Oil
Professor: More Oil Spills to Come
Recently the Insurance Journal published an interesting article on oil spills and some of the issues that are ignored in the mainstream media when discussing BP’s Deepwater Horizon spill.
From the article:
“The Deepwater Horizon oil spill in the Gulf of Mexico is not simply a random accident. There will be more of these spills to come, as the days of easy oil are over, says an anthropologist at Washington University in St. Louis.
“BP and other oil companies have tried to portray this spill as an accident or an aberration, but in fact there are spills on off-shore and on-shore sites around the world, increasingly,” says Bret Gustafson, PhD, associate professor of anthropology in Arts & Sciences. Gustafson teaches a course on “Oil Wars: America and the Cultural Politics of Global Energy.”
A rig sank off the coast of Venezuela in May. Last October, a rig spilled oil for two months into the Timor Sea off of Australia. There are recurring spills in virtually every oil region, such as the Peruvian and Ecuadorian Amazon and Nigeria.
“These environmental and public health catastrophes are almost always accompanied by corruption and violence tied to oil activities,” Gustafson says. In the United States, which is more of a consumer than producer of oil, we are generally ignorant about this reality of oil until something like this comes home to roost.”
Rest of the piece can be found here.
IHS CERA: The Role of Canadian Oil Sands in U.S. Oil Supply
The BP Deepwater Horizon oil spill has triggered outrage among the general public and may lead to heightened regulatory environment for the offshore drilling industry. Already the Obama administration has suspended shallow-water drilling in the Gulf of Mexico until producers resubmit plans to meet the revised safety and environmental rules. In the months and years to come additional restrictions may be put in place to prevent future disasters and potentially increasing the cost of oil exploration. In this scenario, Canada’s oil sands to the US oil supply attains greater importance.
Renowned consultancy IHS CERA recently published a report titled “The Role of Canadian Oil Sands in U.S. Oil Supply”. Some of the key takeaways from this report are noted below:
“Geography has made us neighbors. History has made us friends. Economy has made us partners. Necessity has made us allies.”
—John F. Kennedy, Address Before the Canadian Parliament in Ottawa, May 17, 1961.
- The growth potential of Canadian oil sands as a source of US oil imports is three to four times higher in 2030 than in 2009
- Due to the high cost of alternative fuels, the US will continue remain as the largest oil market in the world for the next two decades
- Oil sands production more than doubled form 2000 to 2009
- In 2009, the US consumed 22 % of the world oil supply
- US oil demand is unlikely to cross the peak reached in 2005
Last year, 60% of the US petroleum demand was satisfied by imports from over 40 countries. However over the past decade 70 percent of crude oil imports have been sourced from just five countries as the table shows below
It is interesting to see Canada among the top five suppliers to the U.S. Canada’s share of US oil imports jumped from 15% in 2000 to 21% in 2009 underscoring the strategic importance of Canadian oil sands.
Click to Enlarge
Compared to other oil producing countries, Canada has the following advantages:
- Of the top 15 countries with the potential to increase oil production in the next decade Canada has the most open oil and gas investment climate
- Canadian oil sands capacity is not controlled by the government
- Canada is the closest in proximity and policy to the US
- Regulation of oil development in Canada is among the most robust in the world
- Canadian oil sands offer greater oil supply security to the US and is poised to become the number one source of crude oil imports this year
- Canadian oil sands represent the second largest recoverable oil reserve in the world at 170 billion barrels with the capacity to produce more as technology improves
- Canada and US have a highly integrated and efficient network to move electricity, natural gas and oil making it cheaper for companies to transport oil from production facilities to refineries
- Investments in Canadian oil sands development have led to increased economic activity in both the US and Canada creating thousands of jobs and other benefits
In addition Canadian companies, American and other multinational companies have invested heavily in the Canadian oil sands industry. US investors have provided capital for development various of oil sands projects reaping handsome profits in the process. Some of the major Canadian firms that are involved in the development of Alberta oil sands are Suncor Energy (SU), Nexen Inc(NXY), Canadian Natural Resources (CNQ), Imperial Oil (IMO), Teck Resources (TECK), Husky Energy (OTC: HUSKF), Encana (ECA) and Talisman Energy (TLM).
Oil Service Companies To Consider For Long-Term Investment
After the BP Deepwater Horizon disaster, stocks of oil service companies that perform work in the Gulf of Mexico have fallen heavily. However according to a Bloomberg BusinessWeek article these stocks offer opportunities for investors with a long-term view.
The following oil service companies are mentioned in the article:
- Cameron International (CAM)
- Halliburton (HAL)
- Transocean (RIG)
- Diamond Offshore(DO)
- Baker Hughes (BHI)
- Noble Group (NE)
- Ensco International (ESV)
- National Oilwell Varco (NOV)
- FMC Technologies (FTI)
- Dril-Quip (DRQ)
- Oceaneering International (OII)
- Subsea 7 (Ticker on the Frankfurt Stock Exchange: S8J)
Founded in 1854, Subsea 7 is a Norwegian company with a “focus on the growing high-tech and high-value deepwater subsea umbilical, riser and flowline markets in Africa, Asia Pacific, Brazil and the Gulf of Mexico, but also retains a leading role in the North Sea.”
