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Irving Oil targets summer for tanker shipments of Western Canadian crude – CBC.ca

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Irving Oil, the operator of the country’s largest refinery, is aiming to begin receiving more crude from Western Canada — delivered to New Brunswick in tanker ships — starting this summer.

The privately held refiner applied last month to the Canadian Transportation Agency (CTA) to use foreign tankers in order to increase the amount of domestic crude it gets from offshore Newfoundland and Western Canada. 

Iriving Oil’s application included a proposal for the tankers to transport oil from a terminal in Burnaby, B.C., through the Panama Canal and on to Irving Oil’s refinery in Saint John, N.B.

On Friday, a company official confirmed the applications had received regulatory approval and it is now working through the details of the federal process for approving individual vessels.

“Over the … next few weeks here, we’ll be acquiring crude oil, organizing shipping and then finalizing the approvals for those ships to transport the crude oil,” said Kevin Scott, chief refining and supply officer for Irving Oil.

Scott said they hope to receive their first barrels from Western Canada by ship in late June or early July.

 The company wants to increase the mix of Canadian crude it uses, which is currently in the range of 20 per cent.

“We’d love to see that get much higher and get above the majority — if technically it works and from a logistics perspective all of that works out,” he said.  

Increasing the amount of Canadian oil the refinery uses would displace the crude imports the company gets from around the world, but it’s not clear which shipments might be affected. 

Scott said the refinery uses a “significant” amount of oil from the United States.

Irving Oil’s refinery in Saint John is the largest in Canada with a capacity to refine 320,000 barrels of oil per day. (CBC)

“Part of this is really opening up the option for us to run more Canadian crude,” Scott said.

“We have limited options today. And, really, when we’re being challenged to be creative in terms of Canadians helping Canadians, this was one way that we said it was possible for us to do that.

“And, of course, all of the approvals and issues around the ships is really what we’re working to get in place … so that we have that option to buy Canadian crude as easily as we buy crudes from anywhere else in the world.”

That could be welcome news for a sector that has been hit hard by a steep plunge in demand for fuel as both consumers and businesses throttle back activity in the face of the COVID-19 pandemic. 

Earlier this week, the Canadian Association of Petroleum Producers said, in the short term, the Irving proposal offers a “desperately needed” expansion of the domestic market.

Alberta Energy Minister Sonya Savage said Friday she is glad Irving Oil will begin using more Western Canadian crude, adding that Alberta produces enough to supply the country.

“However, it is unfortunate that Irving is forced to use complicated marine shipping routes either around the entire continent or up from the Gulf of Mexico,” she said in a statement.

“The proposed Energy East Pipeline would have provided a safe and faster route.”

In its application to the CTA, Irving Oil said it recognized recent events had caused the economy, and the energy sector in particular, to be in a state of crises, and that “it is a time for Canada to come together.”

The application stated that it is the company’s intent to enter into long-term agreements with Canadian crude suppliers for the nomination of barrels over a one-year timeframe.

Irving Oil’s plan is to use foreign oil tankers to ship Canadian crude from three key points, including from the West Coast, down through the Panama Canal and on to Saint John.

It also wants to take delivery of Canadian oil from suppliers in Newfoundland and Labrador, as well as terminals on the U.S. Gulf Coast, where crude from Western Canada can be delivered by pipeline.

Irving Oil currently receives some oil from offshore Newfoundland as a routine part of its mix, Scott said, as well as a “small amount” of Western Canadian crude by rail.

“This would increase our capability to get access to Western Canadian crude, either from Vancouver or from the U.S. Gulf Coast, which is a slightly shorter route,” he said.

Asked if the company’s refinery could use Alberta’s heavy grade of oil, Scott said it can use “some amount” and that it has been doing modelling and testing.

“Today we run some synthetic crude oil, which is lighter, from from Western Canada,” he said. 

“This will allow us to access the heavier crude by marine [transportation]. But we would expect that it will be a mixture of crudes. Much like our refinery today, we would run a mixture of different types of crudes from different locations, ultimately to get the right mix to make the products that we’re looking for.”

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Zoom transforms hype into huge jump in sales, customers – BNNBloomberg.ca

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Zoom Video Communications Inc. reported quarterly sales that leapfrogged estimates, showing that a surge in demand for its video-conference service during the coronavirus pandemic has translated into more paying customers. The company also about doubled its annual revenue forecast.

Revenue increased about 170 per cent to US$328.2 million in the period that ended April 30, the San Jose, California-based company said Tuesday in a statement. Analysts, on average, expected US$203 million, according to data compiled by Bloomberg. Profit, excluding some items, was 20 cents a share, compared with analysts’ average projection of 9 cents.

Zoom projected sales of as much as US$1.8 billion in the fiscal year, from a forecast of as much as US$915 million in early March. Analysts estimated US$930.8 million.

