$60 / Barrel by year end

[a_majoor]

Out of the box thinking is only allowed if it provides opportuneities for graft and corruption.

 

[cupper]

How about instead of "pipeline" a underground railway built into a artificial tunnel to contain any potential spills.

You know, that idea might just fly...

Wait...

Oh, I see what you did there.  ;D

 

[jmt18325]

Related thought Colin.

At the Canada-US border where the XL pipelines were to join - insert a 1 mile circular loop of track.  Fill in Canada.  Empty in the US.
Problem solved.  No restrictions on shipping oil across the border by rail.

I've often thought the same thing.

 

[Brad Sallows]

Fill and pave the bottom lands through the Burnaby lakes corridor; move airport there.  Very close to marine terminal.  Problem solved.

 

[Kirkhill]

Pro-choice party.
Separating the Liberal Senators from the Liberal Party.
Ejecting sitting MPs without process because of accusations by members of competing parties.
Imposing closure on the debate on Air Canada employment.
Attempting to rewrite the rules of debate in the House of Commons unilaterally.
Taking into his own hands the management of the House of Commons.
Imposing a new constitution on the Liberal Party itself that would increase central authority and decrease local input.
Denying the Liberal Party debate on the elements of the assisted dying bill.
Stacking the committee to impose changes to the electoral process.

I look forward to seeing how the consensus on the pipelines is managed.

 

[a_majoor]

The invisible hand once again wrestles all competition to the ground:

http://www.the-american-interest.com/2016/06/13/resilient-shale-producers-get-their-second-wind/

FRACK BABY FRACK
Resilient Shale Producers Get Their Second Wind

Oil prices creeped above $50 per barrel recently, and already we’re seeing encouraging signs in the American shale industry. Fracking shale rock is a relatively expensive process, so when crude prices tumbled from a high of more than $110 per barrel two years ago to a nadir of under $28 per barrel this past January, America’s oil output correspondingly flagged as companies were forced to halt production, awaiting an uptick in the market. Thanks to supply disruptions abroad that have helped to ease the glut that precipitated oil’s price collapse, the market has somewhat rebounded, and as the FT reports U.S. companies are taking advantage:

The rebound in activity in the US is so far only modest…The rigs that are being put back to work, though, reflect decisions taken a few weeks ago, when oil prices were lower than they are today. If prices remain stable for a while at about $50 per barrel — and still more if they move higher — more companies are likely to join in the revival. […]

The prospect of the US resuming its position as a growing supplier to global crude markets creates what Paul Sankey of Wolfe Research describes as a “soft ceiling” on prices…Scott Sheffield, chief executive of Pioneer Natural Resources, one of the most active shale drillers, expects a long-term oil price of about $60 per barrel. It will fluctuate around that level, he says, and at times could go to $40 or $80. But any producer that needs oil to be consistently above $60 will be in trouble. […]

Some costs of large projects have been coming down. A global glut of offshore drilling rigs means their rates have plummeted, for example. But it is much harder to achieve efficiency improvements in a handful of multibillion-dollar projects that each present their own unique challenges, than it is in thousands of similar shale wells that are repeated over and over again.

That last bit gets to the heart of one of shale production’s greatest strengths: the fact that the size of fracking projects are tiny relative to most conventional operations, and the relatively quick decline in output that necessitates continual re-drilling, both make for an environment that fosters innovation and encourages companies to discover new ways to adapt to today’s difficult market conditions.

American oil production has been down recently, but you’d be a fool to count it out. If demand grows—as OPEC predicts will happen in the second half of this year—or supply contracts further on more disruptions like the ones we’ve seen in Nigeria or Canada, prices could spike higher to $60 per barrel. That seems to be the price point most U.S. shale firms are hoping for, and if we see that the shale boom would once again hit its stride. That effectively puts a soft cap on today’s oil market, because the higher prices rise, the more American crude we’ll see.

