Author Topic: $60 / Barrel by year end  (Read 35387 times)

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Online Chris Pook

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Re: $60 / Barrel by year end
« Reply #50 on: January 26, 2016, 14:44:27 »
http://montrealgazette.com/opinion/columnists/opinion-why-montreal-says-no-to-the-energy-east-pipeline

Message to Messrs Coderre et al:

So glad you are enjoying the benefits of the reversal of 9B to supply the refinery in Montreal.

It is with regret that we note your refusal to permit the transport of oil and gas products across your province to your fellow Canadians in New Brunswick.  As a result we shall be forced to continue with the current plan and utilize the previously agreed means of transport across your region.  You might want to consider updating some of your investment, management and response plans.

  1910

  1898

1904

1876

1916

1893

  1854



A couple of thoughts during your deliberations.



Quote
But Saskatchewan Premier Brad Wall noted that Quebec municipalities were benefiting from $10 billion in transfer payments as part of Canada’s equalization system. In the Canadian federation, equalization transfers money from the wealthiest provinces to so-called "have-not" provinces to ensure that all parts of the country have adequate resources for public services.

“For the better part of the last decade, the western Canadian energy sector and western Canadian taxpayers have supported a great portion of these transfer payments as well as the Canadian economy,” Wall wrote on Thursday on his Facebook page. “Is it too much to expect that these Quebec municipal leaders would respond to this reality with generous support for a pipeline that supports the very sector that has supported them?”

And Christie Clark - you are no better.



How do you get the royalties from your Northeastern fields? Through pipelines that run through Alberta as well as pipelines that Pembina and Kinder Morgan and Spectra have run over the mountains for best part of 60 years. 




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Anticipating the triumph of Thomas Reid.

"One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.”  - James Lovelock

Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others. [Ambrose Bierce, 1911]

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Re: $60 / Barrel by year end
« Reply #51 on: January 26, 2016, 15:28:44 »
http://montrealgazette.com/opinion/columnists/opinion-why-montreal-says-no-to-the-energy-east-pipeline
Funnily enough, that's not quite carved in stone  ;D
Quote
Montreal Mayor Denis Coderre signalled Tuesday that he is open to changing his mind on the Energy East pipeline.

Following a 45-minute meeting with Prime Minister Justin Trudeau, Coderre told reporters that what he had retained from his meeting with his former Liberal caucus colleague was "this notion of being responsible" and of finding "a balance" between economic development and sustainable development.

"If we have a role to play, there are people who have homework to do," he said.

“Energy East must change its project and then we will see,” he later told The Huffington Post Canada ...
Not quite a blatant ...

... but time will tell ...
“Most great military blunders stem from the good intentions of some high-ranking buffoon ...” – George MacDonald Fraser, "The Sheik and the Dustbin"

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Offline Thucydides

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Re: $60 / Barrel by year end
« Reply #52 on: January 26, 2016, 15:36:19 »
Maybe we can tempt the Cree "nations" with an energy and transportation corridor across the District of Ungava...

A few billion in pipeline, railway, highway and power line construction and ongoing maintainance should get a few people seeing things our way, and will be a productive spending on "infrastructure" to boot. Win win.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Online Chris Pook

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Re: $60 / Barrel by year end
« Reply #53 on: January 26, 2016, 15:38:19 »
Quote
“Energy East must change its project and then we will see,

Accommodation Quebec style.
Over, Under, Around or Through.
Anticipating the triumph of Thomas Reid.

"One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.”  - James Lovelock

Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others. [Ambrose Bierce, 1911]

Offline jollyjacktar

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Re: $60 / Barrel by year end
« Reply #54 on: January 26, 2016, 16:43:09 »
Thinking of Coderre reminds me of the lyrics of the Cindy Lauper song " and I see your true colours come shining through".  What a POS.

Rick Mercer has one of his better rants on this very same subject for tonight's show. 

Here it is http://www.cbc.ca/news/canada/calgary/rick-mercer-s-energy-east-rant-1.3419698

Offline Colin P

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Re: $60 / Barrel by year end
« Reply #55 on: January 28, 2016, 16:46:49 »
I wonder how much further capacity Iran can bring on and how much is existing under the table sales being converted into above table sales which might make it appear there is a larger supply.

Online Chris Pook

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Re: $60 / Barrel by year end
« Reply #56 on: January 28, 2016, 17:21:38 »
Quote
The question is whether even US shale can ever be big enough to compensate for the coming shortage of oil as global investment collapses. “There has been a $1.8 trillion reduction in spending planned for 2015 to 2020 compared to what was expected in 2014,” said Mr Yergin.

