Why Alberta Will Win The War Over Trans Mountain

[Refman + 207]

10 hours ago, William Edwards said:

Not according to US refinery purchasers of import data. Possibly only Canadian wishful thinking believes as you do.

I know at least one major refiner that would love to purchase more Canadian heavy.

How much Canadian crude is being exported? 

Edited May 19, 2018 by Refman

[William Edwards + 708]

9 hours ago, Fulcaneli said:

Your claim that Canadian oil is going to be hit so hard by the new IMO regulations as to end the oil sands, specifically. That's not factually supported by anything, and in fact the evidence points to the contrary. 

I have validated my criticisms, repeatedly, in this thread. First you claimed that Bunker C fuel demand would end the industry, then it was the lack of refining capacity, and then it was the lack of demand. All of those theories have more holes than a piece of swiss cheese, respectfully. 

Canadian oil has a lot of issues, but demand for it isn't one of those issues. So I guess in 18 months we'll see if the Canadian oil industry craters, but to be honest William your theories are directly contradicted by corporations who employ people much more intelligent than you or I. 

You failed, Richard, to refute one fact. Instead you continued to object to my conclusions, without offering any defense of your own ideas other than "there are more intelligent people than you". Good luck with your unwillingness to investigate and learn. I will cease trying to be of assistance to your thinking.

[William Edwards + 708]

1 hour ago, Refman said:

I know at least one major refiner that would love to purchase more Canadian heavy.

How much Canadian crude is being exported? 

I would love to have your refiner contact me, particularly if his interest is at current offering prices. Can you assist?

According to the EIA, the US imported 3.474 Million barrels a day of Canadian crude last week. That covers most of the Canadian exports.

[gregor + 1]

Just joined to learn. Thanks, gregor

[EXXMobil + 6]

14 hours ago, William Edwards said:

I would be interested in seeing your global crude balance from which you draw this conclusion. I would be particularly interested in your expectations for production declines in the Middle East. Alternatively, you may force a surge in global demand, rather than the possible decline resulting from the expected recession. I would be interested in those numbers, as well.

Hello Mr. Edwards,

Thank you for your response. 

As many watching the oil industry do not see, China is a sleeping giant consuming millions of barrels of oil a day, Gasoline and diesel, for example, made up over half of China’s crude consumption in 2016. That is, of the 556 million tons of crude consumed, about 282 million tons were refined oil products predominantly used in transport. 

Hence, it is probably more appropriate to compare China to the United States, where transportation is the biggest driver of oil demand, rather than South Korea. As of 2016, China’s total civilian vehicle fleet (includes passenger vehicles and trucks) was about 194 million.

Of course, its large population virtually guarantees that China will end up with the largest vehicle fleet in the world, even if it remains below the US level in per capita terms.

The choices China makes regarding its vehicle fleet and the types of fuel going into those vehicles could make any of today’s projections of oil demand even more obsolete.

Beyond vehicles, China is also rapidly swapping diesel for electricity in its passenger rail system. More than 20,000 km of high-speed rail (HSR) track has been laid, with ambitious expansions underway. By the end of 2016, the HSR system had already completed 1.4 billion passenger/trips. 

Taken together, these political and industry dynamics make predicting China’s oil demand much more challenging and less assured than has been the case for a long time. Any projection will have to accept a great deal more uncertainty as China embarks on an uneven transition from the old economy to the birth of something new.

Hope this explanation helps. 

Thanks again!

X

 

[Guest]

8 hours ago, William Edwards said:

You failed, Richard, to refute one fact. Instead you continued to object to my conclusions, without offering any defense of your own ideas other than "there are more intelligent people than you". Good luck with your unwillingness to investigate and learn. I will cease trying to be of assistance to your thinking.

I think we've already clearly established that there's no shortage of demand for Canadian heavy oil, I think we've clearly established that bitumen can be refined into products other than Bunker C fuel, and I think we've clearly established that the refining capacity exists in the United States to process heavy oil.

