Is Canada hosed?

[Ward Smith + 6,615]

23% of the Canadian workforce gone, so far

Quote

This is the latest sign that Canada’s oil and gas industry has a long way to go before it recovers despite the efforts of the Alberta government, which last year imposed obligatory production cuts on oil companies operating in the province to arrest the decline in prices.

An astounding number of Canadians have never figured out how important Alberta and its oil industry are to the rest of the country. They still treat it like the enemy and continue to wonder why the purchasing power of the Loony continues to diminish. But I'm sure they'll all line up to protest the next pipeline, or demand divestment from oil shares. 

Edited April 10, 2019 by Ward Smith
Stupid auto-correct

[Ian Austin + 131]

4 hours ago, Ward Smith said:

23% of the Canadian workforce gone, so far

An astounding number of Canadians have never figured out how important Alberta and its oil industry are to the rest of the country. They sell treat it like the enemy and continue to wonder why the purchasing power of the Loony continues to diminish. But I'm sure they'll all line up to protest the next pipeline, or demand divestment from oil shares. 

Funny the article mentions a reduction in Chinese and US crude buying with increased commodity price. I’m going to assume that the writer has her information in order. So, basically, this jives with what @WilliamEdwards said years ago: there’s lots of demand for Canadian oilsands crude...as long as the price is right (low).

Ive been writing to any/everybody in each level of government for at least 2 years, which has unsurprisingly fallen on deaf ears (I probably wouldn’t listen to me either) - I fear we made a huge miscalculation: if we spent near as much time and effort on making useful product, instead of trying to ram-rod through Bitumen pipelines, the Canadian oilfield would be much better off. 

I am one of the 23% - to be honest, there’s only a small part of me that even cares anymore. The only issue is industry, in its infinite wisdom (more likely stubbornness) is wasting away something (a large amount of hydrocarbon resource) that doesn’t belong to them.

Edited April 10, 2019 by Ian Austin

[Keith boyd + 178]

It's never been better here In fort mcmurray. Wages are only down 5-10% but housing and rents are down 40% and even consumer goods and services are 20% ish cheaper then back when this town was a mad house. Now its calm and quiet, and your money goes farther then it used to. There are still jobs galore up here every company is looking for LOCAL people to replace commuters. The fly in fly out crowd is getting decimated, its nigh impossible to find a gig that pays your flights and accommodations any more. I moved here last year when I saw the writing on the wall. So the camp life is gone, I still get a free bus to work from town. The oil sands is not finished. It's not going to all shut down canada still needs a domestic supply and pipelines will eventually get built. Where I work they have cut to the bone the place is falling apart, they are cutting costs by just running the plants flat out and not spending money on anything non  essential. Today I sat down in a lunch room chair and I realized the chair had old gloves duct taped to the arms for arm rest pads. Eventually they will need to make investments In their infrastructure and that means jobs. The longer the recession goes on the bigger the next boom will be. 

[Tom Kirkman + 8,860]

5 hours ago, Ward Smith said:

23% of the Canadian workforce gone, so far

An astounding number of Canadians have never figured out how important Alberta and its oil industry are to the rest of the country. They sell treat it like the enemy and continue to wonder why the purchasing power of the Loony continues to diminish. But I'm sure they'll all line up to protest the next pipeline, or demand divestment from oil shares. 

Hey Canadians, perhaps if you vote out Trudeau, the Canadian Oil & Gas industry might actually have a chance to recover.  Just a thought.

[John Foote + 1,135]

Canada is one of the most rich countries in the world in terms of natural resources, and an educated population. They'll survive their politics. Voters have the right to be idiots, we prove that every day. Yet despite, or because, tends to work better than the places where you don't get a real vote.

[ByronWalter + 11]

2 hours ago, Ian Austin said:

" ...Funny the article mentions a reduction in Chinese and US crude buying with increased commodity price. I’m going to assume that the writer has her information in order. So, basically, this jives with what @WilliamEdwards said years ago: there’s lots of demand for Canadian oilsands crude...as long as the price is right (low)."
 

Canadian oil producers work for the US, since virtually all their exports go south and we get a great price break in the process. If they ever get the TMP built, they might have a chance to get better prices. 

Adding to the fun is that eastern Canada has to import the stuff from such great places as Saudi Arabia at undiscounted prices, paid in weak Canadian dollars since they have little ability to move Albertan oil east. Why support your own economy when you can send Loonies to the peace loving Saudis? Good plan.

Canadians are so full of it. For example government web sites love to crow about how Canada leads the world in preventing deforestation, which is true. But if you read the fine print their definition of deforestation, it doesn't include ...ah... logging. Just look at British Columbia on Google earth. Look at the border between Washington State and BC. One side has major bald spots and the other doesn't. Need I say who the winner is? Thirty yeas ago I was biking on Vancouver Island, marveling at the way they had clear cut 45 degree slopes at some point in the past. Those slopes are still bare.

BC in particular loves to flash their eco credentials while fighting against the TMP but they use more oil on a per capita basis than the US. Their favorite vehicle is the Ford F150 not-so-eco-friendly truck. Their second biggest export is lumber and lumber products (no deforestation here:). 

Oh, and BC's number one export?... that would be coal. Thanks for nothing.

But things are looking up. Some time in 2020 Victoria is going to enter the 20th Century (about a century late) and no longer pump there sewage straight into the ocean. Lovely town by the way.

2 hours ago, Ian Austin said:

 

[Tom Kirkman + 8,860]

7 minutes ago, ByronWalter said:

Canadian oil producers work for the US, since virtually all their exports go south and we get a great price break in the process. If they ever get the TMP built, they might have a chance to get better prices. 

Adding to the fun is that eastern Canada has to import the stuff from such great places as Saudi Arabia at undiscounted prices, paid in weak Canadian dollars since they have little ability to move Albertan oil east. Why support your own economy when you can send Loonies to the peace loving Saudis? Good plan.