Yet oil demand is still growing briskly. The world economy will need 7m b/d more by 2020. Natural depletion on existing fields implies a loss of another 13m b/d by then.

Adding to the witches’ brew, global spare capacity is at wafer-thin levels - perhaps as low 1.5m b/d - as the Saudis, Russians, and others, produce at full tilt.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/12118594/Saudis-will-not-destroy-the-US-shale-industry.html

Quote
Ms Croft said the market is likely to tighten in the second half of the year despite the return of Iran, arguing that there are very few spots in the world other than Libya able to crank up output quickly

“We remain of the view that many of the bearish macro factors appear overblown. Current market conditions are setting the market up for a supply shortfall for the coming years, which is not accurately priced into the forward curve,” she said.

http://www.telegraph.co.uk/finance/economics/12100609/Glimmers-of-hope-for-oil-as-Russia-poised-to-slash-output.html
Over, Under, Around or Through.
Anticipating the triumph of Thomas Reid.

"One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.”  - James Lovelock

Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others. [Ambrose Bierce, 1911]

Offline ModlrMike

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Re: $60 / Barrel by year end
« Reply #57 on: January 28, 2016, 18:08:45 »
So we weather the storm and go into a heavy maintenance cycle. We then have the ability to ramp up production once the profit margin rebounds. That being said, we should also be looking to build the infrastructure to get our oil to market. Something like Energy East perhaps?
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Re: $60 / Barrel by year end
« Reply #58 on: January 29, 2016, 12:30:33 »
Posted in another thread but I will repost here. If the predictions are even half accurate, the United States holds the high cards and can act as the swing producer in reaction to oil prices and demand. We know that US foundations have spent hundreds of millions of dollars trying to cripple the Canadian oil industry, but fast moving American producers reacting rapidly to market signals may be even worse for *us* in terms of establishing a national energy infrastructure. Who will want to invest (as Chris Pook noted) $39 billion in pipelines if the cost isn't going to be amortized through the price of the oil flowing through?

http://nextbigfuture.com/2016/01/technological-progress-in-big-data.html

Quote
Technological progress in big data analytics could create Shale 2.0 and bring US oil costs to $5-20 per barrel
 
The Oil-price collapse was caused by the astonishing, unexpected growth in U.S. shale output, responsible for three-fourths of new global oil supply since 2008. And as lower prices roil operators and investors, the shale skeptics’ case may seem vindicated. But their history is false: the shale revolution, “Shale 1.0,” was sparked not by high prices—it began when prices were at today’s low levels—but by the invention of new technologies. Now, the skeptics’ forecasts are likely to be as flawed as their history.

The information here is from a paper called "Shale 2.0: Technology and the Coming Big-Data Revolution in America's Shale Oil Fields" was released in May by Mark P. Mills, senior fellow for the Manhattan Institute and faculty fellow at Northwestern's McCormick School of Engineering and Applied Sciences
 
Technological progress, particularly in big-data analytics, has the U.S. shale industry poised for another, longer boom, a “Shale 2.0.”
 
We’re not at the end of this shale era, we’re at the very beginning.
 
The shale industry is unlike any other conventional hydrocarbon or alternative energy sector, in that it shares a growth trajectory far more similar to that of Silicon Valley’s tech firms. In less than a decade, U.S. shale oil revenues have soared, from nearly zero to more than $70 billion annually (even after accounting for the recent price plunge). Such growth is 600 percent greater than that experienced by America’s heavily subsidized solar industry over the same period
 
The transition to Shale 2.0 will take the following steps:
 
1. Oil from Shale 1.0 will be sold from the oversupply currently filling up storage tanks.
 2. More oil will be unleashed from the surplus of shale wells already drilled but not in production.
 3. Companies will “high-grade” shale assets, replacing older techniques with the newest, most productive technologies
 in the richest parts of the fields.
 4. As the shale industry begins to embrace big-data analytics, Shale 2.0 begins.

Shale companies now produce more oil with two rigs than they did just a few years ago with three rigs, sometimes even spending less overall. At $55 per barrel, at least one of the big players in the Texas Eagle Ford shale reports a 70 percent financial rate of return. If world prices rise , to $65 per barrel, some of the more efficient shale oil operators today would enjoy a higher rate of return than when oil stood at $95 per barrel in 2012.
 
