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

Bear Head LNG requests DOE permits to export US natural gas

03/03/2015 Liquefied Natural Gas Ltd.’s wholly owned subsidiaries, Bear Head LNG Corp. and Bear Head LNG LLC (USA), have filed an application with the US Depa...

TAP initiates contracts for offshore section construction

03/03/2015 Trans Adriatic Pipeline (TAP) AG has launched two pre-qualification contracts for building the natural gas pipeline’s 105-km offshore section throu...

EIA forecasts continued rise in US oil production from gulf

03/03/2015 Crude oil production from the Gulf of Mexico will reach 1.52 million b/d in 2015 and 1.61 million b/d in 2016—or respectively 16% and 17% of total ...

Pennsylvania governor proposes natural gas severance tax

03/03/2015 Pennsylvania Gov. Tom Wolf proposed a $29.9 billion budget on Mar. 3 that includes $2.5 billion of net tax increases for fiscal 2016, including a 5...

Shell moves to business-as-usual plan for strike-impacted refineries

03/03/2015 As the United Steelworkers union (USW) strike enters its fifth week, Royal Dutch Shell PLC, which serves as lead company for National Oil Bargainin...

BOEM proposes lease sale for western Gulf of Mexico

03/03/2015 The US Bureau of Ocean Energy Management (BOEM) will offer more than 21 million acres offshore Texas for oil and gas exploration and development, i...

Shell Canada withdraws application for Pierre River heavy oil project

03/03/2015

Shell Canada Ltd. has withdrawn its regulatory application for the proposed Pierre River heavy oil mine north of Fort McMurray.

Anadarko cuts spending, stalls well completions

03/03/2015 Anadarko Petroleum Corp. on Mar. 3 said it will cut spending 33% during 2015 compared with 2014 and will reduce drilling and defer 125 onshore well...

Petrobras to divest $13.7 billion in 2015-16

03/03/2015 Petroleo Brasileiro SA (Petrobras) plans to divest $13.7 billion in 2015-16, up from the previously reported $5-11 billion in the company’s busines...

White Papers

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...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by

Available Webcasts



Global LNG: Adjusting to New Realties

When 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

When 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



On Demand

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


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

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