Canadians are so full of it. For example government web sites love to crow about how Canada leads the world in preventing deforestation, which is true. But if you read the fine print their definition of deforestation, it doesn't include ...ah... logging. Just look at British Columbia on Google earth. Look at the border between Washington State and BC. One side has major bald spots and the other doesn't. Need I say who the winner is? Thirty yeas ago I was biking on Vancouver Island, marveling at the way they had clear cut 45 degree slopes at some point in the past. Those slopes are still bare.

BC in particular loves to flash their eco credentials while fighting against the TMP but they use more oil on a per capita basis than the US. Their favorite vehicle is the Ford F150 not-so-eco-friendly truck. Their second biggest export is lumber and lumber products (no deforestation here:). 

Oh, and BC's number one export?... that would be coal. Thanks for nothing.

But things are looking up. Some time in 2020 Victoria is going to enter the 20th Century (about a century late) and no longer pump there sewage straight into the ocean. Lovely town by the way.

Just curious, is this your cue for Canadians to apologize?

[ByronWalter + 11]

Hardly that. We yanks have an epic amount of egg on our faces too. Canadians tend to resist better the urge to go around and muck up other parts of the world like we do. But then they hardly have the number of bombs and bullets that we have.

We believe that we can spread democracy by blowing stuff up and killing people. And that has worked so well....

[Ian Austin + 131]

1 hour ago, Tom Kirkman said:

Hey Canadians, perhaps if you vote out Trudeau, the Canadian Oil & Gas industry might actually have a chance to recover.  Just a thought.

I’m not sure it matters anymore Tom. This whole file has been so badly botched, by both Industry and Government, that it’s going to take years to fix. 

People up here (including those still working) are running out of patience for the whole deal. It’s going to end up as a “good luck finding even decent people” type of industry

[Ward Smith + 6,615]

@Ian Austin I hope you'll do well. I have friends up there who haven't recovered and they're smart, hard working people caught in a bad bind.  The companies are struggling and no one will invest in that mess and most of the problems are self inflicted. I feel badly that Canada can't get it's act together and how Alberta was always treated like the bastard red-headed stepchild, while leisurely getting its pockets picked for "transfer payments" to ingrates in the rest of the country. 

[Ian Austin + 131]

14 hours ago, Ward Smith said:

@Ian Austin I hope you'll do well. I have friends up there who haven't recovered and they're smart, hard working people caught in a bad bind.  The companies are struggling and no one will invest in that mess and most of the problems are self inflicted. I feel badly that Canada can't get it's act together and how Alberta was always treated like the bastard red-headed stepchild, while leisurely getting its pockets picked for "transfer payments" to ingrates in the rest of the country. 

Thank you. They’re challenging times (things are a lot worse up here than the news projects), but it will all get figured out.....eventually. Hopefully before it isn’t too late

Edited April 10, 2019 by Ian Austin

[Bobby P + 88]

I am a Albertan, I worked in the Oil sands for over 5 years before I lost my job due to low oil prices, lack of pipeline infrastructure, incompetent provincial and federal politicians (Alberta NDP provincially and Liberals federally) they are doing everything they can to scare investors away. It is so sad to see so many of my co-workers lose jobs, some had to move to USA/Middle East for work, some retired, some gave up looking for work, some of them have had no job for over 3 years, some of them Engineers/designers/geologists ended up working at co-op stores or at Costco just to make some money. Behind all these numbers are real people and their struggles and I I saw first hand how much they were struggling. For me, I am so glad President Trump rolled back energy policies and regulations to encourage investment - I got lucky and found a job in the US...you can call me crazy, but I believe this is due to the return of investor confidence in the US energy industry due to Trump's policies. 

 

Everyone talking about equalization. Alberta has paid over $600 billion to the confederation (the highest per capita amount of any province) and all we get is obstruction and no way to get our resources to tide water. The feeling of alienation among Albertan's is real and the threat of separation, isn't just a threat anymore. 

[Ward Smith + 6,615]

12 minutes ago, Bobby P said:

I am a Albertan, I worked in the Oil sands for over 5 years before I lost my job due to low oil prices, lack of pipeline infrastructure, incompetent provincial and federal politicians (Alberta NDP provincially and Liberals federally) they are doing everything they can to scare investors away. It is so sad to see so many of my co-workers lose jobs, some had to move to USA/Middle East for work, some retired, some gave up looking for work, some of them have had no job for over 3 years, some of them Engineers/designers/geologists ended up working at co-op stores or at Costco just to make some money. Behind all these numbers are real people and their struggles and I I saw first hand how much they were struggling. For me, I am so glad President Trump rolled back energy policies and regulations to encourage investment - I got lucky and found a job in the US...you can call me crazy, but I believe this is due to the return of investor confidence in the US energy industry due to Trump's policies. 

 

Everyone talking about equalization. Alberta has paid over $600 billion to the confederation (the highest per capita amount of any province) and all we get is obstruction and no way to get our resources to tide water. The feeling of alienation among Albertan's is real and the threat of separation, isn't just a threat anymore. 

Idaho will happily take Alberta, or you could split it with Montana.    

I'm glad you're working here. I've met Canadians working in Alaska and Texas (they seem to prefer Alaska) and they're tremendous assets to their companies here, and we're lucky to have them. 

For all his faults, and if you believe the press they're legion, Trump is working miracles on the economic front. Manufacturing jobs are recovering, steel is doing better than it has in 40 years and all Obama could say was, "Are you going to wave a magic wand?" Those jobs that aren't coming back,came back. 

If, and it's a big if, Canada elected someone even remotely as brash who put Canadian interests first, who knows? Maybe Idaho will ask to join Canada 😌

[Marc Savoie + 19]

Baby steps...Albertans  go to the polls next week. 

ByronWalters, do not compare Canada to America as just having less bombs and bullets: that's arrogance personified.  

[ByronWalter + 11]

2 hours ago, Marc Savoie said:

Baby steps...Albertans  go to the polls next week. 

