16 percent rig utilization Jan 4

[hillbillyreefer]

I can't believe it's that high, it wil get worse. Factor in low energy prices and a government elected on a mandate to destroy every industry in Alberta, except civil service, what did anyone expect was going to happen?

Maybe we should raise taxes, and toss in a carbon tax to make things better.

Stupid voters create their own misery. Enjoy it!

[79ford]

Less oil drilling is the best thing that can happen during an oil glut, maybe companies will finally stop trying to increase production this year vs trying to pump more to make up revenue shortfall on the quantity side.

[muskrat]

As Merle Haggard says in his - "are the good times really over for good " . Well from seeing this type of roller coaster for over 40+ years in AB, and the vastly changed world geopolitics I would say yeah .... Time for the mass migrations outbound to happen until the diversification reveals itself. Only resource left yet to fritter away is the land. Perhaps expand tourism by adding more ski hills, interpretive hikes through ghost oil and lumber towns , or setting up dude ranches on leased land.
Doubt if any political party could rescue the drowning Alberta Advantage for the foreseeable future. Too bad for our childrens opportunities and expectations.

[SBE2]

Originally Posted by JustMe

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.

In all likelihood, this will be happening. Many thousands will return to where they originally came from and possibly almost as many will head out of province to land work. That is the potential reality of the situation. Please explain what you mean or lay out your grand game plan for "looking to other industries"? When we as a province are currently not attractive at all for business investment right now, and don't suggest any that are going to have to be heavily subsidized by tax payer money. Ok, go.....!

[martinnordegg]

Well oil is off over a buck again this morning. Our dollar went below the 71 cent mark for a bit. Looks like another week of decline.

Just overnight our Provincial Govt. will have to find another 170 million to make up the royalty shortfall.

[Mangosteen]

If the inventory storage problem is as acute as Goldman Sachs predicted for North America the next stop will be 29 bucks a barrel.

I can see lower levels of inventory in your sporting goods stores. That Lund or Ranger fishing boat just got so much more to buy.

Above this the Royal Bank just announced they are raising Mortgage Rates.

The perfect storm.

[hillbillyreefer]

I'm predicting '80s bad. With the amount of personal debt out there, small upticks in interest are going to be extremely painful.
Junior O&G companies have started falling like dominos, the loss of work from those companies will snowball throughout the service sector. Once the trades and equipment guys take a hit every other business will start to suffer also.
With the dollar in free fall all our imported goods will continue to increase in price, consumers are already seeing that in groceries, soon it will be apparent in big ticket items too.
It's going to get ugly, batten down the hatches.


I hope I'm wrong!

[Mangosteen]

My prediction is that it will be quite a bit more worse than the 80's.

The 80's were not easy for some but this one is a tsunami.

[rugatika]

Originally Posted by hillbillyreefer

I'm predicting '80s bad. With the amount of personal debt out there, small upticks in interest are going to be extremely painful.
Junior O&G companies have started falling like dominos, the loss of work from those companies will snowball throughout the service sector. Once the trades and equipment guys take a hit every other business will start to suffer also.
With the dollar in free fall all our imported goods will continue to increase in price, consumers are already seeing that in groceries, soon it will be apparent in big ticket items too.
It's going to get ugly, batten down the hatches.


I hope I'm wrong!

Me too. I've never seen entire fields getting shut in like this before.

[hillbillyreefer]

I was out on a tour yesterday with a fellow outdoorsman that works for a junior/intermediate oil company, we looked at three fields/batteries that are suspended. They were profitable at $70-$80/barrel, but not now. I'm guessing somewhere around 200SI wells. It takes a lot of expenditure and creates a lot of jobs looking after that many wells, it affects everyone in the small surrounding area, right from the waitress in the restaurant on upto the corner office guys.

This was just one company, there are several around here. This company will most likely shut down several more marginal properties before breakup.

It was nice having grocery stores, in town.

[fargineyesore]

Originally Posted by JustMe

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.

Yeah the other provinces love Albertans working there. They get treated so well.

[avb3]

I remember the days some of us were laughed at and ridiculed because we dare said $100 oil was unsustainable and don't make plans based on that amount. Some of us warned about wages and personal expenditure excesses and were told not to project or that we were jealous, or a detailed analysis that we didn't understand the industry.

Except an industry sustained by debt and dependant on cash flow to service that debt never makes long term sense.