And finally, keep this in mind: $60 may be the desired price for shale today, but that will continue to come down with time. In October 2014 the majority of shale production was believed to require an oil price of $75 to profit, but innovative new techniques and more streamlined operations have brought that breakeven price down significantly and, in true American fashion, will continue to do so.

 

[Colin Parkinson]

I suspect that they will be very careful about costs, during the boom, money flowed pretty easily and a lot of waste speaking to people I ran into.

 

[a_majoor]

Some frackers are ready to take on the Saudis on a direct cost basis. Starving our enemies and ensuring North American energy security are both goals which can be achieved with this one tool:

http://www.the-american-interest.com/2016/07/30/shale-ready-to-tango-with-the-saudis/

Shale Ready to Tango with the Saudis

When oil prices first started falling two summers back, market observers turned their attention to OPEC to see if the cartel would constrain production to stop the slide. But Saudi Arabia strong-armed its fellow petrostates into staying put, reasoning that market share was more important than robust prices, and so oil fell down below $30 per barrel earlier this year before rebounding into the $40s where it remains today. Riyadh’s reasoning was based on the assumption that bargain prices would hurt upstart non-OPEC producers (read: American shale firms) more than it would hurt the big petrostates, and its strategy of inaction has been somewhat successful: U.S. oil production is down roughly one million barrels per day from a year ago.

But this dip is hardly the precipitous fall the Saudis were hoping for. Shale production is relatively expensive, but U.S. frackers have innovated their way out of a tight spot and managed to keep the oil flowing in quantities most analysts expected wouldn’t be possible in today’s price environment. But a slower-than-expected decline isn’t the only trick shale has up its sleeve, because as Reuters reports, one fracking company believes it can compete on cost with Saudi Arabia’s mega-fields:

On Pioneer’s second-quarter results call, [CEO Scott Sheffield] said that, excluding taxes, production costs have fallen to $2.25 a barrel on horizontal wells in the Permian Basin of West Texas, so it is nearly on even footing with low-cost producers of conventional oil. “Definitely we can compete with anything that Saudi Arabia has,” he said.

“My firm belief is the Permian is going to be the only driver of long-term oil growth in this country. And it’s going to grow on up to about 5 million barrels a day from 2 million barrels,” even in a $55 per barrel price environment, he added. […]

Pioneer expects output to grow 15 percent a year through 2020 after posting production of 233,000 barrels of oil equivalent a day this past quarter. It sees most of its growth in the Permian, though it also has acreage in the Eagle Ford. Pioneer helps limit costs by doing much of its oilfield services work in-house. It also has its own sand mine, and uses effluent water from the city of Odessa for frack jobs using pressurized sand, water and chemicals to unlock oil from rock.

Back when prices first started to tumble, analysts believed the breakeven price for most shale projects—that is, the oil price companies would need to still turn a profit with their operations—was somewhere near $75 per barrel. Pioneer is now claiming it is operating wells that could still turn a profit with prices under $3 per barrel, putting those projects on par with the bigger conventional fields of Saudi Arabia.

This doesn’t mean that every shale well could stay online if prices suddenly plunged below $10 (Pioneer is citing its lowest cost wells in its most productive fields here), but it does evince one of the underlying strengths of the American shale boom: its ability to constantly improve, iterate, and innovate new techniques and technologies to bring costs down while boosting output. Are you ready for a shale rebound?

 

[Colin Parkinson]

Mind you, Saudi has cheap production rates for oil, but high social cost expectations per barrel and can only run on cheap oil for so long and that time is much shorter when involved in a war.

