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  • Oil majors see low prices persisting for months, perhaps years  [View news story]
    V recovery is out of the cards unless some major geo-political event takes place. The distortion in markets created by central banks in 2009 and onward created mis-allocations of capital and a flight to hard assets - not necessarily a supply/demand imbalance.

    The point is everyone loves to hate on oil, its the most important product to global well being we have, economies cannot run without and the earth supports approximately 5 billion too many people without this cheap energy.

    We have a supply demand imbalance of approximately 1.5 million barrels per day (2%) copper/iron ore other commodities have worse supply/demand relationships and are less important to world economies because they mean nothing without cheap energy. Demand sits at 95.3 million barrels per day and supply at 96.8 million barrels per day. With zero investment (drilling) that 96.8 million barrels per day is 87.5 million barrels per day in one year.

    Its a cyclical commodity, when the price is high we drill too much, when the price is low we defer investment. We have over drilled and swing producers have over produced in a slowing demand environment (not a reduced demand environment).

    Demand in Q4 2016 (revised lower) is forecast to be 96.8 million barrels per day.

    Demand in 2020 expected to be +/-99.0 million barrels per day. The oil we have producing today (96.8 million barrels per day) will be +/-70 million barrels per day in 2020 using an 8% decline average. In the simplest terms 29 million barrels of oil per day needs to be found in the next 4 years alone.

    If you research new tight reservoirs declines are +/-30% in the first 3 months, 50% after 1 year and 10% per year after that, some vary but not long life reserves like old light oil reservoirs exploited in the latter half of last century (Ghawar etc.) - the easy low cost stuff has been found and exploited. If Saudi is so awash in oil why are they drilling heavy offshore oil plays? How much drilling is going on in OPEC countries right now? A fraction of what was happening one year ago, they are trying desperately to balance their budgets just like oil companies - they are simply opening wells up and accelerating declines by increasing production and depleting reserves from reservoirs already drilled.

    The oil that will replace that massive decline is not in US shale plays - its offshore and in the oilsands. Those projects are done at these prices - hence a low oil price will lead to a higher oil price due to lack of investment.
    Nov 10, 2015. 03:24 PM | 14 Likes Like |Link to Comment
  • Oil majors see low prices persisting for months, perhaps years  [View news story]
    Best cure for a low oil price is a low oil price. Stimulates demand and destroys investment. Some people actually think that when you drill a well it produces forever, good luck with that.

    The world is producing approximately 94 million barrels per day - each year we must find over 12 million barrels per day to keep production flat. The low hanging fruit is gone, the oil required to satiate demand and declines comes from ultra-deep offshore projects and heavy oil plays - these projects are not economical at $40 to $55/bbl.

    The shale plays in the USA have been a short term relief for the oil market in a time of slowing demand, it has created a false sense of security to oil markets. Access to high yield debt, investors tripping over themselves to hand money to wild-catters, drove production gains you won't see again anytime soon. The US was running 40% more rigs than they should have been, given reservoir dynamics and long run investment criteria.

    How come I can't find an engineer or a geologist in North America that says the US is sitting on all this oil that is cheaply extractable? Only the media and talking heads believe that.

    US oil production will be below 8.0 million barrels per day by the end of 2016 at current investment levels...cue the rally once the cats out of the bag.
    Nov 10, 2015. 11:32 AM | 20 Likes Like |Link to Comment
  • New technology could double output from new oil sands projects, exec says  [View news story]
    SAGD is no more pristine than any other conventional horizontal well project conducted anywhere in North America, it has a footprint and like any energy project it does have waste. It is not the scorched earth you portray in the original comment...that is mined bitumen, only 3% of the oil sands is surface mineable.

    You are correct it is very energy intensive. SAGD has a far better return than surface mined projects. Some operators are better than others, all are improving and have been for almost a decade. Cenovus, it is thought, has one of the best EROEI (energy return on energy invested) of its peer group, (Foster Creek, Christina Lake). Cenovus metrics indicate that 900,000 BTU's of energy are required to produce 5.8 million BTU's of oil. Some others are almost 4X higher at 3.3 million BTU's - to be fair though those are operators that are starting out with new projects and don't yet have the scale or experience of Cenovus. Those numbers were based on 2013 data - they are constantly improving the process.

