$60 / Barrel by year end

[Kirkhill]

http://business.financialpost.com/news/energy/as-politicians-gloat-about-climate-leadership-saudi-arabias-oil-is-dumped-in-canada?__lsa=226b-502a

As politicians gloat about climate ‘leadership,’ Saudi Arabia’s oil is dumped in Canada

Claudia Cattaneo | February 9, 2016 | Last Updated: Feb 9 5:54 PM ET

As federal and provincial politicians pat themselves on the back for their climate change ‘leadership,’ and pipeline opponents gloat about stalling construction of new Canadian pipelines, tanker-loads of foreign oil are delivered regularly to Eastern Canadian refineries, including increasing volumes from Saudi Arabia.

That’s right. Saudia Arabia, the oil-rich kingdom that is waging a brutal price war to shore up its market share and devastating Canada’s oil and gas sector in the process, dumped an average of 84,017 barrels a day of its cheap oil in New Brunswick’s Irving Oil Ltd. refinery in 2015, according to data compiled by the National Energy Board (NEB). That’s up from 63,046 b/d on average in 2012.

Overall, refiners in Quebec, Ontario, Newfoundland and New Brunswick imported about 650,000 barrels a day from foreign producers in 2015. In addition to Saudi Arabia, the oil came from the United States, Algeria, Angola, Nigeria, because there is insufficient pipeline capacity to import it from Western Canada, which produces far more oil than it needs.

The reversal of Enbridge Inc.’s Line 9, which is finally up and running after much opposition and moves up to 240,000 b/d of Western Canadian oil to Montreal, means oil imports will drop this year — but not likely from Saudi Arabia.

Wouldn’t it be nice if refineries in our own country took this oil rather than foreign oil?
The Irving refinery, Canada’s largest, says on its website it has a long-term supplier partnership with the Saudis. The company is a big supporter of TransCanada Corp.’s proposed Energy East pipeline from Alberta to New Brunswick, but until it’s done, it has a 350,000 b/d refinery to keep in business. Irving Oil did not respond to a request for comment.

The Saudi imports alone are equivalent to the daily production of a mid-sized producer such as Calgary-based Penn West Exploration Ltd., one of scores of Canadian companies that are struggling to remain solvent after slashing jobs and budgets to survive the Saudi-instigated oil price collapse.

Where is the political outrage over oil imports from rogue nations with inferior environmental records and deplorable behaviours toward women, dissidents and minorities? Where are the beefed up regulatory reviews of Saudi Arabia’s climate change impacts, or their dumping practices? Why is Canada so consumed with scrubbing its oil clean while oil from foreign sources flows into the gasoline tanks of Eastern Canadians free of scrutiny?

“If we choose to import oil from Saudi Arabia … shouldn’t we estimate the total GHG (greenhouse gas emission) impact of Saudi Arabian oil, which must include the military footprint of safeguarding that oil in the midst of a perpetual war zone?” asks Terry Etam in a column for the BOE Report, an industry online trade publication. “Could someone please show the calculation for how much GHG is emitted by a fighter jet launching air strikes to irritate neighbours, including the chaotic aftermath? What are the CO2 emissions of torched oil wells that will take months to put out? How much GHG is emitted by tanks blowing things up?”

Meanwhile, refineries in Quebec — where mayors led by Montreal’s Denis Coderre are fighting Energy East — are relying heavily on imports from the United States, a lot coming on oil trains, even as President Barack Obama killed the Keystone XL pipeline to frustrate imports of “dirty” Canadian oil.

“If recent history is any indication, like 2015, we will potentially be losing over 500,000 b/d of product from Western Canada due to shut-ins given the price levels,” said Tim Pickering, president of Calgary-based commodities trading firm Auspice Capital Advisors. “This will likely be exacerbated to at least 600,000 b/d by capital expenditure cut-backs. Wouldn’t it be nice if refineries in our own country took this oil rather than foreign oil? It would potentially tighten up the entire North American supply/demand picture.”

