Oil prices jump on talk OPEC is ready to deal, but traders are wary of ‘jawboning’

NEW YORK — Global oil prices surged as much as 12 per cent on Friday after a report once again suggested OPEC might finally agree to cut production to reduce the world glut, while a bounce in stock markets fed appetite for risk.

Despite the strong daily gain, oil prices were poised to end the week down as much as 5 per cent.

The United Arab Emirates’ energy minister said the Organization of the Petroleum Exporting Countries was willing to cooperate on an output cut, the Wall Street Journal reported on Thursday after crude futures settled in U.S. trade.

Many traders were skeptical at first about the report, noting that Venezuela and Russia had tried in vain earlier in the week to stir Saudi Arabia and other major producers into agreeing to output cuts.

But after a 75 per cent price slump since mid-2014 that has taken crude prices to more than 12-year lows, many were inclined to believe that a rebound was due sooner or later if production tightens or demand picks up.

“We expect declining U.S. oil production, in particular, to drive the oil price back up to US$50 per barrel by the end of the year,” Frankfurt-based Commerzbank said in a note.

U.S. crude contracts over the next five years were trading under US$50 a barrel on Friday, rising above that level only from November 2021 onwards.

U.S. crude’s front-month settled up US$3.23, or 12.3 per cent, at US$29.44 per barrel, reaching a session high of US$29.66. It hit a 12-year low of US$26.05 the previous day. For the week, it lost 4.7 per cent.

Brent’s front-month closed up US$3.30 at US$33.36 a barrel, having slid below US$30 on Thursday. Weekly losses were pared to 2 per cent.

Prices extended gains after data showed an eighth straight weekly drop in the number of U.S. rigs drilling for oil. Oil also got a boost from the rally in global equity markets.

Some cited Monday’s Presidents Day holiday in the United States, saying fewer players wanted a short position in oil ahead of the longer weekend break for the New York crude market.

But others, like Tyche Capital Advisors’ Tariq Zahir, were hoping to profit again from bearish bets once the rally peaks. “It gives me great opportunity to put out new shorts in crude spreads,” he said.

Many expected wilder price swings in coming weeks.

“It’s not a one-way price movement anymore,” said ABN AMRO’s senior energy economist Hans van Cleef. “We will see a period of high volatility.”

© Thomson Reuters 2016

64-bit iPhones and iPads get stuck in a loop when set to January 1, 1970

Zach Straley demonstrates the problem on an iPhone.

Take a 64-bit iOS device—iPhone 5S or newer, iPad Air or newer, iPad Mini 2 or newer, sixth generation iPod touch or newer—laboriously set its date to January 1, 1970, and reboot. Congratulations: you now have a shiny piece of high-tech hardware that’s stuck at the boot screen, showing nothing more than the Apple logo… forever.

Posted on Reddit and subsequently demonstrated on YouTube, it appears that iOS has a rather embarrassing software flaw. Redditors testing the bug have found themselves with unusable phones, and there are reports that vandals have been resetting the clocks of display devices in Apple stores.

So far, taking advantage of this bug requires a few minutes of physical access, as it takes a while to wind the date back 46 years in the settings app. There is concern that Wi-Fi devices could be vulnerable to malicious data from NTP (network time protocol) servers. NTP is used by many operating systems to set the time and date of a device, and its data is both unencrypted and unauthenticated, making spoofing relatively straightforward. NTP clients should not generally change the time and date by such large amounts, so this may not be an issue, but iOS’s behavior in this regard is currently unknown.

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Facebook India MD Kirthiga Reddy stepping down

(Reuters) – Facebook Inc’s India managing director, Kirthiga Reddy, said on Friday she is stepping down and returning to the United States to “explore new opportunities” at the company’s headquarters in Menlo Park, California.

Counting down the Canadian energy industry’s 2015 lowlights

How bad was 2015 for the Canadian energy industry? Try a 42 per cent decline in oil export revenues. Or an 88 per cent drop in propane prices. Even wind and solar capacity had an unremarkable year, despite the policy momentum in their favour.

The National Energy Board’s “Highlights of 2015” published Friday, documents the woes of the Canadian energy industry. Some factoids from the report:

HOW THE MIGHTY HAVE FALLEN

Last year, the Western Canadian oil industry eked out its smallest growth in production in six years, rising to 3.66 million barrels per day. Forest fires and facility shutdowns did little to improve sentiment. Storage levels also reached an all-time high last August and remained at an elevated level throughout 2015.

As prices plunged, oil export revenues also declined 42 per cent compared to 2014, to $41.2 billion.

