CNOOC Central

Update

July 23, 2012: CNOOC to buy Nexen; huge premium; CNOOC has only nine years of proven reserves. 

November 30, 2011: CNOOC in joint venture in the deepwater Gulf of Mexico with Nexen. Nexen is one of the leaders in deepwater GOM, producing 20,000 bbls/day.

Original Post

Just a little footnote in the long march of CNOOC's quest to garner an ever-larger share of the world's oil reserves.

CNOOC announced that CNOOC Luxembourg S.a r.l, an indirect wholly-owned subsidiary of the Company, has completed its acquisition of OPTI Canada Inc. ("OPTI"). The total value of the consideration is approximately US $2.1 billion. An application to delist the OPTI Shares will be filed by OPTI with the TSX Venture Exchange.

I guess if the US doesn't want Canadian oil, the Chinese are happy to take it.

Likewise, if the US doesn't want the oil in the Gulf of Mexico, China is more than happy to take it.

China's leading offshore oil producer CNOOC Ltd yesterday said it agreed to buy small stakes in oil assets in the Gulf of Mexico from Norway's Statoil, marking its first entry into oil reserves in the gulf.

CNOOC Ltd, through its subsidiary, OOGC America Inc, has signed an agreement with StatoilHydro for four prospects in the Gulf of Mexico, namely Tucker, Krakatoa, Logan and Cobra, the company said in a statement yesterday.

My hunch is that when the bottom falls out from under the Bakken when the EPA bans fracking, the Chinese will buy the state of North Dakota, knowing that sanity will eventually return to the White House.

I am not being facetious. After the last bust in the Williston Basin, a local man and wife bought up huge assets (I won't get more specific; folks would know who I am talking about) of oil equipment and just let it sit. They are now one of the wealthiest couples in the US. It took a few years, but it all worked out nicely.

Did I say "long march" for the CNOOC saga? The CNOOC buy-in of the Gulf was back in 2009. Ancient history in the oil business.

From OPTI's website, which will soon go away, I assume:

OPTI Canada is a Calgary, Alberta-based company, established in 1999 to develop major integrated bitumen and heavy oil projects in a joint venture with our partner, Nexen Inc. OPTI holds a 35 percent working interest in all joint venture assets including all reserves and resources and current and future expansion developments, with Nexen as the sole operator and 65 percent working interest owner. Our first project, the Long Lake Project (the Project), is located near Fort McMurray, Alberta and includes the Long Lake SAGD (steam assisted gravity drainage) Operation and the Long Lake Upgrader.

The Project is the first to use OPTI’s OrCrude™ process, integrated with gasification and hydrocracking processes. Through gasification, the configuration substantially reduces the exposure to and the need to purchase natural gas. Through these processes, the Project delivers a high quality synthetic crude oil from the Canadian oil sands with low operating costs at full production.
On a 100 percent basis, the Project has capacity to produce up to 72,000 barrels per day of SAGD bitumen production. The Project is expected to produce up to 58,500 barrels per day of products, primarily 39 degree API Premium Sweet Crude (PSC™) with low sulphur content, which makes it a desirable refinery feedstock.

Start-up of the Upgrader and production of first PSC™ was announced in January 2009.

Note the phrase:  The Project is expected to produce up to 58,500 barrels per day of products, primarily 39 degree API Premium Sweet Crude (PSC™) with low sulphur content, which makes it a desirable refinery feedstock. That oil, no doubt, would have found its way into the Keystone XL project, the project scuttled by the President, yes, the one so concerned about American jobs.

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Bakken oil is 43-degree API premium sweet with low sulphur content also -- literally the best oil in the world. One can pour most Bakken oil directly into a hydrocarbon engine and the engine will run without first refining the oil. Or so I've been told.

Oh, by the way, a reminder how incredibly rich the Bakken is, yes the Bakken that the EPA will shut down:

Organic-carbon values are calculated from formation-density logs using the equation: TOC... is organic-carbon content ...Test calculations comparing this equation to laboratory organic-carbon analyses from 39 wells in North Dakota show an average absolute difference of 1.1% in organic-carbon content. Organic-carbon content, calculated at 159 locations in North Dakota and 107 in Montana, averages 12.1% for the upper member of the Bakken Formation and 11.5% for the lower member. The mass of organic carbon in the Bakken Formation is approximately evenly divided between the upper and lower members, and it totals about 126 X 10 ¹² kg in the study area, of which 102 X 10 ¹² kg are in the thermally mature region. Tentative estimate that hydrocarbons equivalent to 132 billion bbl of 43 degrees (API gravity) oil have been expelled.--Modified journal abstract. 

Saudi Arabian TOC is about 0.5%. That's half a percent. The decimal point is not in the wrong spot.