But some of us BTDT and learned. Maybe those lessons from way back will finally sink in now. The euphoria of a boom is hard to avoid until the boom does what booms do... crash.

Many will be hurt by this. For some, especially with young families, and who did not go to excesses, will still be caught up in the mess, and be hurt badly. I feel true empathy for them.

Those that needed all those $70K high rise trucks? Get over it, get a real trade or education, and rebuild. Six years from now, you will be in much better shape.

[Skytop B]

Originally Posted by avb3

I remember the days some of us were laughed at and ridiculed because we dare said $100 oil was unsustainable and don't make plans based on that amount. Some of us warned about wages and personal expenditure excesses and were told not to project or that we were jealous, or a detailed analysis that we didn't understand the industry.

Except an industry sustained by debt and dependant on cash flow to service that debt never makes long term sense.

But some of us BTDT and learned. Maybe those lessons from way back will finally sink in now. The euphoria of a boom is hard to avoid until the boom does what booms do... crash.

Many will be hurt by this. For some, especially with young families, and who did not go to excesses, will still be caught up in the mess, and be hurt badly. I feel true empathy for them.

Those that needed all those $70K high rise trucks? Get over it, get a real trade or education, and rebuild. Six years from now, you will be in much better shape.

What trade should I get? I know a few welders, machinists, electricians, geologists, mech, Petroleum, chemical engineers out of work right now. Maybe law or politics would be a safe bet.

[Sigg]

Originally Posted by Skytop B

What trade should I get? I know a few welders, machinists, electricians, geologists, mech, Petroleum, chemical engineers out of work right now. Maybe law or politics would be a safe bet.

Probably one that gives you tonnes of hours during the boom years and gives you a skill set to do odd jobs for cash during the down times.

[Skytop B]

Originally Posted by Sigg

Probably one that gives you tonnes of hours during the boom years and gives you a skill set to do odd jobs for cash during the down times.

Got it, man whooore it is

[dale7637]

Originally Posted by Skytop B

Got it, man whooore it is

Do you have room for an apprentice?

[Sigg]

Originally Posted by Skytop B

Got it, man whooore it is

Gotta use the talents the god lord gave you to make ends meet!

That could go so many ways....

[79ford]

Lots of the alberta boom was based on debt and share issues etc by the producing companies. The big source of the boom being the tarsands always seemed marginal except for those with some strategy at the other end of the pipeline, upgraders/refineries/some sort of diluent recovery or asphalt manufacturing deal.

The pumping of raw bitumin is essentially dead in the water with the 22$ price for wcs, just the operating cost and the pipeline cost eat out all that money nevermind having to buy a barrel up perfectly good expensive condensate to move three barrels of goopy bitumin down a pipeline. Anyone using a rail terminal is dead at 20$ barrel just to ship lol.

Alberta produces 2 million barrels of bitumin a day i think.... 2/3 of the production is losing money big time and its only a matter of time before companies run out of money if the price stays low.

[The Elkster]

Existing oilsands projects will manage alright until a turnaround. Given consumption growth, the lack of investment and natural declines across the world. Barring a big reversal in demand due to some kind of global depression this downturn has a limited shelf life (my guess 2-3 years max). Certainly enough to crush a lot of people and companies but oilsands will be kept limping along until the inevitable turnaround. And they will eventually make money again. Their size makes them too big to fail basically. Its not in anyone's vested interest to shut them down as long as they can minimize losses for a limited time.

Keep in mind we are at a point of max negative and everyone is looking worst case. Its the exact opposite of the boom times. In good times everything is extrapolated up up up and any mention of negatives is vehemently discounted. Right now everything is worst case scenario and any talk of potential positives is quickly extinguished by most.

The probability that one or some of the many potential positives happen is actually pretty good. Winter could end with a bang helping gas prices, a myriad of ME/global issues could disrupt supply, demand could increase more than expected, at some point natural declines will start overtaking output increases as countries run out of spare capacity and easy pickings and declines take hold due to limited capital spend. For the sake of AB I hope we get lucky and we get some strong signals in 2016. Sooner the better

[martinnordegg]

Oil at $34 bucks even and our dollar is at $1.41.

Holy Cow!!

The Outfitters should be happy.

[Mangosteen]

Copper Mines in BC suffering big layoffs

Are we in for more than a recession?

http://infotel.ca/newsitem/low-coppe...c-mine/it26540

[martinnordegg]

If the real Chinese economic stats ever come to light recession will be a mild term to the decline.

