Why Alberta Will Win The War Over Trans Mountain

[Guest]

7 hours ago, William Edwards said:

You have written enough for me to realize that your limited grasp of the global supply picture prevents you from understanding the significant points that I have presented in shorthand style. Possibly I should dig out and publish some past articles that give a more detailed explanation. I suspect, however, that you may not be willing to read such with an open mind and with understanding, so for you such an effort on my part may be pointless. In any case, future events will instruct us, whether we understand the reasons or not. Just let it happen.

I'd much rather see you try and refute the point, which it appears that you might have been avoiding. 

[William Edwards + 708]

1 minute ago, Fulcaneli said:

Then William should take into account the tremendous amount of spare refining capacity that already exists, coupled with the tremendous decline of heavy oil exports from Mexico and Venezuela. 

Unlike you, William is smart enough to know that no spare refining capacity exists for running the heavy end of the crude barrel. Asphaltenic crudes are a special breed. But I’m sure that is over your head. There is so much you need to learn to even discuss this subject intelligently that I probably am going to lose my patience.

And the “tremendous decline” you expect in Mexico and Venezuelan crude is minor relative to the 2 million barrels a day surplus created by the sulfur regulation change.

As a sidenote, I am sure your mother would be disappointed at your lack of respect for your elders.As a sidenote, I am sure your mother would be disappointed at your lack of respect for your elders.

 

 

[William Edwards + 708]

7 minutes ago, Fulcaneli said:

I'd much rather see you try and refute the point, which it appears that you might have been avoiding. 

Avoidance is not one of my usual characteristics. Intolerance for ignorance is.

[Guest]

11 minutes ago, William Edwards said:

Unlike you, William is smart enough to know that no spare refining capacity exists for running the heavy end of the crude barrel. Asphaltenic crudes are a special breed. But I’m sure that is over your head. There is so much you need to learn to even discuss this subject intelligently that I probably am going to lose my patience.

And the “tremendous decline” you expect in Mexico and Venezuelan crude is minor relative to the 2 million barrels a day surplus created by the sulfur regulation change.

As a sidenote, I am sure your mother would be disappointed at your lack of respect for your elders.As a sidenote, I am sure your mother would be disappointed at your lack of respect for your elders.

 

 

William, I gave you respect until the condescending attitude started coming out. Age is no excuse for making rude comments. This is a discussion forum, and I think you should anticipate having your theories and views challenged. I know I do, and I think most other people do as well. Anyone that makes an assertion on a discussion forum should be prepared to back it up.

Your theories don't add up. I'm sorry, but that's just the reality of the situation. There's no lack of refining capacity, and if you can provide a link that demonstrates otherwise I'd gladly look at it. 

The potential change from Bunker C fuel to an alternative fuel, most likely diesel, won't effect the market for heavy oil. Again, if you can provide a link to a credible source that supports this theory I'd gladly take it into consideration. Heavy oil is refined into diesel every day. 

 

[Guest]

18 minutes ago, William Edwards said:

Avoidance is not one of my usual characteristics. Intolerance for ignorance is.

Great, then refute the point. 

[merrill morris 0]

4 minutes ago, Fulcaneli said:

William, I gave you respect until the condescending attitude started coming out. Age is no excuse for making rude comments. This is a discussion forum, and I think you should anticipate having your theories and views challenged. I know I do, and I think most other people do as well. Anyone that makes an assertion on a discussion forum should be prepared to back it up.

Your theories don't add up. I'm sorry, but that's just the reality of the situation. There's no lack of refining capacity, and if you can provide a link that demonstrates otherwise I'd gladly look at it. 

The potential change from Bunker C fuel to an alternative fuel, most likely diesel, won't effect the market for heavy oil. Again, if you can provide a link to a credible source that supports this theory I'd gladly take it into consideration. Heavy oil is refined into diesel every day. 

 

 

[merrill morris 0]

On 5/20/2018 at 12:20 AM, William Edwards said:

Thanks for sharing your views on demand. Now can you please do the same for your expectations of Middle Eastern crude production?

 

[William Edwards + 708]

26 minutes ago, Fulcaneli said:

Great, then refute the point. 

