Japan looks to oil sands to ease reliance on Middle East - The Globe and Mail- Calgary
Japanese companies are contemplating investment in Alberta's oil sands, or buying crude from
existing projects, the country's Calgary consulate says.
A delegation of government officials and energy and trading firms will tour Alberta next week.
They will spend a day in Edmonton and three days in Calgary, where they will meet with Canadian
energy and pipeline firms, but will not visit Fort McMurray in the north, in the heart of the oil
sands industry.
"A lot of companies are interested in investing," the consul spokesman said.
However, Japan itself would not make any investment, he added.
The delegation includes representatives from Japan's Natural Resources Ministry, and executives
from Cosmo Oil Co. Ltd., Idemitsu Kosan Co. Ltd., Nippon Oil Corp., Japan Energy Corp.,
Mitsubishi Co. Ltd. and Mitsui & Co. Ltd.
Companies from France and China have only recently invested in the oil sands, but Japan has had a
presence for nearly three decades, in the form of Japan Canada Oil Sands Ltd., which operates a
10,000-barrel-a-day project, 50 kilometres south of Fort McMurray.
Japanese companies have been hesitant to look at Canada as a new source of supply because of
Japan's long-term relationship with Middle Eastern oil producers, said Brian Fowler, director of
commercial development for Enbridge Inc.'s $4-billion Gateway pipeline project. The line would
connect Edmonton to the West Coast of British Columbia, marking the first time that oil sands
crude could move to Asia.
Japan imports virtually all of its oil, and of that, nearly 85 per cent comes from Persian Gulf
producers, the consul spokesman said. But Japan is hoping to reduce its dependence on Middle East
oil, he added.
The delegation of Japanese businesses heading to Calgary is one sign of progress, Mr. Fowler
said, although he noted that Japan remains at an early stage, in terms of interest, studying the
potential supply from the oil sands rather than actively pushing to sign commercial contracts for
supply on Gateway.
Enbridge has said three-quarters of Gateway's 400,000 barrels a day would likely be exported to
Asia. The company has solicited China, Japan and South Korea, receiving the most enthusiasm from
rapidly growing China.
Enbridge chief executive officer Pat Daniel said his company will be meeting with the Japanese
delegation and is hoping to sign up Japanese customers to its Gateway pipeline.
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Vast Alaskan area is opened to oil exploration - The New York Times
The Interior Department has decided to open 389,000 acres of Alaskan lakes, tundra and shoreline to oil exploration, reversing an eight-year-old compromise intended to protect the habitat of hundreds of thousands of migratory birds and the hunting grounds of Inupiat natives who live near the Beaufort Sea.
Henri Bisson, state director of the federal Bureau of Land Management in Alaska, said Thursday that the new plan would increase by as much as 2 billion barrels the oil that could be recovered from the northeastern section of the National Petroleum Reserve while providing protections for wildfowl in the summer weeks when they shed their flight feathers and hatch chicks.
Critics, including Alaskan natives and groups like the Audubon Society and the Wilderness Society, said the protections would not prevent fragmenting the bird habitat or the disturbance when pipelines are built.
There will be plane and helicopter traffic, the critics said, and industrial activity will be a fixture of the collection of lakes and damp tundra that is now empty 150 miles, or 240 kilometers, west of the Arctic National Wildlife Refuge.
The fight over the area where wildfowl from California, Japan, Mexico and Russia congregate every summer has been largely overshadowed by the controversy over the Arctic refuge, which remains closed to oil and gas exploration after a Democratic filibuster last month.
The two disputes center on protecting caribou, wildfowl and natives' interests. But it is generally agreed that the Teshekpuk Lake area has a particularly important role in the annual migration of tens of thousands of birds like brandt, geese and tundra swans, providing them with relative safety from predators and ample food supplies for the flightless weeks of summer.
"We are not persuaded that this provides the protection needed," said the Audubon Society's Alaska director, Stan Senner. "I think our answer, our view, is that waterfowl biologists who know the area have essentially all said that a core goose molting area needs to be protected without fragmentation."
Although 242,000 acres, or 98,000 hectares, of the 389,000 can have no surface structures except pipelines, Senner said, the lines and the human monitoring they require will intrude in areas the birds have had to themselves.
The final decision, which the Interior Department made public Wednesday, opens seven tracts of land ranging from 45,000 to 60,000 acres that were previously off limits to energy development.
"We believe that we have put forward the best environmentally sensitive approach we could take in terms of conducting a viable oil and gas leasing and development opportunity," Bisson said in an interview.
"I can't think of anything else we could do to make it more environmentally protective than we have."
He added that for the areas north of Teshekpuk Lake, the department would not allow exceptions to its restrictions except for aircraft that have to deviate from agreed-on flight patterns for passengers' safety.
