Shell cancels oilsands project over lack of pipeline capacity

rugatika · #1 10-28-2015, 08:43 AM

http://business.financialpost.com/ne...ng-us2b-charge

The construction of new pipelines and possible market access became an issue in Canada’s recent federal election as numerous pipeline companies proposed projects that would increase takeaway capacity from Alberta’s oilsands by hundreds of thousands of barrels a day.

Though market access has long been an issue for Alberta’s oilsands producers, Shell is among the first companies to publicly cancel a project as a result of pipeline constraints.

deerguy · #2 10-28-2015, 08:45 AM

Seems like a pretty straight forward solution. Time to get pipelines and refineries built.

fish_e_o · #3 10-28-2015, 08:46 AM

Quote:

Originally Posted by deerguy

Seems like a pretty straight forward solution. Time to get pipelines and refineries built.

ha! good luck!

evil oil has no place here

Okotokian · #4 10-28-2015, 08:51 AM

The pipeline situation hasn't really altered since they made their go ahead decision earlier in the year. And the reason they gave for the earlier slow down in development was low oil prices. Pipeline capacity is a real issue but you can always put on trains. There is no political advantage to be gained if a company says it is shelving a project because of price. Better to say it's for pipeline capacity to give the issue a push.

fish_e_o · #5 10-28-2015, 08:52 AM

pipelines are the safest way to transport oil we should all be pushing for it

CaberTosser · #6 10-28-2015, 08:56 AM

It would be a good time to build while fuel prices are low and contractors are hungry for work, the labor pool is deep and margins a little more enticing.

I noticed after the election that CP's stock had a solid bump up, if pipelines are to be hamstringed then rail is a solid investment.

79ford · #7 10-28-2015, 08:58 AM

Project cancellations are a good thing right now considering the oil glut issue.

Bluedog · #8 10-28-2015, 09:00 AM

Wooden Head, Wooden Shoes, Wouldn't listen!
Royal Dutch SHELL should get the &3(% out out Canada!!

The Elkster · #9 10-28-2015, 09:24 AM

When they claim pipelines are the issue I'd like to see a little more info. Like what is the demand for oil sands production outside the current US markets? If we run a line out to the coast are we going to have a mass of buyers looking to pay big dollar for Canadian bitumen when all world oil prices are in the dumps even on prime oil. Is there sufficient refinery capacity in Asia able to handle this bitumen such that the price differential will get better? I'm doubting it. Better to leave the stuff in the ground until it is worth more and their decision reflects that. It is a great chance to take a political side swipe on the way out however. Oil companies aren't dumb. They play the game as hard as anyone. They know which side the people bend towards and that NDP isn't going to get any benefit of the doubt. Nobody in conservative AB is going to challenge them on any claims anyways.

igorot · #10 10-28-2015, 09:33 AM

Quote:

Originally Posted by rugatika

http://business.financialpost.com/ne...ng-us2b-charge

The construction of new pipelines and possible market access became an issue in Canada’s recent federal election as numerous pipeline companies proposed projects that would increase takeaway capacity from Alberta’s oilsands by hundreds of thousands of barrels a day.

Though market access has long been an issue for Alberta’s oilsands producers, Shell is among the first companies to publicly cancel a project as a result of pipeline constraints.

This was in full blast until right after the budget was announce, coincidence

Okotokian · #11 10-28-2015, 09:38 AM

Quote:

Originally Posted by igorot

This was in full blast until right after the budget was announce, coincidence

If the budget was the reason, I'm pretty sure they would say so. Also unlikely given the budget had nothing in it about oilsands or pipelines or oil prices.

Big Grey Wolf · #12 10-28-2015, 09:52 AM

Interesting, talked many times to relative on the Shell project, he said it was on hold over year ago, just building power plant. This is old news, believe Big Oil just wants to stir pot around NDP budget time. Watch for additional negative Big Oil announcements in next few weeks.