ByronWalters, do not compare Canada to America as just having less bombs and bullets: that's arrogance personified.  

 

Hi Marc,

Unfortunately Canada tends to wander into the same swamps as the US. Here's a reference to Canadian involvement in the 2003 Iraq war:

https://en.wikipedia.org/wiki/Canada_and_the_Iraq_War

The war in Iraq was one of the worst US mistakes ever. Bush junior, under the dark influence of Cheney, gave us that and then managed to get re-elected. And Canada just couldn't stay out of it in spite of  push back from most Canadians.

More recently Canada managed to pump bombs and bullets into Syria:

https://en.wikipedia.org/wiki/Operation_Impact

I blame the US for suckering Canada into both of those involvements.

One way that Canadians are not like us is that they tend to muck up the environment even more than we do. Some might blame that on the lousy weather, which could explain why Canadians have such a heavy energy footprint. You can look up various stats for the US and Canada and Canadians use more fossil fuel per capita than we do. In Europe the Scandinavian countries, which also have rotten weather, use about half as much while maintaining their high rent lifestyle.

I wish that both the US and Canada would try to emulate those countries at least as far as energy usage. But hey, we both love those full size pickup trucks and McMansions.

 

[Bobby P + 88]

6 hours ago, Ward Smith said:

Idaho will happily take Alberta, or you could split it with Montana.    

I'm glad you're working here. I've met Canadians working in Alaska and Texas (they seem to prefer Alaska) and they're tremendous assets to their companies here, and we're lucky to have them. 

For all his faults, and if you believe the press they're legion, Trump is working miracles on the economic front. Manufacturing jobs are recovering, steel is doing better than it has in 40 years and all Obama could say was, "Are you going to wave a magic wand?" Those jobs that aren't coming back,came back. 

If, and it's a big if, Canada elected someone even remotely as brash who put Canadian interests first, who knows? Maybe Idaho will ask to join Canada 😌

There was a poll conducted just recently which found that close to 50% of Albetans want separation as we view it no longer beneficial to part of the Canadian Confederation. 

https://www.ctvnews.ca/canada/we-are-getting-robbed-blind-billboards-call-for-alberta-to-separate-1.4306265

If it means more market access and access to tidewater we will gladly join the USA! And with President Trumps new executive orders to expedite pipeline approval process it is even more enticing! 

The benefits to the USA is obviously that they will not have to import or worry about oil and gas supply for at least a 100 years as Alberta has the 3rd largest proven reserves in the world. I would encourage to read the below article by a Petroleum engineer (P.Eng) and why it is possible that it would very well be the largest heavy oil/bitumen reserve in the world. Along with vast reserves of Shale Oil and natural gas. 

https://www.jwnenergy.com/article/2017/3/how-its-quite-possible-canada-has-worlds-largest-oil-reserves/

https://www.nrcan.gc.ca/energy/sources/shale-tight-resources/17679

We Albertans disliked Obama due the fact that he dragged his feet on KXL even though his own state department concluded it was in US national interest, all to please a few special interest and tree huggers. 

Finally, thanks for the nice words! I am very glad to have an opportunity to work here and help the US energy industry! I only feel left out when Trump says "Buy American! Hire American!" ha...damn Canadians! Sorry. 

[Bobby P + 88]

https://www.usnews.com/news/best-states/alaska/articles/2019-04-02/alaska-governor-asks-president-to-grant-rail-extension

Another reason for Alberta to join the USA! It's crazy that a US State governor is more interested in connecting oil infrastructure than Canadian Premiers and PM. I and many other Albertans for one do not mind sharing our money and taxes which the oil industry generates with the US. Well, the US is already our #1 importer of crude anyways. 

[Ward Smith + 6,615]

5 hours ago, Bobby P said:

https://www.usnews.com/news/best-states/alaska/articles/2019-04-02/alaska-governor-asks-president-to-grant-rail-extension

Another reason for Alberta to join the USA! It's crazy that a US State governor is more interested in connecting oil infrastructure than Canadian Premiers and PM. I and many other Albertans for one do not mind sharing our money and taxes which the oil industry generates with the US. Well, the US is already our #1 importer of crude anyways. 

Amazingly I met one of the founders of this enterprise many years ago in Calgary. I personally thought he was nuts but they've had some success. Here's a link to their Timeline

[A Kang + 6]

So sad.

 

-Alberta's power market changes could add $1.4B in costs for consumers" https://calgaryherald.com/business/energy/varcoe-albertas-power-market-changes-could-add-1-4b-in-costs-for-consumers

 

-"Between 2008 and 2016, Ontario’s residential electricity costs increased by 71%, far outpacing the 34% average growth in electricity prices across Canada. In 2016, Toronto residents paid $60 more per month than the average Canadian for electricity." https://www.fraserinstitute.org/blogs/taking-a-page-from-ontario-s-power-pricing-playbook

 

-"Data from the U.S. Energy Information Agency shows crude-by-rail movements from Canada exceeded those from the U.S. — even though the U.S. produced 12.2 million BPD in March, which is close to three times as much oil as produced in Canada ...Overall capital spending in the U.S. oil and gas sector has increased 38 per cent since 2016, while capital spending in Canada decreased 19 per cent over the same time period.

 

"Part of the reason for that, Bloomer said, is that Canadian pipeline projects spend twice the amount of time in regulatory review processes in Canada compared with the U.S." https://calgaryherald.com/commodities/as-canada-dithers-the-u-s-approved-3-oil-pipelines-to-carry-2-4m-bpd-by-2020/wcm/da78306c-36d0-4999-885c-634ddf16c6f0

Edited April 11, 2019 by A Kang

[Jan van Eck + 7,558]

On 4/9/2019 at 8:12 PM, Ian Austin said:

Funny the article mentions a reduction in Chinese and US crude buying with increased commodity price. I’m going to assume that the writer has her information in order. So, basically, this jives with what @WilliamEdwards said years ago: there’s lots of demand for Canadian oilsands crude...as long as the price is right (low).

