Next week look for another swarm of mid cap E&P earnings, the natural gas supply slide show, ZLT performance year to date, a new idea or two, and a fresh catalyst list.
Next week look for another swarm of mid cap E&P earnings, the natural gas supply slide show, ZLT performance year to date, a new idea or two, and a fresh catalyst list.
VTZ……..Re Your Opinion on the Duvernay
Keith Schafer had an interesting writeup that Encana had just spent $300 at an Alberta Lease sale purchasing Duvernay leasehold. Howevver there are only two well data points in the entire play, and neither of them are Encana wells.
Keith went on to say the NGL's in the most recent well are highly prized by Oil Sands folks to use for blending, and the gas has an immediate near market for SAIG oil sands.
He described in detail the two companies with the Duvernay wells.
Is the Duvernay the next big Gas field in Canada…..and if so how would you play it.?
I can't comment on it too much and I don't track the companies specifically however Shell did buy out Duvernay oil and gas for their assets at the top of the last cycle when people were picking up Haynesville and other acreage like that and they paid a hefty premium. That might say something on the prospects. I believe they are the largest land holder in the area. I don't think the Duvernay shale is by any means a new story however the liquids portion sounds like new results. The Duvernay is typically included in the discussion about northeastern BC nat gas and the Montney shales.
As for the condensates from those fields, I can comment on the fact that we currently purchase them for blending and the prices are at a 5-10 $/bbl premium to light synthetic which is at a premium to WTI. They are used as a density cutter to meet pipeline specs (940 kg/m3 as a heavy or 875 kg/m3 as a light crude). Given that dry bitumen has a density higher than water you can see that the density cutting requirements are quite high volumetrically. Because condensate is lighter than light sweet synthetics and synthetics sell at a premium to WTI, condensates are better value for blending purposes because the volume that is blended into the crude is then discounted to heavy pricing (because it is being shipped on a heavy pipeline as part of the heavy crude blend).
Two things about the condensate market in Alberta going forward. The struggle in Alberta will always be to maintain a balance between light and heavy crudes such that there is enough density cutter to ship products to refineries therefore that is the driver for upgrading because margins expand until there are new upgraders making more light product in the area or other condensates are brought into local terminals for import to the upgraders. That being said:
-The Northwest Upgrader that is sponsored by the government is now going ahead to upgrade royalty bitumen, this should mean that there are more lights on the market for blending
-The Southern Lights pipeline is being built and will be importing 80,000 bbl/day of condensate from the US and this should ease the supply constraints on the market.
http://www.enbridge-expansion.com/expansion/main.aspx?id=1216
It is however hard to say how the condensate market will look in Alberta because it's difficult to predict how many insitu/SAGD/CCS projects will be going ahead and their blending schemes. If I had to guess I would say that even with the 80,000 bbl/day coming back to the local pipeline terminals, there will still be a shortage beyond the intermediate term as a result of those projects which are simply too economic to pass up at these oil prices.
Apologies for not being able to comment too much more on the actual Montney/Duvernay. I know there are many who are bullish on Celtic who is one of the smaller players in the area. That being said, there are many companies with pieces around that region as the acreage is rather large and fragmented. Even two years ago ECA was pounding the drum on the area as being one of the most economic plays in North America however the infrastructure was lacking and that area really is all trees. Now the infrastructure is somewhat improved and that should help development. NG prices aren't helping either.
Thanks for the color V
Silver flash pullback
http://www.marketwatch.com/story/silver-price-dives-gold-down-too-2011-05-01?link=MW_home_latest_news
osama bin laden dead.
impact on market tomorrow? Oil off 72 cents at 955pm CST
I don't know what crude will do but…
To celebrate the death of Osama Bin Laden, tomorrow Starbucks will offer a .99 cent Osama Bin Latte…
sorry that was pretty bad.. 🙂
did SBUX merge with 99 cent stores? That would be the cheapest thing ever offered there.
Apparently UBL had allowed his iPhone to "Set his current location". Dang you AAPL!!!
The Monday post is up.