The “walking rig” is one technological advance that has contributed greatly to gains in rig productivity. Rather than drill a single well from a well-pad, a walking rig can move around the pad, drilling multiple wells (sometimes dozens)

Sand used per well has risen, from 5 million to 15 million pounds, on average; the additional sand adds 2 percent to completion costs but boosts output by 40 percent.
 
Even more oil supply is now, de facto, being stored underground. As noted, production begins with the distinct second stage of well construction. Once a shale site is mapped and long horizontal wells completed, operators can delay the expensive step of fracking. Since the latter constitutes 50–60 percent of total costs, significant spending can be deferred with no loss of the core asset. The oil is simply left stored, in situ, until markets and prices make retrieval more attractive.
 
In January 2016, there are probably over 5000 wells awaiting completion.
 
It takes only a few months to complete a well, such wells, once completed, could swiftly add 2–3 million barrels per day to U.S. supply.
 
Incremental and dramatic improvements will continue in all aspects of the many technologies used in shale production: logistics, planning, seismic imaging, well-spacing, fluid and sand handling, chemistry, drilling speed, pumping efficiency, instrumentation, sensors, and high-power lasers. Shale fields will increasingly be developed using advanced automation, mobile computing, robotics, and industrial drones. At present, barely 10 percent of projects use fully automated drilling and pressure-control systems, for example.
 
Big Data can make oil fracking 4 times more efficient
 
Many companies are keeping their big-data projects proprietary, some information is publicly available. Halliburton reports that its analytic tools achieved a 40 percent reduction in the cost of delivering a barrel of oil. Baker Hughes says that analytics have helped it double output in older wells.
 
At present, each long horizontal well is typically stimulated in 24–36 stages, with, on average, only one-fourth to one-third of those stages productive. At present, in other words, about 20 percent of stages generate 80 percent of output.
 
The current state of stimulation technology means that, on average, at least 300–400 percent more oil is not extracted. Bringing analytics to bear on the complexities of shale geology, geophysics, stimulation, and operations to optimize the production process would potentially double the number of effective stages—thereby doubling output per well and cutting the cost of oil in half.
 
SOURCES - Shale 2.0: Technology and the Coming Big-Data Revolution in America's Shale Oil Fields by Mark P. Mills
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Online Chris Pook

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Re: $60 / Barrel by year end
« Reply #59 on: February 03, 2016, 01:07:08 »
Quote
BP expects to emerge from the oil market collapse by the end of 2016 even as the severe downturn in the oil market has left the energy giant nursing its worst annual loss in at least 20 years.

In 2015, the oil major posted an annual loss of $5.2bn, compared to the $8.1bn profit the oil major recorded in the previous year, and will be forced to slash thousands of jobs on top of those already announced.

The worse than expected financial results drove a share price sell off of over 8pc on Tuesday, driving BP's stock to levels almost 25pc lower on the year at 334 pence per share.

But chief executive Bob Dudley said the market will begin to "rebalance" by third or fourth quarter to allow oil prices to correct to levels between $50-$60 per barrel by the end of the year.

http://www.telegraph.co.uk/finance/oilprices/12135351/BP-looks-ahead-to-60-oil-after-5.2bn-annual-loss.html

Over, Under, Around or Through.
Anticipating the triumph of Thomas Reid.

"One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.”  - James Lovelock

Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others. [Ambrose Bierce, 1911]

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Re: $60 / Barrel by year end
« Reply #60 on: February 09, 2016, 20:51:31 »
http://business.financialpost.com/news/energy/as-politicians-gloat-about-climate-leadership-saudi-arabias-oil-is-dumped-in-canada?__lsa=226b-502a




Quote
As politicians gloat about climate ‘leadership,’ Saudi Arabia’s oil is dumped in Canada

Claudia Cattaneo | February 9, 2016 | Last Updated: Feb 9 5:54 PM ET

As federal and provincial politicians pat themselves on the back for their climate change ‘leadership,’ and pipeline opponents gloat about stalling construction of new Canadian pipelines, tanker-loads of foreign oil are delivered regularly to Eastern Canadian refineries, including increasing volumes from Saudi Arabia.

That’s right. Saudia Arabia, the oil-rich kingdom that is waging a brutal price war to shore up its market share and devastating Canada’s oil and gas sector in the process, dumped an average of 84,017 barrels a day of its cheap oil in New Brunswick’s Irving Oil Ltd. refinery in 2015, according to data compiled by the National Energy Board (NEB). That’s up from 63,046 b/d on average in 2012.