Yet the main preoccupation of political leaders like Liberal Prime Minister Justin Trudeau is to tighten the screws of  regulatory reviews of Canadian pipeline projects, by looking at their climate change impacts and expanding consultations, even if it means keeping Canada’s already highly regulated oil in the ground and buying foreign oil to meet demand.

“We are going to say no, we don’t like our oil, we are going to buy oil instead from these countries and we are going to fund these kinds of international behaviors … and that’s OK because we feel better in our conscience,” said Gaetan Caron, a former National Energy Board chairman who is now an executive fellow at the School of Public Policy at the University of Calgary and questions the priority.

It’s come to this because of pressure of groups such as the Sierra Club, which in a recent statement took credit for rallying Quebec mayors against Energy East. “When the Montreal Urban Community … announced its opposition to TransCanada Corporation’s controversial Energy East pipeline yesterday, nearly two dozen hard-working volunteers with Sierra Club Canada’s Quebec Chapter took a victory lap,” the group said.

Or because it’s an expedient way to build political capital or to show Canada is making progress on its new climate commitments to the international community or because reducing greenhouse gas emissions fairly is a lot harder than picking on pipelines. Less hypocrisy and more respect for the needs of ordinary Canadians would be nice once in a while.

[email protected]

twitter.com/cattaneooutwest

I am supposed to comment under the fair dealings section of the the copyright act.  I offer none.  The article stands on its own merits.

 

[jollyjacktar]

I'll bite.  As far as I'm concerned, buying SA oil isn't much better than buying Daesh oil.  That we're buying from those who would destroy us, because we're forced to by special interest groups who won't support an eastern pipeline, is disgusting.

 

[Kirkhill]

The sell us oil.  We sell them LAVs.  So the cars in eastern Canada are fuelled by Saudi LAVs

 

[cupper]

The sell us oil.  We sell them LAVs.  So the cars in eastern Canada are fuelled by Saudi LAVs

I think I'd rather have the LAV on my commute.

 

[a_majoor]

While Canadians continue to hamstring each other, the US shale oil drillers learn to continue to be profitable even in today's environment. And the practice of "fracklogging" makes responding to these market swings faster than ever:

http://www.the-american-interest.com/2016/02/04/lone-star-shale-producers-defy-opec/

Lone Star Shale Producers Defy OPEC

For a state that prides itself on being “bigger” in every sense of the word, Texas is managing to handle smaller oil profit margins awfully well, as a number of producers in the state’s two shale basins are keeping output up despite plunging prices. Bloomberg reports:

A handful of shale patches in [Texas], which would be the world’s sixth-largest oil producer if it were a country, are profitable with crude below $30 a barrel, according to an analysis by Bloomberg Intelligence. In the Eagle Ford’s DeWitt County, which produced more than 100,000 barrels a day in November, the average well can be profitable with U.S. benchmark crude at $22.52 a barrel, $4 below the lowest level this year. […]

“It may be harder to kill many U.S. E&Ps than analysts originally thought,” Bloomberg Intelligence analyst William Foiles said in the presentation. “The wide range of break-evens undermines efforts to come up with a single threshold for U.S. shale producers.”

And even as some producers find ways to turn a profit with today’s profits, many in the industry that have seen their margins erased are nevertheless still busy pursuing a forward-looking strategy: drilling but not yet fracking wells. This approach essentially lines up projects to bring online the minute prices rise high enough to justify them. This so-called “fracklog” is a widespread phenomenon, and it’s growing. For Saudi Arabia and the rest of the world’s petrostates, that’s a terrifying prospect, because it means what if and when we see the global glut erased and prices start trending back upwards, these new American supplies will flood the market and bring those prices right back down again.

And while producers amass this fracklog, plenty of companies are innovating ways to keep output up despite the fact that America’s oil benchmark is currently lingering below $32 per barrel. The shale boom isn’t done yet.