    When you account for production, transport & refining Cenovus SAGD projects actually have a better ERORI than Nigerian Light and California Heavy crudes. Granted far poorer than Saudi crudes.

    I think the early estimates (2007-8 ish) of the brackish produced water used in the process for steam was only a recycle ratio of 50%, with improved technology that number is now close to 90%.

    The majority of fracking technology used on tight shale plays uses fresh water - not brackish produced water like in SAGD operations.

    I think existing SAGD production is sustainable at $20 to $30/bbl; new production to existing facilities where there is spare capacity is probably $40 to $50/bbl; new pads that require new facilities is probably in the order of $55 to $70 depending on location, operator and the process. Surface mining assets might not be viable until $100/bbl, those are done for some time and most operators are not and never were concentrating on that 3% portion - its all about SAGD.

    My apologies for my terse posts earlier, as an Albertan involved in this industry it bothers me that most people outside Alberta (yes also other Canadians) are misinformed about what oil sands production is mainly about. Those pictures of SAGD operations don't make for very good shock value in hollywood or with the tree huggers - they prefer to fly over the mined bitumen sites - because that helps there agenda.

    This 27,000 square mile area has about 100,000 permanent residents, most of which are only there for the work these projects provide, approximately 4 people per square mile. Texas is approximately 100 persons per square mile, running +/- 900 - 950 drilling rigs at its peak versus +/-40-50 drilling rigs in the wood buffalo region at its peak.

    This is a valuable resource, 166 Billion barrels of proven reserves, 3rd only to Venezuela and Saudi Arabia. It's being produced and developed in a regulated way and in an environmentally friendly manner. What's even better is that its on your door step, a friendly democratic nation, that isn't bound on your destruction and way of life.

    Please let common sense control the conversation and facts, a pipe line to the USA is in our mutual national interests - not one to China.

    Oct 1, 2015. 09:08 AM | Likes Like |Link to Comment
  • New technology could double output from new oil sands projects, exec says  [View news story]
    Here is some other good reading for you:

    3% of the Oilsands is surface mined; 97% will be produced by SAGD, again that is horizontal well bores not surface mining.

    We recycle 80 - 90 % of the water we use for steam, some operations like Devon Jackfish utilize saline produced water.

    The oilsands accounts for 8.7% of Canada's GHG emissions and 0.1% of global GHG. We are investing in massive Carbon Capture and Storage projects. We are regulated, probably a bit more stringently than Venezuela, Russia and Saudi Arabia wouldn't you agree?

    Canada contributes 1.48% of world CO2 emissions - the USA is 16.16% and the Arab World is 4.76%, Russia over 5%, China 24%
    Sep 24, 2015. 04:24 PM | 3 Likes Like |Link to Comment
  • New technology could double output from new oil sands projects, exec says  [View news story]
    Dear Moshe - looks similar to any coal strip mine operation in numerous places in North America, looks nicer than your open pit copper mines I've seen in the USA as well.

    Again you show your lack of education on the subject. SAGD is below ground production from horizontal wellbores, 50% of our production and growing at oil prices above $60/bbl.

    here is a link to what SAGD looks, and a good description of the process (which incidentally is what the Imperial article is all about - not mined bitumen)

    Here is a picture of a Conoco SAGD well pad and facility:

    Again if you care to get educated there are lots of ways to do it...not just Netflix and Hollywood Documentaries
    Sep 24, 2015. 03:43 PM | 3 Likes Like |Link to Comment
  • New technology could double output from new oil sands projects, exec says  [View news story]
    Please get educated.

    What environmental disaster? Do you understand what a SAGD well is - "tar sands" - its heavy oil, drilled using two well bores 1250 to 2000 feet below ground, one for steam and the other for production.

    No fracking required.