Bluedog · #13 10-28-2015, 09:57 AM

SHELL can only blame themselves, They engineered a big white Elephant!
DUE TO OVERWHELMING INCOMPATANCE!

hal53 · #14 10-28-2015, 10:05 AM

Quote:

Originally Posted by Okotokian

If the budget was the reason, I'm pretty sure they would say so. Also unlikely given the budget had nothing in it about oilsands or pipelines or oil prices.

The fact that the budget didn't have anything in it regarding pipelines, or anything to stimulate the oil patch , could as well have been the reason they said to heck with it we'll spend money elsewhere....

igorot · #15 10-28-2015, 10:07 AM

Quote:

Originally Posted by Big Grey Wolf

Interesting, talked many times to relative on the Shell project, he said it was on hold over year ago, just building power plant. This is old news, believe Big Oil just wants to stir pot around NDP budget time. Watch for additional negative Big Oil announcements in next few weeks.

Then I guess your relative was misinform or he might have higher level info. . This was announce yesterday (2:30 pm to be exact) on the corporate level.

igorot · #16 10-28-2015, 10:12 AM

Quote:

Originally Posted by Bluedog

SHELL can only blame themselves, They engineered a big white Elephant!
DUE TO OVERWHELMING INCOMPATANCE!

Its not a white elephant as it was not canceled or abandoned, it was place on hold. There is a big difference. Not sure about "incompatance"

rugatika · #17 10-28-2015, 10:16 AM

Quote:

Originally Posted by Bluedog

SHELL can only blame themselves, They engineered a big white Elephant!
DUE TO OVERWHELMING INCOMPATANCE!

Be that as it may, I bet they have no ragrets.

79ford · #18 10-28-2015, 10:22 AM

Quote:

Originally Posted by hal53

The fact that the budget didn't have anything in it regarding pipelines, or anything to stimulate the oil patch , could as well have been the reason they said to heck with it we'll spend money elsewhere....

Why don't you write a letter to the government and ask if they can raise the price of oil,lol

hal53 · #19 10-28-2015, 10:30 AM

Quote:

Originally Posted by 79ford

Why don't you write a letter to the government and ask if they can raise the price of oil,lol

Please don't embarrass your self by showing how little you know about the industry.....LOL.......

DiabeticKripple · #20 10-28-2015, 10:35 AM

If we can get keystone, energy east, kinder Morgan on the go that would be awesome. Bonus points for northern gateway too.

79ford · #21 10-28-2015, 10:44 AM

Quote:

Originally Posted by hal53

Please don't embarrass your self by showing how little you know about the industry.....LOL.......

You could write a letter to the government to ask for lower bitumin royalties then?? I hear they are exhorbitantly expensive

What about a sweet heart capital expenditures deal for tarsand plants/operations capex when it comes to tax season?

Oooh wait, they get dirt cheap royalties, good capex tax treatment...... maybe the government could give them easy project approvals? ..... ooops, silly me, pretty much every project gets rubber stamped.

Better start the high oil price letter ol buddy

it is obvious that it is the governments fault when it comes to low oil prices and the resulting malaise in the energy industry.

hal53 · #22 10-28-2015, 10:50 AM

Quote:

Originally Posted by 79ford

You could write a letter to the government to ask for lower bitumin royalties then?? I hear they are exhorbitantly expensive

What about a sweet heart capital expenditures deal for tarsand plants/operations capex when it comes to tax season?

Oooh wait, they get dirt cheap royalties, good capex tax treatment...... maybe the government could give them easy project approvals? ..... ooops, silly me, pretty much every project gets rubber stamped.

Better start the high oil price letter ol buddy

it is obvious that it is the governments fault when it comes to low oil prices and the resulting malaise in the energy industry.

As you get all your "experience and information" from the DOB and Oilweek, go back and re-read their press release and tell me where oil prices and the rest of your post comments are mentioned. Maybe do this while your supervisor is actually doing his job and not watching you get paid to surf the net....

Redfrog · #23 10-28-2015, 10:56 AM

Quote:

Originally Posted by Okotokian

If the budget was the reason, I'm pretty sure they would say so. Also unlikely given the budget had nothing in it about oilsands or pipelines or oil prices.