Bisson said his estimates of the commercially retrievable oil and the 3.2 trillion cubic feet of retrievable natural gas were based on federal and company data. The estimates, he said, indicate that a compromise reached by Bruce Babbitt, interior secretary in the Clinton administration, that opened all but 13 percent of the reserve to energy production left as much as three-quarters of the recoverable oil in the reserve off limits to drilling.
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Oil prices fall as traders fear Iran sell-off may have been overdone - AFX News Limited
Oil prices were lower as some traders took the view the strong gains seen this week on the back
of supply concerns stoked by the standoff with Iran over its nuclear ambitions may have been
overdone. At 16.45 pm, February-dated Brent futures were down 17 cents at 62.45 usd a barrel,
while US WTI benchmark February-dated contracts were down 9 cents at 63.85 usd.
The US contract hit a 3 month high of 65.05 usd yesterday, with prices remaining up for most the
day as markets moved into 'crisis mode' over the Iran nuclear dispute, according to Man
Financial's Edward Meir.
Traders fear Iran, the world's fourth biggest exporter, will cut supply if it is referred to the
UN Security Council over the restart of its nuclear enrichment programme.
But Alaron Trading analyst Phill Flynn said while the fears are entirely legitimate, it was
becoming increasingly unclear whether the dispute will actually lead to a supply disruption.
'I think traders are thinking while the Iran issue has significantly increased the upside risk
for oil prices, we may be a bit ahead of ourselves here as we don't know how this dispute is
going unfold,' he said.
Today Britain, France and Germany, which have called for Iran to be referred to the UN Security
Council over its nuclear ambitions, cautioned it is too early to consider imposing sanctions
against the Islamic republic.
Sucden analyst Sam Tilley said concerns over the Iranian nuclear standoff centre around the fact
that 'there is not enough spare capacity in the world to cover any loss of production from Iran'.
He added the issue 'is going to keep the market supported until it is resolved'. There was little
sign of that today, however, with Iran threatening to end snap inspections of its nuclear sites
if it is referred to the council.
The EU, US, Russia and China, who are to meet over the crisis in London on Monday, fear Iran is
trying to develop nuclear weapons but Tehran denies this, insisting its uranium enrichment
programme is strictly for civilian purposes.
Elsewhere, traders are keeping an eye on Nigeria, where oil major Shell said yesterday it was
losing some 226,000 barrel per day after one of its major pipelines was sabotaged and four
foreign oil workers abducted.
Shell has warned its customers crude oil exports from its Forcados terminal in Nigeria will be
delayed this month following Tuesday's attack on its oil pipeline.
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Repsol, Petrobras in Argentina oil exploration deal - Reuters
Spanish oil major Repsol YPF and Brazil's Petrobras will join Argentina's nascent state-owned
energy firm Enarsa in oil exploration in Argentina's Atlantic waters, the government said on
Wednesday.
The accord is the first major commercial venture by Enarsa, created by President Nestor Kirchner
in the midst of an energy shortage in 2004 to give the state a greater role in the energy sector
after wide-scale privatization in the 1990s.
The new consortium, which includes Uruguay's state oil firm Petrouruguay, will explore three
blocks in the Colorado Marina basin, 200 kilometers (124 miles) east of Argentina's coast.
Enarsa has jurisdiction over underwater hydrocarbons resources in Argentina but has almost no
assets and limited operating capacity, analysts say, forcing it to rely on partnerships with
private operators to finance projects.
"This will be Argentina's first attempt to recover oil income," said Planning Minister Julio De
Vido.
The accord calls for joint development and production of oil if commercially viable resources are
found, which could trigger investments of over $2 billion, Repsol YPF said in a statement.
Repsol YPF will be the operator of the group, with a 35 percent stake, and together with
the non-Argentine partners will invest between $40 million and $100 million in the exploration
stage.
Enarsa will also have a 35 percent share while Petrobras will have 25 percent
and Petrouruguay 5 percent.
The 35,000 square kilometer area to be prospected includes two blocks provided by Enarsa, called
CAA-7 and CAA-44, and another provided by Repsol and Petrouruguay called CCM-2.
Repsol YPF said it will begin registering information from a 1,000 square kilometer area this
year and will start drilling in 2008.
"In case of a commercial discovery that allows us to advance to a phase of development and
production, the investment could surpass $2 billion," the company said.
Enarsa and Repsol YPF also signed a separate 10-year accord on Wednesday to explore other
offshore areas in Argentina.
Enarsa has been seeking exploration partners at a time when low investment in the energy sector
following a 2001-2002 crisis has led to predictions the nation will become a net importer of
crude within a few years.
Repsol YPF obtains the majority of its crude and gas in the South American nation and in December
said it planned to sink $6.7 billion in Argentina overall in the 2005-2009 period.