So I guess we're going to need to wait another 18 months to see if your predictions for the end of the Alberta oil industry are fulfilled. Personally, I have my doubts regarding that. 

[William Edwards + 708]

10 hours ago, EXXMobil said:

Hello Mr. Edwards,

Thank you for your response. 

As many watching the oil industry do not see, China is a sleeping giant consuming millions of barrels of oil a day, Gasoline and diesel, for example, made up over half of China’s crude consumption in 2016. That is, of the 556 million tons of crude consumed, about 282 million tons were refined oil products predominantly used in transport. 

Hence, it is probably more appropriate to compare China to the United States, where transportation is the biggest driver of oil demand, rather than South Korea. As of 2016, China’s total civilian vehicle fleet (includes passenger vehicles and trucks) was about 194 million.

Of course, its large population virtually guarantees that China will end up with the largest vehicle fleet in the world, even if it remains below the US level in per capita terms.

The choices China makes regarding its vehicle fleet and the types of fuel going into those vehicles could make any of today’s projections of oil demand even more obsolete.

Beyond vehicles, China is also rapidly swapping diesel for electricity in its passenger rail system. More than 20,000 km of high-speed rail (HSR) track has been laid, with ambitious expansions underway. By the end of 2016, the HSR system had already completed 1.4 billion passenger/trips. 

Taken together, these political and industry dynamics make predicting China’s oil demand much more challenging and less assured than has been the case for a long time. Any projection will have to accept a great deal more uncertainty as China embarks on an uneven transition from the old economy to the birth of something new.

Hope this explanation helps. 

Thanks again!

X

 

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]

On 5/18/2018 at 2:42 PM, Fulcaneli said:

Will the reduction in heavy oil imports from Venezuela not free up refining capacity? Production in Venezuela is down substantially, their production capacity and infrastructure is crumbling, and it appears that the situation is going to get much worse before it gets any better. 

As far as the economic aspects, I was under the impression that WCS trades at a large discount to offset the challenges you outlined. 

I guess what I'm getting at is that the scenario your theorizing is brand new to me, and its seemingly contradictory to the conventional wisdom and multi billion dollar investments that are being made in the Canadian heavy oil industry. I see it mentioned frequently that a lack of pipeline capacity, high production costs and an unstable oil market are the biggest challenges facing Alberta oil. But to be completely honest, I've never once seen anyone take the position that finding customers for heavy oil is going to not just be a problem, but be a problem that will be the end of the oil sands and result in the loss of hundreds of billions worth of investments made by oil companies over the previous 30 years. I guess time will tell, but I do have a bit of a hard time believing that these oil companies don't understand the markets enough to know if they're going to have customers for their products, especially when that product is the result of multi billion dollar investments. Why would Kinder Morgan build a 16 billion dollar pipeline to the pacific coast, if there were no customers for the product it will be transporting after 2020? Why would Suncor sanction new multi billion dollar projects if there will be no market after 2020? 

You ask some good questions regarding customers for high cost, low quality crude. ( I have talked with potential Far Eastern buyers, have you?) But you do not suggest any answers from yourself or the oil companies. If you read CAPP's publications you can well assign them to the bin of "Wishful Thinking" with no substance to back up their hoped-for results. I am merely trying to point out the reality of simple arithmetic and sound logic. If others choose to operate on a different basis, then so be it. I welcome logical, fact based objections to my assessments, but saying "Others who should know better differ" is not a persuasive argument.

The common thought expressed by Canadian producers is "We will push out Venezuela, Mexico, Colombia and Iraq from the USGC refineries and supply Canadian crude instead. But they fail to mention how they do so when their cost to produce and move oil to the USGC is $20/B greater than their competition.

[William Edwards + 708]

On 5/18/2018 at 2:42 PM, Fulcaneli said:

Will the reduction in heavy oil imports from Venezuela not free up refining capacity? Production in Venezuela is down substantially, their production capacity and infrastructure is crumbling, and it appears that the situation is going to get much worse before it gets any better. 

As far as the economic aspects, I was under the impression that WCS trades at a large discount to offset the challenges you outlined. 

