Is Canada hosed?

(edited)

11 hours ago, Jan van Eck said:

Hi, Enthalpic, and 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 yourse

lves 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. 

Please don't use my name.

[Moderator edit, fixed that for you.]

NDP does have a plan to increase rail capacity - even if the province has to buy the cars themselves.

" The Alberta government has signed contracts with Canadian National and Canadian Pacific to lease 4,400 rail cars to take oilsands crude to American and international markets."

https://www.cbc.ca/news/canada/edmonton/premier-notley-update-progress-rail-cars-crude-oil-1.5024665

Edited by Tom Kirkman
Moderator edit, Removed name

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On 4/12/2019 at 7:44 AM, A Kang said:

"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."

The Canadian "Keep Oil & Gas In The Ground Forever" crowd is clearly winning, death by a thousand red tape paper cuts.

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4 hours ago, Tom Kirkman said:

The Canadian "Keep Oil & Gas In The Ground Forever" crowd is clearly winning, death by a thousand red tape paper cuts.

Oh Tom! Big day for Alberta as we have a crucial provincial election! it is not looking too good for the incumbent socialist government in Alberta (Anti-oil crowd) and the front runner is Conservative leader Jason Kenney (Pro-Oil!) and he has threatened to sue these so called environmental groups such as greenpeace for spreading mis-information and lies regarding the oil sands, he has threatened to "Cut-off" oil supply to the British Columbia coast if they continue to obstruct the transmountain pipeline expansion project, has promised to repeal the "carbon tax", has promised to hold referendum on equalization payments if the federal Liberals don't scrap bill C-69 and C-48 (ridiculous and stupid bills to basically "Keep oil in the ground"), promised to cut corporate taxes from 12% to 8% (would be the lowest in North America), cut and streamline approval processing times of new wells and major projects. How many promises will be keep? Who knows? But he has a very good chance of being elected the next Premier of the most wealthy oil jurisdiction on the planet. 

 

 

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4 hours ago, Bobby P said:

and the front runner is Conservative leader Jason Kenney (Pro-Oil!)

I wouldn't get too excited about Jason Kenney as a Provincial leader.  From what I can make of it, he comes across as a bit of an opportunist and not very reliable.  Cutting off oil flows to BC is not very bright. That Trans-Mountain pipe project is a bit of a dubious concept, it involves a ton of cash to move a product that at best has a shaky sales future.  Whether you like it or not  (I presume not), the reality (as William Edwards has repeatedly pointed out) is that Canadian heavy oil is the highest-cost material out there, and as demand weakens and supplies from Venezuela again come on the market (as they will) and more supplies eventually from Iran (as they will), then whose oil gets shut in?  Canada tar sands oil, that's who.  

SO, if the longer-term market is shaky, and it takes to the longer term to build that long pipeline over difficult terrain, then all that cash may well end up getting spent for naught.  Meanwhile, your current "socialist" Premier  (and I am not convinced that she is "socialist," notwithstanding that NDP label) is buying, ordering, and leasing rail tankcars by the thousands, which can come on-line quickly and get out there producing real revenue NOW, while the iron is hot, instead of years away, when who knows what the story might be. 

Meanwhile, Canada just might create a closed market, placing quotas or tariffs on imported oils and products, to force the use of Canadian oil as a feedstock for everything.  If that happens, you are better off putting that pipe money into refineries, and converting tar oil into hockey pucks, and shipping in gondolas, and attempting to develop new markets for asphalt around the world. Joey Smallwood's idea of having a balancing refinery in Newfoundland still has merit; might want to take another look at that.  Does Jason Kenney have the intellectual brainpower to absorb and action-plan all that?  Probably not. 

