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Canadian Natural Resources

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Canadian Natural Resources Limited
Company typePublic company
TSX: CNQ
NYSE: CNQ
S&P/TSX 60 component
IndustryOil and gas
FoundedCalgary, Alberta (1973)
HeadquartersCalgary, Alberta
Key people
Steve Laut, President
Tim S. Mckay, COO
Murray Edwards, chairman of the board
Revenue$17.945 billion CAD (2013, before royalties)[1]
Number of employees
6,621 (Dec 2013)
Websitewww.cnrl.com

Canadian Natural Resources Limited, or CNRL or Canadian Natural, is an oil and gas exploration, development and production company with its corporate head office in Calgary, Alberta. Along with its core area Western Canadian Sedimentary Basin (WCSB),[2], CNRL also has North Sea and offshore West Africa fields. By 2011, with a production of 121,000 barrels (19,200 m3), CNRL was Canada's largest oil company and Canada's "single biggest conventional heavy oil producer."[3] By 2009 CNRL ranked number 251 on the Forbes Global 2000 list.[4]

CNRL is one of the largest independent crude oil and natural gas producers in the world, with its head office in Calgary, and operations focused in the Western Canadian Sedimentary Basin,[notes 1][2] the North Sea and offshore West Africa.

Operations

Corporate Headquarters resides in Calgary, Alberta. It operates field offices in Alberta, British Columbia, Saskatchewan as well as international offices in Gabon, Côte d'Ivoire and Aberdeen, Scotland. Canadian Natural is the largest oil and gas producer in Canada as of Q2 2014.

Western Canadian Sedimentary Basin (WCSB)

According to their own website "Canadian Natural has the largest undeveloped base in the Western Canadian Sedimentary Basin" (WCSB).[5] CNRL's North America assets include "conventional and unconventional natural gas, along with projects in crude oil, including primary, secondary and tertiary light, medium and heavy production, in situ oil sands, and oil sands mining"[5]

Natural Gas

According to their own website "Canadian Natural is the largest independent producer of natural gas in Western Canada."[5] They have natural gas assets "[which] are strong, leveraged by a vast land base, well developed infrastructure and a deep, diversified inventory of drilling prospects. Conventional and unconventional natural gas production is concentrated in five North American core regions: Northwest Alberta, Northeast British Columbia, the Foothills, the Northern Plains and the Southern Plains."[5]

According to their own website "Canadian Natural continues to access and develop new natural gas opportunities, focusing on growing an already strong location inventory and optimizing existing production."[5]

Heavy Crude Oil

According to their own website "Canadian Natural is the largest producer of heavy crude oil in Canada with a competitive advantage through its vast land base."[5]

According to their own website,[6]

"The Company targets primary, secondary and tertiary recovery of heavy crude oil and thermal in situ recovery of bitumen. Canadian Natural’s primary heavy crude oil operations are centered on the Alberta – Saskatchewan border, near the city of Lloydminster. The Company’s extensive and dominant land base allows them to conduct large scale drilling and development programs while minimizing capital cost requirements. Costs are further managed through owning and operating centralized treating and sand handling facilities, maximizing their utilization and using their size to achieve economies of scale. Infrastructure includes five crude oil processing facilities and four salt caverns for solids disposal. Ownership of the ECHO sales pipeline allows Canadian Natural to be the only producer capable of delivering undiluted heavy crude oil into blending facilities at Hardisty, Alberta."

— CNRL 2014

Pelican Lake

According to their own website,[7]

"Pelican Lake is a large, shallow crude oil pool in the Northern Plains core region; estimated to contain 4.1 billion barrels of original oil in place on Canadian Natural land. Although initially developed for primary production, the Company started converting portions of the field to waterflood in 2004, resulting in a significant production increase which reversed the previous three years of production decline. Building on that success, the Company began testing polymer flooding in 2005. This enhanced oil recovery technique has proven to be much more effective than waterflooding and as such, the Company is converting more of the field to polymer flood."

— CNRL 2014

Thermal In Situ Oil Sands

Canadian Natural holds "some of the best thermal in situ oil sands assets in Canada, providing tremendous value and growth potential. Our thermal assets are located in two of the major oil sands deposits in Western Canada – the Athabasca and the Cold Lake deposits."[8] Canadian Natural's oil sands deposits are in the form of bitumen, which in its natural state is too viscous to flow. When bitumen is too deep (>80 m) to economically mine, steam is injected to warm the bitumen, reducing the viscosity and allowing it to be pumped through surface wells. Only about 7% of Canada's oil sands can be mined, the majority has to be recovered using thermal in situ recovery.[8]

Light Crude Oil and NGLs

Canadian Natural produces light crude oil and NGLs in all of its western Canadian core regions. The majority of these pools are mature but recovery factors are still modest. The majority of Canadian Natural’s light crude oil pools are produced under waterflood which provide relatively high ultimate recovery factors with low production decline rates. All of these projects are low risk but do require rigorous geological and engineering analysis in order to be successful.[9]

Horizon Oil Sands

See main article Horizon Oil Sands

Canadian Natural's largest operation to date is the Horizon Oil Sands project which is located 75km north of Fort McMurray, Alberta.

