Oilsands/Keystone Pipeline Protests in Washington D.C.

[Oil Stain]

Originally Posted by burn_this_city

Thanks tips, but good luck finding enough trades to construct them along with all the downstream projects being built. We're looking at flying in 30% of our trades from east, where we will be competing with major projects in NFLD, because there aren't enough people in the local market. Suncor's Voyageur project alone will need 5000-8000 people during construction. Upgrading soley in Canada is a great idea, but realistically we're never going to keep pace with production increases from the mines and SAGD facilities.

So we bring in American workers and otherwise, and they spend some of their dollars in the local economy. Or, we build slowly and methodically.

Of course, this has the interests of the Canadian citizen in mind rather then the profit margins of giant Oil companies so it isn't very realistic, but it would be nice to see some politicians take this type of stance.

It has worked very nicely in Norway.

[burn_this_city]

Norway is a different animal, they don't have the additional step of building upgraders for their production. Its doubtful that bringing in Americans would benefit the local economy much at all. Our workers fly in and out and rarely leave the lease during their shift, if anything you're now exporting jobs via temporary foreign workers. This isn't about profit margins for oil companies, by skipping upgrading they lose out on 20% of the money made off a barrel of oil. This is more about allocating resources, both monetary and man-power/shop space to upstream projects which will reap more benefits.

[Azure]

So maybe you go one step further and try to permanently relocate those workers.

The US is having a hell of a time creating jobs. Alberta, Sask and Manitoba can't create them fast enough. How many unemployed Americans would relocate to Canada if they got a good paying job?

How many oil companies would subsidize the relocation cost if it meant that the workers they were bringing in stayed for at least 5 years?

Maybe you have to start looking at all of this long-long term.

[SebC]

I'm still trying to figure out why Albertans would want to bring in more workers. For the average Albertan, the labour shortage is a good thing because it increases their wages.

[Bill Bumface]

Originally Posted by SebC

I'm still trying to figure out why Albertans would want to bring in more workers. For the average Albertan, the labour shortage is a good thing because it increases their wages.

Everything around here started to really suck when the job market got tight. Service, business owners chance of making it when they had to pay kids $20/hour to work a til, people couldn't find places to rent, people were buying houses without actually seeing them in person... it wasn't good.

A balanced job market is best for everyone.

[Cowboy89]

Originally Posted by SebC

I'm still trying to figure out why Albertans would want to bring in more workers. For the average Albertan, the labour shortage is a good thing because it increases their wages.

That's actually the real reason why building refineries in Alberta doesn't have a business case. Too little people in Alberta realize that they're half the employee their US counterparts are and get paid twice as much.

[Azure]

Originally Posted by SebC

I'm still trying to figure out why Albertans would want to bring in more workers. For the average Albertan, the labour shortage is a good thing because it increases their wages.

And for the average business owner, it is a lot harder to stay in business because high school kids are demanding $18/hour because they can get that working for the construction crew down the road during the summer.

In the end, more people moving to Alberta will help the economy grow a lot more.

[Cowperson]

Originally Posted by Cowboy89

That's actually the real reason why building refineries in Alberta doesn't have a business case. Too little people in Alberta realize that they're half the employee their US counterparts are and get paid twice as much.

What I find stunningly amusing is that house prices in the refinery towns on the Gulf in the Houston area might be only one-quarter what they are in Fort McMurray or even Edmonton, demonstrating that's probably the better place to put the work.

Pasadena, Texas . . . . http://www.trulia.com/TX/Pasadena/

Cowperson

[Oil Stain]

Originally Posted by burn_this_city

Norway is a different animal, they don't have the additional step of building upgraders for their production. Its doubtful that bringing in Americans would benefit the local economy much at all. Our workers fly in and out and rarely leave the lease during their shift, if anything you're now exporting jobs via temporary foreign workers.

Maybe if you are building the upgraders in fort Mac then you don't have the Americans spending money in the local economy, but that isn't the case if the Refineries are built around places like Edmonton, Calgary, or Red Deer.

Rather then staying in camps, foreign workers stay in hotels, and go out and spend food and entertainment dollars in the local communities. After an upgrader is built it creates permanent jobs that workers will relocate to get.

This isn't about profit margins for oil companies, by skipping upgrading they lose out on 20% of the money made off a barrel of oil. This is more about allocating resources, both monetary and man-power/shop space to downstream projects which will reap more benefits.

Without the upgrading of bitumen into other usable products, there aren't any downstream projects. They aren't going to upgrade the bitumen in the US and then ship the upgraded fuel back to Canada to be processed in a chemical plant. They'll build, or use a chemical plant in the US.

Once that oil crosses the border, the vast majority of the benefits to the common man goes with it. These big companies don't lose 20% of the profits made from a barrel of oil because they OWN the refineries that are in the states. Down there, they hire all kinds of uneducated workers to work in their refineries to save money. Their safety rates are atrocious compared to Canadian plants. It is all about profits.

