Official (Alberta) Oil Discussion Thread

[IliketoPuck]

Fundamental difference is supply this time around.

The markets are acting irrationally, in my opinion. A slight increase in U.S. rigs does nothing in the grand scheme to offset the declines occurring right now.

You need to get back to the level of rigs we were at pre-crash, and stay there for 2 years straight to get back to adding meaningful amounts of production.

Everything else right now, in my opinion, is typical media sensationalism backed up by little to no actual analysis.

[oilyfan]

I think its not the supply but the continued overhang of too much stock. I don't think anyone argues that if rig counts remain where there are that supply will drop, the problem is that it will still take 12-18 months (by most accounts) to eat through this glut.

[Reaper]

Originally Posted by oilyfan

I think its not the supply but the continued overhang of too much stock. I don't think anyone argues that if rig counts remain where there are that supply will drop, the problem is that it will still take 12-18 months (by most accounts) to eat through this glut.

Look for the United States to enter a sustained military conflict with a regime that has an impact in the oil market before the end of the glut elimination.

[InglewoodFan]

Originally Posted by Reaper

Look for the United States to enter a sustained military conflict with a regime that has an impact in the oil market before the end of the glut elimination.

So ... Go Trump?

[para transit fellow]

So with this Sask pipeline as an example, how quickly does a pipeline operator know they have a spill on their hands?

From what I have read about two pipeline spill events (saskatchewan and Kalamazoo) there still is heavy reliance on the Mark I eyeball.

[Lubicon]

It's been a long time since my summer job days as a pipeline guager but back then at least the answer partially depends on what kind of pipeline it was. On a main line, or major line there are pressure monitors and a drop in line pressure that does not correspond to drop in pumping rates is cause for concern and would trigger an immediate alarm in the control centre (manned 24/7/365). There are also meters along the way at various locations and the volumes that pass each meter should be more or less equal depending on what is being shipped at the time. Basically if you see more going in than you get coming out something is obviously wrong. Third main way we monitored the line was by weekly aircraft patrol, or in other words by eyeball as you have alluded to. I guess the fourth method was visual inspection on the ground every day as we made our rounds to the various batteries and pump stations each day.

But for a major leak they should know about it in the control centre, or at least see somethings is not adding up and investigate further almost immediately.

[Fuzz]

It was during a re-start, so I could see it being a bit confusing for them.

• On Wednesday, July 20, at approximately 8 p.m. the pipeline monitoring system indicated pressure anomalies as several segments of the pipeline system were being returned to service. This is common during start-up operations.
• As per the company’s normal procedures “when we note such anomalies, we immediately began reviewing data and operating characteristics.”
• As a precaution, crews were dispatched along the gathering system and did not identify a leak. As a further precaution, aerial surveillance was also organized overnight to fly the length of the pipeline at the first available daytime opportunity.
• As its analysis continued through the night, Husky said it decided as a further precaution to start safe shutdown procedures at about 6 a.m. The valves on either side of the river shut in automatically as part of the shutdown procedures.
• Subsequently, on Thursday morning Husky received reports regarding a sheen on the river.
• Also on Thursday morning the company initiated its emergency response plan and dispatched crews to site.
• Based on the industry-standard SCADA system which it uses to monitor the pipeline, the company confirmed the released volume was between 200-250 cubic metres.

[Bootsy]

Originally Posted by Lubicon

It's been a long time since my summer job days as a pipeline guager but back then at least the answer partially depends on what kind of pipeline it was. On a main line, or major line there are pressure monitors and a drop in line pressure that does not correspond to drop in pumping rates is cause for concern and would trigger an immediate alarm in the control centre (manned 24/7/365). There are also meters along the way at various locations and the volumes that pass each meter should be more or less equal depending on what is being shipped at the time. Basically if you see more going in than you get coming out something is obviously wrong. Third main way we monitored the line was by weekly aircraft patrol, or in other words by eyeball as you have alluded to. I guess the fourth method was visual inspection on the ground every day as we made our rounds to the various batteries and pump stations each day.

But for a major leak they should know about it in the control centre, or at least see somethings is not adding up and investigate further almost immediately.

Good points and in some instances the low pressure alarm triggers esd shutdowns on each side of the river crossing to limit the size of the spill.
It's also worth noting Saskatchewan has much more lax pipeline regulations than Alberta and if this Husky pipeline is not a sales line ( I don't know if it is or not , I haven't heard) then it wouldn't even be licensed and would be considered a flowline with even less regulation.

And for those that don't know a sales line is a pipeline leaving a processing facility and it's product is processed oil or gas which is much less corrosive than all the pipelines coming to a facility which is wet, higher in CO2 and potentially H2S percentage making have a much higher corrosion threat. In Saskatchewan only sales pipelines are licensed in Alberta they all are.

[CaptainCrunch]

I was watching the news this morning, and the Fed report that was released estimated that the long term Oil prices will probably dip to $35 dollars US per year. The World Bank report estimates about $63 to a top end of $70.00 per barrel by 2020.