Ive been writing to any/everybody in each level of government for at least 2 years, which has unsurprisingly fallen on deaf ears (I probably wouldn’t listen to me either) - I fear we made a huge miscalculation: if we spent near as much time and effort on making useful product, instead of trying to ram-rod through Bitumen pipelines, the Canadian oilfield would be much better off. 

I am one of the 23% - to be honest, there’s only a small part of me that even cares anymore. The only issue is industry, in its infinite wisdom (more likely stubbornness) is wasting away something (a large amount of hydrocarbon resource) that doesn’t belong to them.

Ian, I fear the issues are more complex than you suggest.  Yes, Canada could (and also in my view should, as is your view) integrate downstream from crude to do their own refining, but - big but - that requires people in Ottawa with at least a shimmer of comprehension of the dynamics of oil production and the oil markets.  That tiny glimmer of a shimmer is not there.  Canada has always been notorious for obtuse politicians,  people with molasses for brains and thick as stone, but that is part of the peculiar dynamics of the place, where seriously smart people do not get into the political party scene and do not run for office.  I spent 18 years living there, in Quebec and Ontario, and got a flavor of the scene albeit from the perspective of the "Easterners," and as you point out those dynamics are quite different from what you have in Manitoba Westward. 

First, the geography works against the Canadian oil industry.  You are producing in this landlocked area with formidable mountains to the West, and with the vast solid-granite Canadian Shield to the East.  So it is not as if you can go dig a pipeline as you can in the soft earth of Texas. Yes, pipe can be constructed above-ground, witness the Alaska Pipeline, but the distances make that impossibly expensive. And the extreme cold with that thick stuff makes for more formidable obstacles, including fabricating insulated double-wall pipe and stringing that for two thousand miles. All for stuff that sells at a discount to LTO. 

Meanwhile, the big (and little) refineries in the East have been abandoned and largely dismantled.  There used to be a complex of refineries on the East End of the Island of Montreal. That is also the terminus of the Portland (Maine) - Montreal pipeline for imported crude.  Why have they been abandoned?  Well, because they are (or are perceived to be) polluters.  Nobody builds refineries any more, except in some third-world country, such as India. Was that a smart move, to tear all that down?  Of course not.  Yet these moves are created responsive to restrictive legislation and a punitive legal system that threatens total bankruptcy over any integrated oil company foolish enough to run a refinery (basically, anywhere in the West except Louisiana, which is wide open in the legal sphere) and create products that the citizens want and need.  Go figure. 

Now in Eastern Canada you still have a smattering of refineries: there is the big one in New Brunswick, at the harbor in St. John, belonging to Irving Oil Co.  But Irving is not dependent on the local market for customers to support that output.  Irving is big, very big, in exporting oil into New England, through a spew of subsidiary companies and even more companies that disguise the Irving ownership and avoid pressures against them for monopolistic practices and price gouging (both of which Irving does cheerfully and with total disdain for their customers).  Irving effectively owns New Brunswick, the Province has become a corporate slave plantation, so they can do whatever they want, subject of course to Trump's levies of import duties (and Trump seriously hit Irving with a 25% tariff on Irving construction lumber from the forests of NB). (Will that support the Maine forest-products industry?  Probably.)

The other refineries, the small ones in Newfoundland, are too tiny to factor into the discussion.  The huge refinery that Joey Smallwood tried to set up in Newfoundland, to act as a swing producer for product demand spikes in Europe, Canada and the USA, got wrecked by the use of sea water as a coolant, rusting everything into oblivion, so bye-b ye that bright idea. 

That leaves the refineries in Sarnia, Ontario, opposite Detroit.  But the feedstocks, from what I can make of it, are not Canadian (maybe it is, but I think that crude comes from the USA) , so there is no real internal market (except in the West) for Western oil.  The stuff has to be exported, under the current dynamics. 

What to do?  It is my thinking that Canada has to craft a closed-market for its oil; that Canada simply prohibits the import of oil and refined product, except under special license.  Now that forces the construction of refineries back on the East End of Montreal, and it forces the construction of a parallel rail line across the central part of the Canadian Shield, onto which streams of oil unit trains deliver the crude. The argument is made that the oil becomes difficult to load as the oilsands stuff is basically asphalt; OK, so then ship it as solidified material in gondola cars, no difference.  But let it rock and roll at 50 mph on its own rail trackage those two thousand miles to market!  And develop a captive market for the product.  It is not realistic to think in terms of pipe, and the reason is that the distance is so vast, and over the Rockies is so expensive and fraught, that by the time you get it built the industry in Alberta is wrecked for lack of customers. Would Keystone be the salvation?  I don't think so;  you still have the issues of sending the oil with lots of diluent, and possibly heating it, and certainly using multiple pumping stages with great big energy-hungry pumps, even if you resolve the spill risks. 

Now the other option is to build refineries in Alberta, and ship and sell only refined product.  OK, you could do that, but remember that Fort McMurray is seriously cold in winter, and winter there lasts what?  seven months?  so your work force and machinery is out there in polar-bear weather trying to keep the machinery running. That is a sobering prospect. And you have this involuntary celibacy of the men, given the chronic shortage of available women, another deterrent. Without the women, the men are going to be drinking and fighting, again not conducive to good production runs. Just how you entice the women to the oil towns is yet another social conundrum to go deal with.  And Ottawa has no solutions, although at one point a bright entrepreneur applied for a Federal Grant to set up "Courtesans Canada" for the remote oil and mining towns. 

The real problem is the march of time.  Alberta has the proverbial back against the  wall, either it can ship large quantities of product or it strangles. How fast can these solutions be brought to bear? Well, that requires a parliament, and a civil service, that is laser-focused on resolving the transportation, refining, and market constrictions.  Are those guys elected to Ottawa?  Or does parliament instead focus on dippy women being kicked out of Cabinet, and some engineering outfit in Montreal paying bribes to utterly wretched cretins in Libya?  And screwing around with the Dairy Supply Management system to enrich the milk industry in Eastern Ontario and Quebec? 

