Fifty dollar Oil here to Stay

[Mangosteen]

http://video.cnbc.com/gallery/?video=3000612211

Interesting comments from the dude that predicted the oil crash a few years ago. Sixties for the price seems to be elusive so we either stay at 50 or break into the seventies. His call now is that fifties are here long term. The death of heavy oil ? Tar sands are kaput!
I heard another major player in Tar sand wants to unload.
Only hope is non conventional multi frac up in the NE area.

Maybe Justin will have a solution like his old man.

[tundraltd]

Things may change with the USA North Korea issue, I see the North Korea Leader told Trump he can sink his air craft carrier with one missile so this may get out of control but I sure hope not. JMTC

[srs123]

short answer, he is right.

long answer, oil needs to stay in the $40 to $60 gap for the good of oil companies. the high oil prices in the last few years results in massive investments in solar and wind in many countries over the past decade as the prices of energy from oil and from solar are in the same ball park.

if they keep the prices suppressed to a max of $60 then it wouldn't make sense to invest in solar or wind and this is what the saudis and every oil producing country have figured.

oil sands will need to become more efficient. I do think that current operating practices of open pit mining will become obsolete in the next few years and we will move on towards automated plants and SAGD plants

[Fur]

Originally Posted by srs123

short answer, he is right.

long answer, oil needs to stay in the $40 to $60 gap for the good of oil companies. the high oil prices in the last few years results in massive investments in solar and wind in many countries over the past decade as the prices of energy from oil and from solar are in the same ball park.

if they keep the prices suppressed to a max of $60 then it wouldn't make sense to invest in solar or wind and this is what the saudis and every oil producing country have figured.

oil sands will need to become more efficient. I do think that current operating practices of open pit mining will become obsolete in the next few years and we will move on towards automated plants and SAGD plants

The goal of all companies are to cut costs. I think the high price of oil was a disservice to the oil sands companies. They had money to burn rather than looking into improving efficiencies. Look at the cost of labour. Looks like wages have been trimmed significantly. Other cost cutting measure will be implemented and I can see $50 oil profitable, maybe not now, but in the future.

[Sushi]

If Penn West (or many other producers still suffering) ever turns another profit, I will know that whatever oil price they need for that is the price oil needs to be at for our province. They have trimmed and trimmed and rooted out as many inefficiencies as possible, except for those brought in by tighter provincial regulation and inspection. They are close and Q1 2017 results after oil hovering around $50 might just be the tipping point (at the current USD exchange rate).

[I_forget]

Suncor and cnrl will continue to make profits. And if anyone can it's them. They could still cut further. Open pit mining is cheap. Cheaper than most sagd operations. BP is rumoured to be selling their assets as well. Good, more Canadian owned assets. We sell land and companies to foreigners when oil is high and buy when it's low. The Chinese got hosed on Nexen. Paid billions now worth probably $500 mil. Companies like crescent point still can't make profits they will be toast before the big oil sands companies.

[ak-71]

What I don't hear often is that besides just numbers on the chart there are other questions experts usually choose to omit.

With exploration, essentially, halted while global demand continues to rise (most agree that it will even with growing renewable energy):
1. How much capacity to satisfy demand traditional producers with mature fields have, nobody really knows what shape Saudis are in, for example.
2. When older projects start to produce less and no new fields come online -how much can shale producers do to continue to increase production and be, actually, profitable - will sweet spot drilling and choking service companies be possible if they have to increase production to compensate?

[The Elkster]

Complete and utter bunk that isn't grounded in reality whatsoever. We are burning close to 100 MILLION bbl/d every day and GROWING even in the face of this supposed renewables revolution which if it was such a revolution should at least be able to cap O&G demand. And keep in mind that some of the worlds biggest pools, in the best case scenario, are in the twilight of their productive years without any giant pools waiting in the wings. We are setting up for one heck of a whiplash affect.

There is not one single driver to obtain that 100 mm bbl/d but a myriad of different projects all fighting natural declines and finite resources. US shale is a spit in the bucket at 3-4 mmbbl/d regardless of the self promoting headlines of endless reserves and unlimited production. The reality is that shale comes with massive cost and effort and an ever quickening decline treadmill (cost of US shale has been greatly underestimated as per SEC filings Vs oil company media spin). Most have no appreciation for the technical problems associated with shale and of course companies don't talk about such negative issues as real as they may be. Biggest being that the decline rates on these wells are so big that you need +50% of well count each year just to stave off declines from previous years wells. (ie if you drill 5 wells at 250bbl/d that decline +50-70% in their first year you need to drill +2.5 wells the next year just to maintain production rates). Massive costs just to maintain production. Now multiply that by thousands of wells in decline and you might see why some O&G experts aren't as concerned about current US rig counts boosting production through the roof as much some of our armchair headline readers.

