Canada’s Tourmaline Seeks Greater Market Diversity
Canada’s Tourmaline Oil, the country’s largest natural gas producer at nearly 1.5bn ft3/day, said March 3 it will continue to seek greater market diversification – in North America and elsewhere – while also greening its gas production.
In releasing its Q4 2019 results, Tourmaline pointed out that it is already the largest gas producer in Alberta’s Deep Basin and the third largest in the prolific Montney play straddling the BC-Alberta border.
But it also has the lowest greenhouse gas (GHG) emissions intensity of any Canadian senior producer, and cut its overall CO2 emissions by 46% between 2013 and 2018.
“The environmental performance improvements achieved thus far, and the myriad of future-planned initiatives, require significant capital investment,” Tourmaline said, noting that the investments will ultimately lower capital and operating costs. “Shareholders receive a double win – a cleaner environment via Tourmaline’s net-cleanest hydrocarbon molecule and enhanced returns via the company’s improved efficiencies.”
In Q4 2019, Tourmaline grew its gas production by 7%, to 1.44bn ft3/day from 1.35bn ft3/day in Q4 2018, and for the full year, output averaged 1.41bn ft3/day, an 8% improvement year-on-year.
And while its realised commodity price for gas slipped 5% for all of 2019, to C$2.59/mn Btu from C$2.73/mn Btu, that price was still a 46% premium over the average Aeco 5A benchmark for the year. Tourmaline is aggressively hedging to maintain or grow that premium, and has hedged more than 860mn ft3/day of production this year either to a weighted-average fixed price of C$2.44/mn Btu or to a basis differential to Nymex of US$0.31/’000 ft3.
It’s also looking to increase its exposure to more lucrative export markets in the US: 490mn ft3/day will be marketed in the US this year, and starting in November 2022, a new long-haul transportation agreement will kick in for 25mn ft3/day to the US Gulf Coast. By the end of 2023, Tourmaline expects to be exporting 660mn ft3/day of its production, part of which will include participation in an LNG supply agreement it expects to achieve within the next two years.