You just exceeded my limit of tolerance. I withdraw from discussions with you until you demonstrate enough accurate knowledge of the industry for us to carry on a reasonable conversation.

[WaytoPeace + 62]

This has been a fascinating discussion.  My thanks to all of you who have contributed.  My only comment is that we should not underestimate the effect big money investment, rising oil prices and other economic factors can have on multiple layers of decisionmaking.  Certainly all of these combined could produce a great deal of “will” and as they say, “where there is a will there is a way.” Depending upon the circumstances leading up to the January 1, 2020 deadline, might not that deadline turn out to be more of a goal coupled with lots of exceptions and grace periods that might extend out as far as 2025?  And, if so, in the interim might not the market find a way to more economically scrub, process or otherwise use Canadian bitumen such that the proposed pipeline turns out to be economically viable?  I expect there has been and will continue to be a lot of money being spent exploring all of these possibilities.  It will certainly be interesting to see how this works out.  

[William Edwards + 708]

1 minute ago, WaytoPeace said:

This has been a fascinating discussion.  My thanks to all of you who have contributed.  My only comment is that we should not underestimate the effect big money investment, rising oil prices and other economic factors can have on multiple layers of decisionmaking.  Certainly all of these combined could produce a great deal of “will” and as they say, “where there is a will there is a way.” Depending upon the circumstances leading up to the January 1, 2020 deadline, might not that deadline turn out to be more of a goal coupled with lots of exceptions and grace periods that might extend out as far as 2025?  And, if so, in the interim might not the market find a way to more economically scrub, process or otherwise use Canadian bitumen such that the proposed pipeline turns out to be economically viable?  I expect there has been and will continue to be a lot of money being spent exploring all of these possibilities.  It will certainly be interesting to see how this works out.  

Indeed, hope springs eternal. Let us hope that some magic bullet is developed, and quickly!

[Rodent + 1,424]

..... AND..... welcome to the Oil Price showdown! Everybody please go back to their corner and take a beat. We would like to remind all our dear posters and readers and lurkers that it is possible to disagree and still be respectful of others. We hope our Oil Price community will be welcoming to all. 

This conversation is a good one and we do not wish to lock it for commenting.

 

If you're new here, welcome to all and don't forget to check in on the new user thread.

 

[William Edwards + 708]

4 minutes ago, Rodent said:

..... AND..... welcome to the Oil Price showdown! Everybody please go back to their corner and take a beat. We would like to remind all our dear posters and readers and lurkers that it is possible to disagree and still be respectful of others. We hope our Oil Price community will be welcoming to all. 

This conversation is a good one and we do not wish to lock it for commenting.

 

If you're new here, welcome to all and don't forget to check in on the new user thread.

 

It is trying on one's patience to endure the challenging combination of arrogance plus missing or erroneous knowledge of accepted facts. Possibly the level of disparity in knowledge bases between participants exceeds the level appropriate for some of us. If my level of tolerance makes my comments inappropriate, please let me know and I will obligingly withdraw.

Thanks.

[EXXMobil + 6]

Hi folks,

Let me change this discussion up a bit. 

Does anyone know where I can deposit $1000 and receive an almost 5% Interest rate...?

If anyone is interested, Kinder bumped up its dividend to almost 5%

The stock is dirt cheap for anyone interested. 

Kinder should be trading between $25 and $32 with a 5% yield. 

The Canadian pipeline is holding the stock back for no reason especially after Canada said they would reimburse Kinder for any losses. 

Kinder's recent earnings and revenue were outstanding.

With oil creeping upwards of $80, solid public companies like Kinder will flourish. 

Have a wonderful night. 

X

[J Owens + 45]

12 minutes ago, William Edwards said:

It is trying on one's patience to endure the challenging combination of arrogance plus missing or erroneous knowledge of accepted facts. Possibly the level of disparity in knowledge bases between participants exceeds the level appropriate for some of us. If my level of tolerance makes my comments inappropriate, please let me know and I will obligingly withdraw.

Thanks.

I've found your insights and depth of knowledge really interesting William, definitely interested in hearing more.