To produce 100mmbbl/d its takes a tonne of effort across the planet and that has not changed in the last two years. Effort/budgets have been greatly reduced however and that's a problem. In fact every year it gets technically and physically more challenging to get that 100mmbl/d out of the ground as we have no choice but to target the harder deeper reserves as conventional reserves decline. Production comes from a huge variety of locations with numerous technical and political issues that complicate the cost and supply structure. For instance Saudi can drill and produce oil very cheaply BUT all of their countries infrastructure and political stability is dependant on oil revenue not just O&G so for the country and their oil industry to stay afloat they need prices far higher than their cost of production to balance the books. They can't operate in the red forever. More than one country is in that boat I might add. Couple that with the fact that many non-OPEC countries and their O&G interests are just treading water or losing money at todays prices (again see regulatory filings Vs company promotional presentations) and cutting budgets accordingly and we have the making for the next oil boom.

There is just way too much misinformation out there right now. Everyone and every headline is towing the party line of "we have unlimited oil at all time low finding costs" which is total bunk. Classic herd behavior. When things are on the way up things are will most definitely go the the moon. When things are going down the only place we will end up is the basement. Then reality hits and there is a rather large wake up call and the herd finally turns after the investment opportunity has come and gone.

Right now excessive storage due to excessively high oil prices of +$100 has everyone feeling very comfortable that cheap oil is a shoe in forever. Talk to me again in 36 months after that storage is shrunk and I'm betting we'll all be singing a different tune.

100mmbbl/d of oil is a BIG undertaking at the best of times.

Bit of investment advice...it rarely pays to follow the herd. The herd says oil is no longer relevant or valuable in the face of endless easy oil reserves and its inevitable demand destruction in the face of renewables. Invest accordingly. Good luck

[ronkaren]

as long as oil companies continue to hire consultants, there is still money in the oil business.

[I_forget]

This province needs to budget like oil will stay at $50 oil. Can't be paying government workers like oil is $100 / barrel. Because cutting wages when oil drops hasn't worked in the public sector need to treat $50-$60 as normal, $80 as a bonus

[The Elkster]

"This province needs to budget like oil will stay at $50 oil. Can't be paying government workers like oil is $100 / barrel. Because cutting wages when oil drops hasn't worked in the public sector need to treat $50-$60 as normal, $80 as a bonus "



Not just the gov't. Everyone should have been budgeting and saving that way. Had workers saved assuming only a 50-60 oil price many would have been in much better condition to handle this inevitable downturn...remember the bumper sticker. I'm sure everyone and every gov't has learned for next time though...surely

[Capt. awesome]

Originally Posted by The Elkster

"This province needs to budget like oil will stay at $50 oil. Can't be paying government workers like oil is $100 / barrel. Because cutting wages when oil drops hasn't worked in the public sector need to treat $50-$60 as normal, $80 as a bonus "



Not just the gov't. Everyone should have been budgeting and saving that way. Had workers saved assuming only a 50-60 oil price many would have been in much better condition to handle this inevitable downturn...remember the bumper sticker. I'm sure everyone and every gov't has learned for next time though...surely

Some people will look at all of the recent oil price downturn as a learning experience while many others wont even remember it if the price starts to rebound and go back to spending instead of saving.

[Newview01]

Originally Posted by The Elkster

Bit of investment advice...it rarely pays to follow the herd. The herd says oil is no longer relevant or valuable in the face of endless easy oil reserves and its inevitable demand destruction in the face of renewables. Invest accordingly. Good luck

Wouldn't one be following the herd by investing in renewables at this point? Its been the word of the day for a couple years already...

[JustMe]

Originally Posted by I_forget

This province needs to budget like oil will stay at $50 oil. Can't be paying government workers like oil is $100 / barrel. Because cutting wages when oil drops hasn't worked in the public sector need to treat $50-$60 as normal, $80 as a bonus

Are Alberta government employees honestly being paid higher or the same as their other provincial counterparts? If so, yes they should be brought down to pare. If not, let's move on to more realistic cost saving measures, like all the special interests factions.