Overall, refiners in Quebec, Ontario, Newfoundland and New Brunswick imported about 650,000 barrels a day from foreign producers in 2015. In addition to Saudi Arabia, the oil came from the United States, Algeria, Angola, Nigeria, because there is insufficient pipeline capacity to import it from Western Canada, which produces far more oil than it needs.

The reversal of Enbridge Inc.’s Line 9, which is finally up and running after much opposition and moves up to 240,000 b/d of Western Canadian oil to Montreal, means oil imports will drop this year — but not likely from Saudi Arabia.

Wouldn’t it be nice if refineries in our own country took this oil rather than foreign oil?
The Irving refinery, Canada’s largest, says on its website it has a long-term supplier partnership with the Saudis. The company is a big supporter of TransCanada Corp.’s proposed Energy East pipeline from Alberta to New Brunswick, but until it’s done, it has a 350,000 b/d refinery to keep in business. Irving Oil did not respond to a request for comment.

The Saudi imports alone are equivalent to the daily production of a mid-sized producer such as Calgary-based Penn West Exploration Ltd., one of scores of Canadian companies that are struggling to remain solvent after slashing jobs and budgets to survive the Saudi-instigated oil price collapse.

Where is the political outrage over oil imports from rogue nations with inferior environmental records and deplorable behaviours toward women, dissidents and minorities? Where are the beefed up regulatory reviews of Saudi Arabia’s climate change impacts, or their dumping practices? Why is Canada so consumed with scrubbing its oil clean while oil from foreign sources flows into the gasoline tanks of Eastern Canadians free of scrutiny?

“If we choose to import oil from Saudi Arabia … shouldn’t we estimate the total GHG (greenhouse gas emission) impact of Saudi Arabian oil, which must include the military footprint of safeguarding that oil in the midst of a perpetual war zone?” asks Terry Etam in a column for the BOE Report, an industry online trade publication. “Could someone please show the calculation for how much GHG is emitted by a fighter jet launching air strikes to irritate neighbours, including the chaotic aftermath? What are the CO2 emissions of torched oil wells that will take months to put out? How much GHG is emitted by tanks blowing things up?”

Meanwhile, refineries in Quebec — where mayors led by Montreal’s Denis Coderre are fighting Energy East — are relying heavily on imports from the United States, a lot coming on oil trains, even as President Barack Obama killed the Keystone XL pipeline to frustrate imports of “dirty” Canadian oil.

“If recent history is any indication, like 2015, we will potentially be losing over 500,000 b/d of product from Western Canada due to shut-ins given the price levels,” said Tim Pickering, president of Calgary-based commodities trading firm Auspice Capital Advisors. “This will likely be exacerbated to at least 600,000 b/d by capital expenditure cut-backs. Wouldn’t it be nice if refineries in our own country took this oil rather than foreign oil? It would potentially tighten up the entire North American supply/demand picture.”

Yet the main preoccupation of political leaders like Liberal Prime Minister Justin Trudeau is to tighten the screws of  regulatory reviews of Canadian pipeline projects, by looking at their climate change impacts and expanding consultations, even if it means keeping Canada’s already highly regulated oil in the ground and buying foreign oil to meet demand.

“We are going to say no, we don’t like our oil, we are going to buy oil instead from these countries and we are going to fund these kinds of international behaviors … and that’s OK because we feel better in our conscience,” said Gaetan Caron, a former National Energy Board chairman who is now an executive fellow at the School of Public Policy at the University of Calgary and questions the priority.

It’s come to this because of pressure of groups such as the Sierra Club, which in a recent statement took credit for rallying Quebec mayors against Energy East. “When the Montreal Urban Community … announced its opposition to TransCanada Corporation’s controversial Energy East pipeline yesterday, nearly two dozen hard-working volunteers with Sierra Club Canada’s Quebec Chapter took a victory lap,” the group said.

Or because it’s an expedient way to build political capital or to show Canada is making progress on its new climate commitments to the international community or because reducing greenhouse gas emissions fairly is a lot harder than picking on pipelines. Less hypocrisy and more respect for the needs of ordinary Canadians would be nice once in a while.

ccattaneo@nationalpost.com

twitter.com/cattaneooutwest

I am supposed to comment under the fair dealings section of the the copyright act.  I offer none.  The article stands on its own merits.
Over, Under, Around or Through.
Anticipating the triumph of Thomas Reid.

