Quote:
Originally Posted by blender
I think there is no doubt that there has been mismanagement at both the political and corporate level.
As far as public opposition to O&G development goes, it is real and it is sometimes vehement. Even if it is misguided, and some of it certainly is, in a country like Canada policy makers need to walk the line. We can't just force pipelines through aboriginal territories or constituencies that are against them.
I have a close friend who is a senior executive with a major energy company and I know for a fact that they are working towards diversification, finding ways to maximize profits, innovation, positioning for the future. Things have changed.
The leaders are moving forward as best they can.
I do feel for all those affected by all the layoffs. It is far from good. I do believe that we will come out better for it on the other side, but it is obviously a difficult transition.
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I hate being a victim, but the reality is Alberta and Canada in general got victimized pretty hard by a very smart, very well-funded, very intricate obstruction campaign that above all was timed perfectly. Up until 2008, besides the existing TransMountain line to Vancouver that allows us to load a trickle of oil onto tankers, essentially all of our export pipeline capacity ran to one country, the US. Not only one country, but one market in one country, the US midwest. These pipelines were all built in the 50s and 60s and served us adequately for a long time but now you had the Midwest declining in importance with the US Gulf Coast and and east Asia now being the most lucrative and complex refining markets. Also, for the first time since the 50's and 60s our oil production was about to explode upwards thanks to the advent of oil sands mining and SAGD projects. In the face of a changing world energy dynamic with new markets set to be the most lucrative and growing, along with a physical need for more pipeline space, Keystone to the Gulf and TMX and northern gateway to the Pacific were proposed. It was probably the most critical time for expanding capacity since oil was first discovered here and it was the perfect time for these obstructionist groups to strike and inflict maximum damage. Which is what they did. Luckily we were able to build the first stage of keystone to access Patoka Illinois and the Gulf coast in 2010 before these groups really got ramped up, but their consistent efforts and a completely arbitrary and damaging revocation by everyone's favorite President Obama has kept the finishing piece tied up. Northern Gateway was killed and TMX has been delayed in part by these same groups. Here we are 10 years later and none of these projects have been completed, and the resulting takewaway limbo has been extremely damaging to our industry, which was by design.
To the best of my knowledge, no other jurisdiction on earth has pipeline constraints like Alberta does. In terms of dysfunctional oil basins it's us, Venezuela due to their economic collapse, and Libya due to their civil war. All of our competitors, for this entire last decade despite low prices, have basically been growing production, building pipelines if needed, and pumping away and selling. The US (obama built lots of needed pipes in texas and oklahoma, he just felt like ####ing us over), Russia, Saudi, UAE, Brazil, Norway, everyone kept going gangbusters. In a world of mobile capital, decision makers in London and New York and Toronto justifiably looked at us and laughed. Why would you put a dollar at risk producing oil that might not even make it into an export pipe in Canada if you could invest it almost literally anywhere else. And that's what happened, look at all the international companies that pulled up stakes and peaced out in the last decade of being capped out pipeline wise.
So in short, if by some miracle of God we can get TMX and KXL built in the next two years we'll add 1.4 million barrels/d of open export space which is ~30% of our existing production. It'll also allow Alberta to be able to diversify down our dependence on one main US market from 50% to 25%. In that case we will be well positioned to continue making money on energy for decades. If we're capped out and tied to one declining market in the US midwest....we won't.