Major players retreated from planned projects in the oilsands and also abandoned drilling program in the Beaufort Sea. However, the East Coast was a rare bright spot with Shell Canada commencing an exploration program in Nova Scotia in October — the first in the area since 2005.

LOSING STEAM

The born-again phenomena of crude oil being transported on trains lost momentum last year, declining 12 per cent to 173,000 bpd. The decline was largely due to low oil prices squeezing rail’s economic viability.

“In 2014, roughly half of all Canadian crude by rail exports were delivered to the U.S. East Coast and one-third were delivered to the U.S. Gulf Coast,” the NEB sad. “In 2015, the share of exports delivered to the Gulf Coast increased to one-half, while the share to the East Coast declined to one-third.”

LIQUIDS PULVERIZED

If you thought crude oil was having a terrible year, natural gas liquids fared a lot worse. Annual average prices for propane, butane and condensate at the Edmonton NGL price hub declined by 87, 54, and 46 per cent, respectively, during the year.

“The propane market has experienced significant turbulence in recent years, from the crop drying and Polar Vortex-driven demand shock of 2013/14 to swelling U.S. supply and storage overhangs in 2015,” the NEB said.





GAS PAINS

Canadian natural gas exports to the U.S. Midwest continue to get displaced by U.S. shale resources, falling seven per cent in 2015. Canadian exports to the Midwest have declined approximately 30 per cent since 2011, the NEB said. Overall, total Canadian natural gas exports in 2015 remained flat at 7.4 bcfd.

UNLIKELY CLIMATE CHANGE LEADER

Canada’s reputation as a climate change pariah may not be entirely deserved. With all the carbon pricing policies being proposed or implemented, as much as 90 per cent of Canada’s population will soon have instituted broad-based carbon pricing, the NEB estimates.

ELECTRICITY SUPERPOWER?

Canada’s electricity exports to its neighbour down south reached the record level of 55 terrawatt hours last year.

“New U.S. initiatives to increase electricity generation from cleaner sources could create opportunities for Canadian producers,” the NEB said.

While President Barack Obama’s Clean Power Plan has been put on hold by the U.S. Supreme Court, the march to de-carbonize power plants is unlikely to be impeded.

RENEWABLES

Canada’s renewable energy capacity grew last year, but at a slower rate. Solar capacity expanded 11 per cent during the year, compared to the galloping 48 per cent increase seen the year before. Similarly, wind capacity grew eight per cent in 2015, a mere shadow of the robust 23 per cent growth of 2014.

“This slowdown in capacity additions can be attributed to slower demand growth, lower prices, and changing incentives,” the NEB said.

yhussain@nationalpost.com
@YAD_FPEnergy

For Valentine’s Day gift, forget diamonds: try ichnusaite

PARIS (Reuters) – Far rarer than diamonds or emeralds, some minerals on Earth are known only from thimbleful samples, according to a first list of 2,550 obscure minerals on Friday that could have…

‘It’s a mess:’ Oil crash creating graveyard of wells abandoned on Albertans’ land

Decades before Tony Bruder was ranching in southern Alberta, natural gas wells dotted the rolling landscape.

The series of wells — drilled in the 1950s by British American Oil, later taken over by Gulf Canada and eventually sold off to much smaller companies — tapped into a “sour” gas field that spread under at least 14 ranches in the area, including Bruder’s property near Twin Butte.

“We have two sour gas wells on our place — they were both drilled in the ’50s, and both have been inactive since the late ’50s, early ’60s,” said the third-generation rancher. “We also have several pipelines that go across our place.”

There have been close to 450,000 oil and gas wells drilled in Alberta, about one-third of which are now considered “abandoned” or “inactive” by the industry. A well that is no longer producing but hasn’t been properly sealed poses an environmental concern as a potential pathway for contaminants to pollute groundwater or soil.

A well is deemed inactive, or suspended, if there has been no activity for 12 months.

In Saskatchewan, Premier Brad Wall has asked Ottawa for $156 million to clean up old wells in that province in an economic stimulus package to address the growing number of laid off oilfield services workers. Friday Canadian Natural Resources Minister Jim Carr said Ottawa would consider the request.

Postmedia photo by David Rossiter

Postmedia photo by David RossiterRancher Tony Bruder has an orphaned gas well on his property near Twin Butte, Alberta that has been inactive for about 60 years.

The Alberta government said this week it won’t make a similar request, but lawyers working with landowners across the province said it could help deal with the burgeoning environmental problem.

It’s a mess and I am not sure what the government is going to do

The economic downturn in the oil and gas industry has made the issue worse for thousands of property owners like Kelly Nelson, who has about 15 wells on her family’s farm near Vulcan.