"One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.”  - James Lovelock

Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others. [Ambrose Bierce, 1911]

Offline jollyjacktar

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Re: $60 / Barrel by year end
« Reply #61 on: February 09, 2016, 21:57:06 »
I'll bite.  As far as I'm concerned, buying SA oil isn't much better than buying Daesh oil.  That we're buying from those who would destroy us, because we're forced to by special interest groups who won't support an eastern pipeline, is disgusting.

Online Chris Pook

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Re: $60 / Barrel by year end
« Reply #62 on: February 09, 2016, 22:09:06 »
The sell us oil.  We sell them LAVs.  So the cars in eastern Canada are fuelled by Saudi LAVs
Over, Under, Around or Through.
Anticipating the triumph of Thomas Reid.

"One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.”  - James Lovelock

Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others. [Ambrose Bierce, 1911]

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Re: $60 / Barrel by year end
« Reply #63 on: February 09, 2016, 22:13:46 »
The sell us oil.  We sell them LAVs.  So the cars in eastern Canada are fuelled by Saudi LAVs

I think I'd rather have the LAV on my commute.
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Re: $60 / Barrel by year end
« Reply #64 on: February 10, 2016, 04:28:43 »
While Canadians continue to hamstring each other, the US shale oil drillers learn to continue to be profitable even in today's environment. And the practice of "fracklogging" makes responding to these market swings faster than ever:

http://www.the-american-interest.com/2016/02/04/lone-star-shale-producers-defy-opec/

Quote
Lone Star Shale Producers Defy OPEC

For a state that prides itself on being “bigger” in every sense of the word, Texas is managing to handle smaller oil profit margins awfully well, as a number of producers in the state’s two shale basins are keeping output up despite plunging prices. Bloomberg reports:

A handful of shale patches in [Texas], which would be the world’s sixth-largest oil producer if it were a country, are profitable with crude below $30 a barrel, according to an analysis by Bloomberg Intelligence. In the Eagle Ford’s DeWitt County, which produced more than 100,000 barrels a day in November, the average well can be profitable with U.S. benchmark crude at $22.52 a barrel, $4 below the lowest level this year. […]

“It may be harder to kill many U.S. E&Ps than analysts originally thought,” Bloomberg Intelligence analyst William Foiles said in the presentation. “The wide range of break-evens undermines efforts to come up with a single threshold for U.S. shale producers.”

And even as some producers find ways to turn a profit with today’s profits, many in the industry that have seen their margins erased are nevertheless still busy pursuing a forward-looking strategy: drilling but not yet fracking wells. This approach essentially lines up projects to bring online the minute prices rise high enough to justify them. This so-called “fracklog” is a widespread phenomenon, and it’s growing. For Saudi Arabia and the rest of the world’s petrostates, that’s a terrifying prospect, because it means what if and when we see the global glut erased and prices start trending back upwards, these new American supplies will flood the market and bring those prices right back down again.

And while producers amass this fracklog, plenty of companies are innovating ways to keep output up despite the fact that America’s oil benchmark is currently lingering below $32 per barrel. The shale boom isn’t done yet.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline Thucydides

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Re: $60 / Barrel by year end
« Reply #65 on: February 11, 2016, 21:45:43 »
More on how oilshale fracking has turned the international situation on its head. Interesting prediction on what price points will bring US shale production roaring back:

http://www.manhattan-institute.org/html/russias-big-worry-not-what-pentagon-thinks-what-shale-frackers-will-do-oil-prices-8487.html

Quote
Russia's Big Worry Is Not What the Pentagon Thinks but What Shale Frackers Will Do to Oil Prices
By Mark P. Mills,    
Forbes,  February 4, 2016

Energy & Environment: Geopolitics

Secretary of Defense Ashton Carter ruffled feathers this week when, in a February 2nd speech at the Economic Club of Washington D.C., he demoted ISIS and terrorism, to the bottom of a list of key threats to America’s national security. At the top of the list of “five evolving challenges”? Russia.

The entire geopolitical landscape is tilted by the prospect of oil prices staying low for a long time and draining money away from oligarchs and meddlers that have interests often antithetical to America’s.
 
Right now, though, odds are that Vladimir Putin is more worried about what oilmen like Harold Hamm are thinking than what’s on the SecDef’s mind. Hamm, founder and CEO of Continental Resources, is one of the more outspoken amongst the multitude of shale pioneers who are collectively responsible for the global oil glut — and the consequent price collapse.

