CERI: Execs voice gas market, oilsands concerns

Jim Stott
Special Correspondent-Calgary

CALGARY, Mar. 4 -- Market forces are working for the North American natural gas industry, but major changes are needed to reduce price spikes and ensure year-round supply, says a senior industry executive.
Tim Bullock, president, BP Gas & Power, North America, made the comments Tuesday to a Canadian Energy Research Institute (CERI) conference.

BP view
Bullock said that issues facing the US industry include the need for infrastructure investment in pipelines, regulatory uncertainty, public loss of trust, and financial restraints. He said price spikes, which are likely to continue, do work eventually in the interests of supply-demand balance.
Bullock said more supply is needed over the whole year, and the challenge for producers is to be efficient and develop reserves that will provide security of supply.

The BP executive also called for:
-- Efforts to make the approval process for new pipelines as short as possible.
-- Initiatives to rebuild public confidence in the industry. He noted that trust has been damaged as a result of industry scandals, and recent polls indicate that 84% of the public do not trust "the industry in which we work."
-- Improved mechanisms for customers to work with suppliers: "There should be increased dialogue between industry and regulators to ensure that each understands the other's needs."
-- More flexibility in storage capacity for faster response to market demand and expanded pipeline capacity, which would help to reduce price volatility. "It is in the overall interest of the gas market to have as many participants as possible and as much liquidity as possible," he said.
-- Improvements in reporting and transparency in gas pricing.

Infrastructure concerns
Bullock said there is a need for expansion of pipeline systems, because not all gas supply is located in the right place, and more infrastructure is needed to get gas to markets.
The BP executive said he is also a believer in expanding LNG access to the US from offshore sites. He said LNG supplies can be drawn in from anywhere in the world, and there is a bigger supply pool to draw from than relying only on North American sources.

Oilsands concerns
Neil Camarta, senior vice-president, oilsands, for Shell Canada Ltd., told the conference that natural gas prices are "hard-wired" to supply costs and a huge factor in oilsands economics.
Camarta said every $1 increase in the price of gas adds 60¢/bbl to the oilsands supply price of $10-12/bbl. Shell and partners recently completed a $7 billion (Can.), 155,000 b/d oilsands mining, pipeline, and upgrader project in Alberta.

The Shell executive said there is 300 billion bbl of recoverable oil Canadian oilsands, but $60 billion in planned and proposed development is not a given. Camarta said risks facing oilsands developers, in addition to gas prices, include capital costs, labor supply, oil prices, and the possible impact of Canada's ratification of the Kyoto Protocol on Climate Change.
He said that if developments proceed, the oilsands resource could provide up to 25% of North American oil needs, reduce imports, and supply more than half of Canadian oil production.
He said cogeneration plants supply much of the power for oilsands and upgrader operations, and their gas requirements could double within the decade.

Camarta said the worst-case scenario for oilsands developers would be a sharp drop in oil prices with gas prices remaining high. That, he said, would give some "wannabe" oilsands developers second thoughts.
The Shell executive said developers planning oilsands projects are not likely to be influenced by short-term developments in the Middle East. He said major oilsands projects require a long-term view on pricing and other issues.

Related Articles

NGPL moves forward with Chicago Market expansion project

04/15/2015 Natural Gas Pipeline Co. of America LLC (NGPL) reported it has signed binding agreements with Antero Resources, Nicor Gas, North Shore Gas, and Occ...

IEA forecasts higher 2015 global oil demand

04/15/2015 In its April Oil Market Report, the International Energy Agency raised its forecast of 2015 global oil demand by 90,000 b/d to 93.6 million b/d, a ...

Delek to acquire stake in Alon USA

04/15/2015 Delek US Holdings Inc., Brentwood, Tenn., has agreed to acquire a minority interest in Alon Israel Oil Co. Ltd.’s US-based refining and marketing s...

MARKET WATCH: Oil prices rise on IEA demand forecast

04/15/2015 Crude oil prices rose on the New York and London markets Apr. 14 for a fourth consecutive day after the International Energy Agency forecast oil de...

More witnesses urge Congress to repeal US crude oil export ban

04/15/2015 The US crude oil export ban is a 1970s anachronism that could hobble US production growth and restrict economic improvement if it is not repealed, ...

AEO2015: US on track to eliminate net energy imports by 2030

04/15/2015 Continued growth in oil and natural gas production, growth in the use of renewables, and the application of demand-side efficiencies show the poten...

Turkmenistan lets contracts for refinery upgrades, GTL plant

04/14/2015 Turkmenistan has let contracts to a consortium led by South Korean firms Hyundai Engineering Co. Ltd. and LG International Corp. for work related t...

House Transportation panel lambastes administration for safety delays

04/14/2015 Members of a US House Transportation and Infrastructure subcommittee from both parties sternly criticized the Obama administration for delays in im...

California PUC fines PG&E record $1.4 billion for pipeline violations

04/14/2015 The California Public Utilities Commission (CPUC) fined Pacific Gas & Electric Co. a record $1.4 billion for the unsafe operation of its natura...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Prevention, Detection and Mitigation of pipeline leaks in the modern world

When Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST



On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected