By Duncan Sutherland – Exclusive to Heavy Oil Investing News

Market and international news

Falling natural gas prices are a boon to oil sands operators, so if prices remain low in the upcoming months, Q3 results should improve, especially for refiners.

A common theme in the Q2 results released a couple weeks ago was the bite that costs of high natural gas took out of profits. With natural gas and oil prices increasingly decoupling, this will be a good quarter for heavy oil and oil sands producers if current trends continue.

The Korea Times has an interesting article on the effects of high oil prices on South Korea’s economy. The country’s traditionally strong shipbuilding and heavy equipment sectors have been huge beneficiaries of the trend, but “domestic oil companies are setting a new record in exports.” The reason for this is the nation’s success in positioning itself as an Asian refining hub. Putting aside the traditional focus on easily-refinable, light sweet crudes, South Korean refineries have also expanded heavy oil upgrading units in a diversification effort. This trend has also been exhibited in the Persian Gulf states, with Saudi Arabia, Kuwait and Qatar, all trying to create value-added production facilities for multiple oil grades.

News from Alberta this week suggests that “another C$2.4 billion worth of pipelines are in the works to handle” the province’s heavy oil output. Alberta is also changing its royalty regime, seeking bitumen royalty-in-kind instead of money. On the website, the provincial government is detailing a new program to get involved in the “upgrading, refining, producing petrochemicals, managing commercial processes” and other such activities. We will have to wait and see what kind of response this gets. The outcome should be interesting.

Company news

Last week, Upgrader had noted that “negotiations are continuing between Ivanhoe Energy (TSX:IE) and state-owned PetroEcuador” over the heavy oil in country’s the Pangarayacu field. It appears that the negotiations are entering a final stage, as Petroecuador’s President indicated that a nine-month timeline before work begins on the field was optimal.

EnCana’s (TSX:ECA) oil sands plays are continuing to garner good press, as The National Post reports that the company is being rated “sector outperform”.

Deloro Resources (TSX.V:DLL) has gotten the approval of Saskatchewan’s government for its pilot project near Wilkie. The company is testing a new enhanced oil recovery (EOR) technique in conjunction with Electro-Petroleum Inc. This space likes to keep an eye on EOR developments, so expect more updates as we see what happens with the Wilkie project. Also on the tech side, the Prince Albert Daily Herald has an article detailing Joint Implementation of Vapour Extraction that is worth a look.

Chevron (NYSE:CVX) is officially in for Newfoundland’s Hebron offshore heavy oil play. Estimates of Hebron suggest “731 million bbl of proved and provable oil resources, about 30 million bbl or natural gas liquids, and 429 bcf of natural gas”.

Upgrader will be back next week. Also, Dig Media is launching Oil and Gas Investing News for a sector-wide view of happenings in hydrocarbons.

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