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QatarEnergy, ExxonMobil partner to
explore offshore Eastern Canada
EASTERN QATARENERGY – recently renamed from semi-submersible rig to complete the explora-
CANADA Qatar Petroleum – has announced that it has tion well in the spring and summer of 2022.
signed an agreement with ExxonMobil to farm “We know we do have something that
into an exploration licence offshore Newfound- QatarEnergy is interested in,” the Oil and Gas
land and Labrador in Eastern Canada. Corporation of Newfoundland and Labrador’s
Exploration Licence (EL) 1165A is located in (OilCo.) CEO, Jim Keating, told CBC News
the Flemish Pass Basin, around 450 km east of this week. He added that companies such as
St John’s, and contains the Hampden prospect in QatarEnergy are seeking “advantaged oil”, which
water depths of around 1,100 metres. can be produced at a relatively low cost with min-
ExxonMobil will retain a 60% stake in the imal greenhouse gas (GHG) emissions.
licence while Qatar Energy will take owner- The Flemish Pass Basin is also home to other
ship of 40%. This marks the Middle Eastern prolific discoveries – most notably Equinor’s Bay
country’s first entry into offshore exploration du Nord. Interest in developing the region – and
in Canada. It already partners with ExxonMo- other offshore areas – dropped off during the oil
bil on a number of other projects elsewhere, price downturns of recent years but could now be
including the Golden Pass LNG project, revived as prices rise again.
which is under construction on the US Gulf However, operators will increasingly have
Coast. to balance new oil and gas development with
The farm-in suggests renewed interest in decarbonisation, which can make the path for-
exploring the Hampden prospect. Drilling at ward more challenging. Indeed, QatarEnergy’s
the site began in May 2020 but was suspended recent name change illustrates how the com-
after a week, without explanation. According pany is trying to position itself as a producer of
to CBC News, ExxonMobil has been seeking a cleaner energy.
PERFORMANCE
Canadian producers hit by heavy
crude price fall at Cushing
NORTH AMERICA THE price of Canadian heavy oil has fallen at the This comes shortly after Enbridge brought
Cushing hub in Oklahoma as refiners have been its Line 3 replacement pipeline online, allowing
increasingly turning their backs on heavy and more Canadian crude to flow to the US. Addi-
higher-sulphur crude. Instead, they are reported tionally, Marathon Pipe Line is preparing to
to be favouring lighter grades that are cheaper reverse its 1.2mn barrel per day (bpd) Capline
to refine. pipeline, which is currently flowing south to
Citing NE2 Group data, Bloomberg reported north. A BMO Capital Markets analyst, Randy
that the discount at which Western Canadian Ollenberger, told the Financial Post that he
Select (WCS) trades to West Texas Intermediate expects the pipeline to shrink WCS discounts
(WTI) had widened to $9 per barrel as of Octo- relative to WTI. His estimates of the discount
ber 27. This discount is around $7 per barrel were wider than that reported by Bloomberg,
smaller than the price Canadian oil fetches at putting it at $15.50 per barrel, which could
Hardisty, Alberta, the news service added. shrink to $10 per barrel as a result of the Capline
The shift among refiners comes as a result of reversal.
the price of hydrogen that is made using natural Oil producers contacted by the Financial Post
gas having surged in recent weeks amid a global also said they expected the reversal to improve
natural gas crunch. This is reported to have the returns of their barrels. However, if refiners
added up to $6 per barrel to the cost of process- continue seeking lighter crude grades for price
ing crudes with a higher sulphur content, which reasons, this could undermine the gains that the
require units that run on that hydrogen, accord- Capline reversal and the start-up of the Line 3
ing to the International Energy Agency (IEA). replacement offers.
Week 43 28•October•2021 www. NEWSBASE .com P7
