worth $4.354 billion, is with a joint venture of KBR Inc. and SK Engineering & Construction, to be led by KBR.

LNG construction sector hits its peak and faces steep fall: Wood Mac (12 November 2015): The LNG construction industry has enjoyed a sustained boom thanks to healthy order books of new LNG projects, especially in the U.S. and Australia, which will see it reach peak capacity in 2015. However, as the global LNG market faces another supply glut, and with few pre-FID LNG projects on the horizon likely to materialize, a new analysis by Wood Mackenzie warns that the LNG Engineering, Procurement and Construction (EPC) sector, which has generated over $200 billion of revenue in the last decade, will be facing its steepest decline in decades, leading to heightened competition and downsizing.

Texas LNG submits all FERC reports, aligns with Honeywell on technology (12 November 2015): Texas LNG Brownsville LLC has submitted all thirteen draft resource reports to the FERC, a key accomplishment in the mandatory US government regulatory approval process, the company confirmed on Thursday. Completion of this milestone places Texas LNG within a select group of US LNG export projects and demonstrates steady progress towards final investment decision (FID), according to company officials.

Shell reorganizing its upstream businesses (6 November 2015): Royal Dutch Shell PLC is reorganizing its upstream businesses in a move the company says will continue when it completes its $70-billion acquisition of BG Group next year. Shell also is slashing spending by the combined company. “We are reshaping the company, and this will accelerate once this transaction is complete,” said Chief Executive Officer Ben van Beurden at a meeting with shareholders in London. Shell is making integrated gas a stand-alone organization and creating separate upstream and unconventional resources organizations.

Contract let for MEG plant at proposed Axiall-Lotte Louisiana ethylene project (30 Octorber 2015): South Korea’s Lotte Chemical Corp. has let a contract to CB&I, Houston, to execute preliminary services related to construction of an associated monoethylene glycol (MEG) plant to be built next to its joint-venture project with Axiall Corp., Atlanta, for a 1 million-tonne/year ethane cracker in Lake Charles, La. CB&I will provide construction planning and reviews, as well as early works services for the proposed MEG unit, which would be built adjacent to the planned cracker, the service company said. A value of the contract was not disclosed.

Gastech ’15: LNG projects pull big financing with long-term contracts (29 Octorber 2015): Over the last three years, LNG liquefaction projects have taken approximately 10% of the market’s PF loans. So far this year, LNG PF has closed about $18 B in debt. This number could rise to over $20 B if Corpus Christi Liquefaction LLC’s Train 3 and Cheniere Energy’s Sabine Pass Train 6 reach financial close. On average, LNG projects have raised much more PF per deal, and at fairly low pricing terms, as compared to other sectors, Lovatt said. LNG pulls an average of $2.2 B per deal from banks at a low 174 basis points. Debt represents 67% of LNG total project cost, on average.

MARKET WATCH: NYMEX oil price continues decline awaiting inventory (28 Octorber 2015): Light, sweet crude oil prices for December delivery declined on the New York Market Oct. 27 awaiting the release of the weekly government inventory report for oil and products. The US Energy Information Administration said commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, rose 3.4 million bbl for the week ended Oct. 23 compared with the previous week. EIA’s latest estimated total was 480 million bbl, the Petroleum Status Report said. The inventory report has risen for five consecutive weeks.

Gazprom said to see its lowest Europe gas price in 11 years (23 Octorber 2015): Gazprom PJSC, the world’s biggest natural gas exporter, is planning for the lowest price for its fuel in its main European market for more than a decade. The state-run exporter is drafting its budget for 2016 with preliminary estimates for gas prices outside the former Soviet Union of about $200 per 1,000 cubic meters ($5.45 a million British thermal units), said two people with direct knowledge of the matter who asked not to be identified because the information is private. That compares with the company’s estimate of an average price for the region, which covers Turkey and Europe outside the Baltic States, in 2015 of about $238 per 1,000 cubic meters and $349 last year.

After year of pain, OPEC close to halting U.S. oil in tracks (20 Octorber 2015): After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in U.S. crude output. The nation’s production is almost back down to the level pumped in November, when the Organization of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share. As the U.S. wilts, demand for OPEC’s crude will grow in 2015, ending two years of retreat, the International Energy Agency estimate.

MARKET WATCH: NYMEX crude oil prices fall on China’s economic numbers (20 Octorber 2015): Light, sweet crude oil prices for November delivery dropped more than $1/bbl Oct. 19 to settle below $46/bbl on the New York Market after China released quarterly statistics showing that economic growth had fallen to 6.9% for the 3 months ended in September. It was the slowest growth rate since the global financial crisis of 2009. Citi Futures analyst Tim Evans said a number of factors contributed to weak oil price fundamentals, including China’s statistics.

Petronas renews pledge to export Canadian gas via Pacific NorthWest LNG (09 Octorber 2015): Petroliam Nasional Bhd. says it will proceed with its C$36 billion ($28 billion) Canadian natural gas export project in the face of a market slump that’s shaking profitability expectations for the global industry. The Malaysian energy company known as Petronas renewed its pledge Thursday to move ahead with the liquefied natural gas (LNG) shipping terminal it’s developing on the nation’s Pacific Coast, pending approval from Canadian regulators.

MARKET WATCH: NYMEX oil prices rally, closing above $48.50/bbl (7 Octorber 2015): Light, sweet crude oil prices for November delivery rallied by more than $2/bbl on the New York market Oct. 6 to settle above $48.50/bbl while Brent crude oil prices also rose more than $2/bbl on the London market to settle at a 4-week high of nearly $52/bbl for November delivery. Mark Papa, former chief executive officer of EOG Resources and now a partner at Riverstone Holdings LLC investment firm, told an Oil and Money conference in London on Oct. 6 that he expects a “dramatic” decline in US production growth.

Buyers market for LNG turns tables on producers amid supply glut (5 Octorber 2015): Encouraged by the plunge in commodity prices, the world’s biggest buyers of LNG are demanding more say in negotiations with their suppliers. Two of the largest utilities in Japan, the world’s top purchaser of the fuel, said they will no longer sign contracts that restrict reselling cargoes by limiting the destination of shipments they buy. Customers elsewhere in Asia are pushing to break LNG’s price relationship with oil and to start regional trading and storage hubs.

Suncor in $3.3-billion bid for Canadian Oil Sands (5 Octorber 2015): Suncor Energy has made an unsolicited offer to Canadian Oil Sands (COS) shareholders to acquire all of the outstanding shares of COS for a total consideration of approximately C$4.3 billion ($3.3 billion), Calgary-based Suncor said Monday. Under the terms of the offer, each COS shareholder would receive a consideration of 0.25 of a Suncor share per COS share. Including COS' estimated outstanding net debt of C$2.3 billion as at June 30, 2015, the total transaction value is approximately C$6.6 billion.