Canadians habitually elect dunces and incompetents to Parliament.  The result is predictable. They concentrate on making toilets unisex, so that the transgenders are mollified.  The oil industry?  Not even a second thought. 

[Ian Austin + 131]

3 hours ago, Jan van Eck said:

Ian, I fear the issues are more complex than you suggest.  Yes, Canada could (and also in my view should, as is your view) integrate downstream from crude to do their own refining, but - big but - that requires people in Ottawa with at least a shimmer of comprehension of the dynamics of oil production and the oil markets.  That tiny glimmer of a shimmer is not there.  Canada has always been notorious for obtuse politicians,  people with molasses for brains and thick as stone, but that is part of the peculiar dynamics of the place, where seriously smart people do not get into the political party scene and do not run for office.  I spent 18 years living there, in Quebec and Ontario, and got a flavor of the scene albeit from the perspective of the "Easterners," and as you point out those dynamics are quite different from what you have in Manitoba Westward. 

First, the geography works against the Canadian oil industry.  You are producing in this landlocked area with formidable mountains to the West, and with the vast solid-granite Canadian Shield to the East.  So it is not as if you can go dig a pipeline as you can in the soft earth of Texas. Yes, pipe can be constructed above-ground, witness the Alaska Pipeline, but the distances make that impossibly expensive. And the extreme cold with that thick stuff makes for more formidable obstacles, including fabricating insulated double-wall pipe and stringing that for two thousand miles. All for stuff that sells at a discount to LTO. 

Meanwhile, the big (and little) refineries in the East have been abandoned and largely dismantled.  There used to be a complex of refineries on the East End of the Island of Montreal. That is also the terminus of the Portland (Maine) - Montreal pipeline for imported crude.  Why have they been abandoned?  Well, because they are (or are perceived to be) polluters.  Nobody builds refineries any more, except in some third-world country, such as India. Was that a smart move, to tear all that down?  Of course not.  Yet these moves are created responsive to restrictive legislation and a punitive legal system that threatens total bankruptcy over any integrated oil company foolish enough to run a refinery (basically, anywhere in the West except Louisiana, which is wide open in the legal sphere) and create products that the citizens want and need.  Go figure. 

Now in Eastern Canada you still have a smattering of refineries: there is the big one in New Brunswick, at the harbor in St. John, belonging to Irving Oil Co.  But Irving is not dependent on the local market for customers to support that output.  Irving is big, very big, in exporting oil into New England, through a spew of subsidiary companies and even more companies that disguise the Irving ownership and avoid pressures against them for monopolistic practices and price gouging (both of which Irving does cheerfully and with total disdain for their customers).  Irving effectively owns New Brunswick, the Province has become a corporate slave plantation, so they can do whatever they want, subject of course to Trump's levies of import duties (and Trump seriously hit Irving with a 25% tariff on Irving construction lumber from the forests of NB). (Will that support the Maine forest-products industry?  Probably.)

The other refineries, the small ones in Newfoundland, are too tiny to factor into the discussion.  The huge refinery that Joey Smallwood tried to set up in Newfoundland, to act as a swing producer for product demand spikes in Europe, Canada and the USA, got wrecked by the use of sea water as a coolant, rusting everything into oblivion, so bye-b ye that bright idea. 

That leaves the refineries in Sarnia, Ontario, opposite Detroit.  But the feedstocks, from what I can make of it, are not Canadian (maybe it is, but I think that crude comes from the USA) , so there is no real internal market (except in the West) for Western oil.  The stuff has to be exported, under the current dynamics. 

What to do?  It is my thinking that Canada has to craft a closed-market for its oil; that Canada simply prohibits the import of oil and refined product, except under special license.  Now that forces the construction of refineries back on the East End of Montreal, and it forces the construction of a parallel rail line across the central part of the Canadian Shield, onto which streams of oil unit trains deliver the crude. The argument is made that the oil becomes difficult to load as the oilsands stuff is basically asphalt; OK, so then ship it as solidified material in gondola cars, no difference.  But let it rock and roll at 50 mph on its own rail trackage those two thousand miles to market!  And develop a captive market for the product.  It is not realistic to think in terms of pipe, and the reason is that the distance is so vast, and over the Rockies is so expensive and fraught, that by the time you get it built the industry in Alberta is wrecked for lack of customers. Would Keystone be the salvation?  I don't think so;  you still have the issues of sending the oil with lots of diluent, and possibly heating it, and certainly using multiple pumping stages with great big energy-hungry pumps, even if you resolve the spill risks. 

Now the other option is to build refineries in Alberta, and ship and sell only refined product.  OK, you could do that, but remember that Fort McMurray is seriously cold in winter, and winter there lasts what?  seven months?  so your work force and machinery is out there in polar-bear weather trying to keep the machinery running. That is a sobering prospect. And you have this involuntary celibacy of the men, given the chronic shortage of available women, another deterrent. Without the women, the men are going to be drinking and fighting, again not conducive to good production runs. Just how you entice the women to the oil towns is yet another social conundrum to go deal with.  And Ottawa has no solutions, although at one point a bright entrepreneur applied for a Federal Grant to set up "Courtesans Canada" for the remote oil and mining towns. 

The real problem is the march of time.  Alberta has the proverbial back against the  wall, either it can ship large quantities of product or it strangles. How fast can these solutions be brought to bear? Well, that requires a parliament, and a civil service, that is laser-focused on resolving the transportation, refining, and market constrictions.  Are those guys elected to Ottawa?  Or does parliament instead focus on dippy women being kicked out of Cabinet, and some engineering outfit in Montreal paying bribes to utterly wretched cretins in Libya?  And screwing around with the Dairy Supply Management system to enrich the milk industry in Eastern Ontario and Quebec? 