We can see what specifically must worry Putin in a new must-read interview with Hamm (courtesy of Christopher Helman at Forbes). Hamm, referencing the fact that American shale producers have in the past half-dozen years nearly doubled America’s oil output, says: “We can double it again.” If Hamm is correct, then the shale fields alone—never mind the rest of America’s onshore and offshore production—would be producing more oil than Russia, and the world markets would again be in oversupply.

That oil is a vital global commodity is without dispute. It is central to global trade and transportation with simply no viable alternative available at any price any time in the foreseeable future. The biggest wildcard in geopolitics right now? The future price of a barrel. That will determine not just how fast and how much more oil will come from America’s shale, but also the future profits for every global producer. And of course profits from oil sales fuel the domestic and extra-territorial ambitions of the world’s petrostates.

For Russia, almost three-fourths of all export revenues and over half its national budget comes from selling oil & gas. The problem is that, according to the World Bank, Russia needs oil at $100 per barrel to balance its domestic budget and fund its military and foreign ambitions. It’s expensive to buy modern weapons, including the missiles Russia has deployed across the NATO frontier. And it’s expensive to meddle in foreign nations whether by deploying troops in the Ukraine and Syria, or funneling “gray” money to bad actors from Africa to South America.

Russia is not alone. With only a couple of exceptions, OPEC’s members all need for oil to sell anywhere from $80 to $150 per barrel to support their domestic and foreign spending. Iran is betting on its future growth coming from oil exports. And ISIS, as has been widely reported, funds its fighters and terrorists with sales from captured oil fields.

With only a couple of exceptions, OPEC’s members all need for oil to sell anywhere from $80 to $150 per barrel to support their domestic and foreign spending.
 
Now the entire geopolitical landscape is tilted by the prospect of oil prices staying low for a long time and draining money away from oligarchs and meddlers that have interests often antithetical to America’s. But in due course prices will rebound. Oil is, after all, a cyclical commodity.

The issue of how long prices stay low is of urgent relevance to private-sector companies that are trying to balance the books and ride out the bottom of the cycle. But the rub for Russia, and OPEC, is that when prices do creep back up, they will unleash another American gusher.

The key question for nation-state oil exporters like Russia: What price will cause the Harold Hamms of America to rush back into drilling and unleash a Shale 2.0 boom? Regardless of the belt-tightening, bankruptcies and consolidations rolling through the U.S. shale ecosystem, the physical resources, infrastructure, experience and intellectual property don’t evaporate, though they may end up with new owners.

Some analysts believe that once prices move north of $40 a barrel the shale resurgence will start; others think it will take at least $50 to make it happen. No one disputes that $70 would feel like Mardi Gras time again from North Dakota and Colorado, to Oklahoma and Texas. The futures market, which reflects today’s trader and investor sentiments, doesn’t foresee $50 for several years yet. That’s a very big problem for Russia and OPEC because even $50 to $70 is a long way below $100.

The minute that private sector investors and oil companies are convinced that oil prices are on the way towards just $50 or so, they will unleash hundreds of billions of dollars in investment capital now standing idle. There is every reason to believe that renewed drilling will lead to production growing at least as fast as the astonishing pace of the past half-decade. It is worth remembering that the shale revolution began when oil was less than $50 per barrel, and employed technologies far less efficient than those now available.

The new world for oil looks very different from the past, with geopolitical implications yet to be felt. It is a world in which oil stays cheap, in which price spikes are embraced and then crushed by high-velocity increases in shale production, and one in which new supply increasingly comes from ever-improving technology deployed by thousands of entrepreneurs making high-velocity decisions on American soil.

The minute that private sector investors and oil companies are convinced that oil prices are on the way towards just $50 or so, they will unleash hundreds of billions of dollars in investment capital now standing idle.
 
Putin, and leaders in other similar petrostates, doubtless understand the new dynamic.   Like so many other aspects of geopolitics though, the outcomes are not easily predicted. Although the United States benefits in many ways, unintended and unpleasant consequences will doubtless emerge. All of this argues for a sober assessment, not one based on wishful thinking about some fictional future where oil is less important; but one reflecting an understanding of the new landscape by analysts in the State and Defense Departments, intelligence agencies, and not least Congress.