Chief Executive Officer Eric Yuan has tried to ensure that his virtual-meeting platform can cope with a swell of demand from people forced to remain home to prevent the spread of Covid-19. While security and privacy issues plagued the system early in the quarantine, Zoom has become an essential social network, attracting more than 300 million participants some days, up from 10 million in December. The software maker allows gatherings of as long as 40 minutes for no charge. While Zoom has attracted more buzz than corporate rivals, its ability to attract more paying customers will determine how well it’s faring against competition from Microsoft Corp., Cisco Systems Inc. and Alphabet Inc.’s Google.

Shares increased 4 per cent in extended trading after closing at a record US$208.08 in New York. The stock has more than tripled this year.

Zoom said it ended the quarter with about 265,400 customers with more than 10 employees, a more than fourfold increase from the same period a year earlier. The company now has 769 corporate clients that have spent more than US$100,000 on Zoom’s products over the last 12 months, about double from a year earlier.

The company said its expects adjusted profit in the fiscal year will be US$355 million to US$380 million, or US$1.21 to US$1.29 a share. Analysts had estimated 46 cents, just more than Zoom’s earlier forecast. The company has been spending to bolster its network capacity, including by buying cloud-computing services from Oracle Corp. during the pandemic. Zoom also continues to use Amazon.com Inc.’s cloud service.

With Zoom’s popularity has come controversy over the company’s security practices. Trolls have invaded myriad meetings, religious gatherings and other events, to share pornography and shout profanity or racial epithets, in a phenomenon known as “Zoombombing.” The company highlighted or created a raft of tools users can employ to prevent the virtual attacks, including passwords and waiting rooms.

There also were instances when Zoom calls were routed through servers in China even when no participant was based there and users were unwittingly sending metadata to Facebook Inc. when they signed in. Zoom put an end to both practices. The company pledged to commit to bolstering privacy over all other concerns for three months, purchasing a secure-messaging company, Keybase, to bring the highest standard of encryption to the platform, and hiring cybersecurity experts to guide safety efforts.

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Surprise Crude Draw Sends Oil Prices Soaring – OilPrice.com

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Surprise Crude Draw Sends Oil Prices Soaring | OilPrice.com

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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The American Petroleum Institute (API) estimated on Tuesday a small crude oil inventory draw of 483,000 barrels for the week ending May 29.

Analysts had predicted an inventory build of 3.038 million barrels.

In the previous week, the API estimated a build in crude oil inventories of 8.731 million barrels. Meanwhile, the EIA’s estimates were for more muted, with the industry body reporting last week that the inventories had climbed by 7.9 million barrels.

WTI was trading up on Tuesday afternoon prior to the API’s data release as OPEC pushed up the timeline for its meeting to discuss the future of the group’s current oil production cut plans which are set to expire at the end of June. Indications are that Saudi Arabia hopes to extend the cuts in some form until the end of the year, while Russia is rumored to prefer an extension of a month or two at most,

Either way, the market likes the idea of more cuts, with the understanding that cutting production through June will be insufficient to draw down the global glut that is weighing on prices and taxing storage capacity,

Oil production in the United States has now fallen from 13.1 million bpd on March 13 to 11.4 million bpd for May 22, according to the Energy Information Administration—a drop of 1.7 million bpd—more than OPEC’s production cut agreement from last year.

At 4:16 pm EDT on Tuesday the WTI benchmark was trading up on the day by $1.42 (+4.01%) at $36.86. The price of a Brent barrel was trading up on Tuesday as well, by $1.31 (+3.42%), at $39.63.

The API reported a build of 1.706 million barrels of gasoline for week ending May 29—compared to last week’s 1.120-barrel build. This week’s draw compares to analyst expectations for a 1.0 million-barrel build for the week.

Distillate inventories were up by 5.917 million barrels for the week, compared to last week’s 6.907-million-barrel build, while Cushing inventories saw a draw of 2.2 million barrels.

­­

At 4:37 pm EDT, WTI was trading at $36.93 while Brent was trading at $39.66.

By Julianne Geiger for Oilprice.com

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Why Saudi Arabia Is Desperate To Extend OPEC Cuts – OilPrice.com

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Why Saudi Arabia Is Desperate To Extend OPEC+ Cuts | OilPrice.com

David Messler

Mr. Messler is an oilfield veteran, recently retired from a major service company. During his thirty-eight year career he worked on six-continents in field and…

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    Saudi Flag

    OPEC+ hopes to reduce global storage volumes with their production cuts, and hopes to extend them through at least, the summer. OPEC’s regular meeting in Vienna is coming up and of course the Russians will be invited as they hold the key to realizing the 9.7 mm BOPD cut now in effect through June. Their hope is to extend these cuts beyond the June-30th expiration through September, 1st. These cuts, as painful as they are to the economies of the OPEC member states, and that of Russia as well, are necessary in order for the cuts to deliver their number planned goal-reduction of U.S. storage.