One thing I would like to hear is your take on a realistic 'best case scenario' for Alberta (excluding any sort of revolutionary tech breakthrough)

I hadn't actually realized that it was Iraqi crude making up for Venezuela's collapse (thanks for opening my eyes to that) but, especially with the result of the Iraqi elections and Maduro's 'reelection' in Venezuela, more heavy oil will be needed. If that supply deficit does come to fruition - could Canada's stability and reliability as a producer make up for its low quality oil?

[J Owens + 45]

45 minutes ago, EXXMobil said:

Hi folks,

Let me change this discussion up a bit. 

Does anyone know where I can deposit $1000 and receive an almost 5% Interest rate...?

If anyone is interested, Kinder bumped up its dividend to almost 5%

The stock is dirt cheap for anyone interested. 

Kinder should be trading between $25 and $32 with a 5% yield. 

The Canadian pipeline is holding the stock back for no reason especially after Canada said they would reimburse Kinder for any losses. 

Kinder's recent earnings and revenue were outstanding.

With oil creeping upwards of $80, solid public companies like Kinder will flourish. 

Have a wonderful night. 

X

Great intervention - will have a look!

[Guest]

4 hours ago, WaytoPeace said:

This has been a fascinating discussion.  My thanks to all of you who have contributed.  My only comment is that we should not underestimate the effect big money investment, rising oil prices and other economic factors can have on multiple layers of decisionmaking.  Certainly all of these combined could produce a great deal of “will” and as they say, “where there is a will there is a way.” Depending upon the circumstances leading up to the January 1, 2020 deadline, might not that deadline turn out to be more of a goal coupled with lots of exceptions and grace periods that might extend out as far as 2025?  And, if so, in the interim might not the market find a way to more economically scrub, process or otherwise use Canadian bitumen such that the proposed pipeline turns out to be economically viable?  I expect there has been and will continue to be a lot of money being spent exploring all of these possibilities.  It will certainly be interesting to see how this works out.  

Canada and China are currently discussing a potential free trade deal. China has put forward 2 preconditions to any potential agreement -

1- A pipeline to the Pacific coast.

2- The removal of the ban imposed on foreign state owned energy corporations from investing in the oil sands. 

This is all public information, and it seemingly contradicts the notion that there is no market for Canadian oil. China is very, very interested thus the need for added pipeline capacity. 

Prices drive innovation. Bitumen and shale production exists because of the high prices of the last decade. In a $20 per barrel world they'll die off on their own, but in an $80+ world there's a dollar to be made. Shale and bitumen producers have made great strides over the last few years in regards to lowering costs, and many new in situ oil sands projects have break even costs down to around $40 per barrel. Suncor has their operating costs down to around $20 per barrel. 

 

[William Edwards + 708]

3 hours ago, J Owens said:

I've found your insights and depth of knowledge really interesting William, definitely interested in hearing more.

One thing I would like to hear is your take on a realistic 'best case scenario' for Alberta (excluding any sort of revolutionary tech breakthrough)

I hadn't actually realized that it was Iraqi crude making up for Venezuela's collapse (thanks for opening my eyes to that) but, especially with the result of the Iraqi elections and Maduro's 'reelection' in Venezuela, more heavy oil will be needed. If that supply deficit does come to fruition - could Canada's stability and reliability as a producer make up for its low quality oil?

Thank you for your kind words and encouragement, Mr. Owens. I will try to pass along some of my perspective on the Canadian situation.

First we set the stage. The International Maritime Organization has decreed that, beginning January 1, 2020, the maximum sulfur content of international bunker fuels will drop from 3.5% to 0.5%. This change creates the worst kind of problem for high sulfur bunker fuel producers and the heavy crude producers from whom they obtain their feedstock. These producers are already making a product with limited uses. Now a key end market is evaporating. So what happens when you deprive 2-3 million bbls per day from its long-time end market? The analogy I use to describe the impact is that of a broken garbage disposal. For years, the shipping industry was the garbage disposal for the oil industry. Ships burned the dirty, heavy stuff that no one else wanted. The IMO’s new regulations just broke the oil industry’s garbage disposal.