 

[a_majoor]

More on how oilshale fracking has turned the international situation on its head. Interesting prediction on what price points will bring US shale production roaring back:

http://www.manhattan-institute.org/html/russias-big-worry-not-what-pentagon-thinks-what-shale-frackers-will-do-oil-prices-8487.html

Russia's Big Worry Is Not What the Pentagon Thinks but What Shale Frackers Will Do to Oil Prices
By Mark P. Mills,
Forbes,  February 4, 2016

Energy & Environment: Geopolitics

Secretary of Defense Ashton Carter ruffled feathers this week when, in a February 2nd speech at the Economic Club of Washington D.C., he demoted ISIS and terrorism, to the bottom of a list of key threats to America’s national security. At the top of the list of “five evolving challenges”? Russia.

The entire geopolitical landscape is tilted by the prospect of oil prices staying low for a long time and draining money away from oligarchs and meddlers that have interests often antithetical to America’s.
 
Right now, though, odds are that Vladimir Putin is more worried about what oilmen like Harold Hamm are thinking than what’s on the SecDef’s mind. Hamm, founder and CEO of Continental Resources, is one of the more outspoken amongst the multitude of shale pioneers who are collectively responsible for the global oil glut — and the consequent price collapse.

We can see what specifically must worry Putin in a new must-read interview with Hamm (courtesy of Christopher Helman at Forbes). Hamm, referencing the fact that American shale producers have in the past half-dozen years nearly doubled America’s oil output, says: “We can double it again.” If Hamm is correct, then the shale fields alone—never mind the rest of America’s onshore and offshore production—would be producing more oil than Russia, and the world markets would again be in oversupply.

That oil is a vital global commodity is without dispute. It is central to global trade and transportation with simply no viable alternative available at any price any time in the foreseeable future. The biggest wildcard in geopolitics right now? The future price of a barrel. That will determine not just how fast and how much more oil will come from America’s shale, but also the future profits for every global producer. And of course profits from oil sales fuel the domestic and extra-territorial ambitions of the world’s petrostates.

For Russia, almost three-fourths of all export revenues and over half its national budget comes from selling oil & gas. The problem is that, according to the World Bank, Russia needs oil at $100 per barrel to balance its domestic budget and fund its military and foreign ambitions. It’s expensive to buy modern weapons, including the missiles Russia has deployed across the NATO frontier. And it’s expensive to meddle in foreign nations whether by deploying troops in the Ukraine and Syria, or funneling “gray” money to bad actors from Africa to South America.

Russia is not alone. With only a couple of exceptions, OPEC’s members all need for oil to sell anywhere from $80 to $150 per barrel to support their domestic and foreign spending. Iran is betting on its future growth coming from oil exports. And ISIS, as has been widely reported, funds its fighters and terrorists with sales from captured oil fields.

With only a couple of exceptions, OPEC’s members all need for oil to sell anywhere from $80 to $150 per barrel to support their domestic and foreign spending.
 
Now the entire geopolitical landscape is tilted by the prospect of oil prices staying low for a long time and draining money away from oligarchs and meddlers that have interests often antithetical to America’s. But in due course prices will rebound. Oil is, after all, a cyclical commodity.

The issue of how long prices stay low is of urgent relevance to private-sector companies that are trying to balance the books and ride out the bottom of the cycle. But the rub for Russia, and OPEC, is that when prices do creep back up, they will unleash another American gusher.

The key question for nation-state oil exporters like Russia: What price will cause the Harold Hamms of America to rush back into drilling and unleash a Shale 2.0 boom? Regardless of the belt-tightening, bankruptcies and consolidations rolling through the U.S. shale ecosystem, the physical resources, infrastructure, experience and intellectual property don’t evaporate, though they may end up with new owners.

Some analysts believe that once prices move north of $40 a barrel the shale resurgence will start; others think it will take at least $50 to make it happen. No one disputes that $70 would feel like Mardi Gras time again from North Dakota and Colorado, to Oklahoma and Texas. The futures market, which reflects today’s trader and investor sentiments, doesn’t foresee $50 for several years yet. That’s a very big problem for Russia and OPEC because even $50 to $70 is a long way below $100.

The minute that private sector investors and oil companies are convinced that oil prices are on the way towards just $50 or so, they will unleash hundreds of billions of dollars in investment capital now standing idle. There is every reason to believe that renewed drilling will lead to production growing at least as fast as the astonishing pace of the past half-decade. It is worth remembering that the shale revolution began when oil was less than $50 per barrel, and employed technologies far less efficient than those now available.

