Pipelines across BC

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Re: Pipelines across BC

Postby steven lloyd » Nov 23rd, 2013, 11:17 pm

flamingfingers wrote: Prove it with a REPUTABLE link. Taking into consideration the tax breaks, incentives and administrative costs, ... .

Especially considering Global News tonight reported that forensic accountants have confirmed that tax loopholes do indeed exist (contrary to the presumed knowledge of certain angst-fuelled posters here), and that at least about eight billion dollars in tax revenue is being siphoned away annually by Canada's largest companies and banks and that number is more likely at ten to twenty billion dollars in tax revenue. These accountants suggesst we could not only be deficit free but actually paying down debt if our government wasn't allowing these Canadian companies and banks to be taking tax money out of the country.
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Re: Pipelines across BC

Postby Gone_Fishin » Nov 24th, 2013, 5:48 am

Is Suncor taking money out of the country? Why does the left always pull that card out of its pocket when corporate profits are discussed?
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Re: Pipelines across BC

Postby NAB » Nov 24th, 2013, 8:35 am

Suncor Energy cancels Voyageur oil sands upgrader projectJeff Lewis | 27/03/13 | Last Updated: 27/03/13 6:34 PM ET
CALGARY — Suncor Energy Inc. is not proceeding with an $11.6-billion upgrading plant to convert raw bitumen into refinery-ready synthetic crude oil.

Canada’s largest oil company said Wednesday the multibillion-dollar plant, a joint venture with France’s Total SA, will not be built, capping months of speculation about the project’s fate. Suncor said it would incur a $140-million charge to its first-quarter net income, plus $180-million to its cash flow. Suncor also acquired Total’s interest in the upgrading partnership for $515-million including a tank farm and a storage facility, it said in a statement.

“Since 2010, market conditions have changed significantly, challenging the economics of the Voyageur upgrader project,” Suncor chief executive Steve Williams said in a statement.

Since 2010, market conditions have changed significantly, challenging the economics of the Voyageur upgrader project

The decision to abandon Voyageur comes as sales of synthetic crude oil from Alberta face new competition from a surge in light oil production in the United States. Production from North Dakota’s Bakken formation alone could hit 1.3 million barrels per day by 2015, according to Wood Mackenzie research, challenging the break-even costs of unsanctioned oil sands projects.

Suncor spokesperson Sneh Seetal said the company remains committed to the remaining joint venture projects with Total, including the Fort Hills and Joslyn mines.

Related
Suncor’s Voyageur plant expected to join scrap heap
Suncor seen shelving Voyageur oil sands plant
Voyageur “clearly is economically challenged given the big growth we’ve seen in light oil particularly coming out of the U.S. Bakken play, which just does not make the economics of an upgrader look very good,” said Lanny Pendill, senior energy analyst at Edward Jones & Co. in St. Louis.

Proposals by TransCanada Corp. and Enbridge Inc. that would send Alberta crude east to refineries in Quebec provide Suncor with better options, he added. “Suncor basically has a refinery sitting there in Montreal that would love to have this type of crude,” Mr. Pendill said. “They would simply have to add a coker to the plant and that would be much more cost-effective than building this huge expensive upgrader.”

Suncor booked an after-tax impairment on the long-delayed upgrading plant of $1.49-billion in the fourth-quarter of 2012. The 200,000-barrel-per-day plant was first sidelined by the recession in 2009 before it was revived as part of the joint venture with the Canadian unit of Total.

“It’s very clear the economics on it weren’t going to justify the capital expenditures,” said Robert Mark, a research analyst at MacDougall MacDougall & MacTier in Toronto.

The decision is also a blow to a cornerstone of Alberta’s oil sands industry, which for years has relied on mining raw bitumen and processing it into lighter oil.

Nobody in the whole business in North America or the world two years ago saw the growth rate of Bakken – nobody

The shale revolution in the U.S. has changed that dynamic. Imperial Oil Ltd. planned and built its $12.9-billion Kearl oil sands mine, the newest project set to start up, without one of the hugely expensive processing plants, for example.