In order to understand the impact of this regulation change on the Canadian situation, we need to understand what is going on in the rest of the world. Most of the high sulfur bunker fuel now used is not produced in North America. It is produced primarily in simple refineries in the Eastern Hemisphere. These refineries take the motor fuels out of crude oil and dump the heavy bottom of the barrel into the bunker fuel market. What happens when that dumping ground disappears? The refiners will try to avoid shutting down their capacity, so they will look for an alternate disposition for the high sulfur bottoms product. The US Gulf coast is only a $5 tanker move away, so why not send it to the US and displace the current supplies of Venezuelan, Mexican and Canadian high sulfur oils that those refineries currently purchase? Does this not set up a price war? Who wins? My view is that it will be the lowest cost supplier. Production will be shut in.

Since there is not sufficient room for much of the newly supplied high sulfur bottoms to be refined, two million barrels a day of oil will be rejected and facing shut-in of production. Since Canadian oil is the highest cost, probably about $20 per barrel higher than Venezuelan, Mexican, Iraqi or Arabian oil, delivered to the US Gulf coast, Canada is in the worst position.

All is not completely lost. There are already commercial processes that remove asphaltenes from oil sands crude. If the cost can be made competitive, some portion of Canadian production can be maintained. However, timing is of the essence.

I hope that this recitation is helpful.

 

[Rodent + 1,424]

15 hours ago, EXXMobil said:

Hi folks,

Let me change this discussion up a bit. 

Does anyone know where I can deposit $1000 and receive an almost 5% Interest rate...?

If anyone is interested, Kinder bumped up its dividend to almost 5%

The stock is dirt cheap for anyone interested. 

Kinder should be trading between $25 and $32 with a 5% yield. 

The Canadian pipeline is holding the stock back for no reason especially after Canada said they would reimburse Kinder for any losses. 

Kinder's recent earnings and revenue were outstanding.

With oil creeping upwards of $80, solid public companies like Kinder will flourish. 

Kinder Morgan stock (NYSE:KMI) has had a rough week. With solid financials (do you have specifics?) and with oil prices climbing, I'm not sure I understand the dip. 

Can you elaborate on this: "The Canadian pipeline is holding the stock back for no reason especially after Canada said they would reimburse Kinder for any losses. "

 

[J Owens + 45]

10 hours ago, William Edwards said:

Thank you for your kind words and encouragement, Mr. Owens. I will try to pass along some of my perspective on the Canadian situation.

First we set the stage. The International Maritime Organization has decreed that, beginning January 1, 2020, the maximum sulfur content of international bunker fuels will drop from 3.5% to 0.5%. This change creates the worst kind of problem for high sulfur bunker fuel producers and the heavy crude producers from whom they obtain their feedstock. These producers are already making a product with limited uses. Now a key end market is evaporating. So what happens when you deprive 2-3 million bbls per day from its long-time end market? The analogy I use to describe the impact is that of a broken garbage disposal. For years, the shipping industry was the garbage disposal for the oil industry. Ships burned the dirty, heavy stuff that no one else wanted. The IMO’s new regulations just broke the oil industry’s garbage disposal.

In order to understand the impact of this regulation change on the Canadian situation, we need to understand what is going on in the rest of the world. Most of the high sulfur bunker fuel now used is not produced in North America. It is produced primarily in simple refineries in the Eastern Hemisphere. These refineries take the motor fuels out of crude oil and dump the heavy bottom of the barrel into the bunker fuel market. What happens when that dumping ground disappears? The refiners will try to avoid shutting down their capacity, so they will look for an alternate disposition for the high sulfur bottoms product. The US Gulf coast is only a $5 tanker move away, so why not send it to the US and displace the current supplies of Venezuelan, Mexican and Canadian high sulfur oils that those refineries currently purchase? Does this not set up a price war? Who wins? My view is that it will be the lowest cost supplier. Production will be shut in.

Since there is not sufficient room for much of the newly supplied high sulfur bottoms to be refined, two million barrels a day of oil will be rejected and facing shut-in of production. Since Canadian oil is the highest cost, probably about $20 per barrel higher than Venezuelan, Mexican, Iraqi or Arabian oil, delivered to the US Gulf coast, Canada is in the worst position.

All is not completely lost. There are already commercial processes that remove asphaltenes from oil sands crude. If the cost can be made competitive, some portion of Canadian production can be maintained. However, timing is of the essence.