According to the 2009 rankings by PFC Energy, Schlumberger (SLB) is the world’s top oil-service company. The list of the Top 15 Global Oil Services Firms can be found here. The Top 15 Global Drilling and Seismic Companies for 2009 can be found here.
The Complete List of Oil ADR Stocks
The complete list of oil-sector related ADRs traded in the organized exchanges in the US are listed below. These stocks include oil and gas producers, distributors, equipment makers and servicing companies.
| Company | Ticker | Country | 2009 Returns |
|---|---|---|---|
| Acergy | ACGY | Norway | 170.07% |
| BP | BP | United Kingdom | 24.03% |
| CGG Veritas | CGV | France | 41.76% |
| China National Offshore Oil-CNOOC | CEO | China | 63.22% |
| China Petroleum & Chemical | SNP | China | 42.53% |
| Ecopetrol | EC | Colombia | 32.06% |
| Eni | E | Italy | 5.83% |
| ENSCO | ESV | United Kingdom | 40.68% |
| Petrobras Energia | PZE | Argentina | 156.65% |
| PetroChina | PTR | China | 33.69% |
| Petroleo Brasileiro | PBR | Brazil | 94.69% |
| Repsol YPF | REP | Spain | 23.94% |
| Royal Dutch Shell - A Shares | RDS.A | United Kingdom | 13.54% |
| Royal Dutch Shell - B Shares | RDS.B | United Kingdom | 13.03% |
| Samson Oil and Gas | SSN | Australia | -35.14% |
| Sasol | SSL | South Africa | 31.68% |
| Statoil | STO | Norway | 49.52% |
| TOTAL | TOT | France | 15.80% |
| Transportadora de Gas del Sur | TGS | Argentina | 43.84% |
| WSP Holdings | WH | China | -26.30% |
| YPF | YPF | Argentina | -4.89% |
Source: BNY Mellon Depository Receipts
Note: Information posted above is known to be accurate. Please do your own research before making any investment decisions.
Contract oil driller Ensco(ESV) is an American company that is currently based in Dallas, TX. Last month, Ensco decided to move its headquarters to London, UK. Hence the stock is now listed as an ADR.
Emerging market oil companies performed better than Western giants such as Eni, BP, Royal Dutch Shell,TOTAL in terms of return to shareholders in 2009. Norwegian oil company Statoil was an exception. Statoil returned nearly 50%. Despite the strong performance in 2009, Petrobras of Brazil holds lots of potential for further growth. Chinese firms CNOOC, Petro-China and China Petroleum & Chemical are also great picks for 2010 as auto sales in China is projected to grow by double digits.
The Complete List of Oil ADRs Traded on the OTC Markets can be found here.
Top Oil Producing Countries in 2008 and World’s Largest Oil Fields
150 years ago this week Colonel Edwin Drake struck oil in Titusville, Pennsylvania. Ever since oil has become the most important commodity in the world.Despite the hype about green technologies and other alternative sources of energy, crude oil will continue to be the major source of energy for many years to come.
In this post lets take a quick review at the largest oil producers in 2008 and oil fields.
Top Oil Producing Countries 2008 (in million barrels per day)
World’s Largest Oil Fields
Source: IHS CERA
A Look at the Petroleum Sector of Norway
The Petroleum Sector is the largest industry of Norway. Today there are 60 oil fields in production on the Norwegian Continental Shelf. In 2008, they produced 2.5 Million barrels of crude oil per day. Norway is one of the top oil producing countries in the western world. In 2008, Norway is projected to surpass Canada to become the second largest natural gas producer in the world.
The Norwegian government receives significant revenues in the form of tax revenues from the sector. In 2008, this sector accounted for 34% of the state’s total revenues. The revenues are allocated to a special fund called the “Government Pension Fund – Global” which had a value of NOK 2275 Billion at the end of last year. (Note: 1 NOK = 0.1644 US$ on August 15,2009)
Growth of the Government Pension Fund – Global
Importance of the Petroleum Sector for Norway (click to enlarge)
The largest oil and natural gas company in Norway is StatOilHydro (STO) which was formed by the merger of Statoil and Norsk Hydro’s oil and gas operations in 2007. StatOilHydro has presence in 24 countries and operates 2,300 service stations in Scandinavia, Poland, the Baltic States and Russia. Year-to-Date the stock is up nearly 31%.
5-Year Performance of StatOilHydro (STO):
Top Countries to which Norway exported its natural gas in 2008:
(click to enlarge)
Source: Facts 2009, The Norwegian Petroleum
Ministry of Petroleum, Norway