I guess what I'm getting at is that the scenario your theorizing is brand new to me, and its seemingly contradictory to the conventional wisdom and multi billion dollar investments that are being made in the Canadian heavy oil industry. I see it mentioned frequently that a lack of pipeline capacity, high production costs and an unstable oil market are the biggest challenges facing Alberta oil. But to be completely honest, I've never once seen anyone take the position that finding customers for heavy oil is going to not just be a problem, but be a problem that will be the end of the oil sands and result in the loss of hundreds of billions worth of investments made by oil companies over the previous 30 years. I guess time will tell, but I do have a bit of a hard time believing that these oil companies don't understand the markets enough to know if they're going to have customers for their products, especially when that product is the result of multi billion dollar investments. Why would Kinder Morgan build a 16 billion dollar pipeline to the pacific coast, if there were no customers for the product it will be transporting after 2020? Why would Suncor sanction new multi billion dollar projects if there will be no market after 2020? 

Why would Suncor sanction new multi billion dollar projects if there will be no market after 2020? Since I have spent no time in the Suncor boardroom I cannot definitively answer the question as to what were they thinking, but I can guess that it was a combination of 1) the price of oil will be high forever and 2) the IMO sulfur regulation was not noticed and 3) they have drawn a barrier around North America and can therefore ignore the rest of the world.

[William Edwards + 708]

20 hours ago, EXXMobil said:

Hello Mr. Edwards,

Thank you for your response. 

As many watching the oil industry do not see, China is a sleeping giant consuming millions of barrels of oil a day, Gasoline and diesel, for example, made up over half of China’s crude consumption in 2016. That is, of the 556 million tons of crude consumed, about 282 million tons were refined oil products predominantly used in transport. 

Hence, it is probably more appropriate to compare China to the United States, where transportation is the biggest driver of oil demand, rather than South Korea. As of 2016, China’s total civilian vehicle fleet (includes passenger vehicles and trucks) was about 194 million.

Of course, its large population virtually guarantees that China will end up with the largest vehicle fleet in the world, even if it remains below the US level in per capita terms.

The choices China makes regarding its vehicle fleet and the types of fuel going into those vehicles could make any of today’s projections of oil demand even more obsolete.

Beyond vehicles, China is also rapidly swapping diesel for electricity in its passenger rail system. More than 20,000 km of high-speed rail (HSR) track has been laid, with ambitious expansions underway. By the end of 2016, the HSR system had already completed 1.4 billion passenger/trips. 

Taken together, these political and industry dynamics make predicting China’s oil demand much more challenging and less assured than has been the case for a long time. Any projection will have to accept a great deal more uncertainty as China embarks on an uneven transition from the old economy to the birth of something new.

Hope this explanation helps. 

Thanks again!

X

 

I still await the global crude balance that I requested so that I can see the source of your conclusions. Simple arithmetic is all that I need. Without that balance it is impossible to draw reliable conclusions.

[Refman + 207]

5 hours ago, William Edwards said:

The common thought expressed by Canadian producers is "We will push out Venezuela, Mexico, Colombia and Iraq from the USGC refineries and supply Canadian crude instead. But they fail to mention how they do so when their cost to produce and move oil to the USGC is $20/B greater than their competition.

That was why Keystone was essential. It costs about $12 to get Canadian crude to the US Gulf Coast by rail, but only $6 by pipeline. If they could get Canadian crude to the Gulf Coast they have a plethora of refineries that could run the stuff, and would happily take it over the disappearing Venezuelan crude. Beside Venezuela the Mexican Maya is also declining in volume.

[EXXMobil + 6]

6 hours ago, William Edwards said:

I still await the global crude balance that I requested so that I can see the source of your conclusions. Simple arithmetic is all that I need. Without that balance it is impossible to draw reliable conclusions.