    The amount of fresh water your Eagleford, Bakken and Marcellus fields are draining from acquifers to Frack is not alarming at all to you is it? You feel thats technology - we have been fracking for 40 years...just because we now do it in horizontal wells in stages you call that technology? The advances in thermal SAGD production and technology have grown exponentially as compared to conventional stimulation techniques.

    Tar sands is a slang term for the strip mining deposits of bitumen that occur in the top 100 to 500 feet - dump trucks and excavators. These projects are done for some time, probably requires north of $90/bbl for new projects.

    SAGD operations which make up about 50% of Canadian heavy oil production is less carbon intensive than your Bakersfield production. No flaring and no where close to urban sprawl.

    You would think after an almost cataclysmic blowout in the gulf of mexico right on your front porch, that really did destroy the environment, people like you would stop spewing crap like this - nope - go drill your safe environmentally friendly ultra deep offshore wells in the arctic ocean and gulf of mexico.

    But what do you care about facts.

    Keep importing your well regulated and environmentally friendly crude from the middle east and venezuela.

    Don't worry, Imperial won't be doing this anytime soon, read the article its about 5 years away...if the price of oil is over $70
    Sep 23, 2015. 10:55 PM | 14 Likes Like |Link to Comment
  • Oil Production Is Falling Faster Than We Thought  [View article]
    The investment that has been required to increase US production 50% over the past years is unsustainable. High yield debt and companies drilling the poorer or low grade points in the basins. People desperate and clamoring for yield enabled poor management teams to drill for oil in the fringes chasing lower grade reservoirs.

    There is not a geologist/engineer in an oil company in North America that thinks the USA is sitting on a mountains of oil that can be economically extracted in a 50 to 70 dollar price range, though politicians and the media believe that like gospel.

    The Bakken wells, for example, have massive decline rates, over 40% per year on the good wells in the sweet spots. There is a lag, the good production numbers the US has been seeing the last 6 months is the result of running 2000 drilling rigs last year, that production has been coming on line over the last 6 to 8 months. Remove that flush production and add new oil based on 800 drilling rigs and you cannot sustain production levels.

    At the current drilling levels US production will be under 8.75 million barrels per day in January.

    The coming defaults on poorly run explorers will exacerbate the supply response when prices do recover, at $70/bbl US explorers will have less access to capital than the last cycle. There won't be 2000 drilling rigs working the USA for a long long time.

    The investment that will be required to maintain US production levels over 8.0 million barrels per day under long run conditions is huge.

    Sep 2, 2015. 12:12 PM | 5 Likes Like |Link to Comment
  • Q1 GDP revised down to -0.7%  [View news story]
    More importantly what do we do next? We have had recovery although it took a long time maybe understandable considering the type of trigger we had in 2008/9.

    Unprecedented monetary easing and ZIRP policy, we now seem to be treading water and rates are still zero. If we have a recession or another shock to the system what are the tools we have in our arsenal?

    As many of us warned over the past years they waited too long to normalize, no willingness to endure some short term pain.

    No bullets in the gun...
    May 29, 2015. 12:17 PM | 2 Likes Like |Link to Comment
  • Some traders take profits in oil  [View news story]
    The price of oil is off 35% since November, its found a range between $45 and $57, there are almost 1000 rigs less working today than one year ago, down +/-48%.

    There has definitely been a supply response in the North America, less investment/drilling, wells shut-in or not repaired/fracked due to poor economics. Production growth has stopped, potentially you might be seeing production decreases in the US in the coming months. Mission accomplished...

    Some OPEC members are calling for a production cut...being massively short here doesn't make much sense, just like being long here makes very little sense.