So it looks like there won't be some kind of quick end of the year recovery in Alberta.

[Flash Walken]

What does recovery even mean for Alberta's energy sector though, relatively stable pricing at $50?

I think I remember some saying that projects that were already online had a break even point of about $40, so is the new reality of Alberta energy a $50 barrel rate?

[Bill Bumface]

Inflation adjusted, after the drop started in 1980, it took until 2007 to hit the same price point.

If we want to be generous and call this cycle peak 2008, we're 8 years in on what was previously a 27 year trough:

[Fighting Banana Slug]

Originally Posted by Bill Bumface

Inflation adjusted, after the drop started in 1980, it took until 2007 to hit the same price point.

If we want to be generous and call this cycle peak 2008, we're 8 years in on what was previously a 27 year trough:

To me the chart tells me that 1990 and 2008 are the outliers. Inflation adjusted at $50-60 is what I would expect for a while, and I think the industry can adjust to that.

[Bill Bumface]

Originally Posted by Fighting Banana Slug

To me the chart tells me that 1990 and 2008 are the outliers. Inflation adjusted at $50-60 is what I would expect for a while, and I think the industry can adjust to that.

There's been very few periods of $50-60 oil on that chart, really only a few years in the 70s in the last century.

[polak]

50-60 makes sense if account for increased demand since only a third of the world consumed at a high rate before Globalization.

[BigNumbers]

What a lot of you are missing is how expensive it is to find the next marginal bbl of production now. Historical trends need to be viewed through the lens of current F&D costs. Current 5 year avg for the super majors is $50/bbl. add a 15% IRR to that and I think the sustainable price level is $65ish. With normal oscillations between $50 and $80.

[Regorium]

Originally Posted by para transit fellow

So with this Sask pipeline as an example, how quickly does a pipeline operator know they have a spill on their hands?

From what I have read about two pipeline spill events (saskatchewan and Kalamazoo) there still is heavy reliance on the Mark I eyeball.

For a major spill, like the San Bruno incident, I would say on the order of seconds to minutes. The drastic drop in pressure would be seen immediately and automatic systems would activate.

For a medium sized leak, like this one or Enbridge Kalamazoo, I would say on the order of hours. The control room has to spend some time interpreting the data that they're seeing. Based on the timeline above, it took about 10 hours for the people to conclude that the anomalies were real and the pipeline being shut down. Enbridge took about 17 hours to fully shut down the system (after several restarts failed, but that's a process issue).

For small leaks, I would say days to weeks. SCADA systems cannot tell the difference if you have a tiny pinhole that's leaking 10mL/min because weight balancing isn't accurate to those levels. In general, these cases will be found by a landowner or an aerial patrol when the oil seeps to the surface. For gas lines, you would get odors or patches of dead vegetation, which again is eyeballed. The Keystone leak in April was an example of this, where it was leaking for a few days before the landowner notified the authorities.

[Fighting Banana Slug]

Originally Posted by BigNumbers

What a lot of you are missing is how expensive it is to find the next marginal bbl of production now. Historical trends need to be viewed through the lens of current F&D costs. Current 5 year avg for the super majors is $50/bbl. add a 15% IRR to that and I think the sustainable price level is $65ish. With normal oscillations between $50 and $80.

What he said. Numbers (especially BigNumbers) aren't my game.

[Bill Bumface]

US data:

[Tinordi]

Balance of power tilts from fossil fuels to renewable energy

http://www.ft.com/cms/s/0/8c28d1c2-2...#ixzz4FmhPLKvI

At the same time, fossil fuel companies are making strides in their efforts to remain competitive. This is not easy. Not only have oil and gas prices plunged over the past two years, but in the long term weaker demand and more abundant supply are expected. Valuations of companies in this sector have been badly dented.
Some new energy technologies, meanwhile, are not making much progress, such as the development of power plants that capture and store the carbon dioxide they produce. It is commonly assumed among policymakers that carbon capture has become essential if humankind is to enjoy the benefits of fossil fuels while avoiding their polluting effects.
It is clear, too, that the growth of renewables and other low-carbon energy sources will not follow a straight line. Investment in “clean” energy has been faltering this year after hitting a record in 2015, according to Bloomberg New Energy Finance. For the first half of 2016, it is down 23 per cent from the equivalent period last year.
Even so, the elements are being put in place for what could be a quite sudden and far-reaching energy transition, which could be triggered by an unexpected and sustained surge in oil prices. If China or India were to make large-scale policy commitments to electric vehicles, they would have a dramatic impact on the outlook for oil demand.
In Ernest Hemingway’s The Sun Also Rises, a character says he went bankrupt “two ways. Gradually, then suddenly.” There is a chance that a profound shift in our energy system could sneak up on us in the same way.

[accord1999]

The most important takeaway from that article is:

While renewable energy has been growing fast, it is coming from a very low base. “Modern renewables” — mostly biofuels, wind and solar, but not hydro or traditional biomass — provided just 2.5 per cent of the world’s primary energy last year, according to BP.