Update On LNG Export Terminal At Cheniere's Sabine Pass -- RBN ENergy -- July 15 ,2016; China Cutting Operations In Canadian Oil Sands

Today's big story? From The WSJ, Chinese energy giant's big bet on oil sands backfires. CNOOC's $15 billion purchase of Canada's Nexen has been marred by accidents and managerial lapses. 

Three years after spending $15 billion on an ambitious bid to revitalize a troubled oil-sands project in a northern Canadian swampland, one of China’s largest state-controlled oil companies has run out of gas.

Cnooc Ltd. ’s local subsidiary on Tuesday raised the specter of abandoning a core part of its oil-sands operation, after an investigation into two major accidents uncovered a series of managerial and safety lapses at an already-troubled plant.

That marks a dramatic shift from the heady days in 2013 when Cnooc bought Nexen—following two other billion-plus-dollar oil-sands deals by state-controlled Chinese oil companies, PetroChina Co. and China Petroleum & Chemical Corp. , known as Sinopec—and points to how far short the Nexen deal has fallen from expectations.
“The deal has turned out to be a bit of a dud for them,” said Gordon Houlden, a China expert at the University of Alberta.

The Nexen acquisition ranked as China’s biggest-ever overseas takeover, surpassed only recently by China National Chemical Corp.’s pending acquisition of Switzerland’s Syngenta SA. In buying Nexen, Cnooc aimed to use it as a beachhead in North America after the failure of a controversial 2005 bid for Unocal, now a unit of Chevron Corp.

Earlier this week, from The Wall Street Journal, Nexen to idle oil-sands facility after accidents. CNOOC's Canadian unit to cut 350 jobs after pipeline lead, explosion at Long Lake crude-procssing plant.

CNOOC Ltd. ’s Canadian subsidiary said Tuesday it would idle a troubled oil-sands facility following two accidents at the site, a move that raises questions about the Chinese company’s $15 billion investment in Canadian oil sands.

Nexen Energy ULC, the Cnooc subsidiary, had already cut its oil-sands production after a July 2015 pipeline leak and then again after an explosion at its Long Lake crude-processing unit in northern Alberta, which killed two workers in January.

Production at the site has been limited to just 15,000 barrels a day since then, compared with 50,000 barrels a day this time last year. The company said it would lay off some 350 employees beyond its previously announced job cuts due to its decision to scale down operations.

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Active rigs:

	7/15/2016	07/15/2015	07/15/2014	07/15/2013	07/15/2012
Active Rigs	29	73	194	186	215

RBN Energy: update on LNG export terminal at Cheniere's Sabine Pass.

US student debt: from AEI. Another myth busted.

Queue: as predicted on the blog a few weeks ago, Great Britain moves to the head of the queue following Brexit.

Katie Ledecky to swim three freestyle races in Rio: the 200, 400, and 800-meter.

US retail sales post solid rise in June. Link here.


The Director's Cut should be released today at 2:00 p.m.

Saudi Arabian Minister of Energy has reason to worry: oil glut persists; prices remain stubbornly low; and, now, tweeting: Dubai crude structure in deeper contango on sluggish demand for September-loading cargoes. 

From Bloomberg/Rigzone:

The world’s biggest consumer of energy is producing less of it.

China’s crude output dropped 4.6 percent to 101.59 million metric tons in the first six months of the year, the lowest for that period since 2012, according to data from the National Bureau of Statistics on Friday. Coal production fell 9.7 percent to 1.63 billion tons in the first half of the year. For June, crude tumbled 8.9 percent, coal fell 16.6 percent and natural gas slipped 0.5 percent.

The cutbacks highlight cost and environmental pressures on the world’s second-largest economy as it shifts toward consumer-driven growth and away from industrial production. Oil producers including PetroChina Co. and Cnooc Ltd. shut unprofitable fields amid a price crash and took advantage of cheaper overseas supplies. Meanwhile, coal output has slipped as President Xi Jinping’s government compels miners to reduce an overcapacity in the biggest producer and consumer of the fuel.

“Domestic crude production will remain weak, while coal-output cuts may even deepen in the coming months,” Tian Miao, an analyst with policy researcher North Square Blue Oak Ltd., said before the data were released. “China’s demand for overseas energy supplies including crude oil and coal will continue to grow in the second half year.”