The Horizon Oil Sands include a surface oil sands mining and bitumen extraction plant, complimented by on-site bitumen upgrading with associated infrastructure to produce high quality SCO. Canadian Natural holds extensive leases that are estimated to contain approximately 14.4 billion barrels of bitumen initially in place (BIIP), with best estimate contingent resources other than reserves of 4.1 billion barrels of bitumen and 3.3 billion barrels of proved and probable SCO reserves. The Horizon Oil Sands are located on these leases just north of Fort McMurray, Alberta in the Athabasca region. Due to the massive resource base, the mine and plant facilities are expected to produce for decades to come without production declines normally associated with crude oil production.[10]

Canadian Natural's Board of Directors sanctioned the Horizon Oil Sands Project in February 2005 and after years of planning and construction, the Horizon Oil Sands successfully and sustainably produced its first barrels of high quality, low-sulphur, 34° API, sweet synthetic crude oil (SCO) in early 2009. [10]

The Company targets to "see incremental production gains throughout the completion of future expansion and debottlenecking, with targeted full facility capacity of approximately 250,000 bbl/d. Further phases of expansion could potentially bring the ultimate capacity to 500,000 bbl/d." [10]

International

International operations remain a strategic part of Canadian Natural's business, providing a stable and committed source of light crude oil production. The Company concentrate[s] efforts in two core areas, the United Kingdom portion of the North Sea and in Offshore Africa. In the North Sea, attention is focused on managing existing infrastructure in a mature basin which leads to field life extension. With a solid inventory of drilling prospects, the North Sea provides significant resource potential in a low-risk environment. In Offshore Africa, the Company enjoys excellent relationships with the governments of Côté d’Ivoire and Gabon, providing unmatched competitive advantage over other local operators. Providing some of the highest returning projects in the Company, the Offshore Africa assets continue to generate significant free cash flow as it provides considerable light oil growth.[11]

History

In 1988, Canadian Natural was heavily in debt due to a combination of excessive leverage in late 1970s and early 1980s, and the collapse of oil prices in 1986. It was forced into a restructuring that saw the majority of its geographically scattered assets sold. It employed 9 people, produced about 1,400 barrels (220 m3) of oil equivalent per day and had a market capitalization of about $1 million. Through growth and acquisitions, it has grown to approximately 8000 employees, production of over 817,000 barrels of oil equivalent per day and a market capitalization of approximately $45 billion.[12]

Accidents

In late November 2014, a CNRL pipeline spilled almost 60,000 liters of crude oil into a muskeg region in northern Alberta, located roughly 27 kilometers from Red Earth Creek.[13] 2014 was a poor safety year for CNRL. [14]

Recent news

In November 2015, the firm announced it would sell most of its royalty assets to PrairieSky Royalty Ltd for around $1.8 billion.[15]

Trading

Canadian Natural's common shares are listed on the New York Stock Exchange under the symbol CNQ and under the Toronto Stock Exchange as CNQ and CNQ.U which denotes trading in US funds.

Corporate governance

Canadian Natural is a limited liability, publicly traded corporation. Current members of the board of directors are: Catherine M. Best, N. Murray Edwards, Honourable Gary A. Filmon, Ambassador Gordon D. Giffin, John G. Langille, Steve W. Laut, Keith A.J. MacPhail, Honourable Frank J. McKenna, James S. Palmer, Eldon R. Smith and David A. Tuer.

Notes

  1. ^ Of the provinces and territories within the WCSB, Alberta has most of the oil and gas reserves and almost all of the oil sands.

Citations

  1. ^ CNRL 2013b.
  2. ^ a b CNRL 2013b, p. 1.
  3. ^ McKenzie-Brown 2011.
  4. ^ Forbes 2009.
  5. ^ a b c d e f CNRL 2014a.
  6. ^ CNRL 2014b.
  7. ^ CNRL 2014c.
  8. ^ a b "Canadian Natural Resources - Thermal In Situ Oil Sands". cnrl.com. Retrieved 8 October 2015.
  9. ^ "Canadian Natural Resources - Light Crude Oil & NGLs". cnrl.com. Retrieved 8 October 2015.
  10. ^ a b c "Canadian Natural Resources - Horizon Oil Sands". cnrl.com. Retrieved 8 October 2015.
  11. ^ "Canadian Natural Resources - International". cnrl.com. Retrieved 8 October 2015.
  12. ^ CNRL 2014.
  13. ^ Staff (1 December 2014). "Alberta pipeline spills 60,000 litres of crude oil into muskeg". Global News. Retrieved 8 October 2015.
  14. ^ Anna Mehler Papernyand Leslie Young (2 December 2014). "Alberta oil spill: Examining CNRL's safety record". Global News. Retrieved 8 October 2015.
  15. ^ "Canadian Natural to sell royalty assets to PrairieSky for C$1.8 billion". Reuters. 9 November 2015.

References

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