16 percent rig utilization Jan 4
Incredible.
Now that the north is frozen in ( or could be ) today's rig utilization is only 16 percent in contrast to around 90 percent for this most opportune time for muskeg access. Never thought I would ever see the day. The ripple effect of this will be incredible all over the province. No end in sight yet. I wonder how much marginal production is going to be shut in next. |
Its over.
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Equipment
I wonder what the banks are going to do with all the equipment.
Ritchie Bros will be interesting in the next few months. |
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Yup not good, the refinery is reduced to 60 % capacity throughput because all the tanks are full and no buyers. Strange how diesel price will not drop below 90 though. Thieves.
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The auction house always does well!
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Doesn't leave me feeling warm and fuzzy inside...
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New York Goldman Sachs
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Well with no rigs running and no hauling, no dozers running, no water trucks, no generators etc. Not to mention all the completions and testing operations suspended. Stimulation gone. Pipelining gone. I bet the only drilling going on is to prevent leases from expiring or farm in commitments to hold land. Nothing more. Dismal. We just shut down around 3000 gallons a day times 500 rigs and not even counting the ripple effect so diesel demand is no longer there. I wonder if the planners are going to double or triple the police force in the province. I can see a big crime spree coming. |
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Where I'm at they've been shutting in marginal producers for over a year. When the price was high everything in the field was driven by volume. The transition at this point has been to everything being driven by pure economics. Which had to happen and is proving that you can still be profitable but at a smaller margin. I'm speaking of a transition from heavy to conventional also. Conventional has always been driven by economics. As a company we are almost bang on with the average for activity industry wide at 16%. I've been watching a lot of the RB sales and agree with previous posts that equip will still move even if it is going south. There has not been near the level of bidding from the floor as previous. |
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If you have people out of work for a long time with families to feed, they may resort to criminal activity to survive. How many lost youth sling dope on the corner because that's all they can do to make a buck? Not just drug addicts steal when times are tough. A good reminder to those of us still employed to help out our food banks, clothing banks, soup kitchens, and shelters. |
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So yes, I would say that the current situation does share some similarities to the "lost youth selling dope" analogy. I'm not going to say its not a tough situation, I'm sure that there are actually people out there that literally can not find work... but I see a lot of people that are willing to do any number of desparate things rather than take an entry level job, cancel their cell phone plan, and quit smoking... Me, I'm sitting pretty good this time, but last slump I did what I had to, took what work was available and cut my costs wherever I could. |
It sure is sad.
Most years, the lineup at the cardlocks in the mornings is 10 trucks deep here. This year...I don't have to wait for anyone. Im so happy I got away from the upstream side this year...production is never 100% safe..but im sleeping better at night. |
Before this gets political, it's not just an Alberta event, but all over. The new "norm" for the foreseeable future is $50/Bbl oil. Diversification is the key for Alberta and Canada. Time to get back to producing consumer goods, instead of just raw materails and there by supporting foreign ecomomies...
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Any jurisdiction in the world would give anything to have the natural resources Alberta has. Oil, NG, coal etc.
All we have done is mismanage it with the inability to realize global market prices and now we want to diversify into something else? Like what? I hear military weapon sales are hot right now. Anyone know how to build a fighter jet? When, as a nation, we cant even build a pipeline.... |
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Who knows, maybe the Saudis will bring the price back up to fill the coffers to deal with Iran... |
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Nortel? Oh you mean the New National Defence Head Quarters Complex?
At least some of the money used to subsidise them came in handy .. |
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Not sure but $50 a bbl is pretty darn good price. We got greedy when the price hit $100. 08/09 was my busyest year despite being down for 3 months.