Canadians habitually elect dunces and incompetents to Parliament.  The result is predictable. They concentrate on making toilets unisex, so that the transgenders are mollified.  The oil industry?  Not even a second thought. 

I think you’re pulling punches there. It’s not like the US has a track record of electing Einstein’s either, but most Canadian politicians fall into the “utterly, completely worthless” category. I’m talking zero redeeming qualities. 

That will never change, as smart people have too much of a want to actually act in a useful capacity - making politics off limits.

You can probably see my love of all things politics shining through

[Jan van Eck + 7,558]

20 hours ago, Ian Austin said:

It’s not like the US has a track record of electing Einstein’s either, but most Canadian politicians fall into the “utterly, completely worthless” category. I’m talking zero redeeming qualities. 

Probably the better American example of utter incompetence is the Legislature (and the Mayor and Board of Aldermen of Chicago) of Illinois.  That State is now effectively bankrupt, with an accumulated deficit of some $130 Billion and still operating in a deficit - all has been unsustainable for the last several decades.  The big hit, no surprise, is the accumulated unfunded public pensions and pension plans, which typically include huge healthcare costs.  Last year Illinois lost some 83,000 residents, moving out to the satellite states and also to places such as Florida, Texas, and Nashville, Tennessee.  Illinois is in large measure funded by the property tax system, and home taxes have effectively doubled in the last year.  It is beyond awful.  Then there are huge surcharges on both income taxes and corporate taxes, roughly another 50% EXTRA, just to try to bring some balance to the books.  

None of this will work, of course, and Illinois has dug itself into a chasm so deep that there is no way to climb back out. Now, how does all this come about?  Incompetence?  Sure.  Graft?  But of course.  The public electing stupid people?  Bingo. 

Perhaps the Canadian equivalent is the leadership of Kathleen Wynne in Ontario.  When I was there Ontario was an economic powerhouse, with thousands of factories churning out everything from steel plate in the massive Hamilton steelworks, to tomato soup at the Campbell's cannery, to automobiles in some half-dozen assembly plants plus foundries for casting engine blocks and transmissions, and a vast number of secondary parts suppliers making wiper blades (Trico) to electrical harnesses (TRW).  Then you had the big diesel locomotive factories in London, the Electro-Motive Diesel operation, and another in Montreal  (MLW, or Montreal Locomotive Works), and the railcar plants in Thunder Bay, even a shipyard at the Welland Canal.  Today, that is all pretty much bust, all directly due to policies of the Wynne Government  (Liberal Party, no real surprise).  What did she do?  She started screwing with the electricity generation system; first separating the providers from the power generators, spinning those off to privatize, at huge costs, then abandoning the nuke plants, at more huge cost, then trying to revitalize the nuke plants with refurbishing contracts, at huge cost, then going into "windmills" or so-called wind turbines, basically wind harvesting machinery, also at huge cost.  The result: the price of electricity made it unaffordable for industry, most of which then decamped to Upstate New York and Ohio.  The rest went under, closing the doors forever. 

Today you have this empty shell of abandoned plants littering the countryside.  Where the plant shell have been re-purposed, they have gone from high-value-added operations that are inherently energy-intensive, to low-value-added operations that rely on low-wage imported labor. And Ontario has gone from being the powerhouse Province, donating to the Inter-Provincial Equalization Payments fund, to a beggar province, standing on the Ottawa steps with its own Little tin Cup, asking for alms  - from Alberta, of course. 

This is what happens when you elect some woman who has no clue as to how to control costs and say "No" to those pesky special-interest groups, particularly the "renewable energy" crowd that is absolutely convinced that building those big sky propellers will save the planet, and who additionally has no training in either basic physics or basic economics. You cannot spend money that you don't have, unless you are Dick Cheney.  And he didn't care because he figured he would be dead by the time the bills came due, which is an accurate enough assessment. In the past, Canadians on the national level have fallen victim to all kinds of myopic ideas, including building the Grand Trunk Railway, which predictably went bankrupt and evolved into the CN  (Canadian National), and then the bizarre, indeed crazy, privatization scheme to make the CN a private company instead of a Crown Corporation, part of a series of really dumb ideas that swept through Canada at the time that Margaret Thatcher was reconstructing Britain out of its "social" malaise  [OK, call it disease].  So you see that politicians of all stripes succumb to ideas of grandiosity, instead of paying attention to the mundane business of actually running the country and keeping their act together. 

Is Canada about to crawl out from underneath this mess?  Answer: No.  And that is why the Loonie will remain devalued by 33% to the Dollar, and Canadians are condemned to very expensive vacations outside the Country. And expensive imports, while they are at it. All told, a great recipe for perpetuating poverty. 

 

[Ian Austin + 131]

10 hours ago, Jan van Eck said:

Probably the better American example of utter incompetence is the Legislature (and the Mayor and Board of Aldermen of Chicago) of Illinois.  That State is now effectively bankrupt, with an accumulated deficit of some $130 Billion and still operating in a deficit - all has been unsustainable for the last several decades.  The big hit, no surprise, is the accumulated unfunded public pensions and pension plans, which typically include huge healthcare costs.  Last year Illinois lost some 83,000 residents, moving out to the satellite states and also to places such as Florida, Texas, and Nashville, Tennessee.  Illinois is in large measure funded by the property tax system, and home taxes have effectively doubled in the last year.  It is beyond awful.  Then there are huge surcharges on both income taxes and corporate taxes, roughly another 50% EXTRA, just to try to bring some balance to the books.  

None of this will work, of course, and Illinois has dug itself into a chasm so deep that there is no way to climb back out. Now, how does all this come about?  Incompetence?  Sure.  Graft?  But of course.  The public electing stupid people?  Bingo. 