    EIA

    As you can see in this graphic from the Energy Information Agency, (EIA) crude storage, thanks to recent unrestrained U.S. production, and the Covid-19 demand destruction, is well above the 5-range. This insulates the oil market from the higher prices the Saudis and the Russians would like and need to have. We think that the market is on track to absorb these excess barrels and deliver inventory levels well toward the lower bound of the five-year range, and will discuss in this article how this will happen.

    OPEC+ meeting this week

    Once again there some minor fractures in the uneasy alliance between Saudi and the Russians. The Russians in particular distress about the cuts they’ve agreed to take, as they operate a number of semi-public companies, notably among them-Rosneft, (ROSN.MM) that have contractual delivery requirements. Symbolic perhaps of that distress Rosneft’s CEO, Igor Sechin was quoted in a recent Reuter’s article with conflicting commentary between its desire to fulfill contracts, and abide by the OPEC+ agreement.

     “Rosneft has told the energy ministry it would be difficult to maintain cuts to the end of the year, as it has had to cut shipments to major buyers, such as Glencore (GLEN.L) and Trafigura, despite good demand, two sources close to the talks said on condition of anonymity.”

    “There is no doubt Rosneft will strictly fulfill all obligations under supply contracts with its foreign and Russian counterparties despite output cuts made by the company as a part of OPEC+ deal,” Rosneft CEO Igor Sechin said in a statement on Friday.”

    Related: Three Reasons Oil Prices Are Bouncing Back

    The Saudis on the other hand, are desperate for these cuts to finally drive prices higher. The Kingdom of Saudi Arabia, also known as ‘KSA’, had been on a spending spree in the years leading up to the 2014 decision to crash prices, and drive higher cost producers-notably U.S shale out of business. This was a calculated ‘Hail-Mary’ sort of action that misfired badly in 2017 as shale producers figured out how to keep drilling with $50 dollar oil. 

    Commissioned in 2016, and known as the Vision 2030 plan, KSA began a capital intensive program to remake their economy by the year 2030. The timing could have been better for this initiative. Now, with over half a decade of reduced prices and slashed market share, they are burning through their cash reserves. KSA needs things to turn around, and quickly.

    I am not predicting the complete breakdown we saw early this year, between the two. There’s too much at stake for both countries to resort to that extreme once again. My expectation is that KSA will get most of what they want later this week. That is bullish for oil prices and should continue the steady recovery seen throughout March.

    Current compliance is less than stellar

    A troubling component of the cuts for OPEC is the spotty compliance by some members. A recent Reuter’s article documented compliance of about 74% of stated production goals for OPEC. Interestingly the key laggards were countries that flirt with anarchy, but somehow manage to deliver oil totals in excess of agreed limit. Among them, Iraq, Venezuela, Nigeria, Libya, and Iran.

    The good news is their production is so stressed by domestic strife, international sanctions, and general lawlessness that these overages just don’t matter a great deal in the grand scheme of things “oil”. Particularly when stacked against the resolve of KSA, and Russia to restrict production in the hope of higher prices.

    What will deliver the reduced storage sought by OPEC+?

    In a recent previous OilPrice article, I discussed in depth what it would take for oil prices to continue moving higher. In it, I forecast that there could be a discrepancy of as much as 6-8 mm BOPD between global demand and supply. The actual decline driven by reduced drilling and completions, doesn’t have to be this high though to be supportive of a steadily increasing price for oil.

    As OPEC+ grapples with compliance and a questionable commitment to production restraints on the part of Russia to reduce inventories in America, the actual amount of production restraint needed to meet this goal is only about 3-mm BOPD. With 210 left in the year, a disparity of 3-mm BOPD will work off most of the current excess in supply by year’s end with some left over for good measure.

    Related: World’s Top Solar Panel Producer Opens New Mega Factory

    This is a figure we are easily on track to meet, as a result of OPEC’s efforts, and the falling production from U.S. shale. Shale producers actually have some solidarity with KSA and Russia, as they need substantially higher prices as well to stay in business. The decline rate for shale, 60-70 percent of initial production, requires new drilling of at least 500 active rigs to deliver incremental production above the decline rate. We are currently at about 60% of that number.

    Your takeaway

    Last week we saw significant builds in oil supplies as reported by the EIA. The ability of oil to stay in the green in the face of that bearish news bodes well for continued price improvement.

    From severe contango in late-April the price of the NYMEX futures contract has moved steadily higher toward backwardation – an expectation of higher prices in the out months, than being received today. Also declining is the spread between the NYMEX contract-WTI and Brent. Last month it was well over $5.50. As of the end of May, it had flattened to $3.87, nearly two dollars in a month.

    This supports the thesis that as drilling remains below the decline rate for shake, and if OPEC+ extends its production cuts to the fall, oil prices should rise significantly higher.

    By David Messler for Oilprice.com 

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