Right now Service companies are hiring. Where I work all three service lines coil frac and cement are booked solid untill spring. What I have witnessed is for every 10 seasoned workers we hire only 2 or 3 of them are wOrth paying. I would rather hire green guys and train then put up with lazy disrespectful should have got out 10 years ago workers. Yes it is slow. Drilling is different then it was 1, 5, 10, even 20 years ago. What 4 rigs did 10 years ago 1 rig does now. What use to be a 2 month hole is a 3 week hole. What took 6 wells to produce only takes one well. On one hand efficiencys have made the job quicker, on the other hand it has made the need for equipment less. The cost of producing a single well has doubled or even tripled in price. The production of that one well have quaddroupled. We had a frenzy at $100 bbl. Now we have effeciency. Lower rig count same production. It sucks but the new reality |
I work with new wells and reserves regularly and I will say that the amount of reserves/well/$ has gone way down continuously not up as CTD suggests. Sure initial rates are high and initially these wells can look like boomers but if you run typecurves of the average well performance and look at the ultimate recoverable gas that number is smaller than we used to get with simple cheap vertical wells (and the same goes for oil). We used to regularly see 1-5 BCF gas out of a $500k vertical gas well and I've seen vertical wells at +20BCF. Now that we are working the very tight poor permeability source rock we are spending +3million per horizontal hoping to get similar cum production to the old verticals. That is not an improvement.
Much is made of out technological advances but technology doesn't change poor rock. Most of the recent improvement in well performance in the US is not due to tech improvements but rather a high grading of prospects and spending gobs of capital. Of course you'll see a volume/well improvement if you stop drilling the bottom 50% of your prospects. Also if you throw endless money at longer horizontals and more fracs you can get higher rates and reserves but at what price. If you care to learn more on some of the unconventional details and analysis of various O&G trends check out this link... http://www.artberman.com/ Based on my experience Art is pretty much on point with cutting through some of the BS and digging into the real numbers...not just those spoon fed/cherry picked by various companies trying to boost their stock price. |
Right On
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Just like they used to say all along " you can't make a silk purse out of a sows ear " Drilling has advanced nicely but the reservoirs are still the challenge. Not like in Iraq where we would punch a hole for seven million and free flow 7 thousand barrels a day crude. |
STFU with this diversify BS!!!
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16 percent rig utilization Jan 4
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Nobody is ignoring it. That was never the point. It's just that for the foreseeable future there is no real market for our crude. There is nothing left or right wing about it. If we want to sustain our province we need to look at all other options or we stand to die a slow death, we can't afford to wait 10 years for oil prices to rebound enough to make Alberta crude viable again. Folks have to quit talking the political crap and recognize our plight for what it is. Diversification has nothing to do with alternative energy sources and everything to do with farming, ranching, logging, pulp and paper, manufacturing, refining etc etc. Our people need jobs and now and for the next long while the oil patch isn't going to keep all those people employed. |
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One if the biggest issues is that of a local solution not a global.
Canada has always had and always will have a resource based economy. Untill we plan for that and openly admit that is what we are we will always have dramatic down turns that effect us substantially. What we should be doing is planning as a country, not spending every dollar and then some made off natural resources revenue. That includes mining, forestry fishing, oil and gas etc. That money should be split into a emergency fund and general fund. Not all spent as general revenue. No matter what resource you go after, fish, trees, oil, gas, coal, gold. The easy stuff is gone. The cost of doing business is up if we want to keep producing at the rates we have or even increase. The glut of Oil and gas is due to the increase in production world wide. Not just here and the US. The days gone where a well is drilling perfed and flowed at insane rates in most areas. Interesting on numbers. I wonder how those wells up north are flowing, yes initial drilling and stimulation costs are up. The easy stuff is gone. But some of those wells are flowing extremely high rates and have been for a few years. How do those numbers compare to the vertical wells? I am not sure but since horizontal wells have been introduced especially in the fluid bearing formations the production per well have gone up. At least that's what the operators have noticed. |
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Well, Hal if we subscribe to your philosophy, then barring a unrealistic jump in oil prices, that none of see happening, the tens of thousands of recently unemployed here in Alberta better beat the rush and look for jobs in the other provinces. Won't be any jobs here for years.... And sad to say, that may become a fact if we keep our heads buried in the sand and don't look to other industries. |
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You don't have to spend the money to go to other Provinces...there won't be anything there either. But wait, you could stay here and get a minimum wage job for 15 bucks an hour. Seriously by Spring a minimum wage job will be a rare commodity. |
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