I hope that this recitation is helpful.

 

Hugely helpful, thanks a lot!

[Guillaume Albasini + 851]

An interesting Platts analysis on the IMO 2020 reg and the demand remaining for HSFO :

https://www.platts.com/latest-news/shipping/london/feature-power-sectors-thirst-for-fuel-oil-after-26962852

[William Edwards + 708]

9 minutes ago, Guillaume Albasini said:

An interesting Platts analysis on the IMO 2020 reg and the demand remaining for HSFO :

https://www.platts.com/latest-news/shipping/london/feature-power-sectors-thirst-for-fuel-oil-after-26962852

Inormative article. But you may notice that it did not actually give an answer to the question of where the excess high sulfur oil will go. It speculates that power plants might burn some of it, but even then is did not compare the expected selling price into that market with the cost of production and transportation of Canadian oil sands crude.

[Guillaume Albasini + 851]

I agree with you William. There is still a huge amount of uncertainty on the fate of the excess high sulfur oil.

And also on the low sulfur bunker fuel availability...

https://www2.argusmedia.com/blog/2018/may/22/imo-2020-sailing-through-a-sea-of-chaos

[William Edwards + 708]

5 minutes ago, Guillaume Albasini said:

I agree with you William. There is still a huge amount of uncertainty on the fate of the excess high sulfur oil.

And also on the low sulfur bunker fuel availability...

https://www2.argusmedia.com/blog/2018/may/22/imo-2020-sailing-through-a-sea-of-chaos

I agree that there will be turmoil, but I also agree with the statement "compliance will be available in some shape or form. But there is a price".

Edited May 22, 2018 by William Edwards

[stockmesh + 2]

Sorry, nearly totally disagree w/ William Edwards

1) Yes, Global climate change is a reality, but higher oil prices will make green energy projects more competitive and spur investment allocations from Super Major E&P's steadily going Green, as the CAPEX dollars are pulled from Oil to Green, Oil supplies will drop further forcing higher prices creating a positive feedback loop...

2) It's already a fact that Alberta has earmarked C$1Billion on Bitumen Heavy Sour Partial Upgrade technology. Goal, turn Bitumen supplies from Heavy Sour to a Medium Grade, yielding a much lower sulfur fuels and at the same eliminate the need to purchase and ship Diluent from US, which accounts for approximately 1/3 of the pipeline volume capacity when presently shipping WCS... What's Partial Upgrade Technology? Just a poor man's cheap dedicated refinery process. With the proposed Alberta Partial Upgrade / PU Refineries in place, the Diluent will only cycle locally within the confines of Alberta, except for those foreign exports still supplying WCS refining processes, they have Cokers and thus a process that requires cheap Heavy Sour crude to make mostly fuel and Asphalt. Lots of Asphalt needed in US come warm months to repair / replace winter road damage, not to mention all the new roads that get built every years... My guess the partial upgrade technology will likely cost less per barrel than the Diluent constantly being cycled between Gulf and Alberta, 80% of all US Refineries have Cokers and thus are made to process cheap Heavy Sour Crude... FYI, if you think Alberta's present $1B investment in PU technology is it, think again, as they will do what ever is necessary to keep their oil income flowing, including partially shutting down B.C. petroleum exports to make the point. Hello $10 fuel?! How long will Horgan last in office, no chance of 2019 re-election when beat down by chorus of average B.C. consumers/voters trying to refill their gas tanks, C$200?!

3) IMHO, Trans-Mountain and Keystone Pipelines will get built despite Eco-efforts, as their are Trillions of Canadian O&G dollars and jobs at stake, what Govt does not want to collect taxes on that... Proof, the present Green B.C. Govt/Horgan and Indians are backing the proposed +C40B Kitimat LNG Plant and connecting Pipeline to Groundbirch NG fields, with large tax cuts offered, Hypocrites? As these NG fossil fuels supplies are nearly all located within B.C. province, 100K high paying jobs will be created over the next 5 years + 100 years of taxes off the NG flowing from Canada to Asia, via lower cost/time Tanker routes vs US Gulf supplies... The JV sponsoring the Kitimat LNG project half owned by Shell, will submit for Final Investment Decision to all JV partners June 30 2018, so expect decision by partners before summer 2018 is done, with ground breaking ceremonies come fall 2018... It's estimated the Kitmat LNG plant could supply Asia w/ 10% of all their LNG needs, and likely boost Canada's NG prices by +$1/Mcf as opposed to being held hostage by US market.

