Official (Alberta) Oil Discussion Thread

[Azure]

Bill Gates, who is actually out there investing in energy companies both renewable and non-renewable thinks there is a lot of room for carbon capture like technologies that allow us to burn natural gas, oil and coal a lot cleaner.

Oil isn't going anywhere. I'm all for the big push into solar/wind, but its obviously coming at the expense of coal, and not oil/gas, and a lot of people don't realize that.

[heep223]

Oil isn't going anywhere in the short term, but I'm not so convinced that longer term the economics of the industry might not be completely different.

Fuel for cars and trucks account for between 50-60% of global oil consumption and as such widespread electrification of motor vehicles could have a profound impact on global oil demand. In that sense, renewables could eventually become a meaningful substitute for oil in this use segment if renewables are a meaningful contributor to grid power (or more likely, nat gas will take up the additional capacity). As a hypothetical, if half of all cars and trucks on the road were suddenly electric, that would conceptually decrease oil demand by 26M barrels.

That is obviously an extreme hyperbole, but that is massive.

Policy makers in Europe are giving serious consideration to banning the sale of internal combustion engines by 2025, by 2030, etc etc. The probability is that it won't happen, but it's possible. VW is making a huge push into the EV space along with other manufacturers.

Sometimes I think that in 50 years as demand for oil continues to shrink, and global demand is less than 50M b/d, we'll look back on this period of time and think "wow, I can't believe we didn't see this coming. It was so obvious." Other times I think that this is all just another flare-up of greenwashing, and that in 50 years we'll look at it as such, and the global economy continues to have increasing thirst for oil.

As always, it's impossible to predict. I try to think about it in probabilities and possibilities.

[Flash Walken]

There was once a time where Whaling was thriving industry and turned what were otherwise unremarkable towns into busy busy metropolis' of workers and capital:

In the mid-nineteenth century, New Bedford, Mass., was the center of the whaling universe and the richest city per capita in the United States -- if not in the world, according to one 1854 American newspaper. The US whaling industry grew by a factor of fourteen between 1816 and 1850. Still New Bedford swallowed half of America's whaling output by mid-century. Demand for New Bedford's haul came from all over the country. Sperm oil could lubricate fancy new machinery. Inferior whale oil could light up a room. Baleen, or whale cartilage, could hold together a corset.

The thesis of Leviathan, the ur-text of whaling economics, is that the source of our dominance in the 19th century will feel familiar to a 21st century audience: a triumph of productivity and technology. Leviathan uncovers countless examples of innovation, but I'll limit our list to four areas. First and most broadly, Americans sailed bigger and better ships (like the barque to the left) guided by smarter ocean cartography and more precise charts. Second, a series of tinkerings with harpoon technology led to the invention of the iron toggle harpoon, an icon of 19th-century whaling and the unofficial symbol of the city of New Bedford.

Third, innovations in winch technology made it easier to pull in or let out large sails, reducing the number of skilled workers needed to man a vessel. It would hardly be hyperbole to say that winch tinkerings practically made the book Moby Dick possible. Melville could realistically populate his book with shady, far-flung, ragtag characters precisely because the vessel's technology had become so easy to maneuver, even an unwashed cannibal could use it.

Fourth, whale captains were innovators in employee compensation. In the lay system, "every member of the ship's company from captain to cabin boy signed on, not for a wage or piece rate, but for a predetermined percentage of the value of the product returned," Lance E. Davis, Robert E. Gallman, Karin Gleiter write. Savvy captains of the whaling barques, not unlike some creative corporate boards today, were keen to aligning company interests.

'YE DAMNED WHALE'

The standard explanation for the decline of whaling in the second half of the century is a pat two-parter consisting of falling demand (from alternative sources for energy) and falling supply (from over-hunting). But according to Leviathan, the standard explanation is wrong.

To be sure, energy preferences had been flowing to another source of oil: petroleum. In 1859, the US produced no more than 2,000 barrels of the stuff a year. Forty years later, we were producing 2,000 barrels every 17 minutes.

But demand doesn't tell the whole story. In the middle of the 19th century, whale oil prices increased, which should have led to more production. But output never recovered after the 1850s even as whaling continued to grow around the world. Why did Americans give up?

The answer from Davis, Gallman, and Gleiter will also look familiar to a modern business audience: US workers got too darn expensive, and other countries stole our share of the whale business.

Thanks to the dry-land industrial revolution, "higher wages, higher opportunity costs of capital, and a plethora of entrepreneurial alternatives turned Americans toward the domestic economy," the authors write. Meanwhile, slower growth overseas made whaling more attractive to other countries. "Lower wages, lower opportunity costs of capital, and a lack of entrepreneurial alternatives pushed [people like the] Norwegians into exploiting the whale stocks," they continue.

Between the 1860s and the 1880s the wages of average US workers grew by a third, making us three times more expensive than your typical Norwegian seaman. Whales aren't national resources. They're supranational resources. They belong to whomever can hunt them most efficiently. With all the benefits of modern whaling technology and workers at a third the price, Norway and other countries snagged a greater share of the world's whales.

