[nik-]

Originally Posted by DiracSpike

I think you're right.

The true recovery in jobs and economic activity, to whatever level that ends up being, is going to have to wait for the completion of Line 3 expansion and TMX, so basically start of year 2023 (hopefully). If that overlaps with strong pricing it will be interesting to see what happens. I don't believe we will ever see the commissioning of a greenfield oil sands mine in this province ever again, so the massive influx of workers and capital associated with that period up to 2014ish won't come back. At best you would maybe see some bolt on capacity additions, like for example the Teck lease that was rejected last year is sitting right next to CNRL's Horizon mine, maybe they would purchase that lease and then route traffic to their existing infrastructure.

I do think though there is a huge growth opportunity for SAGD projects (thermal oil, no mining required). These projects have a lower cost basis than oil sands mines, but still require a lot of permanent infrastructure that would necessitate a good amount of fabrication work and extra labor that represents a nice capital influx to alberta. They're lower cost, lower impact, and less of an environmental flashpoint than oil sands mines which makes me think companies would be willing to invest new money in them while not doing so for mining. Also the completion of export pipelines and narrowing of the heavy oil differential gives them a huge asymmetric boost over possible mining projects because SAGD produces regular heavy oil and mining produces SCO. There's no differential on SCO, it sells for WTI basically. But a narrowing of the diff gives heavy oil a guaranteed per barrel price boost, plus greater egress certainty, plus more available volume. So I think we'd have a lot of projects that should theoretically get capital, hopefully that comes to pass and we can get a nice economic boost besides just improvement in pricing.

Maintaining flat production and improving steam to oil will likely be the "projects" in the SAGD realm I'd guess.