Canada's tar sands unexpected winner from fracking

Canada's tar sands unexpected winner from fracking
Updated 02 July 2012

Canada's tar sands unexpected winner from fracking

Canada's tar sands unexpected winner from fracking

LONDON: Soaring output of light condensate in the United States has crushed refining margins for naphtha and added to the global gasoline surplus.
But it is also providing a boost to Canada's oil industry, which increasingly benefits from a captive source of the diluent needed to make bitumen and heavy oil flow through processing facilities and pipelines.
In the past two years, collapsing gas prices have forced drilling companies in the United States to shift from targeting dry gas fields to liquid-rich plays containing a mixture of gas and more valuable crude oil and condensate to keep paying the bills.
The result has been an upsurge in output of very light liquid fuels variously described as light condensate, drip gas, pentanes plus or natural gasoline, which compete head one with the light naphtha traditionally produced by oil refineries, an essential component in the production of both motor gasoline and petrochemicals.
The sudden increase in availability of light hydrocarbons like pentane (which has five carbon atoms) and hexane (six carbon atoms) has crushed refining margins for light naphtha in North America, and added to downward pressure on the naphtha market worldwide.
It is also worsening the global refining imbalance, which is producing too much gasoline and not enough diesel, pushing gasoline prices to a discount and worsening the outlook for older refineries in North America and Europe.
As US prices for naphtha and natural gasoline fall, more and more of the surplus condensate is being exported to Canada for use in the production and transportation of bitumen and heavy crude oils, where it is being added as a diluent to improve viscosity and help them flow more easily through the processing and pipeline system.
In the first three months of 2012, the United States exported 10 million barrels of "pentanes plus," almost all to Canada, compared with less than 1 million barrels in the corresponding period last year, according to the Energy Information Administration (EIA), the independent statistical arm of the US Department of Energy.
EIA defines pentanes plus as "a mixture of hydrocarbons, mostly pentanes and heavier, extracted from natural gas. Includes isopentane, natural gasoline, and plant condensate."

COCHIN REVERSAL
Exports seem set to rise further. On June 5, Kinder Morgan Energy Partners announced it had secured binding commitments to transport more than 100,000 barrels per day of light condensate (pentanes plus) for at least ten years on its Cochin pipeline from the US state of Illinois to Fort Saskatchewan in Alberta, Canada.
At present, Cochin transports propane and propane-ethane mix from Canada to the United States. But as US gas output surges, demand for Canadian exports has fallen and the line is operating at a fraction of its rated capacity. Meanwhile, rising output of bitumen and heavy oil in Canada requires increased imports of light condensate to dilute the viscous crude.
"The Canadian National Energy Board is projecting a need to import over 180,000 barrels per day of pentanes plus into Canada by 2014. By 2020 and 2025, the import demand for light condensate is projected to grow to over 330,000 barrels per day and over 450,000 barrels per day, respectively" according to Kinder Morgan.
"The projected import demand will exceed the currently available pipeline capacity by the end of 2014, creating an opportunity for the conversion of existing, underutilized pipeline capacity to meet the growing market demand" ("Notice of binding open season for the Cochin reversal project" April 24, 2012).
From July 2014, subject to regulatory approvals, Kinder Morgan is proposing to reverse the flow on Cochin to transport light condensate northwards, and link it up with the Explorer pipeline, bringing light products up from the fast-growing shale gas and oil fields along the US Gulf Coast, including the Eagle Ford formation in Texas.
The Cochin reversal, new tank facilities and the link to Explorer will allow light condensate from Eagle Ford and other liquid-rich plays to be sent directly to oil sands producers in.
Ironically, Canada's oil sands producers benefit from a captive source of supply. US regulations banning the export of crude oil also apply to lease condensates and drip gas, which means they cannot normally be sent to other countries but may be exported to Canada for consumption or use therein owing to a special exception for the country's northern neighbor (15 CFR 754.2).

CONDENSATE GLUT
Exports are increasingly critical for the U.S. condensate market. In the second half of 2011, US stocks of pentanes plus surged to over 17.5 million barrels, exceeding previous highs set in 2010 and 2007, and far above normal levels of 6-10 million barrels. By the end of March 2012, commercial stocks of light condensate were still at almost 16 million barrels.
Stocks would have risen even more strongly were it not for the surge in exports to Canada (Charts 3-4). Even so, oversupply has helped push cash prices for light condensate and natural gasoline to a steep discount against regular refinery-produced gasoline, which contains other heavier molecules such as octane.
Predictably, rising output of light condensate is putting downward pressure on margins for refinery-produced light naphtha, which has traditionally been blended into regular motor gasoline, as well as being used as a feedstock for petrochemicals, and a diluent for heavy crude transportation.
It also worsens the global imbalance between gasoline and diesel production. Motor gasoline is a mix of hydrocarbons with mostly four to twelve carbon atoms while diesel fuel generally contains a mixture of slightly heavier molecules with between 8 and 21 carbon atoms.
Policies to promote the use of diesel rather than gasoline in Europe, coupled with growing demand for diesel in emerging markets, and rising production of condensate around the world, have resulted in refineries producing too much gasoline and not enough diesel.
The sudden increase in US pentane and hexane production is worsening the imbalance, adding extra molecules to the gasoline pool, while doing nothing to relieve the shortage of heavier molecules in the diesel segment.
Much of the extra US condensate will be used in transporting bitumen and heavy oils from Canada. Some will be lost as a result of evaporation in the pipelines. More will be lost in refining. But most will ultimately be recovered when the diluted heavy oils are passed through a US refinery, adding to the gasoline/naphtha pool glut.

— John Kemp is a Reuters market analyst. The views expressed are his own.