“Things change,” said one executive in the refining business. “Nobody in the whole business in North America or the world two years ago saw the growth rate of Bakken – nobody. And nobody saw three years ago the WTI-Brent disconnect.”

http://business.financialpost.com/2013/ ... s-project/
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Re: Pipelines across BC

Postby steven lloyd » Nov 24th, 2013, 9:05 am

*removed*/ferri
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Re: Pipelines across BC

Postby Merry » Nov 24th, 2013, 12:14 pm

One thing that keeps coming through loud and clear in this thread is that there appears to be a lot of support for the idea of an east/west pipeline to the eastern refineries. It seems to be the one solution that people of all political stripes, and even industry itself, can all agree on.
So, if that's true, the Government would be wise to get behind the idea and do their utmost to promote it.
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Re: Pipelines across BC

Postby twobits » Nov 24th, 2013, 3:06 pm

NAB wrote:Suncor Energy cancels Voyageur oil sands upgrader projectJeff Lewis | 27/03/13 | Last Updated: 27/03/13 6:34 PM ET
CALGARY — Suncor Energy Inc. is not proceeding with an $11.6-billion upgrading plant to convert raw bitumen into refinery-ready synthetic crude oil.

Canada’s largest oil company said Wednesday the multibillion-dollar plant, a joint venture with France’s Total SA, will not be built, capping months of speculation about the project’s fate. Suncor said it would incur a $140-million charge to its first-quarter net income, plus $180-million to its cash flow. Suncor also acquired Total’s interest in the upgrading partnership for $515-million including a tank farm and a storage facility, it said in a statement.

“Since 2010, market conditions have changed significantly, challenging the economics of the Voyageur upgrader project,” Suncor chief executive Steve Williams said in a statement.

Since 2010, market conditions have changed significantly, challenging the economics of the Voyageur upgrader project

The decision to abandon Voyageur comes as sales of synthetic crude oil from Alberta face new competition from a surge in light oil production in the United States. Production from North Dakota’s Bakken formation alone could hit 1.3 million barrels per day by 2015, according to Wood Mackenzie research, challenging the break-even costs of unsanctioned oil sands projects.

Suncor spokesperson Sneh Seetal said the company remains committed to the remaining joint venture projects with Total, including the Fort Hills and Joslyn mines.

Related
Suncor’s Voyageur plant expected to join scrap heap
Suncor seen shelving Voyageur oil sands plant
Voyageur “clearly is economically challenged given the big growth we’ve seen in light oil particularly coming out of the U.S. Bakken play, which just does not make the economics of an upgrader look very good,” said Lanny Pendill, senior energy analyst at Edward Jones & Co. in St. Louis.

Proposals by TransCanada Corp. and Enbridge Inc. that would send Alberta crude east to refineries in Quebec provide Suncor with better options, he added. “Suncor basically has a refinery sitting there in Montreal that would love to have this type of crude,” Mr. Pendill said. “They would simply have to add a coker to the plant and that would be much more cost-effective than building this huge expensive upgrader.”

Suncor booked an after-tax impairment on the long-delayed upgrading plant of $1.49-billion in the fourth-quarter of 2012. The 200,000-barrel-per-day plant was first sidelined by the recession in 2009 before it was revived as part of the joint venture with the Canadian unit of Total.

“It’s very clear the economics on it weren’t going to justify the capital expenditures,” said Robert Mark, a research analyst at MacDougall MacDougall & MacTier in Toronto.

The decision is also a blow to a cornerstone of Alberta’s oil sands industry, which for years has relied on mining raw bitumen and processing it into lighter oil.

Nobody in the whole business in North America or the world two years ago saw the growth rate of Bakken – nobody

The shale revolution in the U.S. has changed that dynamic. Imperial Oil Ltd. planned and built its $12.9-billion Kearl oil sands mine, the newest project set to start up, without one of the hugely expensive processing plants, for example.

“Things change,” said one executive in the refining business. “Nobody in the whole business in North America or the world two years ago saw the growth rate of Bakken – nobody. And nobody saw three years ago the WTI-Brent disconnect.”

http://business.financialpost.com/2013/ ... s-project/


Exactly what I have been trying to get thru the head of a certain poster here who continues to call for upgrading at source. It just ain't gonna happen in that environment or location!!! Now, just find the safest way to move what we can sell leaving it economically viable. In other words, don't double wall the economics out of the business model. Be real in what is possible. The term charlatan comes to mind.
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Re: Pipelines across BC

Postby hobbyguy » Nov 25th, 2013, 12:16 am

The discussion of the reasons for the requirement to upgrade do not, unfortunately, relate strictly to the ROI calculations that prompted the cancellation of the Voyager facility. Those calculations are made in the context of a complex and changing market environment, which continues to evolve.

