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Context Timeline of Selected Events in Integrated Oil Industry

  • 7 November 2014
  • According to FT Alphaville’s Izabella Kaminska, formerly a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP’s internal magazine, the unanticipated over-production of ultra-sweet, light crude oil in the United States has resulted in market oversupply at a time when refineries had invested “huge sums of money”to develop highly complex refineries with coker units capable of processing cheap inferior crudes just as efficiently as light sweet grades (Kaminska 2014).”
    2012-07-23China National Offshore Oil Corporation (CNOOC Group) one of the largest state-owned oil companies in resource-hungry China, announced it had “agreed to acquire Nexen for $15.1 billion, China’s biggest foreign takeover bid. Shares of Nexen jumped almost 52 percent that day.” (Reuters. 2012-07-28. “SEC alleges insider trading ahead of CNOOC-Nexen deal.”).” CNOOC “promised to retain all employees and to make Canada home base for its Western Hemisphere operations.”

  • 2012-03-05“In the crude market, the Enbridge pipeline outage deepened discounts for Canadian heavy crude against U.S. benchmark West Texas Intermediate. Western Canada Select heavy blend for April delivery traded at C$33.00 ($33.21) per barrel under the West Texas Intermediate benchmark, down from C$32.80 under the benchmark last week. Barrels for March delivery were bid at C$40 a barrel under WTI. Canadian crude was already suffering deep discounts due to limited pipeline space on Enbridge and other pipeline systems (
  • Reuters 2012-03-05).”

  • 2012-03-05 U.S. April 2012 contract Light Crude Oil (Light Crude) [West Texas Intermediate (WTI) crude oil] rose 30 cents to $107.00 a barrel after settling $2.14 lower at $106.70. Front-month Brent rose 30 cents to $123.95 a barrel by 0332 GMT. Brent fell 2 percent on Friday after Saudi Arabia denied a media report of an explosion at a Saudi oil pipeline that had helped Brent crude prices shoot up $5 to $126.20, their highest level since 2008.”Jaganathan, Jessica. 2012-03-05.”
  • 2012-03-02 Brent crude rose $3.54, or 2.89%, to settle at $126.20 a barrel, then traded as high as $128.40 in post-settlement trading, the highest intraday price since July 23, 2008, when front-month Brent reached $129.50. Brent crude rose sharply reacting to an unconfirmed Iranian media report of an explosion on an unknown Saudi Arabian oil pipeline (Robert Gibbons and Lisa Shumaker 2012-03-01 Reuters)
  • 2012-03-01 Canada’s Oil Sands Innovation Alliance (COSIA), with Dr. Dan Wicklum as CEO, is an alliance of 12 oil sands producers who represent more than 80% of the oil sands production in CanadaBP Canada Energy Company, Canadian Natural Resources Limited, Cenovus Energy Inc., ConocoPhillips Canada Resources Corp., Devon Canada Corporation, Imperial Oil, Nexen Inc., Shell Canada Energy, Statoil Canada Ltd., Suncor Energy Inc., Teck Resources Limited, Total E&P Canada Ltd.. COSIA’s focus is on accelerating the pace of improvement in environmental performance in Canada’s oil sands through collaborative action and innovation. Through COSIA, participating companies will capture, develop and share the most innovative approaches and best thinking to improve environmental performance in the oil sands, initially focusing on four Environmental Priority Areas (EPAs) – tailings, water, land and greenhouse gases. COSIA will take innovation and environmental performance in the oil sands to the next level through a continued focus on collaboration and transparent exchange.Van Loon, Jeremy.
  • 2012-03-01.Oil-Sands Producers Group May Offer New Businesses, Suncor Says.” Bloomberg. Dr. Dan Wicklum was Director General of Water Science and Technology for Environment Canada. While working at EC, Wicklum’s stressed, “You can’t manage what you can’t measure.” Sustainability metrics is becoming more common but it is not enough. “Quality guru W Edwards Deming went further, putting ‘management by use only of visible figures, with little consideration of figures that are unknown or unknowable’ at No 5 in his list of seven deadly management diseases. Henry Mintzberg, the sanest of management educators, proposed that starting ‘from the premise that we can’t measure what matters’ gives managers the best chance of realistically facing up to their challenge (Caulkin 2008).”