As the costs of whaling grew, capitalists funneled their cash into other domestic industries: notably railroads, oil, and steel. When New Bedford's whaling elite opened the city's first cotton mill and petroleum-refining plant, the harpoon had been firmly lodged inside the heart of American whaling. Ishmael complained famously, in the first paragraph of Moby Dick, of having "nothing particular to interest me on shore," so he struck out to earn a living wage at sea. In the second half of Melville's century, the industrial revolution lured young men without means to factories rather than the ocean. Capital beckoned the nation's Ishmaels to the machines, away from the watery parts of the world.

http://www.theatlantic.com/business/...-story/253355/

[Locke]

When it comes to cars:

- How do you plan on making tires?
- What will the body be constructed of?
- How would you paint them?
- What about the plastics in the interior?

Making them electric is a good start, but the process of building a car is still incredibly oil-intensive.

[PsYcNeT]

Originally Posted by Locke

When it comes to cars:

- How do you plan on making tires?
- What will the body be constructed of?
- How would you paint them?
- What about the plastics in the interior?

Making them electric is a good start, but the process of building a car is still incredibly oil-intensive.

Doesn't this kind of underscore the need to not overuse oil as a fuel source?

[Locke]

Originally Posted by PsYcNeT

Doesn't this kind of underscore the need to not overuse oil as a fuel source?

Sure, but it also underscores the fact that even if you're not using it for fuel its still needed and being used, the world isnt 'moving away from oil' its moving away from oil as a fuel source.

[Azure]

Given how anti-nuclear the world is right now, the more electric cars we have, the more non-nuclear power plants we will need. Can renewables keep up? Or do we need more natural gas plants?

[Enoch Root]

Originally Posted by Flash Walken

There was once a time where Whaling was thriving industry and turned what were otherwise unremarkable towns into busy busy metropolis' of workers and capital:


http://www.theatlantic.com/business/...-story/253355/

There was also a time when the population explosion was an absolute, unavoidable, we-have-gone-way-past-the-point-of-no-return, death sentence for humanity.

Just saying (and no, I am not arguing that climate change isn't real)

[OldDutch]

Originally Posted by Mr.Coffee

There's nothing wrong with renewables. If it means we are taking better care of the planet, bring it on! My career and livelihood is pretty sticky to oil and gas, and it's a pretty specific career path ive chosen. I think a lot of people, like me, if renewables just somehow jumped oil and gas as the primary energy mix miraculously sooner than expected, will manage just fine. Will get other jobs. It'll eventually work out.

I just don't see how it happens though. How do we use renewables for roads? Fertilizer? Petrochemicals? We use oil for lots of different things. Many of these things are just ignored when people talk renewables.

But but, if we block the pipelines it will happen, David Suzuki told me so! It's a fading industry, you can be the face of good in this war!

Sorry couldn't resist, I have a friend who is a zealot in his foundation. Talking to her gives me headaches, probably because I like to think and not emotionally react but I digress..

In all seriousness, this is a point I try and make as well. Heavy industry, the kind that provides us with Social Media, Amazon same day delivery, etc. You know the things enviro movement like to use daily wouldn't exist in petro free world. Neither would that restaurant you eat at. Fertilizer made from Natural Gas to grow food, Machinery to harvest, Semi-trucks to transport, roads to drive, the table and chairs. All use Oil.

So how is an environmentally conscious ignoramus like me going shame my friends in Alberta on Facebook, on my iPhone, while I bicycle to the hottest and most pretentious Filipino restaurant in Vancouver? What?!?

[Azure]

Farming is actually a great point to bring up. It isn't going electric anytime soon, and while a lot of technology advancements have been made with modern farm equipment, they are still very fuel inefficient. No way we can grow food for the world without oil related products.

[_Q_]

I don't think anyone has ever argued that we will never need oil. But as the world moves towards electrified transportation, demand for oil will drop off a cliff. Demand will still be there, but prices will be too low to be conducive of a robust Oil and Gas industry in North America.

I don't think that's happening just yet, but I think the next recovery in price will most likely be the last one before the big plunge.

[Enoch Root]

Originally Posted by _Q_

I don't think anyone has ever argued that we will never need oil. But as the world moves towards electrified transportation, demand for oil will drop off a cliff. Demand will still be there, but prices will be too low to be conducive of a robust Oil and Gas industry in North America.

I don't think that's happening just yet, but I think the next recovery in price will most likely be the last one before the big plunge.

I'll take that bet

[GGG]

Originally Posted by _Q_

I don't think anyone has ever argued that we will never need oil. But as the world moves towards electrified transportation, demand for oil will drop off a cliff. Demand will still be there, but prices will be too low to be conducive of a robust Oil and Gas industry in North America.

I don't think that's happening just yet, but I think the next recovery in price will most likely be the last one before the big plunge.

I think that this misses the concept of the marginal replacement barrel. For example we have likely hit Peak $40 oil. Meaning at $40 oil there is almost no oil in the world that can be economicly produced. So eventually even with demand only for chemicals and plastics you would have at least a $40 oil price.

