Brent above $45. Holding breath for $50??

[Keith boyd + 178]

A year ago I considered $50 oil really low, approaching unprofitability. And now $50 is a milestone I see as the Canadian oil industry becoming sustainable again. 

$40 not enough for us and I suspect it's not enough for most American production too. 

It's like a game of chicken. Operate at a loss long enough that someone else goes bankrupt or shuts in. Oil sands isnt profitable at these prices, if you include the cost of maintaining production levels. Mine expansion projects are on hold and new well pads are being scaled back. 

At some point production will suffer enough that prices must rise enough to incentivise new investment. 

I imagine most producers world wide are not very happy with $40 to $45 the question is, how long until price normalization and who will survive? 

I see a lot in the news about shale drillers going bankrupt but not much about canada. 

Putting the juicy info right at the end. . Sunshine oil sands is bankrupt and petro China is shut down. 

Very few people even know about petro China. It's real I was there once! 

 

 

[Hamish + 17]

Hmmm....hadn't heard about Sunshine yet. Petro-China doesn't surprise me. But, they were having pretty big issues there before the covid price crash.

[Ward Smith + 6,615]

The cure for low oil prices is … wait for it … low oil prices

We're seeing the usual capital destruction inherent oh this industry, and the Canadian "Juniors" were on life support long before Covid hit. The US just took 2 million bbls offline in May and I'm sure June will be bigger. That's just us, add in the other countries and the worldwide output is likely down 10-20% possibly permanently. The demand will creep back over time, and some bright person somewhere will notice those big tanks and tankers are sitting empty and then the panic buying starts and prices do indeed hit $100/bbl again.

Meanwhile those people who think the spigots will simply turn on again are sorely mistaken. There won't be any petroleum engineers etc. ready to step into the void yet again for an industry that has abandoned them one too many times. Then we'll see that the cure for high oil prices is… high oil prices…

[Junior Geo + 25]

1 hour ago, Ward Smith said:

Meanwhile those people who think the spigots will simply turn on again are sorely mistaken. There won't be any petroleum engineers etc. ready to step into the void yet again for an industry that has abandoned them one too many times. Then we'll see that the cure for high oil prices is… high oil prices…

The loss of talent is what worries me for the oil industry here in Alberta. Couple that with the lack of investment in new generations of people to work in the industry. As a junior geologist it took a lot of networking, coffees, and talking to people to land my first contract as a new grad in 2019 (and I graduated in 2018..). No positions for new grads and no one willing to train. A real lack of foresight in the oil industry and the newer generations see that.

I am currently working but contract to contract with no stability. I can see why people avoid this industry now. I love working in it, but man.. it can be disheartening to always be wondering when your contract ends...

[Ward Smith + 6,615]

10 hours ago, Junior Geo said:

The loss of talent is what worries me for the oil industry here in Alberta. Couple that with the lack of investment in new generations of people to work in the industry. As a junior geologist it took a lot of networking, coffees, and talking to people to land my first contract as a new grad in 2019 (and I graduated in 2018..). No positions for new grads and no one willing to train. A real lack of foresight in the oil industry and the newer generations see that.

I am currently working but contract to contract with no stability. I can see why people avoid this industry now. I love working in it, but man.. it can be disheartening to always be wondering when your contract ends...

Welcome aboard sir. 

Yes it is a crying shame that the industry is so dysfunctional. I sort of grew up in it, but abandoned it many years ago. Against my better judgement I got back into it when all my father's contacts were retired or dead, not that I would have leaned on them. My perspective as a pseudo outsider looking in is that the industry as a whole is insular and xenophobic. I develop technology for the industry, it makes things better for them, but they are so reluctant to try new things it's a joke. Finally, instead of selling solutions to the oil companies, we decided to become an oil company. Now we just use our tech and know how to farm into fields they couldn't produce economically and we take the biggest slice of the pie. One company that flat turned us down 6 years ago is now our enthusiastic junior partner in a field they own. If someone there would have had the huevos to commit years ago, they'd be money ahead. But that's the way the business is. 