[The Elkster]

Some interesting discussion on the supposed global supply "glut".

http://crudeoilpeak.info/where-actua...lobal-oil-glut

The conclusion as paraphrased from the linked article:

"It is misleading to say the world sits on excess stocks of 3 bn barrels of oil, 2.7 bn of which are already needed in both crude and product stocks for a smooth operation of the refining and distribution system. Most of the stock build since mid 2014 seems to be related to US light tight oil which refineries could not accommodate due to their original designs."

A positive to this is US shale production is going to be one of the first to see meaningful production cuts.

[79ford]

There is probably a global recession/slump in the works right now, look at the commodities space as a whole. Coal, copper,platinum,palladium,zinc,nickel,oil,nat gas,lng,uranium, you name it the commodities sector as a whole is getting trashed on slowing demand.

I think it is a sign the economy is weak. There is no way resource prices being cut in half or more is not going to seriously affect alot of countries. The amount of money not going into the economy on low resource prices must be staggering.

Just think about canada. I think we are at 4million ish barrels of oil per day..... 4 million times 70$ less per barrel than 2014. 280 million in revenue is not being created every day. Thats 102 billion dollars over a year or 6% of canadas gdp, thats just oil, nevermind the slew of other stuff thats in the gutter

[79ford]

https://www.eia.gov/dnav/pet/hist/Le...s=WCRFPUS2&f=W

The united states has actually been mustering marginal gains in production after slipping to 9.09 million bbls per day. Their production is flat to slightly rising. Everyone else has put the hammer to the floor to get more barrels going. The usa was thought to throw in the towel after a year of low prices but it turns out just the opposite. Any drops in us production are negligable as opec and russia etc even norway are still increasing output and there is a slough of mega projects close to start up coming on line that were being built over the last 3-7 years or so.

Originally Posted by The Elkster

Some interesting discussion on the supposed global supply "glut".

http://crudeoilpeak.info/where-actua...lobal-oil-glut

The conclusion as paraphrased from the linked article:

"It is misleading to say the world sits on excess stocks of 3 bn barrels of oil, 2.7 bn of which are already needed in both crude and product stocks for a smooth operation of the refining and distribution system. Most of the stock build since mid 2014 seems to be related to US light tight oil which refineries could not accommodate due to their original designs."

A positive to this is US shale production is going to be one of the first to see meaningful production cuts.

[79ford]

Venezuela has doubled their rig count and wants to go full bore ahead with production increases to get more foreign currency into the country.

Mexico is essentially doing the same thing, maximizing production and pemex is inviting the large multinationals into their acreages to get production up.


Shes gonna be a tough glut this time around, the economy really sucks to so it seems like a supply glut is also going to be a demand driven glut aswell.

The world glut is the biggest glut yet, in the usa the glut is the biggest since the dirty thirties. The glut is mammoth in size i spend an hour per day working on some sort of training in case i get laid off,lol

[rae61]

Say what you want about the oil and gas economy, but compare Alberta to Manitoba over the past 30 years, and it is obvious where Albertans would be without O&G. No offence to Manitobans, it is not a shot at the people or province; it is just a comparison. Manitoba's population 1976 & 2014 - 1.021M/1.282M and Alberta 1976 & 2015 - 1.838M/4.146M. What drove the growth here and how has Manitoba diversified their economy over the same period? The cyclical nature of any resource economy is not always eased but diversification seems so be a simplistic response to a complicated issue.

[pitw]

Lucky Manitobans.

[avb3]

Originally Posted by Skytop B

What trade should I get? I know a few welders, machinists, electricians, geologists, mech, Petroleum, chemical engineers out of work right now. Maybe law or politics would be a safe bet.

All those trades and professions made serious money in the boom times. If smart, they didn't live to the extent or even over the extent of their incomes. The smarter ones will weather this economic reality just fine.

Those that had to be the Jonses everyone aspired to keep up to, I have no empathy for. Most of those skills are portable to other industries, even other areas. Just don't expect to make close to what you were making.

And then there are all those highschool drop out rig pigs.....

[Deer Hunter]

Originally Posted by avb3

And then there are all those highschool drop out rig pigs.....

And then there are those who sit at home, on the internet, and complain that everyone was making too much money working.