  • 2012 Thomas Golembeski’s spokesman for Sunoco claimed that Sunoco’s Northeast refining business lost c. $1 billion from 2009-2012 (Philips 2012-03-01). Another source cited, “Thomas P. Golembeski, a Sunoco spokesman, said the company’s Northeast refining business has lost more than $900 million in the past three years (Penn lawmakers 2012-02-16).” “Thomas Golembeski, spokesperson for Sunoco claimed their oil refineries lost 8 out of the last 10 quarters between 2009 and 2011 to a total of $772 million (Nixon 2011-09-17).”
  • 2012-02 According to a recent report “the world is becoming more reliant on gasoline and diesel fuel refined in the U.S. This week, we learned that in 2011, the U.S. became a net exporter of gasoline, diesel and other fuels for the first time since 1949. Such refined products were the top U.S. export in 2011, beating out such staples of U.S. manufacturing as Detroit’s autos and Boeing’s (BA) airplanes (Philips 2012-03-02).
  • 2012-02-21 Roger McKnight, of Ontario-based En-Pro International Inc., senior analyst with 30 years experience in predicted that the price of gasoline will be up across Canada by 15% at the end of April. Challenging record prices in 2008: (ex. Estimated price per litre of gasoline in the summer of 2012: Calgary: $1.30; Vancouver: $1.50). McKnight argues that the major factor in the rise in prices is the distribution changes in the U.S. – “refinery implosion that we’ve had in the eastern part of the U.S., in the Philadelphia area, which has basically taken a million barrels of production out of the system.” “McKnight said the fire last week at BP’s Cherry Point refinery in Washington is also a factor in higher B.C. prices, because the plant – which contributes to Vancouver’s supply — is producing less. Making the price more volatile is the The uncertain geopolitical situation with Iran makes the price more volatile CBC News 2012-02-21) .
  • 2012-01-20 “TransCanada Corp. is considering possibilities for moving Bakken shale crude south to the US Gulf Coast via a stand-alone system following the US rejection of the company’s permit application for the Keystone XL crude oil pipeline. TransCanada had originally envisioned moving Bakken crude south as part of Keystone XL, concluding a binding open season for its Bakken MarketLink Project in early 2011. Options for moving Bakken crude south could include a completely new-built pipeline, or modification of Bakken MarketLink plans to route Bakken production to the existing Keystone pipeline, already delivering Canadian crude to Cushing, Okla. TransCanada declined to comment on specific possibilities, saying that discussions need to occur with customers and nothing has been finalized (TransCanada mulls Bakken options while reapplying for Keystone XL).”
  • 2012-01-18 President Barack Obama halted TransCanada’s proposed Keystone XL tar sands pipeline project, which would have brought bitumen from the Alberta oil sands (“dilbit”) through the U.S., to Gulf Coast refineries near Port Arthur, Texas, where the oil would then be exported to the global market.
  • 2012-01-26 Premier Alison Redford says her government will take a hands-off approach to the increased upgrading of bitumen in the province as Alberta’s oilsands production continues to ramp up. “With the energy spotlight focused recently on the proposed Keystone XL and Northern Gateway pipelines that would ship raw bitumen to the United States and Pacific Coast, respectively, there have been growing calls for increasing the capacity in Alberta to upgrade and refine oilsands into products like synthetic crude, gasoline and diesel.” “Redford said it is up to the market and energy industry to determine opportunities for more processing (if it makes economic sense) — not the government. “Redford remains committed to the planned North West upgrader, but there are no other projects in line for provincial involvement.” “If we have wheat, we’re not going to say to people you can only export bread.” (Wood 2012-01-26).” Critics claim that the metaphor is inappropriate. If we have good top soil than we can export wheat, flour and baked goods. If we give away our top soil we have no wheat.
  • 2012-02-13 The price for a barrel of WTI crude broke above $100 U. S. a barrel. “West Texas Intermediate (WTI) crude oil is of very high quality, because it is light-weight and has low sulphur content. For these reasons, it is often referred to as “light, sweet” crude oil. These properties make it excellent for making gasoline, which is why it is the major benchmark of crude oil in the Americas. WTI is generally priced at about a $5-6 per barrel premium to the OPEC Basket Price and about $1-2 per-barrel premium to Brent (Amadeo February 13, 2012).” Alberta Oil Sands Royalties are tagged to the price of West Texas Intermediate (WTI) crude oil.
