Bloomberg reports that energy giant, Exxon, is preparing to write off certain fossil fuel reserves as "unviable" in the world's new energy markets. For Exxon that may mean writing down 20 per cent of the company's booked reserves.
If depressed prices persist for the rest of the year, “certain quantities of crude oil, bitumen and natural gas will not qualify as proved reserves at year-end 2020,” the company said in a regulatory filing on Wednesday. A 20 per cent hit would impact the equivalent of almost 4.5 billion barrels of crude, or enough to supply every refinery on the U.S. Gulf Coast for 18 months.
The company’s massive Kearl oil-sands mine in Alberta was the only specific asset singled as a potential victim of any year-end revision. Imperial Oil Ltd., which is about 70 per cent owned by Exxon and run as a subsidiary, said in a separate filing that an undetermined portion of Kearl’s reserves may be imperiled.
Exxon isn’t waiting until the traditional end-of-year period to reasses reserves. After slashing its drilling budget by US$10 billion to cope with the virus-driven market collapse, the company on Wednesday said it removed about 1 billion barrels from its books. Most of that involved shale fields, according to the filing.Exxon is by no means alone. Chevron, a half-owner of the Kitimat LNG plant, already took a $ 2 billion ($1.6 billion USD) write down on the project and is trying, so far in vain, to find a buyer to take it off the company's hands.
Of course Kenney has sunk billions of Alberta money into Keystone XL and Trudeau has sunk vastly more of your money into the Trans Mountain expansion and I'm sure neither one of them is going to look like complete idiots which leaves them with a vested interest in keeping this charade going at least until the next bunch takes over.
" It's not like Justin Trudeau and Jason Kenney couldn't see this coming. It's just that they wouldn't."
ReplyDeleteYou nailed it there.
There are times, Toby, when corporations keep bad bets running to defend share value that could collapse if they did the rational thing to cut losses. They might believe or at least hope that by riding it out they'll be positioned to exploit the next big thing that comes along. A bizarre form of that rationale may infect political decision making.
ReplyDeleteAlberta developes oil, gas and bitumen extraction.
ReplyDeleteIn BC we build Site C and go big on LNG.
Similar madness happening all around the world all supported by wilful ignorance.
Either these projects will become stranded assets soon OR
They will prove to be ironically profitable a in a dystopian race to the bottom.
.. What's that line in the Paul Simon song.. 'but a man hears what he wants to hear' and what Jason Kenney can only hear is himself and the echo chamber he echoes from. I noticed this syndrome years back in several truly glib folks addicted to their own voice, their 'idea'.. I kid you not.. silence angered them, thus they found comfort in their own droning & that of folks like them
ReplyDeleteBy the way.. Andrew Leach, an energy economist at U of A has a very recent article.. plus tweet thread on this tar sands matter. You probably came across it. He reminds me of Andrew Derocher, the polar bear dude at U of A.. both brilliant in my view. Where others are pretenders, they the real deal
The problem with Jason Kenney is that he plays poker with other peoples money.. and he's gotten control of AIMCo pension fund monies. He's in way over his pay grade on every file. Education, Healthcare and Resources being the killers. And he has low grade evangelical snots as Ministers.. just like Harper did.. and Jason was one of them under 'the great man'.. the head smartypants in every room
Now comes the big crunch.. COVID-19 is the pinball machine saying 'TILT' .. and Jason has to try to explain. He for sure is caught pants down re the eastern Rockies slopes opening to strip mining for thermal coal by liquidating Provincial Parks for what ? 5 MILLION ?? He blows 6 times that annually for his War Room.. So lay off 500 nurses.. That's Peter Robbing Paul shit.. Rope a Dope by a little fatty in a ring with a Chuvalo banger..
He's a pretentious posturing little prick pope.. proving why he'll never be Prime Minister of Canada.. and he and AIMCo are blowing peoples pension funds .. Its a fine tradition.. He's Christy Clark in trousers..
It's a pretty big step for Exxon to announce that it is wiping 20 per cent of its energy reserves off its books, NPoV. That's a hefty drop in your asset sheet. It's a safe bet that Exxon wasn't exaggerating its losses. It's a pretty astute outfit.
ReplyDeleteExxon's announcement is another say of saying these are "stranded assets." They're not economically viable. They can't remain on the asset sheet. Banks and pension funds and other institutional investors know what this means but they can't trigger a run on Exxon shares either, not without cutting their own throats.
The smart money began exiting the Tar Sands some time ago. Canada's chartered banks have been left, in a manner of speaking, holding the bag. What did we think was going on when Trudeau had to buy Trans Mountain or when Kenney took a multi-billion dollar gamble on KXL? Governments are investors of last resort. They're the Norwegian Blue pining for the fjords.
Sal, do you have a link to that Andrew Leach article?
ReplyDelete.. July 30 - CBC.. think Tor Star had it too
ReplyDeletehttps://www.cbc.ca/news/canada/calgary/alberta-canadian-energy-centre-war-room-fiasco-1.5665926
I'll look up his personal or U of Alberta site too..
Plus he's become very active lately on Twitter.. very blunt
I'm sure Lorne has noticed.. we follow some similar folks
.. Also a quick follow up for Northern POV
ReplyDeleteFully 97% of Canada's 'vast oil reserves' are in fact Bitumen.. That is Gov of Canada published..
If you subtract all 'Conventional Oil'.. ie arrives via a pump jack.. or offshore Newfoundland & Labrador what might be the grand total from Alberta ?? 2% ? 1% ? Yes.. Alberta and BC rich in natural gas.. but conventional oil about 'played out'.. The 'oil patch' is the Bitumen Patch..
I have cousins who are master drillers and friends who are master welders, I know what they drill & what they welding.. I wrote the video scripts for the early Tar Sands Investment Offerings.. I directed and produced the videos.. When the TSE went public.. I created the videos seen by brokers worldwide.. I do have an inkling.. I was there north of Swan Hills, Alberta when the oil fields gushers was coming in, running heavy equipment in the ice, clay muck.. and mosquito season.. Been there done it got the t-shirt and the tattoo..
Methane is coming down the pipe to the tar sands.. from northern Alberta. Its also flowing west to Kitimat mainly from the BC side of the provincial border.. The pipeline networks in Canada are astonishing.. but its the secret poker game of Bitumen & Gas in the backrooms with our 'Public Serpents' that is even more astonishing.. it all has PONZI written all over it..
ReplyDeleteJason Kenney's personal, multi-million dollar, spin machine, Sal. I do recall its pathetic attack on the New York Times. It was of the standard we've come to expect of Trump's West Wing scribes.
Perhaps it is the magnitude - the economic and political catastrophe - that might befall Alberta and Ottawa if bitumen markets collapse that causes JT to keep propping up Kenney, like the frog dutifully carrying the scorpion across the pond.
The markets will no longer support these ventures. Chevron has been unable to entice a private sector buyer for their half-interest in the Kitimat LNG project. Will Victoria have to step in to keep that venture from collapsing? Kinder Morgan couldn't flog the Trans Mountain pipeline and wouldn't bite at Ottawa's promise of financial guarantees. Those Texas cowboys threatened to shut it down until Morneau came to see them with the federal cheque book, paying them far more than what it was worth. Then Kenney squeezed some 6-billion out of Alberta's dwindling coffers to fund the troubled KXL. It's becoming grotesque to see our political leadership squirm so.
Thx Salamander.
ReplyDeleteWhat's your twitter handle?
Mine is @AustinDotRon