The new world for oil looks very different from the past, with geopolitical implications yet to be felt. It is a world in which oil stays cheap, in which price spikes are embraced and then crushed by high-velocity increases in shale production, and one in which new supply increasingly comes from ever-improving technology deployed by thousands of entrepreneurs making high-velocity decisions on American soil.

The minute that private sector investors and oil companies are convinced that oil prices are on the way towards just $50 or so, they will unleash hundreds of billions of dollars in investment capital now standing idle.
 
Putin, and leaders in other similar petrostates, doubtless understand the new dynamic.  Like so many other aspects of geopolitics though, the outcomes are not easily predicted. Although the United States benefits in many ways, unintended and unpleasant consequences will doubtless emerge. All of this argues for a sober assessment, not one based on wishful thinking about some fictional future where oil is less important; but one reflecting an understanding of the new landscape by analysts in the State and Defense Departments, intelligence agencies, and not least Congress.

Energy policy in recent years has been over-focused on finding alternatives to oil, instead of dealing with the realities of an increasingly dangerous world. For an excellent overview of today’s geopolitical complexities, and why they matter so much, I recommend “Oil and World Power,” (published in the latest The New Atlantis magazine), an essay from Lee Lane, a visiting fellow at the Hudson Institute. While Lane and I may disagree on just how quickly and expansively Shale 2.0 will happen (though I’d put my money on Harold Hamm’s view), we are on the same page when he suggests a “need to develop a more realistic concept of U.S. national interest.” He is in good company: we have recently heard similar admonitions from former Defense Secretary Leon Panetta and former Secretary of State Henry Kissinger.

Following Secretary Ashton’s rhetorical call to arms, we now have the New York Times editorial board agreeing with the SecDef that “deterring Russia is essential.” Perhaps the Times in calling for alternatives to “big wars” and “costly weapons” in dealing with our adversaries, might come to appreciate that America’s new petroleum power presents a once-in-a-lifetime opportunity.

This piece originally appeared in Forbes

 

[Colin Parkinson]

Russia is closer to Europe which reduces cost. Putin would be well advised to streamline the oil & gas exploitation and export industry to compete and focus on the near markets.

I do like this though and might bring it up

“If we choose to import oil from Saudi Arabia … shouldn’t we estimate the total GHG (greenhouse gas emission) impact of Saudi Arabian oil, which must include the military footprint of safeguarding that oil in the midst of a perpetual war zone?” asks Terry Etam in a column for the BOE Report, an industry online trade publication. “Could someone please show the calculation for how much GHG is emitted by a fighter jet launching air strikes to irritate neighbours, including the chaotic aftermath? What are the CO2 emissions of torched oil wells that will take months to put out? How much GHG is emitted by tanks blowing things up?”

 

[Kirkhill]

An interesting commentary from Montreal in the Calgary sun.  It stands in counter-point to Denis Coderre's vapourings and validates OGBD's contention that Quebecer's are a whole lot more sympathetic to Oil. Western Canada and Pipelines than the mayor of Montreal.

Anyone would be forgiven for thinking that Quebecers are all opposed to Western Canadian crude, and to the infrastructure required to carry it to Quebec and the Atlantic. After all, our duly elected representatives, both at the provincial level and at the municipal level, seem to be falling over each other lately to speak out against oil and pipelines.

The truth of the matter, though, according to a Leger poll commissioned by my organization, is that 59% of Quebecers think it is preferable for the oil imported from outside the province to come from Western Canada, versus a total of just 13% who think it preferable that we import it from other countries (and another 28% who either had no opinion or refused to answer).

That’s pretty much a slam dunk. Indeed, Quebec doesn’t produce any oil to speak of at the moment, but since we use plenty of it—and will continue to do so for the foreseeable future—it has to come from somewhere. Most Quebecers who have an opinion on the matter think it makes a lot of sense to get it from Western Canada.