What's your specialty? 

[Junior Geo + 25]

Funny how things have a way of turning around right? Data analytics seems to be having an uptick of important in the industry as well. Some companies still do rely on the very old techniques though which is interesting due to the changes in technology!

I personally do a lot of new ventures exploration (just based on the roles I have gotten thus far). Primarily at private junior/intermediate companies. Only reason I have found work is due to using LinkedIn to research companies, and cold calling people (something my generation hates doing!)

[Prometheus1354 + 178]

10 hours ago, Junior Geo said:

Funny how things have a way of turning around right? Data analytics seems to be having an uptick of important in the industry as well. Some companies still do rely on the very old techniques though which is interesting due to the changes in technology!

I personally do a lot of new ventures exploration (just based on the roles I have gotten thus far). Primarily at private junior/intermediate companies. Only reason I have found work is due to using LinkedIn to research companies, and cold calling people (something my generation hates doing!)

I always found it odd how the industry shuns 'tech' yet is always "touting" it's new levels of innovation.  Huh??

{Only reason I have found work is due to using LinkedIn to research companies, and cold calling people (something my generation hates doing!)}  I had to laugh at this. Certainly NOT because I'm makin fun of you. Rather because in Sales, that is a tool that can really save your backside in what would otherwise be a slow quarter if done correctly.  As in it Has to be done.  But youngsters today only want to consider something it seems 'If there's an App' for it... My fear is that somewhere down the road (10-20 yrs) that generation will refuse to become involved in the industry because there Isn't an App that with a click on a phone screen an Presto!! There's your well, drilled, cased an flowing too the refinery....  (ahem)

[JoMack + 549]

When Obama arrived in office, access to federal lands was pretty much outlawed.  Competitive oil and gas leasing in New Mexico (Permian Basin) went from 4 sales a year to 1 a year.  During that time, the industry had to nominate the tracts and give data.  Of course, competition is the life blood of the oil and gas industry so no actual competitive leasing took place.  However, what did happen was horizontal drilling and enhanced fracing technology took place.  There are more than just Majors and large independents in the industry and the smaller independents will again find ways to profit even at staggeringly low prices.  The independents that actually take the risk and find fields that were left as too tight, went the distance and found that exploration could be done with horizontal wells and hydraulic fracing.  More than one independent used a well pad to drill up to 3 or 4 wells to different depths.  The industry is volatile as everyone knows, but the School of Mines, OU, UT, etc. still bring the brightest minds to the oil and gas business.  There is one thing the oil and gas industry knows how to do and that's overcome whatever obstacles are put in its way.  When Biden and his liberal handlers check the balance sheet from oil and gas taxes and revenue, even they will accept the fact that oil and gas pays a lot of money to the U.S. Treasury.

[Ward Smith + 6,615]

On 8/9/2020 at 1:45 PM, JoMack said:

and gas pays a lot of money to the U.S. Treasury.

More than just direct payments too. Ever look at fuel taxes at the pump? The US charges are high, Europe charges are enormous. So the whole time these moronic governments are shooting down petroleum, they're killing their own golden goose. My brother's Leaf costs ten times more to license than an ICE car. Why is that? Oh yeah, no gas taxes. 

[Ward Smith + 6,615]

On 8/7/2020 at 7:43 PM, Junior Geo said:

Funny how things have a way of turning around right? Data analytics seems to be having an uptick of important in the industry as well. Some companies still do rely on the very old techniques though which is interesting due to the changes in technology!

I personally do a lot of new ventures exploration (just based on the roles I have gotten thus far). Primarily at private junior/intermediate companies. Only reason I have found work is due to using LinkedIn to research companies, and cold calling people (something my generation hates doing!)