Dubai’s Meydan to hold talks on $2.6bn debt restructure plan

Dubai’s Meydan to hold talks on $2.6bn debt restructure plan
Updated 22 min 18 sec ago

Dubai’s Meydan to hold talks on $2.6bn debt restructure plan

Dubai’s Meydan to hold talks on $2.6bn debt restructure plan
  • PwC has been appointed to work on a proposal
  • Meydan's total debts amount to about $4 billion

RIYADH: Dubai developer Meydan will meet its creditors next week to discuss a $2.6 billion debt restructuring plan, Bloomberg reported citing people familiar with the matter.

PricewaterhouseCoopers (PwC) has been working with the company to put together a proposal, the people said, asking not to be identified for information confidentiality.

Meydan’s total debt amounts to about $4 billion, of which $2.6 billion needs to be restructured, the people said.

Under the plan, the company will ask creditors to extend repayments on that amount for an expected period of 8 to 10 years, they said.

The company also intends to sell assets to raise fresh funds, they added.

Spokespeople for PwC and Meydan declined to comment.


European banks should start merging, says Deutsche Bank’s top Qatari investor

European banks should start merging, says Deutsche Bank’s top Qatari investor
Updated 57 min 1 sec ago

European banks should start merging, says Deutsche Bank’s top Qatari investor

European banks should start merging, says Deutsche Bank’s top Qatari investor
  • European banks need the scale to compete with US, Chinese rivals

DOHA: Deutsche Bank AG’s biggest Qatari shareholder urged consolidation in Europe’s financial services industry, so the continent’s lenders can achieve the scale to compete globally, Bloomberg reported.

European lenders should start merging now to confront the growing strength of US and Chinese lenders, the former Qatari prime minister and influential investor Sheikh Hamad bin Jassim bin Jabor Al Thani said in an interview.

“They have to decide,” he said about Deutsche Bank, “but I’m saying what I think and I believe that mergers are inevitable.”

“Everybody’s waiting to have a better valuation to think about merging, but I believe to merge now is better because the market is being taken by the big banks,” Sheikh Hamad said in an interview at the Qatar Economic Forum, Powered by Bloomberg.

“If we compare the European banks with the American banks or with the Chinese banks, we would find that they are too small to survive by themselves,” he said.

Sheikh Hamad is one of the German lender’s largest shareholders through an entity called Paramount Services Holdings.

In 2015, he transferred about half his shareholding to Supreme Universal Holdings, controlled by former emir Sheikh Hamad Bin Khalifa Al Thani and each entity owns a stake of just over 3 percent in Deutsche Bank.


Dubai repays $500m bond certificates

Dubai repays $500m bond certificates
Updated 23 June 2021

Dubai repays $500m bond certificates

Dubai repays $500m bond certificates
  • Notes matured on June 22

RIYADH: The Government of Dubai, acting through the Department of Finance (DOF), announced that the $500 million Fixed Rate Note issued on 22 June 2011 under its Euro Medium Term Note Programme, reached maturity on 22 June 2021.

Upon maturity, all the notes have been redeemed in full, according to the Dubai Media office statement on Tuesday.

“The Government of Dubai’s ability to fulfill its financial obligations reflects its deep fiscal stability amidst the circumstances imposed by the current global crisis,” said Director General of DOF Abdulrahman Saleh Al Saleh. “The government’s solvency has allowed it to fulfill its past and current obligations and will continue to enable it to meet all future obligations on time.”

“We have been successful in overcoming the most challenging repercussions of the global pandemic, and have now entered a solid phase of recovery, thanks to the measures taken by the government to ensure rational prioritized spending, under the directives of our leadership,” Al Saleh added.


Saudi $48m culture fund may take stakes in private companies

Saudi $48m culture fund may take stakes in private companies
Updated 23 June 2021

Saudi $48m culture fund may take stakes in private companies

Saudi $48m culture fund may take stakes in private companies
  • Fund will begin receiving requests for beneficiaries in August
  • Financing, including crowdfunding, also being explored

RIYADH: The Saudi Cultural Development Fund may take direct stakes in private companies as it seeks to stimulate investment in the sector, said CEO Mohammed Bindayel.

Cultural projects in Saudi Arabia will receive SR180 million ($47.9 million) from the fund in 2021 and requests for beneficiaries will start to be received in August, he told Asharq.

Financing options being explored include crowdfunding, said Bindayel, who was appointed as the CEO of the fund last week.

The Cultural Development Fund, which was created to support projects of private-sector enterprises, NGOs and associations working in the cultural sectors and their supporting fields, is working within the Kingdom’s Vision 2030, said Bindayel.


Cruises set to return to Abu Dhabi in September 2021

Cruises set to return to Abu Dhabi in September 2021
Updated 23 June 2021

Cruises set to return to Abu Dhabi in September 2021

Cruises set to return to Abu Dhabi in September 2021
  • About 500,000 cruise visitors arrived in the UAE capital in 2019, a 46 percent year-on-year increase

DUBAI: Abu Dhabi said it will resume receiving cruise liners in the emirate from Sept. 1, after the industry faced a global shutdown because of the COVID-19 pandemic.

The Department of Culture and Tourism (DCT Abu Dhabi) said it would work with Abu Dhabi Ports to regain the momentum it achieved before the pandemic – about 500,000 cruise visitors arrived in the UAE capital in 2019, a 46 percent year-on-year increase.

“This comes as part of the efforts to enliven the emirate’s tourism sector after the impressive results we have achieved in combating the spread of the pandemic, and yet another step towards strengthening the UAE capital’s position as a world-class hub for maritime tourism,” Ali Al-Shaiba, the executive director of DCT Abu Dhabi.

A series of initiatives throughout the year will be implemented to ensure a smooth return of the business, the department said, including joining international events to promote Abu Dhabi to global cruisers.