Official (Alberta) Oil Discussion Thread

[DoubleK]

Plains

[Weitz]

Originally Posted by Lubicon

It is still a hit to Stampede Park financially but yeah, it was never something I fond much use for.

Easy PDH for Apega!

[SeeGeeWhy]

Originally Posted by burn_this_city

Biden is trying to tamp down inflation by asking OPEC to pump more, conservatives in the states have been attacking him for the gas prices.

Most of the oil buys from Russia are going to California, a market we can potentially take over once TMX is done. KXL wouldn't have tapped that market as very few internal US pipelines cross the mountains into the state. The coastal refineries buy waterborne barrels and with falling Mexican and Venezuelan heavy production they have to go to OPEC+.

Alberta is in good position if Line 3 is completed this year and TMX next year. We don't really need KXL until late decade and that probably assumes business as usual vs tightening GHG emissions.

Word, let’s see what happens.

Has anyone compiled a table of oilsands projects in production and how close they’re getting to “post payout” status and thus increased royalty rate take by the crown? I seriously dislike going into AER tables to manually figure it out LOL

[bizaro86]

Originally Posted by SeeGeeWhy

Word, let’s see what happens.

Has anyone compiled a table of oilsands projects in production and how close they’re getting to “post payout” status and thus increased royalty rate take by the crown? I seriously dislike going into AER tables to manually figure it out LOL

I would be super interested in knowing this as well. I believe CVE's Foster Creek is post payout, how many others are there?

It seems like that could dramatically increase royalties if some big projects reach payout, especially if prices are high when that happens.

Alternatively, it might spur expansions to avoid hitting payout, which would be good for hiring in the province.

[Leondros]

Originally Posted by bizaro86

I would be super interested in knowing this as well. I believe CVE's Foster Creek is post payout, how many others are there?

It seems like that could dramatically increase royalties if some big projects reach payout, especially if prices are high when that happens.

Alternatively, it might spur expansions to avoid hitting payout, which would be good for hiring in the province.

I was always curious about the economics of the above. Is it always worth the capital cost in order to defer your royalty payouts? Sure you are unlocking incremental barrels, but if you are doing expansions purely to continue to receive preferential rates is that the best use of funds flow?

[Brewmaster]

Originally Posted by bizaro86

I would be super interested in knowing this as well. I believe CVE's Foster Creek is post payout, how many others are there?

It seems like that could dramatically increase royalties if some big projects reach payout, especially if prices are high when that happens.

Alternatively, it might spur expansions to avoid hitting payout, which would be good for hiring in the province.

It's not a complete list and there could be some mistakes, but here are the status of the larger projects with some rough estimates of payout:

SAGD
CVE Christina Lake & Foster Creek - post payout
COP Surmont - 2026+
SU Firebag - expected ~2021
CNQ Jackfish - Ph1&2 post payout, Ph3 expected ~2022
CNQ Primrose - post payout
MEG Christina Lake - expected ~2024

Mines
CNQ Jackpine - expected ~2022
CNQ Horizon - expected ~2023
CNQ Muskeg River - post payout
IMO Kearl - long time / never
SU base - post payout
SU Fort Hills - long time / never
Syncrude - post payout

So from those projects we could see somewhere around 700 - 800 mbbls/d of production reach payout in the next 3 years if oil prices continue at similar price levels. How much that actually equates to in incremental annual royalties is tough to say, but it's in the billions.

[burn_this_city]

CNRL making vaccines mandatory. I would expect them to be the first and basically everyone else will follow.

https://www.fortmcmurraytoday.com/ne...ported-in-rmwb

[Weitz]

Originally Posted by burn_this_city

CNRL making vaccines mandatory. I would expect them to be the first and basically everyone else will follow.

https://www.fortmcmurraytoday.com/ne...ported-in-rmwb

There are companies that already have them mandated. They appear to be the biggest so far though.

[burn_this_city]

Originally Posted by Weitz

There are companies that already have them mandated. They appear to be the biggest so far though.

I meant first of the big 4, which trickles down to the rest of the industry.

[bizaro86]

Originally Posted by Leondros

I was always curious about the economics of the above. Is it always worth the capital cost in order to defer your royalty payouts? Sure you are unlocking incremental barrels, but if you are doing expansions purely to continue to receive preferential rates is that the best use of funds flow?

