Page 6 - NorthAmOil Week 32
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NorthAmOil PIPELINES & TRANSPORT NorthAmOil
Oil shipments begin on Cactus II
TEXAS
COMMODITY trader Tra gura announced on August 12 that it had started shipping oil on the Cactus II pipeline out of the Permian Basin.
The company has an agreement with the pipeline’s operator, Plains All American Pipe- line, to transport a total of 300,000 barrels per day (bpd) of crude and condensate on Cactus II. e crude is being shipped to the oil hub in Cor- pus Christi on the Texas Gulf Coast, from where it can be exported. Indeed, Tra gura is one of the largest exporters of US crude.
Cactus II has a total capacity of 670,000 bpd but flows on the pipeline are expected to be around 300,000 bpd for the remainder of this month, according to estimates by market sources cited by Reuters. e same sources anticipate volumes on the pipeline nearing full capacity in September.
e pipeline’s start-up is a welcome devel- opment for producers in the Permian, where growth has been somewhat constrained recently by a shortage of takeaway capacity. Cactus II is one of three major pipeline projects set to come online in the basin this year, o ering relief from the pipeline bottlenecks.
This is already evident, with West Texas Intermediate (WTI) prices in Midland, Texas strengthening to a premium compared with US
crude futures ahead of the pipeline’s start-up. And Reuters noted that traders expect that the arbitrage window to ship barrels to Cushing, Oklahoma – the delivery point for US crude futures – will eventually shut as the price of Mid- land crude strengthens.
At the beginning of August, Plains said spot tari rates on Cactus II pipeline would be in the $4.75-5.60 per barrel range. e pipeline opera- tor is also charging shippers tari s of $0.05 per barrel to pay for additional costs associated with US tari s on imported steel, which were intro- duced last year. Plains said the steel tari had added $40mn in construction costs.
Koch exits oil sands
ALBERTA
KOCH Industries has confirmed that it has recently sold o its upstream leases and aban- doned licences in Alberta’s oil sands. e Kan- sas-based industrial conglomerate joins a number of international companies that have exited the region in recent years, having pre- viously been one of the largest acreage holders there.
e Financial Post reported on August 14 that it had received con rmation that Koch struck a deal to sell oil sands acreage to Calgary-based Cavalier Energy, a subsidiary of Paramount Resources. e transaction took place in June.
Koch has also abandoned the licences it did not sell in the Cavalier transaction and has been allowing its leases in the oil sands to expire. e newspaper reported receiving confirmation from both Koch and the Alberta Energy Regu- lator (AER).
“The majority of Koch Oil Sands licences have been transferred to Paramount Resources. All of the remaining licences for well sites have been abandoned, which means that they have been permanently sealed and taken out of ser- vice,” an AER spokesperson, Shawn Roth, told the Financial Post in an email.
“ ose leases, which were held by Koch Oil Sands Holdings, have varied over the years. ese recent transactions are merely a re ection of the opportunities that are currently available in the marketplace and our desire to prioritise other initiatives,” a Koch spokesperson, Rob Carlton, said in a separate email to the Financial Post.
Paramount has not disclosed the transaction, but did update its land holdings in an investor presentation earlier this month. According to the latest presentation, Cavalier now holds rights for 1,994 net sections of land in the oil sands, which marks a 512% increase on the 326 net sections of land it reported holding at the beginning of 2019.
The Alberta government equates one sec- tion of land to 640 acres (2.6 square km), which suggests that Cavalier could hold almost 1.3mn acres (5,164 square km) of land in the oil sands.
Koch remains involved in the Cana- dian energy industry through its Flint Hills Resources subsidiary. e unit owns oil storage tanks at Hardisty, Alberta, as well as re neries in the US that process diluted bitumen from the oil sands.
INVESTMENT
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w w w . N E W S B A S E . c o m Week 32 15•August•2019