  • 2012 “Most fundamentally, shipping unprocessed bitumen crude out of Canada has been attacked by the biggest of Canada’s energy labour unions, the Communications, Energy and Paperworkers Union of Canada, as a bad idea. The CEP estimates it means exporting 40,000 jobs out of Canada (figure based on jobs lost through the Keystone Pipeline). They prefer refining the crude here in Canada.  (The CEP is also not a group to which your allegation that opponents of Gateway also oppose all forestry, mining, oil, gas, etc is anything but absurd (May 2012-01An Open Letter to Joe Oliver“.)”
  • 2012-01 “Compared to 2010, Suncor’s annual operating earnings next, and as Firebag Stage 4 is expected to begin its own more than doubled in 2011 to a record $5.7 billion. Cash ramp up in 2013. Flow from operations was also the highest ever, at nearly $10 billion. While the results primarily reflected increased It’s estimated that some 80% of Canada’s oil sands production from our Oil Sands business and a strong reserves are buried too deep to be reached by crude pricing environment, we also saw increased price conventional mining. Of Suncor’s proved plus probable Oil realizations due to our capacity to upgrade bitumen and Sands reserves, nearly 60% are associated with the refine crude oil in-house (Suncor Annual Report 2011).”
  • 2011-12 Refining capacity in the U.S. has been steadily increasing, climbing 0.8 percent, to 17.7 million barrels a day in December, 2011 compared to December 2010 (Philips 2012-03-02).
  • 2011-11 In a joint business venture Cenovus and ConocoPhillips completed a new four-drum coker as part of the coker and refinery expansion (CORE) project at Wood River (Illinois). The new coker has a capacity of 65,000 barrels per day and is expected to expand our heavy oil processing capacity to approximately 200,000 – 220,000 barrels per day, increasing the production of clean transportation fuels for the U.S. Midwest market, including St. Louis and Chicago. The CORE project took about three years to build, with a total cost of US$3.8 billion (US$1.9 billion to Cenovus), and has increased clean product yield by 5% to approximately 85%. Cenovus is involved in a business venture with ConocoPhillips in upstream enhanced oil operations and downstream refining. Cenovus has a 50% interest in the Wood River (Illinois) and Borger (Texas) refineries. ConocoPhillips has a 50% interest in our Foster Creek and Christina Lake Steam Assisted Gravity Drainage (SAGD), enhanced oil recovery technology for producing heavy crude oil and bitumen. These two extraction upstream projects in the Athabasca region in northeast Alberta. This interest in two quality refineries is a strategic fit for Cenovus and allows us to capture the full value from crude oil production through to refined products such as diesel, gasoline and jet fuel (Cenovus).” “The Foster Creek project began in 1996 and in 2002 became the industry’s first commercial SAGD project. It has grown in five phases with an expected production capacity of 120,000 gross barrels per day. In the first quarter of 2010 Foster Creek achieved a significant milestone in becoming the largest commercial SAGD project in Alberta to reach royalty payout status. For a project to reach payout its cumulative revenues exceed cumulative allowable costs.” Cenovus is Alberta’s sixth largest energy company with more than 3,000 staff (Cenovus Energy). It’s a sign of commercial success for Cenovus and ConocoPhillips but what does it mean in terms of Alberta’s oil sands royalties if a project can reach royalty payout status?
  • 2011-10-31 In a report commissioned by the  The Canadian Petroleum Products Institute (CPPI), Todd Crawford claimed that Since the 1970s, the number of operating refineries in Canada dropped from 40 in the 1970s to 19 in 2011 although this was more from increased refinery productivity/efficiency than from a decrease in quantity. Crawford also predicted that there will be a decline in demand for refined petroleum products in the North American and other OECD markets as alternative greener forms of energy become competitive. The a strong dollar, tight labour markets, and rising wage pressures make it more difficult for Canadian refineries to compete on the global market. It would be difficult for Canada to upgrade aging refineries or to build new ones that could compete with the newly-operational U. S. oil refineries built to process Alberta’s bitumen that are already processing 2 million barrels per day of Canadian crude piped from Hardisty, Alberta. As well, Canada’s oil refineries would be competing against modern super-refineries in China and India to export gasoline to North America ( Crawford, Todd. 2011-10-31. “Canada’s Refining Sector: An Important Contributor Facing Global Challenges.” The Conference Board of Canada. Commissioned by The Canadian Petroleum Products Institute (CPPI). 52 pages).