It makes a big difference. On a big project that is close to payout you get to deduct the entire capex off your payout calculation, so you effectively get the credits very quickly. Do you build a 30kbopd phase and instead of it getting cheap royalties for 25 years the whole 300kbopd project gets cheap royalties for 2.5 years. Time value of money difference is very large there.

Obviously it doesn't make a bad project great, but it definitely makes a difference at the margins.

[burn_this_city]

Line 3 in service Oct 1st.

https://www.cbc.ca/news/canada/calga...line-1.6193519

[Locke]

Originally Posted by burn_this_city

Line 3 in service Oct 1st.

https://www.cbc.ca/news/canada/calga...line-1.6193519

I was planning on having Subway for lunch today, in your opinion how much meat should I order?

[Azure]

Is Alberta going to gain from the increased natural gas prices?

How are things going on that front?

[Table 5]

With the recent energy issues in Europe and China, and general underinvestment in the industry the last few years, there definitely feels like there is a looming global energy crisis slowly building...but I'm curious how you guys in the Canadian oil/gas sector feeling these days about prospects moving forward? I assume a little more bullish, even if cautiously so?

Interesting article I read this am:
https://financialpost.com/commoditie...and-gas-stocks

[Azure]

I am mostly interested in how the Kitamat LNG progress is going and what we expect.

Canada could be a world leader in LNG. We need to be on top of this and take advantage of other countries not being able to export.

[burn_this_city]

Originally Posted by Table 5

With the recent energy issues in Europe and China, and general underinvestment in the industry the last few years, there definitely feels like there is a looming global energy crisis slowly building...but I'm curious how you guys in the Canadian oil/gas sector feeling these days about prospects moving forward? I assume a little more bullish, even if cautiously so?

Interesting article I read this am:
https://financialpost.com/commoditie...and-gas-stocks

Investors keep telling everyone no additional capital for production growth, give us buy backs and dividends. Most of the producers here are switching gears to CCS and the pathways initiative.

Once OPEC's spare capacity is drawn down this could keep climbing. Could also see things drop back to $50-60 if SP500 ect take a months long dump.

[Kybosh]

All I know is that the Pathways initiative is keeping me and my team stupid busy.

[Leondros]

My management team saw the writing on the wall for the industry last summer in terms of massive underinvestment. Pricing is going to keep rising - its a simply supply and demand issue and when you take billions and billions of capital off of the table over the past half decade you are going to run into problems.

Add to the fact that our demand is expected to reach 100 mmbopd by the end of 2021 (back to almost precovid) levels without jet fuel demand really coming back, we are going to see supply increasing as well. All of this storage draw down over the past couple of months is scaring traders.

Now, the ESG movement and shareholder paradigm shift (give me $ back rather than growing our reserves), is going to put a great amount of pressure on the mid caps and majors. This is going to leave the privates, the small publics, and OPEC (state owned) producers left to fill the void. OPEC is certainly going to win overall from this whole movement and frankly their carbon footprints are quite large compared to other producers. Ironically speaking, the ESG and climate minded investors are creating an environment that is absolutely going to be more harmful than when they first pushed for this.

In summary, we are absolutely headed for a supply side issue on the oil and natural gas side globally which is going to create a huge number of issues including but not limited to increased costs of transportation, costs in consumer goods all while being at the detriment of the climate.

My two cents anyway.

[accord1999]

Originally Posted by Azure

Is Alberta going to gain from the increased natural gas prices?

Without LNG exports, Alberta and BC can't really benefit from the bidding war between European and Asian countries right now.

Originally Posted by Azure

I am mostly interested in how the Kitamat LNG progress is going and what we expect.

Canada could be a world leader in LNG. We need to be on top of this and take advantage of other countries not being able to export.

Right now it looks like protests are back:


https://financialpost.com/commoditie...c-gas-pipeline


Canada will be decades behind Australia and the US by the time LNG Canada is finished.

[Lubicon]

Originally Posted by Table 5

With the recent energy issues in Europe and China, and general underinvestment in the industry the last few years, there definitely feels like there is a looming global energy crisis slowly building...but I'm curious how you guys in the Canadian oil/gas sector feeling these days about prospects moving forward? I assume a little more bullish, even if cautiously so?

Interesting article I read this am:
https://financialpost.com/commoditie...and-gas-stocks

Cautiously bullish but short term the industry is going to struggle with labor shortages. If that can be overcome (it will not be easy) there is room for more optimism.