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[The Elkster]

Originally Posted by Newview01

Wouldn't one be following the herd by investing in renewables at this point? Its been the word of the day for a couple years already...

I think you misunderstood my point. I agree that the current herd is against O&G and is pro renewables...invest accordingly. Buying into a depressed market (O&G) with lots of negative sentiment swirling around is hard to do but generally a winning strategy if one wants better than average returns.

[HeavyD111]

Originally Posted by JustMe

Are Alberta government employees honestly being paid higher or the same as their other provincial counterparts? If so, yes they should be brought down to pare. If not, let's move on to more realistic cost saving measures, like all the special interests factions.

Not more than others, SK gov pays better in most respects than AB.

I have worked 2x for SK gov in corrections and natural gas, and from what I experienced the wages are decent but nothing special. My pay as an operator in potash beats the best i made in those positions by at least 40k, and I am on the lower scale of PE $.

[Smokey]

Originally Posted by tundraltd

Things may change with the USA North Korea issue, I see the North Korea Leader told Trump he can sink his air craft carrier with one missile so this may get out of control but I sure hope not. JMTC

Oh gosh that place would be a parking lot...two madmen with big egos....

[elkdump]

Originally Posted by Smokey

Oh gosh that place would be a parking lot...two madmen with big egos....

Yeh, but only one of those two ego manics has thousands of Long Range Nukes that actually are working

[Sleddawg]

Originally Posted by ronkaren

as long as oil companies continue to hire consultants, there is still money in the oil business.

As in well site supervisors or in house downtown consultants?

[JustMe]

The need for petroleum products won't end tomorrow, but it's hey-day has probably come and gone and we'll not likely see a great boom again. Alberta needs to start a plan today for the diverse industry it will need in the near future. Even the Saudi's see the writing on the wall and what the future holds.

https://www.washingtonpost.com/busin...=.59bc7f393f28


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[Scott h]

Originally Posted by JustMe

Are Alberta government employees honestly being paid higher or the same as their other provincial counterparts? If so, yes they should be brought down to pare. If not, let's move on to more realistic cost saving measures, like all the special interests factions.


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Alberta pays considerably higher wages in health care than does BC. This despite the fact that the cost of living is much cheaper in Calgary or Edmonton than Vancouver.

[Fur]

Originally Posted by JustMe

The need for petroleum products won't end tomorrow, but it's hey-day has probably come and gone and we'll not likely see a great boom again. Alberta needs to start a plan today for the diverse industry it will need in the near future. Even the Saudi's see the writing on the wall and what the future holds.

https://www.washingtonpost.com/busin...=.59bc7f393f28


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We always want just one more boom though!

[JustMe]

Originally Posted by Scott h

Alberta pays considerably higher wages in health care than does BC. This despite the fact that the cost of living is much cheaper in Calgary or Edmonton than Vancouver.

For which health care workers, front line doctors and nurses, admin staff, orderlies? Likewise, it may be cheaper to live in other locations in BC than Calgary or Edmonton.


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[Scott h]

Originally Posted by JustMe

The need for petroleum products won't end tomorrow, but it's hey-day has probably come and gone and we'll not likely see a great boom again. Alberta needs to start a plan today for the diverse industry it will need in the near future. Even the Saudi's see the writing on the wall and what the future holds.

https://www.washingtonpost.com/busin...=.59bc7f393f28


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Went to the auto show this year and there was a huge assortment of electric vehicles being offered. It will be interesting when Tesla starts shipping their model 3 this summer (400k pre-orders!!!).
We may just be at the beginning of a massive change (think cell phones vs land lines) and that can't be be good for oil demand/price.

[JustMe]

Originally Posted by Fur

We always want just one more boom though!

LOL and that's the truth ladies and gentlemen!


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[Scott h]

Originally Posted by JustMe

For which health care workers, front line doctors and nurses, admin staff, orderlies? Likewise, it may be cheaper to live in other locations in BC than Calgary or Edmonton.


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Top level bedside nurse is $43 vs $50, Respiratory Therapist $34 vs $46, etc.
Very similar house in North Vancouver ($1,400,000) vs Calgary ($450,000).