“There are six wells that a company just disappeared on us,” said Nelson, noting it means the $3,000 to $4,000 in annual rent per well also disappeared in 2012. She went to the Alberta Surface Rights Board, which resolves disputes between energy companies and landowners, and it now pays the rent.

 David Rossiter / Postmedia News

David Rossiter / Postmedia NewsThe Bruder ranch near Twin Butte, north of Waterton Lakes National Park.

“It’s a mess and I am not sure what the government is going to do,” she said.

Enforcing the existing rules has been challenge enough for the Alberta Energy Regulator, said Barry Robinson, a lawyer at Ecojustice in Calgary. He noted that last year the AER found 37,000 of the 80,000 “inactive” wells in the province weren’t in compliance with its own rules.

Another issue, he said, are wells that have been deemed “inactive” for decades, with no chance production will ever resume.

“Obviously, no one is coming back to those, nobody is going to reopen those,” he said. “So they should be abandoned.”

An abandoned well has the surface equipment removed and cement poured down the well bore.

Robinson said the AER’s rules don’t put timelines on abandoning a well, noting there are at least 10,000 across the province that have been inactive for more than a decade.

Another 66,500 wells have been abandoned, but the land hasn’t been reclaimed. About 17,000 have been that way for more than a decade, he said.

“It takes time to abandon and reclaim, and that’s all fine in inactive wells, but we’ve got probably between 25,000 and 30,000 wells that have been inactive for more than 10 years, just sitting there,” he said. “The longer a well sits inactive, the greater the risk that you are going to have groundwater contamination and leakage as the pipe breaks down — that sort of thing.

“The sooner these wells are properly abandoned and properly reclaimed, the better.”

Keith Wilson, a lawyer in St. Albert who handles about 20 to 30 ‘orphaned’ site cases a year, said the problem has been brewing for years as companies put installing new wells ahead of cleaning up old sites when the oil price exceeded US$100 a barrel.

“We know, for sure, that they are not going to see incentive with oil at $30 a barrel, so now the problem is even worse,” Wilson said.

Bruder would simply like the province to enforce its abandonment policies.

In the meantime, he’ll keep collecting his annual rent on his two wells — a battle that’s becoming more of a concern as the companies suffer in the current economy. No one from the companies returned calls for comment.

Bruder said it’s more likely that they’ll pay the $3,200 to $5,000 fee for the inactive wells than clean them up.

“The reclamation companies tell me it could cost up to $1.5 million to repair,” he said. “Even the company says, ‘It’s dollars and cents. It’s cheaper to pay you your annual fees than for me to clean it up.’ ”

cderworiz@postmedia.com

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Women on boards: Searchable database shows you how many women sit on boards of TSX-listed companies

With the confirmation of Maureen Jensen as the new chair and chief executive of the Ontario Securities Commission, companies and investors can expect the issue of women on boards to remain at the forefront of the OSC’s agenda.

Jensen was nominated last month to replace former OSC chair Howard Wetston by Ontario Finance Minister Charles Sousa. At the time, Sousa singled out Jensen’s work in implementing Ontario’s new “comply or explain” disclosure regime, which aims to increase the representation of women on boards of directors and in executive officer positions.

In mid-November 2015, Canadian regulators released company-specific data on the representation of woman on boards and in senior management for 722 TSX-listed companies after releasing new “comply or explain” rules a year earlier designed to encourage companies to put more women on their boards and in executive suites.

The results from the searchable database come from that exercise.

One caveat though, the data was derived from regulatory year-end filings from the period Dec. 31, 2014 to March 31, 2015 so a search of some TSX-listed companies are missing from the list.

An OSC spokesperson said they expect to “round out our sample in the coming months by completing reviews of issuers with year-ends outside the period Dec. 31, 2014 to March 31, 2015.”

Quebec government faces lawsuits if it backs out of Anticosti Island oil exploration project

CALGARY / MONTREAL – If the Quebec government backs out of its contract to explore for oil and gas on Anticosti Island, its joint-venture partners say they will sue.

Even though the provincial government owns a 35-per-cent interest in the joint venture and has a contractual obligation to help fund the drilling of three wells this summer on the island in the St. Lawrence River, Quebec Premier Philippe Couillard this week continued to distance himself from the shale project. 

“Clearly our faith in Quebec as a place to invest in oil and gas, or any other possible development for that matter, is shaken,” Corridor Resources Inc. chief executive Steve Moran said in an email.

Clearly our faith in Quebec as a place to invest in oil and gas, or any other possible development for that matter, is shaken

He confirmed the company would seek compensation if the government breaks its contract with Corridor and its partners.

Corridor is one of three companies with an ownership stake, alongside the Quebec government through Resources Quebec, in Anticosti Hydrocarbons LP.