Hello Mr. Edwards,

As you know, or may not know, Oil is a major driver of the Canadian economy, and equalization payments from oil-rich Alberta to so-called "have-not" provinces help hold Canada together. But the anti-oil sands lobby has been successful in slowing the construction of new pipeline capacity out of Western Canada over the past decade, and the consequent shortage of outgoing pipeline capacity creates logistical and financial problems for Canada's oil producers, who frequently have to sell their crude at below-market prices. Over the past seven years, that shortage of pipeline capacity has cost Canada C$117 billion ($95 billion) in lost revenues, according to estimates from TD Bank.

The pipeline is not 100% about the oil, the financial consequences of not approving the Kinder pipeline will be devastating to Canada with crushing blows to the Canadian jobs market trickling through small and large business on the way causing massive bankruptcies, job losses and business closings. 

We understand the need to protect the earth but protecting the earth will come at a huge devastating cost to Canada if the pipeline is not approved.

There comes a time where you draw a fine line between bankrupting small business, foreclosures and personal bankruptcies and allowing something to be built that you oppose in order to save the country and the Canadian people.  

If you're OK with the Canadian people, and maybe friends and families losing their businesses and homes because the so called save the earth people "think" an oil spill "might" happen if the pipeline is approved, (with no solid evidence or knowledge anything will happen at all), you along with all the other save the earth people have to live with those decisions and ultimately the consequences. 

Right now, the Canadian Government is playing the game and allowing the save the earth people a chance to be heard but in the end, the Canadian Government does not care about the save the earth people. The Canadian Government has a job, that job is to protect the majority. That majority are the Canadian people not voicing an unfounded concern. That majority are the Canadian people who cannot sleep at night wondering if they can pay the mortgage, the credit cards and at the same time put food on the table, buy clothes for the family and put their children through school. That majority is / are, "We the People" of Canada along with the small businesses that depend on the oil industry to pay the bills and keep Canadians employed.

This argument is about the financial well being of Canada, it is absolutely not about a group of save the earth people with unfounded allegations, void of fact / evidence, that if the Kinder Pipeline is built, it "might cause"
an oil spill. 

As you know, bringing an argument in a court of law is not about the possibility of something happening, it's about proving beyond a reasonable doubt that if something is built or a law is passed, the outcome "will" cause tragic results. In this case, everything the save the earth people are arguing is "unfounded and void of fact." 

I hope this clears up your thoughts. 

Just remember, it all comes down to the financial outcome of something, not the unfounded arguments a "very small group" of people think they have. 

Cheers,

X

Edited May 20, 2018 by EXXMobil
edit

[William Edwards + 708]

2 hours ago, Refman said:

That was why Keystone was essential. It costs about $12 to get Canadian crude to the US Gulf Coast by rail, but only $6 by pipeline. If they could get Canadian crude to the Gulf Coast they have a plethora of refineries that could run the stuff, and would happily take it over the disappearing Venezuelan crude. Beside Venezuela the Mexican Maya is also declining in volume.

You provide us with another example of how insufficient knowledge and wishful thinking have allowed Canadian producers to make such expensive mistakes. Addressing your points: The $20 debit versus other producers already assumes pipeline transportation at the marginal cost of existing lines at $6-8/B. And you conveniently fail to mention the Middle Eastern producers, including Iraq, Saudi Arabia, the UAE and Kuwait, with their billions of barrels of available production, that will be looking to dispose of their high sulfur oil in the same US capacity that you think is reserved for the higher cost, lower quality Canadian oil. My guess is that you have not even recognized that the 300-400 MB/D  drop in Venezuelan imports into the US has been replaced by Iraqi crude, not the abundant supply of Canadian dilbit. Price competition prevails.

[William Edwards + 708]

1 hour ago, EXXMobil said:

Hello Mr. Edwards,

As you know, or may not know, Oil is a major driver of the Canadian economy, and equalization payments from oil-rich Alberta to so-called "have-not" provinces help hold Canada together. But the anti-oil sands lobby has been successful in slowing the construction of new pipeline capacity out of Western Canada over the past decade, and the consequent shortage of outgoing pipeline capacity creates logistical and financial problems for Canada's oil producers, who frequently have to sell their crude at below-market prices. Over the past seven years, that shortage of pipeline capacity has cost Canada C$117 billion ($95 billion) in lost revenues, according to estimates from TD Bank.