Petrobras, which has experience in producing heavy oil from deep-sea locations, has a producing
unit in Argentina that pumps oil in onshore areas.
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China's CNOOC Finds Its Oil - Motley Fool
If at first you don't succeed, move on to the next opportunity.
Although China's CNOOC(NYSE: CEO) didn't wrest Unocal away from Chevron(NYSE: CVX), there are
other offshore oil opportunities in the sea. CNOOC locked one of them up on Monday, agreeing to
acquire a 45% working interest in an offshore Nigerian energy field for nearly $2.3 billion in
cash.
CNOOC will be buying its license from a Nigerian company by the name of South Atlantic Petroleum
-- a company supposedly controlled by a former Nigerian government official. Interestingly, the
state-owned Oil & Natural Gas Corp of India originally had a deal in place to buy the same
working interest for about $2 billion, but the deal fell through when India's cabinet would not
approve it.
Assuming that estimates of the amount of recoverable oil and gas in the field prove accurate,
CNOOC will be paying about $4.60 per barrel of oil equivalent. That looks cheap, but you should
consider some relevant factors.
First, the estimates provided by the operator of the field, French energy giant Total(NYSE: TOT),
a Motley Fool Income Investor recommendation, don't seem to constitute proven reserve estimates
-- the standard by which I usually evaluate energy deals. Second, deepwater drilling is tricky
and expensive (look at how much Transocean(NYSE: RIG) is getting in dayrates to see what I mean).
Finally, you're talking about doing business in Nigerian waters and, by extension, with the
Nigerian government -- a government so corrupt that only countries like Myanmar look much worse.
Still, if things go right and CNOOC hits its target of about 80,000 barrels per day from this
field in 2008, that'll be a significant contribution (the company produces about 410,000 barrels
per day now). What's more, energy companies need to add reserves if they are going to grow. Is
this is a risky investment? Sure. But it almost goes without saying that you have to take some
risks in the oil business if you want to make money.
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State provides details of Venezuelan heating oil aid - Reuters
Venezuela's Citgo Petroleum Corp. will donate heating oil to homeless shelters in Maine in addition to helping Indian tribes and the state's poor heat their homes, state officials said Tuesday. Citgo will sell 8 million gallons on the open market and donate $5.5 million -- tantamount to a 40 percent discount -- that will be used to provide an additional $100 benefit to Low Income Home Energy Assistance Program recipients in Maine.
Also, Citgo will donate 120,000 gallons of oil to 40 homeless shelters, officials said.
In confirming the deal's details, the Baldacci administration made no apologies for accepting aid from a country whose leader called President Bush "a madman."
"The cost of heating oil has risen dramatically and the federal government has failed to provide the resources needed to help Maine citizens. We are grateful to Citgo and the Venezuelan government for their generosity," Gov. John Baldacci said Tuesday.
Under the agreement, the discount from the sale of 8 million gallons of heating oil will be converted into a cash donation to the Maine State Housing Authority, which administers LIHEAP, Beth Nagusky, the governor's top aide on energy matters, said Tuesday.
Citgo's $5.5 million, combined with $5 million approved by state lawmakers last week, will bring LIHEAP funding to last year's levels, Nagusky said.
Furthermore, Citgo is giving 120,000 gallons of heating oil free of charge to homeless shelters, Nagusky said. This oil will be delivered to more than 40 homeless shelters in Maine by their heating oil suppliers.
In a separate deal, Citgo will provide discounted heating oil directly to 912 households on or near reservations of the Passamaquoddy, Penobscot, Micmac and Maliseet Indians. That deal is worth $543,000 in savings, tribal officials said.
Critics contend Venezuelan President Hugo Chavez is simply trying to embarrass Bush by offering aid to Maine, Massachusetts and New York City. Separate deals are also in the works in Rhode Island and Vermont, officials say.
In a statement, Bernardo Alvarez, Venezuela's ambassador to the U.S., said the offer of heating assistance is genuine.
"This Maine heating oil program represents the goodwill between the people of Venezuela and the United States. Help for those who need it most is a cornerstone of the new Venezuelan economy under President Chavez," he said.
Citgo is a wholly owned subsidiary of Venezuela's state oil company. Citgo has more than 160 gas stations across Maine.
One LIHEAP participant, Richard F. Smith, 75, of Auburn, said he has no serious qualms about accepting help from Venezuela.
The combined LIHEAP benefit from the Citgo and from the state adds up to $10.5 million, which equates roughly to 100 gallons of heating oil at the current average price of $2.36 per gallon. That's enough to heat a home for several weeks, Nagusky said.
Even with the extra help, Smith expects to eat into his savings to keep his house warm this winter. "Every little bit helps," he said
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