[bigskinner]

Never could understand why we have to depend on opec to set the price of oil , we have our own oil in this country , can we not regulate our own oil and set our own prices

[Olthreelegs]

Originally Posted by The Elkster

Complete and utter bunk that isn't grounded in reality whatsoever. We are burning close to 100 MILLION bbl/d every day and GROWING even in the face of this supposed renewables revolution which if it was such a revolution should at least be able to cap O&G demand. And keep in mind that some of the worlds biggest pools, in the best case scenario, are in the twilight of their productive years without any giant pools waiting in the wings. We are setting up for one heck of a whiplash affect.

There is not one single driver to obtain that 100 mm bbl/d but a myriad of different projects all fighting natural declines and finite resources. US shale is a spit in the bucket at 3-4 mmbbl/d regardless of the self promoting headlines of endless reserves and unlimited production. The reality is that shale comes with massive cost and effort and an ever quickening decline treadmill (cost of US shale has been greatly underestimated as per SEC filings Vs oil company media spin). Most have no appreciation for the technical problems associated with shale and of course companies don't talk about such negative issues as real as they may be. Biggest being that the decline rates on these wells are so big that you need +50% of well count each year just to stave off declines from previous years wells. (ie if you drill 5 wells at 250bbl/d that decline +50-70% in their first year you need to drill +2.5 wells the next year just to maintain production rates). Massive costs just to maintain production. Now multiply that by thousands of wells in decline and you might see why some O&G experts aren't as concerned about current US rig counts boosting production through the roof as much some of our armchair headline readers.

To produce 100mmbbl/d its takes a tonne of effort across the planet and that has not changed in the last two years. Effort/budgets have been greatly reduced however and that's a problem. In fact every year it gets technically and physically more challenging to get that 100mmbl/d out of the ground as we have no choice but to target the harder deeper reserves as conventional reserves decline. Production comes from a huge variety of locations with numerous technical and political issues that complicate the cost and supply structure. For instance Saudi can drill and produce oil very cheaply BUT all of their countries infrastructure and political stability is dependant on oil revenue not just O&G so for the country and their oil industry to stay afloat they need prices far higher than their cost of production to balance the books. They can't operate in the red forever. More than one country is in that boat I might add. Couple that with the fact that many non-OPEC countries and their O&G interests are just treading water or losing money at todays prices (again see regulatory filings Vs company promotional presentations) and cutting budgets accordingly and we have the making for the next oil boom.

There is just way too much misinformation out there right now. Everyone and every headline is towing the party line of "we have unlimited oil at all time low finding costs" which is total bunk. Classic herd behavior. When things are on the way up things are will most definitely go the the moon. When things are going down the only place we will end up is the basement. Then reality hits and there is a rather large wake up call and the herd finally turns after the investment opportunity has come and gone.

Right now excessive storage due to excessively high oil prices of +$100 has everyone feeling very comfortable that cheap oil is a shoe in forever. Talk to me again in 36 months after that storage is shrunk and I'm betting we'll all be singing a different tune.

100mmbbl/d of oil is a BIG undertaking at the best of times.

Bit of investment advice...it rarely pays to follow the herd. The herd says oil is no longer relevant or valuable in the face of endless easy oil reserves and its inevitable demand destruction in the face of renewables. Invest accordingly. Good luck

and here we have more of this misinformation that you speak of. thanks for pointing that out boss. even the slightest amount of research would indicate that what you have just stated is pie in the sky dreaming!! fact is there is a glut because the old narrative of these oil supplies drying up is a farce. oil reserves around the world are basically endless.

[JustMe]

Originally Posted by bigskinner

Never could understand why we have to depend on opec to set the price of oil , we have our own oil in this country , can we not regulate our own oil and set our own prices

But it's all about $$ for the shareholders. If they can get crude cheaper from the Middle East and maximize profits, guess what? Hence the high gas prices in Canada. Rip off the public to maximize profits. Other countries won't put up with it. Gas in Missoula has been <$2.50 a gallon forever. Prices just keep going up in Alberta. I thought oil and gas was a global commodity?? Not in Canada b


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[13mileranch]

Originally Posted by bigskinner

Never could understand why we have to depend on opec to set the price of oil , we have our own oil in this country , can we not regulate our own oil and set our own prices

You bet we can. Trudeau Sr. tried it. Maybe little potatoe will give it a go.