  • 2011 In Alberta’s fiscal year 2010-11, synthetic crude and bitumen royalties totaled $3.72 billion, or 38% more than the $1.42 billion in royalties derived from natural gas – the province’s traditional cash cow (Alberta Oil 2011-10-11).
  • 2011 “According to the Energy Information Administration, the United States crude oil imports fell to 8.9 million barrels a day, the lowest level since 2001. Since 2005, foreign imports dropped from 60% of U.S. consumption to 45% in 2011, according to U.S. Department of Energy data (Philips 2012-03-02.)”
  • 2011-10-11 “Sunoco Inc. shut a fluid catalytic cracker for repairs at its Marcus Hook refinery in Pennsylvania. Gasoline rose to a three-week high on speculation fuel output will decline as refinery shutdowns and maintenance curb supply on the U.S. East Coast. Futures gained as refinery rates probably fell 0.78 percentage point to 86.9 percent last week, according to the median estimate of 14 analysts in a Bloomberg News survey.”Powell 2011-10-11).
  • 2011-09-30“ConocoPhillips stopped production at its Trainer, Pennsylvania, refinery saying if it couldn’t find a buyer, the plant would be shut permanently in six months Powell 2011-10-11).” The Trainer plant is one of three oil refineries recently closed in the Eastern states.

    “Unlike their counterparts in the U.S. Midwest and on the Gulf Coast, most U.S. East Coast operations are built to refine only light, sweet oil such as Brent crude. Since this oil is largely imported from such countries as Nigeria, its price is heavily affected by global events. The Arab Spring and threats of Iranian oil disruption have driven the price of Brent from $94 a barrel to over $120 in the last year, costing the U.S. East Coast refineries dearly. Demand for gasoline in the U.S., meanwhile, is close to a 15-year low, so refineries have been unable to pass on all their costs to customers. True, gasoline prices have been climbing—gas in New York State will probably hit $4 a gallon soon—but not enough to keep these refineries profitable. “The golden age of U.S. East Coast refineries is over,” says Fadel Gheit, an analyst with Oppenheimer (Philips 2012-03-01).”

  • 2011-09-17 Thomas Golembeski, spokesperson for Sunoco claimed their oil refineries lost 8 out of the last 10 quarters between 2009 and 2011 to a total of $772 million. Philadelphia-based Sunoco announced in September that they intended to exit the refinery business. They were planning on selling the last of its refineries, in Philadelphia and Marcus Hook. The refineries have a combined capacity to process more than a half million barrels of oil a day. Sunoco, which has 150 gas stations in the Pittsburgh region (Nixon 2011-09-17).”CBC.
  • 2011-09-13Former Alberta Premier Peter Lougheed, who championed and invested in the early development the oilsands in the 1970s opposed the Keystone pipeline.” In an interview with Anna Maria Tremonti of CBC Radio’s The Current September 13, 2011, Peter Lougheed argued, “We should be refining the bitumen in Alberta and we should make it public policy in the province [. . .] I would prefer…we process the bitumen from the oilsands in Alberta and that would create a lot of jobs and job activity […] That would be a better thing to do than merely send the raw bitumen down the pipeline and they refine it in Texas that means thousands of new jobs in Texas.”
  • 2011 “Within the U.S. market, the price of oil, (which is set globally) compared to the price of natural gas (which is set regionally) is very important in determining market share when there is the opportunity for substitution. Over the last decade or so (2001-2011), when oil prices have been high, the ratio of the benchmark West Texas Intermediate oil price to the Henry Hub natural gas price has been consistently higher than any of the standard rules of thumb (MIT 2011).”
  • 2011-04 and 2011-05 The price of gas ($3.90 a gallon) and oil prices ($113 a barrel) peaked for the year (Amadeo February 13, 2012).
  • 2011-02-16 Government of Alberta (GA). 2011-02-16. “Bituman refinery agreement promotes value-added development.” The Way Forward.