Perhaps the Canadian equivalent is the leadership of Kathleen Wynne in Ontario.  When I was there Ontario was an economic powerhouse, with thousands of factories churning out everything from steel plate in the massive Hamilton steelworks, to tomato soup at the Campbell's cannery, to automobiles in some half-dozen assembly plants plus foundries for casting engine blocks and transmissions, and a vast number of secondary parts suppliers making wiper blades (Trico) to electrical harnesses (TRW).  Then you had the big diesel locomotive factories in London, the Electro-Motive Diesel operation, and another in Montreal  (MLW, or Montreal Locomotive Works), and the railcar plants in Thunder Bay, even a shipyard at the Welland Canal.  Today, that is all pretty much bust, all directly due to policies of the Wynne Government  (Liberal Party, no real surprise).  What did she do?  She started screwing with the electricity generation system; first separating the providers from the power generators, spinning those off to privatize, at huge costs, then abandoning the nuke plants, at more huge cost, then trying to revitalize the nuke plants with refurbishing contracts, at huge cost, then going into "windmills" or so-called wind turbines, basically wind harvesting machinery, also at huge cost.  The result: the price of electricity made it unaffordable for industry, most of which then decamped to Upstate New York and Ohio.  The rest went under, closing the doors forever. 

Today you have this empty shell of abandoned plants littering the countryside.  Where the plant shell have been re-purposed, they have gone from high-value-added operations that are inherently energy-intensive, to low-value-added operations that rely on low-wage imported labor. And Ontario has gone from being the powerhouse Province, donating to the Inter-Provincial Equalization Payments fund, to a beggar province, standing on the Ottawa steps with its own Little tin Cup, asking for alms  - from Alberta, of course. 

This is what happens when you elect some woman who has no clue as to how to control costs and say "No" to those pesky special-interest groups, particularly the "renewable energy" crowd that is absolutely convinced that building those big sky propellers will save the planet, and who additionally has no training in either basic physics or basic economics. You cannot spend money that you don't have, unless you are Dick Cheney.  And he didn't care because he figured he would be dead by the time the bills came due, which is an accurate enough assessment. In the past, Canadians on the national level have fallen victim to all kinds of myopic ideas, including building the Grand Trunk Railway, which predictably went bankrupt and evolved into the CN  (Canadian National), and then the bizarre, indeed crazy, privatization scheme to make the CN a private company instead of a Crown Corporation, part of a series of really dumb ideas that swept through Canada at the time that Margaret Thatcher was reconstructing Britain out of its "social" malaise  [OK, call it disease].  So you see that politicians of all stripes succumb to ideas of grandiosity, instead of paying attention to the mundane business of actually running the country and keeping their act together. 

Is Canada about to crawl out from underneath this mess?  Answer: No.  And that is why the Loonie will remain devalued by 33% to the Dollar, and Canadians are condemned to very expensive vacations outside the Country. And expensive imports, while they are at it. All told, a great recipe for perpetuating poverty. 

 

Yes sir, the bottom-dollar Loonie is a legacy of the Trudeau family, both young and old...

[Enthalpic + 1,496]

On 4/13/2019 at 7:17 AM, Jan van Eck said:

Ian, I fear the issues are more complex than you suggest.  Yes, Canada could (and also in my view should, as is your view) integrate downstream from crude to do their own refining, but - big but - that requires people in Ottawa with at least a shimmer of comprehension of the dynamics of oil production and the oil markets.  That tiny glimmer of a shimmer is not there.  Canada has always been notorious for obtuse politicians,  people with molasses for brains and thick as stone, but that is part of the peculiar dynamics of the place, where seriously smart people do not get into the political party scene and do not run for office.  I spent 18 years living there, in Quebec and Ontario, and got a flavor of the scene albeit from the perspective of the "Easterners," and as you point out those dynamics are quite different from what you have in Manitoba Westward. 

First, the geography works against the Canadian oil industry.  You are producing in this landlocked area with formidable mountains to the West, and with the vast solid-granite Canadian Shield to the East.  So it is not as if you can go dig a pipeline as you can in the soft earth of Texas. Yes, pipe can be constructed above-ground, witness the Alaska Pipeline, but the distances make that impossibly expensive. And the extreme cold with that thick stuff makes for more formidable obstacles, including fabricating insulated double-wall pipe and stringing that for two thousand miles. All for stuff that sells at a discount to LTO. 

Meanwhile, the big (and little) refineries in the East have been abandoned and largely dismantled.  There used to be a complex of refineries on the East End of the Island of Montreal. That is also the terminus of the Portland (Maine) - Montreal pipeline for imported crude.  Why have they been abandoned?  Well, because they are (or are perceived to be) polluters.  Nobody builds refineries any more, except in some third-world country, such as India. Was that a smart move, to tear all that down?  Of course not.  Yet these moves are created responsive to restrictive legislation and a punitive legal system that threatens total bankruptcy over any integrated oil company foolish enough to run a refinery (basically, anywhere in the West except Louisiana, which is wide open in the legal sphere) and create products that the citizens want and need.  Go figure. 

Now in Eastern Canada you still have a smattering of refineries: there is the big one in New Brunswick, at the harbor in St. John, belonging to Irving Oil Co.  But Irving is not dependent on the local market for customers to support that output.  Irving is big, very big, in exporting oil into New England, through a spew of subsidiary companies and even more companies that disguise the Irving ownership and avoid pressures against them for monopolistic practices and price gouging (both of which Irving does cheerfully and with total disdain for their customers).  Irving effectively owns New Brunswick, the Province has become a corporate slave plantation, so they can do whatever they want, subject of course to Trump's levies of import duties (and Trump seriously hit Irving with a 25% tariff on Irving construction lumber from the forests of NB). (Will that support the Maine forest-products industry?  Probably.)

The other refineries, the small ones in Newfoundland, are too tiny to factor into the discussion.  The huge refinery that Joey Smallwood tried to set up in Newfoundland, to act as a swing producer for product demand spikes in Europe, Canada and the USA, got wrecked by the use of sea water as a coolant, rusting everything into oblivion, so bye-b ye that bright idea. 