Energy policy in recent years has been over-focused on finding alternatives to oil, instead of dealing with the realities of an increasingly dangerous world. For an excellent overview of today’s geopolitical complexities, and why they matter so much, I recommend “Oil and World Power,” (published in the latest The New Atlantis magazine), an essay from Lee Lane, a visiting fellow at the Hudson Institute. While Lane and I may disagree on just how quickly and expansively Shale 2.0 will happen (though I’d put my money on Harold Hamm’s view), we are on the same page when he suggests a “need to develop a more realistic concept of U.S. national interest.” He is in good company: we have recently heard similar admonitions from former Defense Secretary Leon Panetta and former Secretary of State Henry Kissinger.

Following Secretary Ashton’s rhetorical call to arms, we now have the New York Times editorial board agreeing with the SecDef that “deterring Russia is essential.” Perhaps the Times in calling for alternatives to “big wars” and “costly weapons” in dealing with our adversaries, might come to appreciate that America’s new petroleum power presents a once-in-a-lifetime opportunity.

This piece originally appeared in Forbes
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

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Re: $60 / Barrel by year end
« Reply #66 on: February 12, 2016, 10:27:13 »
Russia is closer to Europe which reduces cost. Putin would be well advised to streamline the oil & gas exploitation and export industry to compete and focus on the near markets.

I do like this though and might bring it up

“If we choose to import oil from Saudi Arabia … shouldn’t we estimate the total GHG (greenhouse gas emission) impact of Saudi Arabian oil, which must include the military footprint of safeguarding that oil in the midst of a perpetual war zone?” asks Terry Etam in a column for the BOE Report, an industry online trade publication. “Could someone please show the calculation for how much GHG is emitted by a fighter jet launching air strikes to irritate neighbours, including the chaotic aftermath? What are the CO2 emissions of torched oil wells that will take months to put out? How much GHG is emitted by tanks blowing things up?”


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Re: $60 / Barrel by year end
« Reply #67 on: February 16, 2016, 00:51:41 »
An interesting commentary from Montreal in the Calgary sun.  It stands in counter-point to Denis Coderre's vapourings and validates OGBD's contention that Quebecer's are a whole lot more sympathetic to Oil. Western Canada and Pipelines than the mayor of Montreal.

Quote
Anyone would be forgiven for thinking that Quebecers are all opposed to Western Canadian crude, and to the infrastructure required to carry it to Quebec and the Atlantic. After all, our duly elected representatives, both at the provincial level and at the municipal level, seem to be falling over each other lately to speak out against oil and pipelines.

The truth of the matter, though, according to a Leger poll commissioned by my organization, is that 59% of Quebecers think it is preferable for the oil imported from outside the province to come from Western Canada, versus a total of just 13% who think it preferable that we import it from other countries (and another 28% who either had no opinion or refused to answer).

That’s pretty much a slam dunk. Indeed, Quebec doesn’t produce any oil to speak of at the moment, but since we use plenty of it—and will continue to do so for the foreseeable future—it has to come from somewhere. Most Quebecers who have an opinion on the matter think it makes a lot of sense to get it from Western Canada.

As for how we should get it here, again, Quebecers’ opinions diverge from those expressed by many prominent politicians. Fully 41% consider pipelines to be the safest means to transport oil, far ahead of those who think that trucks (14%), ships (10%), or trains (9%) are the safest.

Quebecers are also much more positive than one might imagine about developing our own oil resources. Over twice as many (54%) think the province of Quebec should exploit the oil resources that exist here, versus those (23%) who think we should continue importing all of the oil we use from outside our borders.

Of particular interest is the fact that those who identify with the province’s Liberal Party, which is currently in power, are even more favourable to oil and pipelines than the average Quebecer: 75% think it’s better for the oil imported from outside Quebec to come from Western Canada rather than from someplace else in the world, and 56% consider pipelines the safest means of getting it here. As for developing Quebec’s own resources, those who identify with the Liberal Party are about as favourable as the average at 57%.

Quebec Premier Philippe Couillard may worry publicly about the “savaging” of the natural environment of Anticosti Island, where significant deposits of recoverable oil are likely to be found. Montreal Mayor Denis Coderre may get into a nasty war of words while joining some of his counterparts in opposing the Energy East Pipeline, to the point of insulting Albertans by suggesting, as he did, that they think The Flintstones is a documentary.

But Quebecers, by and large, are not on board with these negative messages. We want our oil to be developed, and we want Western Canadian oil to flow here, preferably by pipeline. I do hope that, going forward, Quebecers’ actual opinions regarding public policy choices on these matters (as opposed to those of the loudest pressure groups) will be taken into account.