Resivoirs continue to dwindle and it is unlikely demand drops faster than natural resivoir decline. This means we will never get into a situation of long term (5-10yr) over production that you would need to have a long term elimination of the NA O+G market.

The other thing it does not consider is the marginal cost of ME oil. Kuwaits next field is a cyclic steam project using desalinated water. Now there construction costs are lower do to the slave labour but their energy costs are quite high. They are in the same ball park as our oil and shale.

What might harm Canadian oil or possibly benefit it is the high initial capital cost but relatively low OP costs. So even in a situation of depressed oil price making large scale expansion untenable sustaining current fields with wellpads would only require a much lower price. So like major refineries right now it makes little sense to build a new one but the existing ones get to print money.

Finally it ignores the benefits of new technology like Insolve or solvent injection which potentially can reduce energy consumption by 20%-80% depending on how they pan out.



TLDR: I'll take that bet

[burn_this_city]

Edmunds was testing the Tesla model X's towing. It has an advertised tow capacity of 5,000lbs when optioned accordingly. They towed a 1,500lb trailer on a 1,000 mile trip. It took 40 hours to go that far, it was charging roughly 40% of the total trip time. That's an average speed of 25mph for the entire trip.

[para transit fellow]

Originally Posted by Azure

Farming is actually a great point to bring up. It isn't going electric anytime soon, and while a lot of technology advancements have been made with modern farm equipment, they are still very fuel inefficient. No way we can grow food for the world without oil related products.

But electric buses and trucks are already in the works

Diesel still might be a requirement for seeding and harvesting but electrics are already being considered for everything else.

Plus I am seeing a lot more solar panels on farm buildings. That tell me that agriculture is already looking at alternate energy

[accord1999]

Originally Posted by para transit fellow

Plus I am seeing a lot more solar panels on farm buildings. That tell me that agriculture is already looking at alternate energy

They're farming subsidies.

[Enoch Root]

Originally Posted by para transit fellow

But electric buses and trucks are already in the works

Diesel still might be a requirement for seeding and harvesting but electrics are already being considered for everything else.

Plus I am seeing a lot more solar panels on farm buildings. That tell me that agriculture is already looking at alternate energy

There is a very big difference between 'looking at alternative energy' and actually getting to a point where the majority of the required energy is coming from alternative sources and the conventional sources are disappearing.

[GaiJin]

Originally Posted by para transit fellow

But electric buses and trucks are already in the works

Diesel still might be a requirement for seeding and harvesting but electrics are already being considered for everything else.

No they are not, put down the crack pipe for a second. I drive a truck for a living and the company I work for is always looking for marketable green strategies and importantly, anything viable that reduces operating costs by saving energy.
Trucks and busses are being put on Natural gas/propane and hybrids of to reduce emissions and operating costs. The problem with solely electric vehicles in the Heavy Duty segment, is weight. Because a commercial truck is only allowed to have so much weight, anything built into the truck that reduces what the truck can carry by law. So far, all the electric trucks marketed to our company have had less than 1/4 of the range of our straight fuel trucks, and far less GVWR. On top of that, they could not provide power for the PTO for the shredding equipment, and still have enough power left to get back to the yard. We have some trucks that run on straight natural gas now instead of diesel, those trucks are used only on short mileage routes, and have to keep the shred times short or you are towing it back to the yard.
There is also the joke of the carbon tax to reduce emissions,as our bean counters have said, the added penalty of more tax to fuels is something we just have pay, because there really are no alternatives when it comes to heavy equipment, and even if there were, the reduced productivity would just bankrupt us, so we may as well pay and at least stay afloat.

[Enoch Root]

Originally Posted by GaiJin

No they are not, put down the crack pipe for a second. I drive a truck for a living and the company I work for is always looking for marketable green strategies and importantly, anything viable that reduces operating costs by saving energy.
Trucks and busses are being put on Natural gas/propane and hybrids of to reduce emissions and operating costs. The problem with solely electric vehicles in the Heavy Duty segment, is weight. Because a commercial truck is only allowed to have so much weight, anything built into the truck that reduces what the truck can carry by law. So far, all the electric trucks marketed to our company have had less than 1/4 of the range of our straight fuel trucks, and far less GVWR. On top of that, they could not provide power for the PTO for the shredding equipment, and still have enough power left to get back to the yard. We have some trucks that run on straight natural gas now instead of diesel, those trucks are used only on short mileage routes, and have to keep the shred times short or you are towing it back to the yard.
There is also the joke of the carbon tax to reduce emissions,as our bean counters have said, the added penalty of more tax to fuels is something we just have pay, because there really are no alternatives when it comes to heavy equipment, and even if there were, the reduced productivity would just bankrupt us, so we may as well pay and at least stay afloat.

Please stop killing everyone's buzz with silly things like facts and practical realities.

[Azure]

Even if a company like Tesla is very successful and meets all their production goals, they still account for a very small number of vehicles sold every year. I do believe we will eventually move away from the combustion engine when it comes to regular cars, but it will take a long, LONG time before we do that with all trucks, machinery, tractor trailers, etc.