 

[Kirkhill]

$50 and four months to go.

http://www.telegraph.co.uk/business/2016/08/18/oil-prices-break-back-above-50-a-barrel/

 

[a_majoor]

Of course the  markets are much like politics, they are influenced by "events, dear boy, events":

http://www.bloomberg.com/news/articles/2016-09-12/opec-flips-forecast-to-predict-rebound-in-rival-supply-next-year-iszxarku

OPEC Flips Forecast to Predict Rebound in Rival Supply Next Year
Grant Smith
September 12, 2016 — 6:45 AM EDT

Mohamed El-Erian Warns This Selloff May Be Different
Non-OPEC supply set for 200,000 b/d gain instead of decline
Group pumping 757,000 b/d more than level required in 2017

OPEC flipped its forecasts for rival supplies in 2017, predicting an increase in output from outside the group instead of a decline, the latest sign that the global surplus is persisting.

Production from outside the Organization of Petroleum Exporting Countries will grow by 200,000 barrels a day next year, according to the group, which a month ago had projected a drop of 150,000 a day. The gain is driven by the startup of the Kashagan oil field in Kazakhstan. That means the organization’s total output of 33.24 million barrels a day in August was 757,000 a day higher than the average amount the world will need from OPEC in 2017.

“For 2017, non-OPEC supply growth has also been revised up,” the organization’s Vienna-based research department said in its monthly market report. “This is mostly due to new production from Kashagan next year.”

Oil climbed above $50 a barrel last week on speculation that OPEC may reach an accord on output levels with competitors such as Russia at informal talks scheduled in Algeria later this month. Prices have since retreated amid doubts that any agreement will mean a reduction of supplies as long as producers are resolved to defend their share of world markets.

To read about possible outcomes of the Algiers talks, click here.

Stockpiles in developed nations remained 341 million barrels above their five-year average in July, OPEC estimated. The surplus is poised to diminish in the coming months as a result of surprisingly strong demand in major consuming nations, according to the report.

“This, along with a potentially improving oil supply picture, would contribute to a reduction in the imbalance of market fundamentals,” it said.
Still, the report indicates that the market will continue to be defined by abundant supply in 2017. As a result of OPEC’s increased projections for rival output, the group cut estimates for the volume of crude it will need to provide next year, by 500,000 barrels a day to 32.5 million a day.

Representatives of producing nations held a flurry of meetings last week ahead of their gathering in Algiers, with Saudi Arabia’s influential Deputy Crown Prince Mohammed bin Salman meeting with Russia President Vladimir Putin on Sept. 4, and OPEC’s Secretary-General Mohammed Barkindo speaking with Saudi and Algerian ministers on Friday.

Kashagan Boost
OPEC pumped 33.24 million barrels a day in August, according to external sources compiled by the organization. Output was 23,100 barrels a day lower than July, as a result of declines in Libya, Nigeria and Venezuela.

OPEC’s revised outlook for Kazakhstan’s long-delayed Kashagan project follows a similar change made by the International Energy Agency, the adviser to oil-consuming nations, in its report a month ago. The startup of the field by a consortium including Total SA and Eni SpA dragged on for more than a decade, prolonged by the need to build remote islands to support drilling equipment. U.S. output is still projected to decline next year by 170,000 barrels a day.

The organization kept its estimates for world oil demand unchanged, forecasting that consumption will increase by 1.15 million barrels a day next year to average 95.42 million a day, driven by growth in India, China and the U.S.

 

[cupper]

Of course the  markets are much like politics, they are influenced by "events, dear boy, events":

http://www.bloomberg.com/news/articles/2016-09-12/opec-flips-forecast-to-predict-rebound-in-rival-supply-next-year-iszxarku

That's not going to help the Saudi's and their falling economy then.

http://army.ca/forums/threads/117134/post-1453832.html#msg1453832

 

[Colin Parkinson]

Saudi will have even more to worry about if the Houthi rebels can sack/capture Najran.

https://www.washingtonpost.com/world/middle_east/yemeni-rebels-pose-a-rising-threat-in-southern-saudi-arabia/2016/02/23/ab8f0eaa-d1e4-11e5-90d3-34c2c42653ac_story.html

 

[a_majoor]

And more good news, a major new find in Alaska:

http://www.nextbigfuture.com/2016/10/new-alaskan-oil-discovery-boost-alaska.html

New Alaskan oil discovery boost Alaska oil reserves by nearly double and should begin production by 2022

New oil discovery nearly doubles the oil reserves of Alaska.

