Oil companies pay into compensation fund for Quebec train crash
By Timothy Cama – 06/11/15 08:35 AM EDT
Oil companies have contributed tens of millions of dollars toward a fund to compensate victims of a major 2013 oil train disaster in Quebec, Canada, that killed 47.
Companies like Royal Dutch Shell PLC, Marathon Oil Corp., ConocoPhillips Co. and Irving Oil Ltd. have paid into the $345 million fund, though they deny responsibility for the events on the train transporting their products, The Wall Street Journalreports.
If courts in the United States and Canada approve the oil companies’ role in the fund, the companies will be shielded from liability for any negligence they had involving the disaster in Lac-Megantic, including for failing to test the oil’s vulnerability.
The Montreal, Maine & Atlantic Railway Ltd., which ran the train that derailed and exploded, filed for bankruptcy shortly after the incident.
But its court-appointed trustee said the oil companies knew that the oil was volatile and dangerous.
The oil companies have responded that their responsibility ended when they extracted the oil.
Most of the companies that contributed to the fund declined to comment to The Wall Street Journal. Marathon Oil told the newspaper that its contribution is not an acknowledgment of liability.
The Quebec disaster led officials in both Canada and the United States to pay new attention to the use of oil trains, which has increased dramatically in recent years along with oil production in places like the Bakken shale region.
It has resulted in rules in both countries that will ban the use of the oldest tank cars for oil in the coming years, as well as speed restrictions and other operational regulations.
Some Democratic lawmakers, led by Sen. Maria Cantwell (D-Wash.), have pushed for regulations limiting oil volatility in rail transport.
Report: Oil price crash stalls more than $100bn of fossil fuel investment
Research on behalf of the Financial Times shows oil majors have shelved or delayed 26 schemes, including nine tar sands projects
By Jessica Shankleman | 19 May 2015
Oil majors have put more than $100bn of investment in new projects on ice in response to the plunge in oil price, new analysis by consultancy Rystad Energy revealed today.
The study, commissioned by The Financial Times, shows that 26 projects in 13 countries have been delayed or axed since oil prices started to tumble last year, including nine Canadian tar sands schemes.
The revelation follows warnings from analysts such as the Carbon Tracker Initiative that capital and carbon intensive projects such as tar sands developments and deep sea drilling operations will struggle to turn a profit if oil prices remain low.
The price of oil crashed to $45 per barrel in January from a high of $115 in June 2014 as a result of surging output of US shale oil and lower than expected demand in Asia. The downward trend in prices was further accelerated by the decision of the Organization of the Petroleum Exporting Countries (Opec), led by Saudi Arabia, to resist calls for it to curb supplies in a bid to protect prices.
As a result, companies such as Royal Dutch Shell, BP and Statoil have been forced to shelve some of their costlier projects.
The analysis shows that at least $118bn of investment has been hit, which is likely to delay future production by as much as 1.5 million barrels per day. This in turn could lead to a substantial rebound in the price of oil, said Rystad.
The report follows a series of studies that have warned capital intensive fossil fuel projects could become stranded assets if the transition to a low carbon economy leads to tighter environmental regulations and reduced demand for fossil fuels.
The findings come after a report from the Institute for Energy Economics and Financial Analysis (IEEFA) yesterday showed how coal company stock prices have collapsed in recent years, concluding that the industry now faces a “grim outlook” as a result of tightening environmental legislation and increasing stranded asset risks.
Wolves Shot From Choppers Shows Oil Harm Beyond Pollution
by Rebecca Penty, April 22, 2015 5:00 PM PDT
Here’s one aspect of Canada’s energy boom that isn’t being thwarted by the oil market crash: the wolf cull.
The expansion of oil-sands mines and drilling pads has brought the caribou pictured on Canada’s 25-cent coin to the brink of extinction in Alberta and British Columbia. To arrest the population decline, the two provinces are intensifying a hunt of the caribou’s main predator, the gray wolf. Conservation groups accuse the provinces of making wolves into scapegoats for man-made damage to caribou habitats.
The cull carried out in winter when the dark fur of the wolves is easier to spot against the snow has claimed more than 1,000 animals since 2005. Hunters shoot them with high-powered rifles from nimble two-seat helicopters that can hover close to a pack or lone wolf. In Alberta, some are poisoned with big chunks of bait laced with strychnine, leading to slow and painful deaths that may be preceded by seizures and hypothermia.
