Page 12 - NorthAmOil Week 10 2021

NorthAmOil PERFORMANCE NorthAmOil

Oil sands maintenance could

help prop up oil prices in April

ALBERTA UPCOMING maintenance on Canada’s oil a major contributor to global supply – indeed,
sands facilities could help prop up crude prices, Canada is the fourth-largest oil producer in the
which have been rising recently amid tighten- world – expansion projects in the region have
ing supplies, and were bolstered last week by essentially ground to a halt following two indus-
the OPEC+ decision to largely maintain output try downturns since 2014. The oil sands’ public
cuts. image has not helped with this, amid mount-
Bloomberg reported last week that almost all ing concerns over their environmental impact
of the major oil sands producers were preparing even as producers have sought to bring down
Maintenance at to idle almost 500,000 barrels per day (bpd) of emissions.
Canadian Natural capacity for maintenance in April. Around half There is also long-term concern over future
Resources Ltd’s Horizon of the planned outages will come from 30 days demand being lower than previously anticipated,
oil sands upgrader will of maintenance at Canadian Natural Resources and the impact this will have on more costly, and
result in the curtailment Ltd’s (CNRL) Horizon oil sands upgrader next more contentious oil projects.
of around 250,000 bpd month, which will result in the curtailment of “I can’t see much growth in the oil sands hap-
in April. around 250,000 bpd of light synthetic crude pening because there is going to be less demand
output. in the future,” CNRL’s president, Tim McKay,
At the same time, Suncor Energy will carry told Bloomberg last week. “The first step is we
out a major overhaul of its U2 crude upgrader, have to get our carbon footprint down.”
cutting output by 130,000 bpd over the entire In the short term, outages caused by main-
second quarter of 2021. And Syncrude Canada tenance are happening after OPEC and its allies
will take 70,000 bpd offline during the same called for more unity and collaboration among
quarter because of maintenance on a unit. other oil-producing countries, including the US
While crude from Alberta’s oil sands is still and Canada.™

PROJECTS & COMPANIES

Chevron sets out strategy

US SUPER-MAJOR Chevron set out a strategy that as the figure announced by rival US-listed
will involve a focus on higher returns and lower super-major ExxonMobil recently for planned
carbon intensity at its annual investor meeting, investments into its lower-emissions business
held this week. between now and 2025.
California-headquartered Chevron reaf- In a surprising move, Chevron revived
firmed its guidance for organic capital and plans to ramp up investment and production
exploratory expenditures of $14-16bn over the in the prolific Permian Basin, from which both
2021-25 period. However, it provided updated super-majors pulled back somewhat last year
versions of other figures, for example saying following the collapse in crude prices. While
that it now anticipated around $600mn worth of ExxonMobil has outlined plans for relatively
synergies from its acquisition of Noble Energy restrained activity in the Permian, Chevron has
– double initial estimates. The company also now restored its target to produce 1mn barrels
said it expected its return on capital employed of oil equivalent per day (boepd) from the basin.
to double by 2025 at a Brent price of $50 per bar- It anticipates generating $3bn in FCF from its
rel, while free cash flow (FCF) was anticipated to Permian assets by 2025 assuming $50 per barrel
grow by more than 10% per year over the period. oil prices.
Chevron is targeting a 35% reduction in car- “This, in our view, confirms [Chevron’s]
bon intensity by 2028, as well as the elimination superior investment case relative to [ExxonMo-
of routine gas flaring by 2030. It noted that it bil],” a Jefferies International analyst, Giacomo
had already exceeded its 2023 upstream carbon Romeo, said in a note to clients.
intensity reduction target, three years ahead of Chevron also said that it was targeting two
schedule. final investment decisions (FIDs) at its US Gulf
The super-major said it intended to invest of Mexico operations by 2022, while its Anchor
more than $3bn into its energy transition strat- project, sanctioned in 2019, remains on schedule
egy in the next few years. This is the same amount to start up in 2024.™

P12 www. NEWSBASE .com Week 10 12•March•2021