“We have not yet determined the amount of any damages, and we and our partners have been focusing on moving the project forward,” Moran said.

The Couillard government — which at one point commissioned studies on how to get oil and gas off the island of Anticosti — now says it wants nothing to do with the joint venture.

“My name will never be associated with the dilapidation of Anticosti Island,” Couillard said in the province’s National Assembly this week, according to the Montreal Gazette. “My name will never be associated with the aggressive savaging of a natural environment like Anticosti.” 

Jacques Boissinot/The Canadian Press

Jacques Boissinot/The Canadian PressQuebec Premier Philippe Couillard. The Couillard government — which at one point commissioned studies on how to get oil and gas off the island of Anticosti — now says it wants nothing to do with the joint venture.

However, a number of executives with assets in Quebec contacted by the Financial Post said the government of Quebec, and the Liberal party in particular, are already closely tied to the project.

On coming to power in 2014, Couillard’s Liberals launched a “Strategic Environmental Assessment” on the entire hydrocarbon sector in the province, and another one specifically on Anticosti.

Montreal-based engineering firm WSP Global Inc. was contracted by the province to do a study on Anticosti. Its report, released in October 2015, explored different scenarios for getting oil and gas off the island, including the construction of a US$4-billion pipeline stretching 900 kilometres from Anticosti, under the St. Lawrence, all the way to Quebec City’s south shore.

But it was the Parti Quebecois government of Pauline Marois, just before the 2014 election, that signed a $57-million exploration contract with a consortium to explore the island’s energy potential.

That contract gives the Quebec government a 35-per-cent equity stake in the Anticosti development, while Corridor, Petrolia Inc. and Saint-Aubin E&P (Quebec) Inc. each own 21.67 per cent.

As part of the deal, Corridor and Petrolia contributed their land holdings on the island and the Quebec government agreed to help finance the venture, which was set to drill and frack three wells on Anticosti — which is twice the size of Prince Edward Island — this summer.

In June 2014, shortly after the Liberals replaced the PQ, Petrolia issued a statement that said the company was “satisfied with the government’s confirmation that it will respect the agreement signed on March 31.”

However, executives think Quebec’s premier has changed his position in the past three months, putting the project in jeopardy and potentially leaving taxpayers on the hook for breaching the contract.

Couillard now says the PQ made an “unforgivable error” in signing the contract and has indicated he is willing to break it.

“If that were to occur, we would certainly think twice about entering into another agreement with the Government of Quebec as our financial partner,” Moran said.

 Photo by Marco Veltri

Photo by Marco VeltriThe Vaureal Falls on Anticosti Island.

When the agreement was first signed, the PQ said the project was estimated to provide $45 billion in royalties, tax revenues and profits directly to the province over the next 30 years, and create hundreds of jobs.

A report in the Journal de Montreal Wednesday suggested the idea of exploring for oil was kicked around when Jean Charest was still premier. Minister of Natural Resources Pierre Arcand said there were “discussions” on the subject under Charest, but the political drive came from the PQ.

“There have always been places within Quebec where there might be the potential of oil,” he told reporters in Quebec City February 5.

Irrespective of which political party signed the agreement, the joint-venture partners in the Anticosti project say they have a contract.

In addition to a potential breach of contract in this case, executives at other oil and gas companies with assets in Quebec told the Financial Post that they have consulted lawyers about making claims based on what they believe are bad-faith negotiations by the Quebec government.

These companies have invested money in exploration activities in various parts of the province, but have been waiting for years for the release of the Quebec Energy Strategy to find out whether they will be allowed to begin producing oil and gas — including from conventional wells that don’t require hydraulic fracturing.

The claimants would seek to recover the capital they’ve sunk into the province based on assurances from the government that at least conventional development would be allowed.

“Couillard flies all over the world in a Bombardier plane, and it doesn’t have an extension cord,” one executive said, referring to what he called the premier’s preference for electricity over hydrocarbons.

Neither Couillard nor Arcand responded to requests for comment.

Quebec Oil and Gas Association president Michael Binnion, who is also the chief executive of Calgary-based Questerre Energy Corp., said Couillard’s attitude toward energy — from the Energy East pipeline project to the Anticosti venture — seems to have shifted following the Paris conference on climate change in December.

Binnion, who is not one of the executives planning to take legal action against Quebec, believes the province had at one point considered oil and gas development as a way to boost its local economy; now it is actively opposing such development.

“Quebec thinks it’s greener than green because they use hydrocarbons, but don’t produce them,” he said.

Financial Post

gmorgan@nationalpost.com

Twitter.com/geoffreymorgan