As for how we should get it here, again, Quebecers’ opinions diverge from those expressed by many prominent politicians. Fully 41% consider pipelines to be the safest means to transport oil, far ahead of those who think that trucks (14%), ships (10%), or trains (9%) are the safest.

Quebecers are also much more positive than one might imagine about developing our own oil resources. Over twice as many (54%) think the province of Quebec should exploit the oil resources that exist here, versus those (23%) who think we should continue importing all of the oil we use from outside our borders.

Of particular interest is the fact that those who identify with the province’s Liberal Party, which is currently in power, are even more favourable to oil and pipelines than the average Quebecer: 75% think it’s better for the oil imported from outside Quebec to come from Western Canada rather than from someplace else in the world, and 56% consider pipelines the safest means of getting it here. As for developing Quebec’s own resources, those who identify with the Liberal Party are about as favourable as the average at 57%.

Quebec Premier Philippe Couillard may worry publicly about the “savaging” of the natural environment of Anticosti Island, where significant deposits of recoverable oil are likely to be found. Montreal Mayor Denis Coderre may get into a nasty war of words while joining some of his counterparts in opposing the Energy East Pipeline, to the point of insulting Albertans by suggesting, as he did, that they think The Flintstones is a documentary.

But Quebecers, by and large, are not on board with these negative messages. We want our oil to be developed, and we want Western Canadian oil to flow here, preferably by pipeline. I do hope that, going forward, Quebecers’ actual opinions regarding public policy choices on these matters (as opposed to those of the loudest pressure groups) will be taken into account.

- Kelly-Gagnon is President and CEO of the Montreal Economic Institute (www.iedm.org)

http://www.calgarysun.com/2016/02/15/quebecers-say-yes-pipelines-and-alberta-oil

Just as a reminder

The CTV headline on the night was "Election 2015: Quebec goes red"

Except for those parts that didnt't.

Montreal is not Quebec.

 

[dapaterson]

Except greater Montreal has a larger population than the maritime provinces combined.  Your map shows geography, not population.  It's like comparing Fort McMurray-Cold Lake to all of Edmonton and Calgary combined.

Or are you suggesting that parliament should allocate votes based on square kilometres instead of population?

 

[Infanteer]

Or are you suggesting that parliament should allocate votes based on square kilometres instead of population?

That's called the Senate.

 

[dapaterson]

That's called the Senate.

Canada: 9,984,670 sq km
PEI: 5,660 sq km (not counting Kanata.  Sorry, Mike Duffy)

PEI: 4 Senators

Therefore: 9,984,670 / 5,660 x 4 = 7056 Senators.

Not quite there yet...

 

[Kirkhill]

DAP - same thing applies to every province but PEI - the urban does not represent the rural.  And just like Calgary doesn't represent Edmonton, Montreal does not represent la Ville de Quebec.

To be honest I personally have very little time for the dwellers of Montreal, Toronto or Vancouver.  Calgary and Edmonton I suppose get a pass because I still remember them when they were less than half the size they are today and reminded more of London, Ont as livable places.

And lets not go to the number of Senators.

The point is that Coderre, the beast of the day (he is not an isolated phenomenon) is playing for the cameras.  And that is a lousy way to define policy.  Unfortunately it seems to be the way of the world.

PS - the 1911 borders of Quebec and Ontario? Effectively they allocated to Montreal and Toronto their very own colonies.  And they treat them as such.

 

[The Bread Guy]

PS - the 1911 borders of Quebec and Ontario? Effectively they allocated to Montreal and Toronto their very own colonies.  And they treat them as such.

That.  Right.  There.
QFTT

 

[dapaterson]

DAP - same thing applies to every province but PEI - the urban does not represent the rural.  And just like Calgary doesn't represent Edmonton, Montreal does not represent la Ville de Quebec.

To be honest I personally have very little time for the dwellers of Montreal, Toronto or Vancouver.  Calgary and Edmonton I suppose get a pass because I still remember them when they were less than half the size they are today and reminded more of London, Ont as livable places.

And lets not go to the number of Senators.

The point is that Coderre, the beast of the day (he is not an isolated phenomenon) is playing for the cameras.  And that is a lousy way to define policy.  Unfortunately it seems to be the way of the world.