I know unemployed senior geologists with PhD's who hate cold calling, hence the unemployed part. Boomers don't like it any better than Millennials. Best of luck to you, and remember, when things slow down, do your own research and try to get overrides on land that might become productive one day. That's how the king of the Bakken got rich (look him up, won an award at an AAPG meeting couple years ago). Cheers

[Dan Clemmensen + 1,011]

56 minutes ago, Ward Smith said:

More than just direct payments too. Ever look at fuel taxes at the pump? The US charges are high, Europe charges are enormous. So the whole time these moronic governments are shooting down petroleum, they're killing their own golden goose. My brother's Leaf costs ten times more to license than an ICE car. Why is that? Oh yeah, no gas taxes. 

Your Leaf costs that because of intense lobbying by oil and gas interests. The most equitable way to handle this would be to charge all vehicles by weight (or weight times miles or some other measure of road usage) and reduce or eliminate the tax on gasoline and diesel.

[Keith boyd + 178]

Even in trucking there is a lack of willingness to train, even when it takes a minimum time and effort investment. 

 

When I started operating pressure and vac equipment I was hired and thrown on turnarounds with  a joke of an amount of training, all just legal liability sign offs, no real experience on the trucks. The first time I operated a super sucker truck was when the operator said hey you with the green hard hat I need to go to the bathroom are you an operator? You are? Sweet! Here is how to shut it off. Here is my radio. When they call shut it off. Ok be back in a bit! 

 

"Yeah...I'll show you how to start it up when I get back."

He never did show me. 

 

On 8/6/2020 at 10:55 PM, Junior Geo said:

The loss of talent is what worries me for the oil industry here in Alberta. Couple that with the lack of investment in new generations of people to work in the industry. As a junior geologist it took a lot of networking, coffees, and talking to people to land my first contract as a new grad in 2019 (and I graduated in 2018..). No positions for new grads and no one willing to train. A real lack of foresight in the oil industry and the newer generations see that.

I am currently working but contract to contract with no stability. I can see why people avoid this industry now. I love working in it, but man.. it can be disheartening to always be wondering when your contract ends...

 

[Ward Smith + 6,615]

3 hours ago, Dan Clemmensen said:

Your Leaf costs that because of intense lobbying by oil and gas interests. The most equitable way to handle this would be to charge all vehicles by weight (or weight times miles or some other measure of road usage) and reduce or eliminate the tax on gasoline and diesel.

Not true. In Washington State they fingered out that they were losing money. That's all it took, no lobbying at all. But let's try and figure out how much money comes in from gasoline taxes at the pump, per day in this country. Quick back of the envelope says about $2.5 billion per day. Just gasoline, diesel and jet fuel taxes almost double that number. Nationwide the average is about 50 cents for gas and 60 cents for diesel and several dollars for jet fuel per gallon. 

Looked at number wrong, actual tax revenues are 10 times lower so "only" $250 million per day. 

Edited August 13, 2020 by Ward Smith
Double checked figure

[JoMack + 549]

In 2018, oil and gas revenue from the oil and gas industry to the U.S. Treasury was $181 Billion U.S. Dollars.  Since renewables such as solar and wind can't generate a revenue stream to come close to oil and gas, what impact would the loss of billions of dollars to the U.S. funding picture look like? You can't say U.S. budget, since that apparently is a thing of the past, unfortunately.  

If Biden-Harris have a Democrat Congress and ban fracing what's the outlook for energy?  I'd say catastrophic.  Since we're currently producing only 10 million b/d and only 176 rigs are running, at this point the industry is in a very weak state.  If Biden wins and Congress turns left, it won't take much to take down production further since shale has pretty steep depletion.  With pipelines under siege and a Biden Presidency in the wings, if he moves swiftly against fracing and oil and gas exploration itself, we'll begin to witness instability in our electric grid where blackouts will be the norm.  Of course, for his 4 years, and that's a long shot if he can do 1 or 2, Biden will blame Trump.

[Jay McKinsey + 1,490]

On 8/14/2020 at 9:37 AM, JoMack said:

, we'll begin to witness instability in our electric grid where blackouts will be the norm.  

Fascinating how you guys just can't wrap your head around the fact that batteries are real and that they prevent instabilities from renewables.