Official (Alberta) Oil Discussion Thread

[burn_this_city]

Originally Posted by Flash Walken

Can you explain this further?

Not everyone is hedged, and as of today the total market value of Canadian energy companies are back at 2001 levels.

With the demand destruction and OPEC deal over, there's probably 5-6Mbpd of excess supply as of April 1st. IHS Markit has pegged the virus demand destruction at 3-4Mbpd in Q1, and who knows when that improves. Back in 2016 there was maybe 1.5-2MM barrels of excess supply and we hit $26, but only for a few weeks. $25 WTI with transportation and differential could mean $10-15 WCS in Edmonton.

CVE and Husky are not hedged and rely on their transportation and refineries to cover them. Rail to Gulf Coast is $15-18/barrel. Crack spreads are low and the strip for those goes below $10 in Q3.

The virus was a black swan and the OPEC breakup today looks like another one. Hopefully we see a cut in the coming weeks or this could get ugly if we have sustained demand destruction and tons of oversupply.

[GGG]

Do we think the OPEC break up sticks?

I see it as a Russian power play to show the Saudis who runs Opec.

[burn_this_city]

Even before the outbreak they were contemplating oil dropping to $25 on oversupply and demand decline. They may figure they can ride out the storm better than almost anyone. Kill off high cost producers after 3 years of increasing cuts.

https://oilprice.com/Energy/Energy-G...Next-Year.html

[Mayo]

Originally Posted by burn_this_city

Even before the outbreak they were contemplating oil dropping to $25 on oversupply and demand decline. They may figure they can ride out the storm better than almost anyone. Kill off high cost producers after 3 years of increasing cuts.

https://oilprice.com/Energy/Energy-G...Next-Year.html

It seems like US shale is ready to collapse which could bring off supply pretty quickly - but trying to kill them didn't work too well in 2015

[guzzy]

Originally Posted by GGG

Do we think the OPEC break up sticks?

I see it as a Russian power play to show the Saudis who runs Opec.

Let's not forget the $155 billion in new spending they just announced in Russia. I see this is a bad thing for Canadian industry. We have every hippie, celebrity and hypocrite trying to shut us down and everyone else in the world is growing their industries.

We are screwed.

[CaptainCrunch]

Originally Posted by guzzy

Let's not forget the $155 billion in new spending they just announced in Russia. I see this is a bad thing for Canadian industry. We have every hippie, celebrity and hypocrite trying to shut us down and everyone else in the world is growing their industries.

We are screwed.

Yeah because Canadians are a soft touch, and hand wringers.

At the same time these environmental groups know that. I have no respect for them until I see them standing in front of tanks in China, or in front of guns in Russia, or in front of Death Squads in Saudi Arabia.

Now in no uncertain terms do I advocate dealing with these people in the same way in Canada.

But they come here, and they fund here because we know that we'll softly and gently let them have their way.

These other countries wouldn't tolerate shutting down rail roads or important projects, and they certainly wouldn't have a catch and release for Protestors so they can show up the next day for more protesting fun after receiving a hot meal and nice steaming cup of Bosco and a pat on the head with a please don't show up again.

These countries wouldn't tolerate foreign interests funding at all.

We're being targeted because we're virtue signaling softies who think that our actions as a country matter.

• If you want to battle climate change develop and sell technology.
• If you want to battle climate change put a carbon tax on all incoming countries goods like China and India and Saudi Arabia.

• If you want to battle climate change promote Canadian Oil and gas that has lower environmental impacts then development in Saudi Arabia and the States and other countries.
• If you want to battle climate change, then stop having countries ferrying oil and gas to Canada in big hideously emission producing tankers from other countries.
• Shutting down our development to make environmental groups and destroying our country and thinking it will reduce emissions worldwise is stupid, all that's going to happen is these other producing countries with no emissions standards are going to jump in to take our market space and laugh at us.

This whole thing is ridiculous and stupid.

[Aarongavey]

Originally Posted by CaptainCrunch

Yeah because Canadians are a soft touch, and hand wringers.

At the same time these environmental groups know that. I have no respect for them until I see them standing in front of tanks in China, or in front of guns in Russia, or in front of Death Squads in Saudi Arabia.

Now in no uncertain terms do I advocate dealing with these people in the same way in Canada.

But they come here, and they fund here because we know that we'll softly and gently let them have their way.

These other countries wouldn't tolerate shutting down rail roads or important projects, and they certainly wouldn't have a catch and release for Protestors so they can show up the next day for more protesting fun after receiving a hot meal and nice steaming cup of Bosco and a pat on the head with a please don't show up again.

These countries wouldn't tolerate foreign interests funding at all.

We're being targeted because we're virtue signaling softies who think that our actions as a country matter.

• If you want to battle climate change develop and sell technology.
• If you want to battle climate change put a carbon tax on all incoming countries goods like China and India and Saudi Arabia.

• If you want to battle climate change promote Canadian Oil and gas that has lower environmental impacts then development in Saudi Arabia and the States and other countries.
• If you want to battle climate change, then stop having countries ferrying oil and gas to Canada in big hideously emission producing tankers from other countries.
• Shutting down our development to make environmental groups and destroying our country and thinking it will reduce emissions worldwise is stupid, all that's going to happen is these other producing countries with no emissions standards are going to jump in to take our market space and laugh at us.

This whole thing is ridiculous and stupid.

Alberta oilsands have some of the highest GHG per barrel of any nation, higher than the two countries you mentioned, so number three would not work.