  • 2011-03-20 The Canadian federal budget introduced changes to taxation that was essentially a subsidy for the oil sands. “Under the current policy, the cost of an oil sands lease can be written off at a rate of 30% a year; the budget proposes narrowing that to 10%. The change on mining expenses is more dramatic. Instead of writing off the entire cost of developing a mine in the years the costs were incurred, the budget calls for forcing those costs to be written off at 30% per year. That will align oil sands mines with other sectors of the energy industry (Vanderklippe, Nathan; Tait, Carrie. 2011-03-22. “Oil sands tax incentives targeted.” Globe and Mail).” oil sands subsidies
  • 2011-03-02 The price for a barrel of WTI crude broke above $100 U. S. a barrel. “West Texas Intermediate (WTI) crude oil is of very high quality, because it is light-weight and has low sulphur content. For these reasons, it is often referred to as “light, sweet” crude oil. These properties make it excellent for making gasoline, which is why it is the major benchmark of crude oil in the Americas. WTI is generally priced at about a $5-6 per barrel premium to the OPEC Basket Price and about $1-2 per-barrel premium to Brent (Amadeo February 13, 2012).” Alberta Oil Sands Royalties are tagged to the price of West Texas Intermediate (WTI) crude oil.
  • 2011-01-31 The U. S. Federal budget included a proposal to eliminate roughly $4 billion a year in subsidies and tax breaks for oil companies, in his third effort to eliminate federal support for an industry that remains hugely profitable (Broder, John M. 2011-01-31. “Obama’s Bid to End Oil Subsidies Revives Debate.” ).
  • 2010-12 Sunoco sold a refinery in Toledo, Ohio, “for $400 million to PBF Energy Co. LLC. Golembeski said the sale has not affected Sunoco retail stations in the Midwest. (Nixon 2011-09-17).”
  • 2009-02 Oil prices dropped to $39 a barrel (Amadeo 2012).
  • 2010-04-13Sinopec, China Petroleum & Chemical Corporation, a state-owned company and China’s second-largest oil producer and top refiner, announced acquisition of ConocoPhillips’ 9.03% interest in Syncrude — the largest oil sands project — with seven other partners controlling the rest. Canadian ownership of Syncrude remains at nearly 56%. The Canadian government granted regulatory approval on on June 25, 2010.(Reuters). Sinopec Group, parent of Asia’s largest refiner Sinopec Corp, has launched at c. 74 acquisition deals worth $48.1B since 2005, as part of China’s attempts to secure resources to feed the country’s rapid growth (source). CEO Wang Tianpu,
  • 2008-12 The price of WTI crude oil plummeted to a low of $30 per barrel (Amadeo February 13, 2012). The price of gasoline also dropped to $1.68 a gallon. (Source: EIA Oil Price Trends,EIA Gas Price Trends)
  • 2010-07-26 “Enbridge Energy Partners LLP (Enbridge) reported a 30-inch pipeline ruptured on Monday, July 26, 2010, near Marshall, Michigan. The release, estimated at 819,000 gallons, entered Talmadge Creek and flowed into the Kalamazoo River, a Lake Michigan tributary. Heavy rains caused the river to overtop existing dams and carried oil 30 miles downstream on the Kalamazoo River.” Cleanup by the numbers: 1,148,411 gallons of oil collected; 17.1 million gallons of oil/water collected and disposed; 187,276 cubic yards soil/debris disposed. Total Est. Oil Spill Cost $US 44,833,205. (From July 20, 2012, Situation Report) (source)
  • 2008-06 The price of WTI crude oil hit $145 per barrel which was an all-time high. The U.S. average retail price for regular gasoline also hit a peak in July 2008 of $4.10, rising as high as $5 a gallon in some areas [. . .] During 2008, there was fear that economic growth from China and the U.S. would create so much demand for oil that it would overtake supply, driving up prices. However, most analysts now realize that such a sudden increase in oil prices was due to increased investment by hedge fund and futures traders. (See What Causes High Oil Prices?) (Amadeo February 13, 2012). (Source: EIA Oil Price Trends,EIA Gas Price Trends)
  • 2008-06 According to the publicly-available Commitments of Traders (COT) reports, activity in the West Texas Intermediate (WTI) light sweet crude oil contracts has grown markedly since 2000. In the last three and a half years alone, open interest across all available contract maturities (the number of contracts open at the end of each day) in WTI futures and futures-equivalent (or “adjusted”) option contracts traded on the New York Mercantile Exchange (NYMEX) has more than tripled from around 900,000 contracts in January 2004 to more than 2.9 million contracts in June 2008. During the same period, the number of large traders has also grown – almost doubling since January 2004, from approximately 220 to just under 400 reporting traders. These figures speak to the competitiveness and depth of the crude oil futures markets in the U.S. (CFTC 2008-06).”