The pipeline is not 100% about the oil, the financial consequences of not approving the Kinder pipeline will be devastating to Canada with crushing blows to the Canadian jobs market trickling through small and large business on the way causing massive bankruptcies, job losses and business closings. 

We understand the need to protect the earth but protecting the earth will come at a huge devastating cost to Canada if the pipeline is not approved.

There comes a time where you draw a fine line between bankrupting small business, foreclosures and personal bankruptcies and allowing something to be built that you oppose in order to save the country and the Canadian people.  

If you're OK with the Canadian people, and maybe friends and families losing their businesses and homes because the so called save the earth people "think" an oil spill "might" happen if the pipeline is approved, (with no solid evidence or knowledge anything will happen at all), you along with all the other save the earth people have to live with those decisions and ultimately the consequences. 

Right now, the Canadian Government is playing the game and allowing the save the earth people a chance to be heard but in the end, the Canadian Government does not care about the save the earth people. The Canadian Government has a job, that job is to protect the majority. That majority are the Canadian people not voicing an unfounded concern. That majority are the Canadian people who cannot sleep at night wondering if they can pay the mortgage, the credit cards and at the same time put food on the table, buy clothes for the family and put their children through school. That majority is / are, "We the People" of Canada along with the small businesses that depend on the oil industry to pay the bills and keep Canadians employed.

This argument is about the financial well being of Canada, it is absolutely not about a group of save the earth people with unfounded allegations, void of fact / evidence, that if the Kinder Pipeline is built, it "might cause"
an oil spill. 

As you know, bringing an argument in a court of law is not about the possibility of something happening, it's about proving beyond a reasonable doubt that if something is built or a law is passed, the outcome "will" cause tragic results. In this case, everything the save the earth people are arguing is "unfounded and void of fact." 

I hope this clears up your thoughts. 

Just remember, it all comes down to the financial outcome of something, not the unfounded arguments a "very small group" of people think they have. 

Cheers,

X

Unlike you, my assessments have nothing at all to do with saving the earth. Or Canadian environmental concerns. It is based only upon simple arithmetic, based on knowing that refiners buy the lowest cost feedstock. Canadian oil sands cannot compete very far from home.

[Refman + 207]

2 hours ago, William Edwards said:

You provide us with another example of how insufficient knowledge and wishful thinking have allowed Canadian producers to make such expensive mistakes. Addressing your points: The $20 debit versus other producers already assumes pipeline transportation at the marginal cost of existing lines at $6-8/B. And you conveniently fail to mention the Middle Eastern producers, including Iraq, Saudi Arabia, the UAE and Kuwait, with their billions of barrels of available production, that will be looking to dispose of their high sulfur oil in the same US capacity that you think is reserved for the higher cost, lower quality Canadian oil. My guess is that you have not even recognized that the 300-400 MB/D  drop in Venezuelan imports into the US has been replaced by Iraqi crude, not the abundant supply of Canadian dilbit. Price competition prevails.

We have a difference of opinion and I doubt it will get resolved here, so we'll have to agree to disagree on this subject.

Good day to you

[William Edwards + 708]

1 hour ago, Refman said:

We have a difference of opinion and I doubt it will get resolved here, so we'll have to agree to disagree on this subject.

Good day to you

Ok. Thanks.

[Guest]

 

Or is it possible that it doesn't matter, because it's refined into products other than Bunker C oil? Do you suppose that's a possibility William? 

Edited May 21, 2018 by Guest

[Guest]

16 hours ago, William Edwards said:

You ask some good questions regarding customers for high cost, low quality crude. ( I have talked with potential Far Eastern buyers, have you?) But you do not suggest any answers from yourself or the oil companies. If you read CAPP's publications you can well assign them to the bin of "Wishful Thinking" with no substance to back up their hoped-for results. I am merely trying to point out the reality of simple arithmetic and sound logic. If others choose to operate on a different basis, then so be it. I welcome logical, fact based objections to my assessments, but saying "Others who should know better differ" is not a persuasive argument.