[GGG]

Originally Posted by Aarongavey

Alberta oilsands have some of the highest GHG per barrel of any nation, higher than the two countries you mentioned, so number three would not work.

Marginal barrel or average barrel? Comparing Canada to the marginal barrel makes Oilsands very favourable. This is the correct comparison as barrels not produced in Canada are marginal barrels elsewhere.

[burn_this_city]

Saudi announced they are ramping up production. I don't like our chances for a deal anytime soon.

[Slava]

Originally Posted by burn_this_city

Saudi announced they are ramping up production. I don't like our chances for a deal anytime soon.

Yeah that's basically going to crater oil prices. Really horrible news.

[burn_this_city]

Originally Posted by Slava

Yeah that's basically going to crater oil prices. Really horrible news.

A price war may kill shale this time. No one wanted to lend to them for the last year or so and even if they reorganize who will fund their drilling programs?

I spent part of last night combing through shale producers, even players like Diamondback look vulnerable with low percentages of production hedged and stupid three-way collars with no downside protection.

I'm also worried about some Canadian producers, everyone seemed to think the floor was firming.

[Slava]

Well I think it will kill a number of them, which longer term might bode well for Canadian energy. The problem is we're caught in the crossfire at this point. It looks like it will get worse before it gets better.

[Aarongavey]

Originally Posted by GGG

Marginal barrel or average barrel? Comparing Canada to the marginal barrel makes Oilsands very favourable. This is the correct comparison as barrels not produced in Canada are marginal barrels elsewhere.

Is there a report that shows that oil sands barrels are comparable to Middle East crude in terms of GHG’s? Or Norway? I have never seen it, seen plenty that say the opposite.

[Wormius]

What is the reason for this? Is OPEC looking to kill competition or does it see this as cooling desire to explore alternative energy sources?

[edslunch]

Originally Posted by Aarongavey

Alberta oilsands have some of the highest GHG per barrel of any nation, higher than the two countries you mentioned, so number three would not work.

Is there any unbiased (in either direction) accounting of end to end GHGs for different jurisdictions considering production, flaring, leaks, transportation, etc.? There’s no question the oil sands have significantly higher carbon intensity for production than most, there’s no refuting that. At the same time we’re continually told we have among the highest environmental standards (I assume that’s true), and for Canadian consumption should have a transportation advantage. I’d love to see how all that adds up.@

[burn_this_city]

I'd say its competition killing after increasing production cuts for nearly 3 years. They are pissed at Russia for refusing to cut more so it's a pox on all our houses.

[Weitz]

Originally Posted by Wormius

What is the reason for this? Is OPEC looking to kill competition or does it see this as cooling desire to explore alternative energy sources?

US shale is reeling. Trying to kill them.

[DiracSpike]

Tough to overstate how awful this news is. Opec+ breaking up is worse than anyone’s expectations for worst case scenario. Shale production was already slowly turning over as banks put the squeeze on for profitability and the Permian became more consolidated with large companies, but it sounds like the Russians are pissed and want to take a blowtorch to American interests instead of being patient. The ironic thing is the first price war didn’t kill shale, and that was when it was a bunch of scattered no name producers. Now that it’s mainly big companies like Exxon and Chevron it’s going to take longer to inflict the kind of damage the Russians are looking for, meanwhile everyone else including them and Saudi are going to get dicked on the price. Millions of barrels are going to be added to the market while millions are coming off from demand losses, it looks like it could be one of the biggest shocks in the history of the oil market. The consequences will be awful here. We’re gonna see more layoffs, more decline in property values, more people leaving the province. This even increases the risk on TMX and keystone getting built too. This is just a brutal brutal development and it’ll only end when Russia and Saudi both come to their senses, who knows when that will be.

[GGG]

Originally Posted by Aarongavey

Is there a report that shows that oil sands barrels are comparable to Middle East crude in terms of GHG’s? Or Norway? I have never seen it, seen plenty that say the opposite.

It certainly isn’t compatible to the average middle eastern barrel. I fully agree. But the question isn’t average. It’s marginal barrel.

If Canada doesn’t produce its barrel what barrel replaces it.

And here is an example of the marginal Middle East barrel

https://www.mees.com/2019/4/19/news-...e-31bada05d658

Inject steam in the ground to get oil out.

[bizaro86]

Originally Posted by DiracSpike

Tough to overstate how awful this news is. Opec+ breaking up is worse than anyone’s expectations for worst case scenario. Shale production was already slowly turning over as banks put the squeeze on for profitability and the Permian became more consolidated with large companies, but it sounds like the Russians are pissed and want to take a blowtorch to American interests instead of being patient. The ironic thing is the first price war didn’t kill shale, and that was when it was a bunch of scattered no name producers. Now that it’s mainly big companies like Exxon and Chevron it’s going to take longer to inflict the kind of damage the Russians are looking for, meanwhile everyone else including them and Saudi are going to get dicked on the price. Millions of barrels are going to be added to the market while millions are coming off from demand losses, it looks like it could be one of the biggest shocks in the history of the oil market. The consequences will be awful here. We’re gonna see more layoffs, more decline in property values, more people leaving the province. This even increases the risk on TMX and keystone getting built too. This is just a brutal brutal development and it’ll only end when Russia and Saudi both come to their senses, who knows when that will be.

The one potential positive is this will let the market see what Saudi Arabia actually has for capacity if this goes on for very long. If it turns out that number is actually 10.5 mmbbl/d instead of the 12.5 mmbbl/d they claim they have, that would be supportive in the long run.