Official (Alberta) Oil Discussion Thread

[Weitz]

Originally Posted by Lubicon

US shale producers are like cockroaches. Last time the Saudi's tried this they decimated the North American industry and as soon as prices went up they came right back. It will be painful here but if the long term strategy is for them to permanently put the shale producers out of business I'm not sure that works.

Plus how long can they go with low prices, they have an government that relies on oil revenue for the vast majority of its revenues for the country as a whole. I had heard a few years ago that their spending promises to the people would require $100+ oil to fund.

Nobody wins in a price war.

Lots of debt on the shale side in the US these days. They won't be so resilient this time. The shale market was having issues prior to all this.

[Flash Walken]

Originally Posted by burn_this_city

Texas Railroad Commission considering managing production.

Explain please

[Vansmack]

Originally Posted by accord1999

Energy indepedence is a key policy of the Trump Administration. I would think they would unwilling to see domestic production drop 1/3 to 2/3 and making the US a major importer again.

I suspect you are correct, but at least they've proven they can be energy independent. I worry that at a certain point these price wars are viewed as an actual attack on the US economy, with a different form of retaliation.

[Weitz]

Originally Posted by Flash Walken

Explain please

Don't want their production to drop too much in an attempt to save companies and have to import oil I imagine.

[burn_this_city]

Originally Posted by Flash Walken

Explain please

Similar to here they would probably curtail production to put a floor on prices. It might also be an olive branch to OPEC that the Americans are willing to shut in to balance the market. I've everyone curtailed 8-10% globally through this crisis you would prevent massive inventory overhang that might take years to resolve.

[nik-]

Originally Posted by Flash Walken

Explain please

For clarification the "Railroad Commission of Texas" regulates the oil industry in Texas. Not exactly a properly descriptive name.

[Weitz]

Originally Posted by burn_this_city

Similar to here they would probably curtail production to put a floor on prices. It might also be an olive branch to OPEC that the Americans are willing to shut in to balance the market. I've everyone curtailed 8-10% globally through this crisis you would prevent massive inventory overhang that might take years to resolve.

The issue is I don't suspect a lot of big US shale players can survive on a curtailment. They were already on a treadmill that was quickly gaining steam prior to this.

[burn_this_city]

Originally Posted by nik-

For clarification the "Railroad Commission of Texas" regulates the oil industry in Texas. Not exactly a properly descriptive name.

Oh yeah good point, such a ridiculous name.

[Flash Walken]

Originally Posted by burn_this_city

Similar to here they would probably curtail production to put a floor on prices. It might also be an olive branch to OPEC that the Americans are willing to shut in to balance the market. I've everyone curtailed 8-10% globally through this crisis you would prevent massive inventory overhang that might take years to resolve.

Im wondering about what that mechanism would be.

You've got 4 players in the region and they all agree to cut prodicution 2%?

Specific well sites get shut based on their long term viability?

Wondering what that might actually look like on the ground

Would you have to cut refining capacity as well in that instance?

[burn_this_city]

Originally Posted by Flash Walken

Im wondering about what that mechanism would be.

You've got 4 players in the region and they all agree to cut prodicution 2%?

Specific well sites get shut based in their long term viability?

Wondering what that might actually look like on the fround

Would you have to cut refining capacity as well in that instance?

Not sure to be honest, if it's like here everyone was allowed a certain amount of production based on previous trailing months. You end up with a quota you can pump to. I guess most producers would look at laggard wells that aren't producing profitably and shut those in.

Refiners will manage utilization independently on their own. Last inventory report the US refiners were only operating at 85ish%. Interestingly the report which is trailing 4 week lookback on fuel demand, showed everything was flat or slightly up over 2019 except for jet fuel.

[GGG]

Originally Posted by Flash Walken

Im wondering about what that mechanism would be.

You've got 4 players in the region and they all agree to cut prodicution 2%?

Specific well sites get shut based on their long term viability?

Wondering what that might actually look like on the ground

Would you have to cut refining capacity as well in that instance?

The AER just gave everyone a quota based on their previous six months of production and allowed a market to buy and sell quota.

[SebC]

Originally Posted by DoubleF

I had this debate with a friend once which stemmed from an Energy East debate.

He said that energy independence would actually be illegal for Canada at an international level (I think he said it was NATO rules).

It might also contravene some of our free trade agreements to ban oil imports.

[Envitro]

Originally Posted by bizaro86

Maybe. Carbon intensity of other oils is pretty high as well, and environmental regulations are not as strict as Canada basically everywhere. As just one example, the Permian is now flaring/venting an estimated 750 million cubic feet of gas per day. That is equivalent to ~5% of Canadas gas production getting converted directed to atmospheric greenhouse gases because the american rules don't require producers to do anything with it. That carbon into the atmosphere should absolutely be included in the carbon intensity of their oil.

I know making steam for sagd is carbon intensive, but more and more of it is cogen now (which reduces carbon emissions elsewhere) and I don't particularly trust the comparative emissions reporting from other countries.

Originally Posted by SebC

It might also contravene some of our free trade agreements to ban oil imports.

I don't think we need to ban it, I think we just need to make it "socially unacceptable" to import and use foreign energy

[Leondros]

Originally Posted by Flash Walken

Explain please

https://oilprice.com/Latest-Energy-N...thinkable.html

[Envitro]

Originally Posted by Leondros

https://oilprice.com/Latest-Energy-N...thinkable.html

It basically means that Trump is probably going to lose his #### on the Saudis, and directly or indirectly strike back (figuratively or literally, not sure which at this point). This is how real wars get started, not just price wars.

[nik-]

Originally Posted by Envitro

It basically means that Trump is probably going to lose his #### on the Saudis, and directly or indirectly strike back (figuratively or literally, not sure which at this point). This is how real wars get started, not just price wars.

Do you think the Saudis or the Russians give a #### what Trump says anymore? He's done, everyone knows it, he's no longer useful. It would be better to send Biden to deal with them at this point.

[Mayo]

Originally Posted by Weitz

The issue is I don't suspect a lot of big US shale players can survive on a curtailment. They were already on a treadmill that was quickly gaining steam prior to this.

I think the best way to look at curtailment is:

Would you rather sell 10 barrels @ $20 OR 9 barrels at $30?

[Weitz]

Originally Posted by Mayo

I think the best way to look at curtailment is:

Would you rather sell 10 barrels @ $20 OR 9 barrels at $30?

The irony of course is that they can’t survive at either.

[Envitro]

Originally Posted by nik-

Do you think the Saudis or the Russians give a #### what Trump says anymore? He's done, everyone knows it, he's no longer useful. It would be better to send Biden to deal with them at this point.

The problem is that I don't imagine that the U.S. will be saying anything at this point to correct the issue. I foresee brute force being the approach, in whichever way this occurs, either direct action or indirect/covert.

[accord1999]

Originally Posted by Envitro

The problem is that I don't imagine that the U.S. will be saying anything at this point to correct the issue. I foresee brute force being the approach, in whichever way this occurs, either direct action or indirect/covert.

An option would be to support the anti-Mohammed bin Salman faction. Without American support, he's much more vulnerable.

Another option would to for US/Canada to embargo Russian and Saudi oil. Maxed out production in Canada and US is nearly enough for self-sufficiency.