4) Canada is sick and tired of being held hostage by US only market, especially for O&G access! Canadian's sick of Trump and his NAFTA games, give us access to Asia, where we can have some good old capitalistic competition for our resources... The writing is on the wall, 99% chance Kitmat LNG project goes forward along with Trans-Mountain and Keystone XL, good luck trying to stop the inevitable William E???  

[William Edwards + 708]

57 minutes ago, stockmesh said:

Sorry, nearly totally disagree w/ William Edwards

1) Yes, Global climate change is a reality, but higher oil prices will make green energy projects more competitive and spur investment allocations from Super Major E&P's steadily going Green, as the CAPEX dollars are pulled from Oil to Green, Oil supplies will drop further forcing higher prices creating a positive feedback loop...

2) It's already a fact that Alberta has earmarked C$1Billion on Bitumen Heavy Sour Partial Upgrade technology. Goal, turn Bitumen supplies from Heavy Sour to a Medium Grade, yielding a much lower sulfur fuels and at the same eliminate the need to purchase and ship Diluent from US, which accounts for approximately 1/3 of the pipeline volume capacity when presently shipping WCS... What's Partial Upgrade Technology? Just a poor man's cheap dedicated refinery process. With the proposed Alberta Partial Upgrade / PU Refineries in place, the Diluent will only cycle locally within the confines of Alberta, except for those foreign exports still supplying WCS refining processes, they have Cokers and thus a process that requires cheap Heavy Sour crude to make mostly fuel and Asphalt. Lots of Asphalt needed in US come warm months to repair / replace winter road damage, not to mention all the new roads that get built every years... My guess the partial upgrade technology will likely cost less per barrel than the Diluent constantly being cycled between Gulf and Alberta, 80% of all US Refineries have Cokers and thus are made to process cheap Heavy Sour Crude... FYI, if you think Alberta's present $1B investment in PU technology is it, think again, as they will do what ever is necessary to keep their oil income flowing, including partially shutting down B.C. petroleum exports to make the point. Hello $10 fuel?! How long will Horgan last in office, no chance of 2019 re-election when beat down by chorus of average B.C. consumers/voters trying to refill their gas tanks, C$200?!

3) IMHO, Trans-Mountain and Keystone Pipelines will get built despite Eco-efforts, as their are Trillions of Canadian O&G dollars and jobs at stake, what Govt does not want to collect taxes on that... Proof, the present Green B.C. Govt/Horgan and Indians are backing the proposed +C40B Kitimat LNG Plant and connecting Pipeline to Groundbirch NG fields, with large tax cuts offered, Hypocrites? As these NG fossil fuels supplies are nearly all located within B.C. province, 100K high paying jobs will be created over the next 5 years + 100 years of taxes off the NG flowing from Canada to Asia, via lower cost/time Tanker routes vs US Gulf supplies... The JV sponsoring the Kitimat LNG project half owned by Shell, will submit for Final Investment Decision to all JV partners June 30 2018, so expect decision by partners before summer 2018 is done, with ground breaking ceremonies come fall 2018... It's estimated the Kitmat LNG plant could supply Asia w/ 10% of all their LNG needs, and likely boost Canada's NG prices by +$1/Mcf as opposed to being held hostage by US market.

4) Canada is sick and tired of being held hostage by US only market, especially for O&G access! Canadian's sick of Trump and his NAFTA games, give us access to Asia, where we can have some good old capitalistic competition for our resources... The writing is on the wall, 99% chance Kitmat LNG project goes forward along with Trans-Mountain and Keystone XL, good luck trying to stop the inevitable William E???  

Your emotional distress comes across loud and clear. I am sorry for your pain. I suspect it is the reason why you’re thinking has become so distorted. Please rethink your statements beginning with the realization that economics prevail. If you can deliver your oil, of an acceptable quality, at a lower price than your competitor, no one can hold you hostage. And you will have no shortage of customers in this hemisphere or the other.