That leaves the refineries in Sarnia, Ontario, opposite Detroit.  But the feedstocks, from what I can make of it, are not Canadian (maybe it is, but I think that crude comes from the USA) , so there is no real internal market (except in the West) for Western oil.  The stuff has to be exported, under the current dynamics. 

What to do?  It is my thinking that Canada has to craft a closed-market for its oil; that Canada simply prohibits the import of oil and refined product, except under special license.  Now that forces the construction of refineries back on the East End of Montreal, and it forces the construction of a parallel rail line across the central part of the Canadian Shield, onto which streams of oil unit trains deliver the crude. The argument is made that the oil becomes difficult to load as the oilsands stuff is basically asphalt; OK, so then ship it as solidified material in gondola cars, no difference.  But let it rock and roll at 50 mph on its own rail trackage those two thousand miles to market!  And develop a captive market for the product.  It is not realistic to think in terms of pipe, and the reason is that the distance is so vast, and over the Rockies is so expensive and fraught, that by the time you get it built the industry in Alberta is wrecked for lack of customers. Would Keystone be the salvation?  I don't think so;  you still have the issues of sending the oil with lots of diluent, and possibly heating it, and certainly using multiple pumping stages with great big energy-hungry pumps, even if you resolve the spill risks. 

Now the other option is to build refineries in Alberta, and ship and sell only refined product.  OK, you could do that, but remember that Fort McMurray is seriously cold in winter, and winter there lasts what?  seven months?  so your work force and machinery is out there in polar-bear weather trying to keep the machinery running. That is a sobering prospect. And you have this involuntary celibacy of the men, given the chronic shortage of available women, another deterrent. Without the women, the men are going to be drinking and fighting, again not conducive to good production runs. Just how you entice the women to the oil towns is yet another social conundrum to go deal with.  And Ottawa has no solutions, although at one point a bright entrepreneur applied for a Federal Grant to set up "Courtesans Canada" for the remote oil and mining towns. 

The real problem is the march of time.  Alberta has the proverbial back against the  wall, either it can ship large quantities of product or it strangles. How fast can these solutions be brought to bear? Well, that requires a parliament, and a civil service, that is laser-focused on resolving the transportation, refining, and market constrictions.  Are those guys elected to Ottawa?  Or does parliament instead focus on dippy women being kicked out of Cabinet, and some engineering outfit in Montreal paying bribes to utterly wretched cretins in Libya?  And screwing around with the Dairy Supply Management system to enrich the milk industry in Eastern Ontario and Quebec? 

Canadians habitually elect dunces and incompetents to Parliament.  The result is predictable. They concentrate on making toilets unisex, so that the transgenders are mollified.  The oil industry?  Not even a second thought. 

As an Albertan I agree with a surprising amount of that.  Although, I really don't think Trudeau, or Notley, are anti-oil.  It was the last governments failure to create a reasonable National Energy Board which resulted in the courts rejecting the pipeline(s) - not the politicians. 

Edmonton has a refinery row, and it's not much warmer here than Fort Mac.  I wouldn't be surprised if Texas refineries waste nearly as much energy cooling during summer as we do heating during winter.

There is talk about creating solid pucks of oilsand "tar" and transporting it by train.  The upsides is spills are super easy to clean up (just pick them up) and it doesn't require a ton of solvent addition or upgrading to make dilbit or syncrude so you can put it in a pipe.  It also allows for easily stockpiling oil when prices are low. 

Edited April 15, 2019 by Enthalpic

[Jan van Eck + 7,558]

21 hours ago, Enthalpic said:

There is talk about creating solid pucks of oilsand "tar" and transporting it by train.  The upsides is spills are super easy to clean up (just pick them up) and it doesn't require a ton of solvent addition or upgrading to make dilbit or syncrude so you can put it in a pipe.  It also allows for easily stockpiling oil when prices are low. 

 Yup, it should be an easy go to mold oilsand bitumen into solid pucks. Once you do that,then you no longer need those hugely expensive pipelines (and their energy-hog pumps), and you can ship product in hopper cars, gondola cars, even on pallets with shrink-wrap or in cardboard gaylords (and then into ordinary boxcars), and you can unload the gondola cars with one of those hydraulic car-rotate machines that dumps the contents onto a conveyor belt.  It gets easy (and cheap) fast to move tar oil long distances by train when you do that. And, you can also ship the stuff by bulk freighter, using bulk-handling machinery. 

Now, "if" Canada incorporates, as a matter of national policy, a program to exclude foreign oils except by special license, "then" you have this captive market for this tar-sands oil.  What will this do?  I predict it will force-feed a rapid invention, innovation and development period to lower the refining costs of that oil.  Who benefits?  Everybody in Canada. And if you come up with an innovative solution, then you have yet another natural resource that you can sell on the international market, to high-costs places such as in Europe. 

If Canada keeps buying (relatively) cheap Saudi oil then it will never develop the downstream capability for WCS. And if you don't develop that capability, when Venezuelan crude starts flowing again (and it will, there is way too much there to be shut in forever),  your inevitably higher-cost oil will get shut in and your customers will be buying from Citgo.  Is Ottawa able to recognize this?  Probably not.

So, as far as national construction goes, what is left is rail line capacity.  Is there enough?  No, not during grain-shipping season, and at this point the grain shippers are in need of very large monthly blocks of rail capacity.  So: this is a good time to re-tool those Hamilton steelworks to cast new rail, build yourselves some stone crushers, and put the lumberjacks to work carving a new parallel railbed to the CN mainline. The nice thing about that is that you can use that line for all kinds of other freight, not just oilsands hockey pucks.  Your trains can move 11,000 tones of those hockey pucks per train, at 60 miles per hour, across the Canadian Shield, to refineries in the East, to the US Gulf, and to harbors in the West and East.  That is one fast-moving pipeline; always neat.  Cheers. 

Edited April 16, 2019 by Jan van Eck
Moderator edit, Removed name