Do you not find that odd since energy drives Alberta?

nekred · #24 10-28-2015, 10:58 AM

Nothing more than a political ploy,

Cancel a project that has very little investment in it and talk about how much will be lost... easy way to drop a white elephant and blame someone else...

Shell is using this downturn to their advantage in every way.

DerFroheJodler · #25 10-28-2015, 11:19 AM

Agreed that placing blame on pipelines may be a political ploy.

I also don't think it has less to do with oil prices than you'd think... I understand Shell's Carmon Creek was expected to be one of the most expensive projects in Alberta--featuring one of the most costly capital efficiencies among all oil sands projects. Yeah, higher oil prices would be nice, but there's other projects worth investing in. Shell may have just taken advantage of the current environment in timing their response, rather than make a very unpopular decision to cancel the project during times of high oil prices.

79ford · #26 10-28-2015, 11:22 AM

Quote:

Originally Posted by hal53

As you get all your "experience and information" from the DOB and Oilweek, go back and re-read their press release and tell me where oil prices and the rest of your post comments are mentioned. Maybe do this while your supervisor is actually doing his job and not watching you get paid to surf the net....

Nah, actually at home reading a book called sucker rod pumping hand book : production engineering fundamentals and long stroke pumping by Gabor Takacs. i generally dont mix my upstream information hobby with work, it wouldnt be fair to the corporation.

I would say the fact rail car shipping in a low commodity price environment doesnt make sense has more to do with the project cancellation than lack of pipeline capacity...... if oil were 100$ right now Shell would be building that project and loading it on a train then worrying about the pipeline later.

Like Shell says, they got money and some projects are looking better right now. Tarsands at 30$ barrel isnt one of the good ideas

Shell is making a good decision right ol buddy?

deerguy · #27 10-28-2015, 11:23 AM

Quote:

Originally Posted by CaberTosser

It would be a good time to build while fuel prices are low and contractors are hungry for work, the labor pool is deep and margins a little more enticing.

I noticed after the election that CP's stock had a solid bump up, if pipelines are to be hamstringed then rail is a solid investment.

Rail is not good for Oil transport at all. Rail should not even be an option.

DerFroheJodler · #28 10-28-2015, 11:26 AM

Quote:

Originally Posted by 79ford

Nah, actually at home reading a book called sucker rod pumping hand book : production engineering fundamentals and long stroke pumping by Gabor Takacs. i generally dont mix my upstream information hobby with work, it wouldnt be fair to the corporation.

I would say the fact rail car shipping in a low commodity price environment doesnt make sense has more to do with the project cancellation than lack of pipeline capacity...... if oil were 100$ right now Shell would be building that project and loading it on a train then worrying about the pipeline later.

Like Shell says, they got money and some projects are looking better right now. Tarsands at 30$ barrel isnt one of the good ideas

Shell is making a good decision right ol buddy?

Agreed--rail car shipping during low prices doesn't make sense. The only time it does make sense is when oil producers look to access markets in the U.S. that aren't easily accessible by pipes, or particularly when pipelines' capacities are constrained. I don't see the main egress pipelines being much constrained right now with oil development being broadly scaled-back... shipping by rail doesn't make a ton of sense.

Map Maker · #29 10-28-2015, 12:37 PM

Quote:

Originally Posted by nekred

Nothing more than a political ploy,

Cancel a project that has very little investment in it and talk about how much will be lost... easy way to drop a white elephant and blame someone else...

Shell is using this downturn to their advantage in every way.

yep I believe this as well.^^

Shell hasn't cut their dividend and they don't want to because of their long history of increasing and never cutting.

But the belt is tightening on every oil empire out there because no one knows how long the drought will be. Shell is just hunkering down and cutting off its extra arms. First the northern arctic program now Carmon and Im sure there will be more.

Worst part is the locals in the area that have planned for this big project. I hope the locals get some of that 2 B in charges.

gmcmax05 · #30 10-28-2015, 12:45 PM

Quote:

Originally Posted by igorot

This was in full blast until right after the budget was announce, coincidence

NOT, this was throttled back significantly when oil$$ went south. Know a few peps that lost jobs directly involved in this project before yesterday, they're will be more jobs cut yet.