[burn_this_city]

I still don't think you're wrapping your mind around the cost of these projects. Suncor will likely spent $21 billion on 200,000bpd Voyageur upgrader. Its pretty simple economics when a Canadian company like Cenovus can go south of the border and get that kind of production for 1/4 the price or less.

The part you bolded was a typo, I meant to say upstream projects are the ones that will win out, because they make economical sense, just barely.

[Oil Stain]

Originally Posted by burn_this_city

I still don't think you're wrapping your mind around the cost of these projects. Suncor will likely spent $21 billion on 200,000bpd Voyageur upgrader. Its pretty simple economics when a Canadian company like Cenovus can go south of the border and get that kind of production for 1/4 the price or less.

I understand it is much more expensive to upgrade the oil in Canada. I just don't care.

Building an upgrader in Denver isn't going to make life better for any Albertan except those who own shares in that company.

[burn_this_city]

I could understand the "they took our jobs" mentality if we didn't have a chronic labour shortage here.

[Cowboy89]

Originally Posted by Oil Stain

I understand it is much more expensive to upgrade the oil in Canada. I just don't care.

Building an upgrader in Denver isn't going to make life better for any Albertan except those who own shares in that company.

Actually it can make your life worse. If it's uneconomic to build a host of upgraders or refineries in Alberta and thus the government does it anyway and then has to operate it at a loss or mothball or sell them at a loss, it hurts you as a taxpayer. Another indirect cost it could have to you as an Albertan is it could really slow the growth in the upstream sector and delay royalties paid to the province on new production.

It's not like there's legions of greenfield refineries and upgraders getting built or even being proposed to be built in the States anyway. These are marginal projects being made economic by virtue of spare refining capacity in the gulf.

Also, what Union do you work for?

[Azure]

Actually, Suncor should build the upgrader. If they can make it work financially. If they can't....fine.

My point goes beyond that though. Alberta should be actively trying to lure skilled workers out of the US. We have jobs, they don't. We have a labor shortage, they don't.

[burn_this_city]

Originally Posted by Azure

Actually, Suncor should build the upgrader. If they can make it work financially. If they can't....fine.

My point goes beyond that though. Alberta should be actively trying to lure skilled workers out of the US. We have jobs, they don't. We have a labor shortage, they don't.

We are seeing a small influx of Americans in project management positions, thing is though, their oil and gas industry is doing well right now because the price of oil, so were competing against a hot market. As far as craft workers go, I agree, but we would have to streamline trade qualifications between the countries for it to be feasible.

[Ducay]

If its so uneconomical to upgrade in Canada, why are there so many upgraders in Alberta, with more under-construction/proposed.

Do you really think Suncor/Syncrude/CNRL/NWU/Total are all dumb enough to invest billions upon billions in upgraders if the capacity could be had for 1/4 of the price down South? Paying 4x as much just to do it in Canada wouldn't make it past the first shareholder meetings at any company.

I'm curious as to how much Albertan bitumen is upgraded versus shipped out as dilbit; I'll try looking that up in our database at work tomorrow.

[redforever]

Originally Posted by burn_this_city

We have neither the capital or the man power to build multi billion dollar upgraders. Its much more economical from a capital investment standpoint to buy an older refinery in the US and install the equipment to process dilbit.

And even if we did, which business is willing to invest huge bucks up front, and then see the projects they have invested in stalled by an ongoing swarm of protesters and NIMBYs?

You are looking at a minimum of 5 to 10 years to get any of those projects on line. What will the economic picture be like then?

[SebC]

Let's make it clear that there's typically a distinction between upgrading and refining. Upgrading is converting heavy bitumen to synthetic crude oil. Refining starts with crude oil and turns it into products like gasoline. Upgrading is more economically viable in Alberta than refining, but extraction is where our real competitive advantage is.

[Flames in 07]

Originally Posted by Ducay

Serious? Thats exactly what I said. Getting the oil to the gulf opens it up to world markets as well as Gulf refineries that are sitting with capacity. Read my post quoted below

Serious? I wasn't replying to that note, I was replying to the one that implies the value to go get to the gulf BECAUSE it's a refining hub, which is incorrect.

[Flames in 07]

Originally Posted by Oil Stain

I understand it is much more expensive to upgrade the oil in Canada. I just don't care.

Building an upgrader in Denver isn't going to make life better for any Albertan except those who own shares in that company.

If it's such a great business opportunity people would build the upgraders here. Your disappointment in the lack of upgrading capacity found here is a direct link to the fact that it's not economic to do so.

I'm not totally clear on all the reasons why but part of it has to be that the cost of labor here is brutal (from companies perspective), and cost of collecting and keeping that staff would be an ongoing headache.