The common thought expressed by Canadian producers is "We will push out Venezuela, Mexico, Colombia and Iraq from the USGC refineries and supply Canadian crude instead. But they fail to mention how they do so when their cost to produce and move oil to the USGC is $20/B greater than their competition.

William, quite frankly you haven't offered anything that hasn't already been easily refuted. 

First you tried to claim there was a lack of refining capacity. Incorrect.

Then you tried to claim that there were no customers. Incorrect.

And your prediction for the end of the oil sands in 2020 will also undoubtedly prove to be incorrect, because the premise is incorrect. 

 

 

[Guest]

8 hours ago, William Edwards said:

You provide us with another example of how insufficient knowledge and wishful thinking have allowed Canadian producers to make such expensive mistakes. Addressing your points: The $20 debit versus other producers already assumes pipeline transportation at the marginal cost of existing lines at $6-8/B. And you conveniently fail to mention the Middle Eastern producers, including Iraq, Saudi Arabia, the UAE and Kuwait, with their billions of barrels of available production, that will be looking to dispose of their high sulfur oil in the same US capacity that you think is reserved for the higher cost, lower quality Canadian oil. My guess is that you have not even recognized that the 300-400 MB/D  drop in Venezuelan imports into the US has been replaced by Iraqi crude, not the abundant supply of Canadian dilbit. Price competition prevails.

William, do you suppose that Iraqi oil might have been used because Canada is having severe pipeline capacity issues? Do you realize that Canada has no spare pipeline capacity left? I thought we'd already established that in this discussion. 

I still find it very interesting how the new sulphur regulations will mean the end of Canadian oil, but the billions of barrels of high sulphur middle eastern oil that you mention here will still have a market in the United States. If you want to educate us as to why middle eastern high sulphur oil will thrive, while Canadian high sulphur oil will cease to exist, that would be great. Because it appears to be very contradictory. 

[Guest]

11 hours ago, Refman said:

That was why Keystone was essential. It costs about $12 to get Canadian crude to the US Gulf Coast by rail, but only $6 by pipeline. If they could get Canadian crude to the Gulf Coast they have a plethora of refineries that could run the stuff, and would happily take it over the disappearing Venezuelan crude. Beside Venezuela the Mexican Maya is also declining in volume.

William thinks there's a shortage of refining capacity for heavy crude. 

 

[William Edwards + 708]

5 hours ago, Fulcaneli said:

William, do you suppose that Iraqi oil might have been used because Canada is having severe pipeline capacity issues? Do you realize that Canada has no spare pipeline capacity left? I thought we'd already established that in this discussion. 

I still find it very interesting how the new sulphur regulations will mean the end of Canadian oil, but the billions of barrels of high sulphur middle eastern oil that you mention here will still have a market in the United States. If you want to educate us as to why middle eastern high sulphur oil will thrive, while Canadian high sulphur oil will cease to exist, that would be great. Because it appears to be very contradictory. 

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.

[William Edwards + 708]

5 hours ago, Fulcaneli said:

William thinks there's a shortage of refining capacity for heavy crude. 

 

Wrong! William thinks that the bunker fuel regulation change will instantly create the need for an additional two million barrels a day of heavy crude refining capacity, thereby instantly creating a two million barrels a day processing capacity shortage overnight, around 2020.

[William Edwards + 708]

6 hours ago, Fulcaneli said:

 

Or is it possible that it doesn't matter, because it's refined into products other than Bunker C oil? Do you suppose that's a possibility William? 

Is it possible that you cannot distinguish between current and future conditions?

[Guest]

6 hours ago, William Edwards said:

Wrong! William thinks that the bunker fuel regulation change will instantly create the need for an additional two million barrels a day of heavy crude refining capacity, thereby instantly creating a two million barrels a day processing capacity shortage overnight, around 2020.

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. 

[Guest]

6 hours ago, William Edwards said:

Is it possible that you cannot distinguish between current and future conditions?

Your prediction regarding future conditions relies on a faulty premise.