For example: historical spreads in price differentials have in recent times been exceeded by significant amounts. In Dec. 2012, the spread was $35/bbl and in Feb. 2013 the spread was $27/bbl between WCS and Syncrude sweet. The assumption, of course, is that the spread return to historical levels. http://www.td.com/document/PDF/economics/special/DrillingDownOnCrudeOilPriceDifferentials.pdf If you make that assumption, then I fully understand the decision to not build the upgrading facility on an ROI, especially in the context of a federal government that appears determined to push through easy access to markets for raw bitumen (regardless of the downsides), and a provincial government that is perversely working against its own interests by putting in place legislation to enforce cost penalties for carbon emissions, thus disadvantaging upgrader economics. It should be noted, however, that the assumption that the spread between WCS and Syncrude sweet would return to historical levels is still not looking to be correct, with spread stubbornly stuck at $25/bbl as of Nov. 1, 2013.

Those ROI calculations do not however, have much relevance to the risk/benefit calculations that are of concern to BC residents, nor to Canadian residents as a whole when making those risk/benefit calculations. The fact remains that from a main street perspective, as Syncrude remains very profitable with their upgrading - even in a down quarter as just reported. The conclusion is that selling the upgraded is both profitable and feasible, and therefore the apparent higher ROI available from shipping the raw product is irrelevant to the calculations, and if considered is altered by the fact that for most Canadians it is maximizing the number of jobs that are provided, which from their perspective means that upgrading has a higher ROI, not lower.

Obviously, as the eastern route does not contain the maritime risk factor and upgrading/refining in eastern Canada raises the number of jobs produced there, the risk/benefit is much, much more favorable.

That said, the Ontario decision to ban coal fired power plants may have another impact on the calculations. Why? Because coal fired generating plants are the biggest market for petroleum coke, and dilbit is high in petroleum coke.

The risk/benefit analysis for shipment across BC and out via tankers is unaltered by the fact that Suncor has capacity in Montreal, that is part of their internal ROI calculation.

I would suspect, based on the profitability of Syncrude, that if the federal government finally takes its head out of the sand and says any pipelines to the west coast must be upgraded product only, that Suncor would revisit their calculations, as access to broader markets would likely achieve of $35-40/bbl spread vs dilbit, and the ROI would once gain become favorable.

By the way, if you hang your hat on GDP, selling the upgraded product generates more GDP for Canada. That's good isn't it?

Still haven't seen a risk/benefit equation argument from you guys that favors dilbit.
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Re: Pipelines across BC

Postby Smurf » Nov 25th, 2013, 5:35 am

hobbyguy don't you figure that someone (big supporter) is pulling governments strings to go the way they are. I would suspect that it is to their benefit somehow to do what they are doing.
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Re: Pipelines across BC

Postby Gone_Fishin » Nov 25th, 2013, 6:25 am

What viable corporation determines its ROI based on what's the best for governments and society as a whole? None that I know of. Corporations are designed to generate a return for shareholders: if there is a consequential benefit to governments and society as a whole, it's a side-effect, not a determining factor. Likely, the leftist attitude that corporations exist firstly to benefit government, etc is best saved for the Cuban model which was embraced by the NDP so heartily, and rejected by the electorate just as heartily. If you as a member of society want a benefit from a corporation's ROI, consider becoming a shareholder instead of expecting the corporation to walk up to you and hand you a benefit for sitting on the sidelines.
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Re: Pipelines across BC

Postby Rwede » Nov 25th, 2013, 7:56 am

Gone_Fishin wrote:What viable corporation determines its ROI based on what's the best for governments and society as a whole? None that I know of. Corporations are designed to generate a return for shareholders: if there is a consequential benefit to governments and society as a whole, it's a side-effect, not a determining factor. Likely, the leftist attitude that corporations exist firstly to benefit government, etc is best saved for the Cuban model which was embraced by the NDP so heartily, and rejected by the electorate just as heartily. If you as a member of society want a benefit from a corporation's ROI, consider becoming a shareholder instead of expecting the corporation to walk up to you and hand you a benefit for sitting on the sidelines.