  • 2007 
  • 2008-05 The price of West Texas Intermediate (WTI) crude oil passed the $123 mark for the first time (BBC).
  • 2007-05-24 West Texas Intermediate (WTI), also known as Texas light sweet crude oil was priced at $63.58 per barrel as against $71.39 per barrel for Brent (Bloomberg). The anomaly occurred perhaps because of a temporary shortage of refining capacity. On April 13, WTI Crude at Cushing may have temporarily lost its status as a barometer of world oil prices.[2] A large stockpile of oil at the Cushing, Oklahoma storage and pricing facility (mainly due to a refinery shutdown[3]) caused price to be artificially depressed at the Cushing pricing point. As stockpiles decreased, the WTI price increased to exceed the price of Brent once again.[4] (West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of Chicago Mercantile Exchange’s oil futures contracts. The price of WTI is often referenced in news reports on oil prices, alongside the price of Brent crude from the North Sea. Other important oil markers include the Dubai Crude and the OPEC Reference Basket. Brent Crude is a major trading classification of sweet light crude oil comprising Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation). Brent Crude is sourced from the North Sea. The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum.) wikipedia
  • 2007-03-20The Conservative government of Canada announced it would gradually phase out some oil sands tax incentives including provisions allowing accelerated write-off of oil sands investments. The New Democratic Party, which had enough votes to keep the Conservatives in power, made eliminating accelerated capital cost allowances for oil sands a price for its support (“Canada to end oil sands aid, add green-car rebates“. Angola Press. 20 March 2007).
  • 2007Alberta`s oil sands, which rival Saudi Arabia`s conventional oil reserves in size, were the target of an unprecedented development rush as companies looked to cash in on North America`s thirst for secure energy supplies (“Canada to end oil sands aid, add green-car rebates“. Angola Press. 20 March 2007).
  • 2007 Crude oil prices were significantly in excess of the average cost of production, which was about $28 per barrel of bitumen. However, bitumen production costs were rising rapidly, with production cost increases of 55% from 2005 to 2007, due to shortages of labor and materials (“Oil sands costs up 55 percent“. UPI. 6 March 2007.)
  • 2007-01-31The European Commission announced plans to force energy companies to produce greener fuels. It says it will propose amendments to a directive on fuel quality, which will require a 10% cut in the CO2 released during production and use of the fuel (BBC News “Brussels presses for greener fuel.”)The changes would make companies use more biofuel, and develop greener biofuels where the production process results in lower CO2 emissions.
  • 2006 The Government of Alberta had “a vision for its hydrocarbon upgrading industry: “Alberta will achieve a competitive hydrocarbon upgrading industry through refining and petrochemical plants that expand the market for Alberta’s bitumen resource and produces higher value products in Alberta.” The vision for hydrocarbon upgrading is a key component in the development of an integrated energy strategy that looks beyond extraction to ensure both the highest value and best use of our resources for the benefit of all Albertans (executive summary) The returns to Alberta and Canada from a fully integrated system could be significant. Successful upgrading to finished products could add billions of dollars to the Alberta and Canadian economy and broaden Alberta’s markets for value-added products, ultimately helping Alberta companies to increase their global competitiveness. As well as the value-added consideration, the high level of activity in the oil sands has raised a concern among industry stakeholders. With the large number of project proposals to develop the oil sands within the next 10 to 15 years, production of the bitumen and synthetic crude oil from the oil sands may exceed current refinery capacity resulting in the value of these products declining over time. Increasing Alberta’s capacity to produce finished products would mitigate this potential problem and serve the North American market better. In addition, the lower cost bitumen derived feedstocks would help sustain Alberta’s worldclass petrochemical industry, which is currently based on higher-priced natural gas feedstocks (Natural Gas – Alberta Plant Gate – C$/MMBtu 2006:10.35).” … The vision for hydrocarbon upgrading [was] a key component in the development of an integrated energy strategy that looks beyond extraction to ensure both the highest value and best use of our resources for the benefit of all Albertans … As well as the value-added consideration, the high level of activity in the oil sands has raised a concern among industry stakeholders. With the large number of project proposals to develop the oil sands within the next 10 to 15 years, production of the bitumen and synthetic crude oil from the oil sands may exceed current refinery capacity resulting in the value of these products declining over time. Increasing Alberta’s capacity to produce finished products would mitigate this potential problem and serve the North American market better. In addition, the lower cost bitumen derived feedstocks would help sustain Alberta’s worldclass petrochemical industry, which is currently based on higher-priced natural gas feedstocks (p.6) . . . The growing demand for refined petroleum products in North America has resulted in constrained refinery capacity and increasing product prices. While refinery capacity expansions are being planned, the demand for refined products is expected to continue to exceed available domestic supply.” Both the natural gas price and the West Texas Intermediate crude oil price forecasts used in the economic model are from a published source, GLJ Petroleum Consultants Ltd. and are summarized here: Crude Oil – West Texas Intermediate – US$/bbl 2006:57.00 2007:55.00 2008:51.00 2009:48.00 2010:46.50 2015:47.75 2020:52.77; Natural Gas – Alberta Plant Gate – C$/MMBtu 2006:10.35 2007:9.00 2008:7.75 2009:7.25 2010:6.95 2015:7.15 2020:7.90 (Netzer 2006-03.”