“It’s an unhappy necessity,” Stan Boutin, a University of Alberta biologist, said of the government-sponsored hunt. “We’ve let the development proceed so far already that now, trying to get industry out of an area, is just not going to happen.”
The energy industry has delivered a death blow to caribou by turning prime habitat into production sites and by introducing linear features on the landscape that give wolves easy paths to hunt caribou, such as roads, pipelines and lines of downed trees created by oil and gas exploration.
A drop in drilling after oil prices plunged can’t reverse the damage. More than C$350 billion ($285 billion) spent by Alberta’s oil-sands producers to build an industrial complex that’s visible from space have made the province’s boreal herds of woodland caribou the most endangered in the country. Their population is falling by about half every eight years, according to a 2013 study in the Canadian Journal of Zoology.
Since 2005, Alberta has auctioned the rights to develop more than 25,000 square kilometers (9,652 square miles) of land in caribou ranges to energy companies, according to the Canadian Parks and Wilderness Society, an Ottawa-based charity. That’s equivalent to about three times New York’s metropolitan area.
“When the oil industry goes in there and cuts those lines and drills and puts in pipelines, it helps the wolves,” said Chad Lenz, a hunting guide with two decades of experience based in Red Deer, Alberta. Lenz has watched caribou herds shrink as the number of wolves soar. “There’s not a place in Alberta that hasn’t been affected by industry, especially the oil industry.”
Home to the world’s third-largest proven crude reserves, Alberta depends on levies from the energy industry to build new roads, schools and hospitals.
British Columbia joined Alberta in sponsoring a wolf hunt this year as its logging and energy industries too are putting populations of woodland caribou at risk. Canada’s westernmost province is trying to erase its debt with revenues from the energy industry, as companies including Royal Dutch Shell Plc consider multibillion-dollar gas export projects along the Pacific Coast.
The provinces are widening their wolf cull — a stop gap poised to extend for years — as companies such as Devon Energy Corp. join in testing other radical measures to revive the herds.
British Columbia killed 84 wolves in the hunt that ended this month. Alberta eliminated 53 this year, bringing its total killed through the program since 2005 to 1,033.
Conservation groups have petitioned for the end of a program they deem unethical without aggressive habitat recovery, while the provinces keep selling drilling rights on caribou ranges.
“We do not support the current wolf kill,” said Carolyn Campbell, a conservation specialist at the Alberta Wilderness Association, a Calgary-based advocacy group. “It’s an unethical way to scapegoat wolves.”
The provinces are only poised to kill more wolves, though, as they prepare plans to reverse the population decline for each caribou range ahead of a 2017 Canadian government deadline.
Alberta is expected to continue the cull in the first of its range plans to be released this year, which will serve as a model for handling of the other herds, said Duncan MacDonnell, a spokesman for Alberta’s Environment and Sustainable Resource Development department. British Columbia’s 2015 cull was just the first of a five-year program.
Killing wolves is saving caribou from extinction while governments and energy companies consider new approaches, said the University of Alberta’s Boutin.
The energy industry has worked to reduce its impact on caribou by adding gates on roads to block access and by returning disturbed land to a more natural state, said Chelsie Klassen, a spokeswoman for the Canadian Association of Petroleum Producers.
After spending about C$200 million annually for 12 years to help revive the caribou and watching populations continue to fall, companies are finally seeing small successes, said Amit Saxena, senior biodiversity and land specialist at Devon.
Wolves tracked with collars are being deterred from areas where companies have replanted trees, Saxena said. At its Jackfish oil-sands project, Devon is monitoring a fenced patch of land to see if it can keep out wolves and bears attracted by bait. Until the lessons can be successfully applied to wider swaths of land, the wolf cull will have to continue, he said.
“Sustainability of caribou herds and oil and gas activity can go hand in hand on the landscape,” Saxena said. “If we can manage that predation level that is too excessive in some areas, then caribou can recover on an industrial, active working landscape.”
The human impact can’t all be reversed for herds that each require about 30,000 square kilometers of mostly undisturbed land to thrive, Boutin said. The biologist advocates building pens for pregnant and newborn caribou and larger fenced-off areas for certain entire herds.