PS - the 1911 borders of Quebec and Ontario? Effectively they allocated to Montreal and Toronto their very own colonies.  And they treat them as such.

Well, the Toronto, Montreal and Vancouver metropolitain areas represent roughly 1/3 of Canada's population.  Yet have less power than any provincial government - so the farce that is the petty, squabbling, nepotistic and dying provinces of the Maritimes each have greater power than any of those cities.  So mayors are forced into other means to try to get their voices heard.

And surely you're not suggesting that some votes should be more than others? 

 

[Kirkhill]

In my world Montreal, Toronto and Vancouver would be provinces in their own right.  Their needs are not the needs of Temiscamingue, Timmins and Trail.  And Canada is more that just three dots on the map.  It is all the territory that connects them and feeds them and buffers them.

 

[Colin Parkinson]

https://gcaptain.com/iran-oil-embargo-first-tankers-depart-for-europe-since-sanctions-ended/?utm_source=gCaptain+Newsletter&utm_medium=email&utm_campaign=40aaa35723-Mailchimp_RSS_CAMPAIGN&utm_term=0_f50174ef03-40aaa35723-139922301

Iran is trying to rebuild its oil production after sanctions were lifted in January, with plans to boost output and exports by 1 million barrels a day this year. Supply deals were signed with Totaland Hellenic Petroleum SA of Greece. Iran pumped 2.86 million barrels a day in January, according to data compiled by Bloomberg.

Iran is planning three initial shipments to Europe carrying 4 million barrels of oil with 2 million barrels going to Total and the rest to companies from Spain and Russia, Roknoddin Javadi, managing director of National Iranian Oil Co., said on Saturday, according to the Iranian oil ministry’s news service Shana.

Total, Spanish refiner Compania Espanola de Petroleos and Russia’s Lukoil PJSC all booked cargoes of Iranian crude to sail from Kharg Island to European ports, according to shipping reports compiled by Bloomberg earlier this month. The vessels included one very large crude carrier, a tanker capable of carrying 2 million barrels of crude, and two smaller Suezmax-sized vessels with capacity of about 1 million barrels each.

 

[Brad Sallows]

>And surely you're not suggesting that some votes should be more than others?

What would be best is for no-one's vote to have any impact more than about 100 km from where he lives.  Let the major municipalities run themselves, and have no say whatsoever about affairs in any other part of Canada.  Strip federal government down to purely sovereign functions.

 

[CougarKing]

Addressing the "worldwide oil glut" :

Associated Press via Yahoo News

Qatar says 12 countries confirmed for oil cap meeting
(Associated Press) | Updated April 1, 2016 - 12:00am

DOHA — Qatar's oil minister says 12 countries have agreed so far to participate in a meeting it's hosting next month to discuss a freeze in oil output levels.

Qatar announced earlier this month it would be the venue for between OPEC and non-OPEC producers on April 17 to discuss the production cap. The talks are aimed atbolstering oil prices that have fallen from over $100 a barrel in 2014 to less than $40 a barrel at present.

Minister of Energy and Industry Mohammed Bin Saleh al-Sada said on Thursday that Qatar is still expecting official confirmation from producers that have verbally expressed plans to attend the meeting

(...SNIPPED)

 

[Colin Parkinson]

>And surely you're not suggesting that some votes should be more than others?

What would be best is for no-one's vote to have any impact more than about 100 km from where he lives.  Let the major municipalities run themselves, and have no say whatsoever about affairs in any other part of Canada.  Strip federal government down to purely sovereign functions.

I think you just described the Liberal party with the elite running the "adult affairs"

 

[Kirkhill]

Funny thing about words - meaning whatever you want them to mean.

Pork is French for Pig - It is acceptable to eat pork but uncouth to eat pig.
Beef is French for Cow - It is acceptable to eat beef but uncouth to eat cow.

Democracy is Greek for Populism - It is acceptable to follow the will of the Demos but uncouth to follow the will of the Populi.

Democracy means that witches get burnt from time to time - regardless of the wishes of the "adults".