  • 2005 The price of crude oil soared from $45 a barrel to above $70 a barrel. BP reported a 25% increase in annual profits “magnified enormously by the high price of oil, high refining margins, and high gas prices”. Profits for 2005 went up to $19.31bn with profits for the last three months of the year increasing by 26% to $4.43bn. Shell’s record profit was $22.94bn in 2005. (BBC 2005).
  • 2004 There was a large, unexpected jump in world oil consumption growth, fostered by strong growth in economic activity in Asia, reduced excess production capacity significantly (CFCT 2008-07).
  • 2003 Between 2000-12 and 2003 there were four gasoline price spikes caused by domestic refining and marketing that resulted in an increase of over $30 billion in gasoline prices. (Cooper 2003).”
  • 2003 Reductions in storage capacity and the number of gasoline stations of over ten percent have also taken place in just the past half-decade. These reductions in capacity have been driven in part by a merger wave that has resulted in a significant increase in the concentration of ownership of refinery capacity and gasoline outlets. Four-fifths of regional refinery markets have reached levels of concentration that trigger competitive concerns, even by the standards adopted by the antitrust division of the Reagan administration’s Department of Justice. In these markets, the largest four firms account for at least one-half and as much as three quarters of the refined product output. A similar trend has been in evidence at the level of gasoline stations (Cooper 2003).”
  • 2003-03-11 “Consumer Groups Seek Energy Price Probe,” Energy Daily, March 11, 2003, p. 4.
  • 2003 OECD oil stocks were at record lows in 2003, following a major strike by oil workers in Venezuela (CFTC 2008-07).
  • 2003 In the United States alone, 75 refineries were closed between 1988-2003 and no new refineries were constructed ( Cooper, Mark. 2003-10. “Spring Break in the US Oil Industry: Price Spike, Excess Profits and Excuses.” Consumer Federation of America.
  • 2002 In 2002, 58 firms were engaged in refining in the United States, down from 189 firms in 1981 (source).
  • 2001-05-21 Public Citizen, Record Oil Company Profits Underscore Market Consolidation, May 31, 2001; Fortune 500, July 18, 2001; Business Week First Quarter Results, May 21, 2001
  • 2000 Between 1985 and 2000, average refinery utilization increased from 78 to over 92 percent (source).
  • 1998 A wave of mergers, acquisitions, joint venture alliances, and selective divestitures started in 1998. The aim was cutting costs, gaining economies of scale, increasing returns on investment, and boosting profitability (source). Exxon and Mobil merged allowing both companies a larger share of the oil and gas market (horizontal merging).
  • 1990s “The 1990s were widely viewed by the industry as a period of unprecedented economic volatility and hardship, characterized by poor profit margins as a result of substantial excess capacity, the increasing cost of compliance with environmental regulations, and unfavorable crude oil price trends. At the same time, the refining industry in the United States has been dramatically changed by corporate restructuring and consolidation (RAND).”

Webliography and Bibliography

There are major challenges in locating reliable sources of useful, comprehensible information on the oil industry. The following sources are not necessarily neutral. Wikipedia entries on concepts and organizations related to the oil industry constantly include warnings to readers that the entries may not be neutral and indeed reflect advertisement more than unbiased, information based on reliable sources. Citations often lack references.**

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