“Habitat recovery will be part of the toolbox but it will never be useful on its own,” Boutin said. If provincial governments don’t pursue radical ideas such as maternity pens, fences and predator control, “then they’re going to be wasting everybody’s time.”
Chevron Posts Lowest Quarterly Profit in Five Years
Oil Major to Pare Capital Budget by 13%, End Buybacks to Offset Low Crude-Oil Prices
By Daniel Gilbert and Chelsey Dulaney, Jan. 30, 2015
Chevron Corp. said it would trim ambitious spending plans and stop buying back its shares as the collapse in oil prices erased billions of dollars from the company’s cash flow.
The San Ramon, Calif., company on Friday reported $3.5 billion in profit for the last three months of 2014, down 30% from a year ago and its lowest since the 2009 recession.
It also outlined plans to spend $35 billion this year to find and tap oil and gas, a 13% cut from last year’s budget, in response to oil prices that have slumped more than 60% since the summer to under $50 a barrel.
With less cash coming in, the company is suspending its share buyback program for 2015, which had cost $5 billion a year since 2012. Repurchasing shares shrinks the number available to the public and tends to increase their value. Its shares were down 67 cents at $102.33 in recent trading.
John Watson , Chevron’s chief executive, said the company remains on track to pump the equivalent of about 3.1 million barrels a day by 2017—20% more than its current levels—despite spending less. Oil prices must rise, he said, because companies won’t invest enough to make up for the natural declines of existing oil and gas wells, eventually reducing supplies.
“The projects that are going to meet demand going forward are more complex than 20 or 30 years ago, and so the costs of the projects will be higher, and will require a higher price than we’re seeing today,” Mr. Watson said.
Chevron’s spending plans remain ambitious relative to its rivals and its shrinking cash flow. On Thursday, Occidental Petroleum Corp. said it would spend a third less on producing oil and gas this year; ConocoPhillips said it would chop 15% off its capital budget, on top of a 20% cut in December; Royal Dutch Shell PLC said it would spent $15 billion less than planned over three years. Exxon Mobil Corp. , the biggest U.S. energy company, reports results on Monday.
Chevron generated $6.5 billion from its operations in the fourth quarter of 2014, down 38% from a year ago, but still better than analysts’ expectations. Unless oil prices rebound significantly, that rate of cash generation isn’t likely to cover the company’s spending on exploration and production, plus dividend payments that totaled $7.9 billion last year.
Even before oil prices fell, Chevron had been spending at a deficit, dipping into its pile of cash and borrowing more money. The company’s debt rose to $27.8 billion by the end of 2015, doubling in two years and marking the highest it has been in at least 20 years, according to data compiled by S&P Capital IQ.
The company still has $12.8 billion in cash, but that is about $3.5 billion less than at the beginning of 2014. Patricia Yarrington, Chevron’s finance chief, said it could borrow “tens of billions of dollars” more. And Mr. Watson, the CEO, said that while acquisitions aren’t a priority, “We are actively screening opportunities that are out there and we’ll take advantage of opportunities that we see.”
Overall, Chevron reported earnings of $3.47 billion, or $1.85 a share, down from $4.93 billion, or $2.57 a share, a year earlier. Results included a net $570 million gain on asset sales. Revenue fell 18% to $46.1 billion.
Analysts polled by Thomson Reuters had forecast earnings of $1.63 a share and revenue of $30.65 billion.
Chevron’s bottom line was helped by foreign-currency effects, which have been a drag on many U.S. companies’ results recently. Chevron said foreign currency helped its earnings by $432 million in the quarter, up from $202 million a year earlier.
The pain from lower oil prices was cushioned by Chevron’s business of refining crude into fuels like gasoline and diesel. The refining business, which in recent years has accounted for less than 15% of its profits, provided $1.5 billion in earnings–44% of the company’s total. Refining profits nearly quadrupled from a year ago, due to a combination of better margins and asset sales.
The fall in oil prices masked the company’s success at pumping more oil, as it began reaping petroleum from two major projects in the Gulf of Mexico’s deep waters in the last months of 2014. But overall, Chevron’s oil and gas output slipped about 1% from a year ago. On Friday, the company said production could increase up to 3% this year.
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