Well said. I think you've summed up the "two sides" to this long thread really succinctly.
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Re: Pipelines across BC

Postby twobits » Nov 25th, 2013, 8:29 am

Gone_Fishin wrote:What viable corporation determines its ROI based on what's the best for governments and society as a whole? None that I know of. Corporations are designed to generate a return for shareholders: if there is a consequential benefit to governments and society as a whole, it's a side-effect, not a determining factor. Likely, the leftist attitude that corporations exist firstly to benefit government, etc is best saved for the Cuban model which was embraced by the NDP so heartily, and rejected by the electorate just as heartily. If you as a member of society want a benefit from a corporation's ROI, consider becoming a shareholder instead of expecting the corporation to walk up to you and hand you a benefit for sitting on the sidelines.


Yes well said. It is also important to note that the ROI is determined after royalty payments to the Gov't(we the people, owners of the resource). Royalty payments are a cost to the corp. If some on here had their way, they would drive the cost of doing business so high......forcing refinement, double walling everything in some tail chasing exercise to obtain a fictional 100% guarantee. Unfortunately these pipe dream demands, pun intended, drive ROI to zero and guess what happens? They curtail further investment, move new investment elsewhere and the income stream that came from royalties becomes stagnant and diminishing until gone. These people just can't understand what the end game to their silly demands will be.

Next up, someone posting income statements with billions of profit. WE DESERVE A FAIR SHARE OF THAT they scream......while completely ignoring the thousands of billions it took to actually earn those tens of billions and the simple math that would say that it is in fact a fair return on investment. I call it zero envy. Anytime a lefty see's more than 6 zero's, they feel entitled to a Cpl of them just cuz.
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Re: Pipelines across BC

Postby George+ » Nov 25th, 2013, 10:12 am

Actually, the Scandinavian model of managing corporations works just fine.
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Re: Pipelines across BC

Postby The Green Barbarian » Nov 25th, 2013, 10:13 am

flamingfingers wrote:
Prove it with a REPUTABLE link.


LOL - the queen of the disreputable link to obese leftist bloggers living in their mom's basements wants a REPUTABLE link. Sure, but the real issue here is - will you understand it.

Here's the current prices of oil that are on the world market:

Crude Oil (WTI) USD/bbl. 93.72 -1.12 -1.18% Jan 14 12:33:04
Crude Oil (Brent) USD/bbl. 110.57 -0.48 -0.43% Jan 14 12:33:42
TOCOM Crude Oil JPY/kl 67,050.00 +1,050.00 +1.59% Apr 14 12:32:10
NYMEX Natural Gas USD/MMBtu 3.78 +0.01 +0.24% Dec 13 12:51:39

http://www.bloomberg.com/energy/

The WTI price is what we get now. You'll note that it is $17 a barrel lower than the Brent price. If we sell to the Chinese via Northern Gateway, the theory is that we should be able to charge Brent prices, and thus make $17 a barrel more for our oil exports. Will we? I'm sure our resident "WE CAN'T DO IT!!!"/"LET'S BUILD AN UPGRADER!!" guy will say no, or will say the risks don't meet the benefits, or some other excuse to do nothing he found off of the Tyee or CCPA website.
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Re: Pipelines across BC

Postby The Green Barbarian » Nov 25th, 2013, 10:14 am

George+ wrote:Actually, the Scandinavian model of managing corporations works just fine.


sounds like you should move there then! Take a cargo container of shoes and clothes with you, as they are 5 times more expensive there than here. But their model "works just fine", as long as you don't burden yourself with understanding it.
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Re: Pipelines across BC

Postby The Green Barbarian » Nov 25th, 2013, 10:17 am

Merry wrote:One thing that keeps coming through loud and clear in this thread is that there appears to be a lot of support for the idea of an east/west pipeline to the eastern refineries. It seems to be the one solution that people of all political stripes, and even industry itself, can all agree on.
So, if that's true, the Government would be wise to get behind the idea and do their utmost to promote it.


Your assumption contains one main flaw though Merry. It assumes that support = actual understanding of all issues. Just because support is high (I support it too) doesn't mean that the government should be basing anything on what we, the no-nothing public, "feel". Their decisions should be based on actual facts. There are some people on these threads that I don't think would even be welcomed in Cuba, as their stupidity and cowardice would harm even their devastated economy. I wouldn't want these people mowing my lawn let alone having any sort of say in what policies we have in place for infrastructure.
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