- Kelly-Gagnon is President and CEO of the Montreal Economic Institute (www.iedm.org)

http://www.calgarysun.com/2016/02/15/quebecers-say-yes-pipelines-and-alberta-oil

Just as a reminder



The CTV headline on the night was "Election 2015: Quebec goes red"

Except for those parts that didnt't.

Montreal is not Quebec.
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Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others. [Ambrose Bierce, 1911]

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Re: $60 / Barrel by year end
« Reply #68 on: February 16, 2016, 07:49:53 »
Except greater Montreal has a larger population than the maritime provinces combined.  Your map shows geography, not population.  It's like comparing Fort McMurray-Cold Lake to all of Edmonton and Calgary combined.

Or are you suggesting that parliament should allocate votes based on square kilometres instead of population?
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Re: $60 / Barrel by year end
« Reply #69 on: February 16, 2016, 08:47:40 »
Or are you suggesting that parliament should allocate votes based on square kilometres instead of population?

That's called the Senate.
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Re: $60 / Barrel by year end
« Reply #70 on: February 16, 2016, 08:55:50 »
That's called the Senate.

Canada: 9,984,670 sq km
PEI: 5,660 sq km (not counting Kanata.  Sorry, Mike Duffy)

PEI: 4 Senators

Therefore: 9,984,670 / 5,660 x 4 = 7056 Senators.

Not quite there yet...
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Re: $60 / Barrel by year end
« Reply #71 on: February 16, 2016, 09:53:32 »
DAP - same thing applies to every province but PEI - the urban does not represent the rural.  And just like Calgary doesn't represent Edmonton, Montreal does not represent la Ville de Quebec.

To be honest I personally have very little time for the dwellers of Montreal, Toronto or Vancouver.  Calgary and Edmonton I suppose get a pass because I still remember them when they were less than half the size they are today and reminded more of London, Ont as livable places.

And lets not go to the number of Senators.

The point is that Coderre, the beast of the day (he is not an isolated phenomenon) is playing for the cameras.  And that is a lousy way to define policy.  Unfortunately it seems to be the way of the world.

PS - the 1911 borders of Quebec and Ontario? Effectively they allocated to Montreal and Toronto their very own colonies.  And they treat them as such.
Over, Under, Around or Through.
Anticipating the triumph of Thomas Reid.

"One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.”  - James Lovelock

Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others. [Ambrose Bierce, 1911]

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Re: $60 / Barrel by year end
« Reply #72 on: February 16, 2016, 10:00:12 »
PS - the 1911 borders of Quebec and Ontario? Effectively they allocated to Montreal and Toronto their very own colonies.  And they treat them as such.
That.  Right.  There.
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Re: $60 / Barrel by year end
« Reply #73 on: February 16, 2016, 10:06:22 »
DAP - same thing applies to every province but PEI - the urban does not represent the rural.  And just like Calgary doesn't represent Edmonton, Montreal does not represent la Ville de Quebec.

To be honest I personally have very little time for the dwellers of Montreal, Toronto or Vancouver.  Calgary and Edmonton I suppose get a pass because I still remember them when they were less than half the size they are today and reminded more of London, Ont as livable places.

And lets not go to the number of Senators.

The point is that Coderre, the beast of the day (he is not an isolated phenomenon) is playing for the cameras.  And that is a lousy way to define policy.  Unfortunately it seems to be the way of the world.

PS - the 1911 borders of Quebec and Ontario? Effectively they allocated to Montreal and Toronto their very own colonies.  And they treat them as such.

Well, the Toronto, Montreal and Vancouver metropolitain areas represent roughly 1/3 of Canada's population.  Yet have less power than any provincial government - so the farce that is the petty, squabbling, nepotistic and dying provinces of the Maritimes each have greater power than any of those cities.  So mayors are forced into other means to try to get their voices heard.

And surely you're not suggesting that some votes should be more than others? 
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Re: $60 / Barrel by year end
« Reply #74 on: February 16, 2016, 10:19:15 »
In my world Montreal, Toronto and Vancouver would be provinces in their own right.  Their needs are not the needs of Temiscamingue, Timmins and Trail.  And Canada is more that just three dots on the map.  It is all the territory that connects them and feeds them and buffers them.
Over, Under, Around or Through.
Anticipating the triumph of Thomas Reid.

"One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.”  - James Lovelock

Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others. [Ambrose Bierce, 1911]