    It has found a range where its now being moved only by the dollar, everyone knows we are still building inventory, trading that news is irrelevant.
    Apr 14, 2015. 02:30 PM | Likes Like |Link to Comment
  • Crude oil inventory builds more than expected  [View news story]
    The recent weakening of the dollar has mitigated some of the downside for now. No news on storage or demand is going to move oil in any meaningful way in the short term...its about the dollar now. We are at a price point where rigs are being parked and that was the intention, now its a waiting game on dollar strength and oil production response.
    Mar 25, 2015. 10:46 AM | 3 Likes Like |Link to Comment
  • Crude oil inventory builds more than expected  [View news story]
    Everyone knew this was going to happen a few months ago, in November this contract was over $80/bbl - its off 40%
    Mar 25, 2015. 10:40 AM | 2 Likes Like |Link to Comment
  • Netanyahu declares victory in Israel  [View news story]
    Sweet...take that Obama
    Mar 17, 2015. 05:06 PM | 8 Likes Like |Link to Comment
  • Oil Supply Accelerating - Saudi Arabia Delivering On Its Promise?  [View article]
    We do have massive reserves the problem with our reserves is incremental production is many years away. Canada could be a high producer in 10 to 15 years if we have a pipeline in place by 2017/18. If you need 10 to 15 million barrels of oil to replace the declines and additional demand over the next 3 to 4 years its not coming from Canada or the Bakken in North Dakota. That type of production is only going to be found by exploiting offshore fields around the world - that is not being done at $45/bbl, you need a price of $70 to $80 to find the oil we will need in the next 3 to 4 years.

    My rigs operate in NE Alberta, very familiar with our challenges up here.

    Jan 27, 2015. 11:05 AM | 2 Likes Like |Link to Comment
  • Oil Supply Accelerating - Saudi Arabia Delivering On Its Promise?  [View article]
    Canadian Imports to the USA
    2008 - 2.5 million BPD
    2010 - 2.6 million BPD
    2012 - 2.9 million BPD
    2014 - 3.3 million BPD
    2015 - Estimated at 3.5 million BPD
    No Increase in imports from Canada?????

    Tar Like?
    WCS (Western Canadian Select) is 20.5 API, our heavy blended with light sweet and condensate, similar to your California Heavy, Venezuelas and the Mexican Maya crudes.

    Yes Canadian crudes are refined in the USA into Diesel and Gasoline - so are American Crudes as well as the Saudi and other crudes you import - why do you think its the Canadian crudes that are exported by your refineries - I suppose the Canadian products are in the tanks with the large Canadian flags or pictures of our igloos?
    Jan 27, 2015. 09:33 AM | 5 Likes Like |Link to Comment
  • Oil Supply Accelerating - Saudi Arabia Delivering On Its Promise?  [View article]
    Estimates vary on current consumption of anywhere between 90.5 to 91.5 MBOPD; IEA estimates 2015 consumption at 92.40 MBOPD.

    Current production is estimated at 92.20 MBOPD (Opec 36.0 & Non-Opec of 56.20 MBOPD)

    Mature field decline rates are anywhere between 6 to 10% per year; Decline rates on tighter shale oil plays in NA are approximately 30% in the first 3 months, then dropping to 15% over a year.

    Probably need to find/open up 8 to 9 MBOPD to replace declines and ensure production is flat. OPEC is rumored to have 2.0 MBOPD spare capacity.

    What people fail to realize is that the oil needed to replace declines and aid in growth demand won't come from tight plays in NA, that oil needs to be found deep offshore in prolific reservoirs that can't be exploited and drilled at $50 to $60 oil.

    This decline in oil and the subsequent decline in investment will lead to the next Oil shock in 18 months. By the time the flush production comes off all the wells drilled in 2014 by late 2015 and demand recovers slightly from low prices, the seed is sown for the next run over $100/barrel.

    For the most important non-renewable commodity in the world the supply imbalance is not huge, I can't believe all the doom and gloom. The Saudis have decided to let investment and normal depletion economics dictate the conversation instead of cutting production themselves as they have done for over 20 years.

    Soon the US media will realize they are not sitting on game changing reserves, just ask any geologist or engineer working these fields in NA and they will concur. The amount of investment required to keep production flat in North Dakota will shock most pundits.
    Jan 26, 2015. 04:31 PM | 17 Likes Like |Link to Comment