A new oil field has been found on Alaska’s north coast. Dallas-based Caelus Energy LLC says the field could contain as much as 6 billion barrels of crude, and that one day it could produce 200,000 barrels per day (bpd).

They expects to be able to extract between 1.8 billion and 2.4 billion barrels from the discovery, probably using barges built along the Gulf Coast, then towed to Alaska and permanently sunk in the bay to create man-made drilling islands

As much as 40 percent of the find, or 2.4 billion barrels, is estimated as recoverable, the company said. That compares with the state’s proved reserves of 2.86 billion barrels in 2014, almost 8 percent of the U.S. total



Alaska’s oil output has been gradually declining, to 483,000 barrels a day last year from a peak of more than 2 million barrels a day in 1988, Energy Department data show.

The development will cost between $8 billion and $10 billion over the life of the project, which could be brought into operation by the fall of 2022.

Oil is in the Smith Bay holdings

With an estimated 6-10 billion barrels of oil in place, Smith Bay ranks as one of the world’s largest oil discoveries in recent years, and the largest on Alaska’s North Slope in four decades. The Smith Bay development has the potential to provide 200,000 barrels/day of light oil to the Trans Alaska Pipeline System (TAPS), which would increase TAPS throughput by 40 percent (based on 2016 flow rates) and extend the pipeline’s long-term viability by reducing the average viscosity of its oil.

The estimates are based on the two wells drilled last winter and existing 126 square miles of 3D seismic. Exploratory well Caelus-Tulimaniq #1 (CT-1) and step-out Caelus-Tulimaniq #2 (CT-2) targeted a large Brookian submarine fan complex in Smith Bay, spanning more than 300 square miles along the North Slope region. The fan was successfully drilled and logged in both wells, encountering an extension of the accumulation 5.25 miles northwest of the CT-1 discovery at the CT-2 location. Gross hydrocarbon columns in excess of 1,000 feet were encountered in each well, with CT-1 and CT-2 logging 183 and 223 feet of net pay respectively.

Extensive sidewall coring and subsequent lab analyses confirm the presence of reservoir-quality sandstones containing light oil ranging from 40-45° API gravity.

Caelus is currently planning an appraisal program, which includes drilling an additional appraisal well and acquiring new 3D seismic survey over outboard acreage.

Caelus owns a 75 percent working interest ownership in 26 lease

 

[SeaKingTacco]

But, but, but, Climate change! Super tankers full of Oil! Pipelines!

Oh wait- the outrage only applies to Canadian Oil...  :

 

[Colin Parkinson]

But, but, but, Climate change! Super tankers full of Oil! Pipelines!

Oh wait- the outrage only applies to Canadian Oil...  :

Funny that, almost as if it was the intended effect?

 

[SeaKingTacco]

Come on, Colin. You would to be a conspiracy theorist to think that...

 

[Kirkhill]

And everybody knows that only crazy people believe in conspiracies.

https://www.justice.gov/usam/criminal-resource-manual-109-rico-charges

 

[Lightguns]

And more good news, a major new find in Alaska:

http://www.nextbigfuture.com/2016/10/new-alaskan-oil-discovery-boost-alaska.html

Imagine that, more tanker traffic in the Queen Charlottes!  The horror!

 

[Colin Parkinson]

Nope long ways off. The original voluntary tanker moratorium was merely an agreement for tankers to remain far enough off the West Coast that a rescue tug can get to them before they drift ashore. The promised ban has not appeared yet and is aimed at crude oil, so a partly refined product tanker would be excluded by the current wording. Meanwhile the Environmental agency is asking Pacific Future Energy about it's export plan. http://www.ceaa.gc.ca/050/details-eng.cfm?evaluation=80127