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Anyone will be better than the NDP at this point. The notion that Oil sands operating cost is high is not longer true, many large integrated oil producers such as Suncor, Husky and Imperial Oil have reduced their operating costs to $25/Barrel. Not sure how buying railcars over building a pipeline is more "environmentally friendly"? Will she charge a "carbon tax" for these rail cars? What a joke, waste of $3.5 billion dollars and maybe she should have not placed her bet on a social license by agreeing to a "carbon tax" and "emissions cap" with nothing to show for it. The price of oil crashed in 2008-2009 as well and we did not see huge multination's dumping oil sands leases such as Shell, Conoco as they did during the NDP's term. NDP cabinet is filled with ex-anti oil lobbyist's, who ever believes their phony fight for the oil industry is blind. 

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You can downvote that post all you want, Bobby, but the reality remains:  Alberta Oilsands crude has a production cost, and thus an irreducible price floor, that will make it the first oil to drop out when overall global demand drops. 

Go ahead, spend your money on a hefty pipeline running across the Rockies; what makes you think the Chinese are going to buy that material when you are finally ready to start shipping, in 2024?  Or 2026?  Have another customer in mind? No?  OK, then with the Chinese buying cheap heavy crude from Iran, why should they bother with your stuff?   

Oh, I get it: they will buy Alberta tar-sand oil because otherwise you will downvote them.  Lotsa luck with that approach. Sorry about that,but the oil market is unforgiving, and not interested in sentiment.  Especially Canadian sentiment.

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(edited)

16 minutes ago, Jan van Eck said:

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You can downvote that post all you want, Bobby, but the reality remains:  Alberta Oilsands crude has a production cost, and thus an irreducible price floor, that will make it the first oil to drop out when overall global demand drops. 

Go ahead, spend your money on a hefty pipeline running across the Rockies; what makes you think the Chinese are going to buy that material when you are finally ready to start shipping, in 2024?  Or 2026?  Have another customer in mind? No?  OK, then with the Chinese buying cheap heavy crude from Iran, why should they bother with your stuff?   

Oh, I get it: they will buy Alberta tar-sand oil because otherwise you will downvote them.  Lotsa luck with that approach. Sorry about that,but the oil market is unforgiving, and not interested in sentiment.  Especially Canadian sentiment.

I Disagree with your assessment. The Chinese have already invested in the Oilsands (Look at CNOOC), why would they invest over $15 billion dollars in the oil sands in the first place if they had no interest in buying Canadian Oil? (so, your assessment of Chinese not being interested gets thrown out the window) My Money? yeah if JT wasn't so incompetent none of my money would be spent on the pipeline in the first place as KM was going to fund and build the project (I'm sure KM did an extensive economic review of the project before they were willing to spend over $7 billion dollars on the pipeline expansion to get Canadian oil to global markets). If they did not see any market for it, the project would have never got past the feasibility stage in the first place. Since you're an "oil major" I'm assuming you are aware of the various stages a project goes through. 

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4 minutes ago, Bobby P said:

I Disagree with your assessment. The Chinese have already invested in the Oilsands (Look at CNOOC), why would they invest in the oil sands in the first place if they had no interest in buying Canadian Oil? My Money? yeah if JT wasn't so incompetent none of my money would be spent on the pipeline in the first place as KM was going to fund and build the project. 

The Chinese are canny buyers.  They put some equity cash into your oilsands in order to hedge their bets. If war breaks out in the Middle East then their supplies will be badly disrupted, and they need oil.  They just don't need YOUR oil.  Your oil is going to be expensive.  When the glut develops, your oil gets shut in - unless Trudeau develops a closed internal market.  You don't like to hear it, but that does not make it untruthful. 

Did Trudeau get out-foxed by Kinder Morgan?  Sure looks like it.  Does that make Trudeau "incompetent" in oil matters?  Probably.  Was KM going to "fund" the pipeline?  Probably not.  It would have been funded by some hedge-fund out of either Toronto or New York. Would the hedge fund have lost their shirts?  Probably not; they would have syndicated it and sold participation certificates to pension fund administrators, the ultimate buyers who would have taken the risk. 

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10 hours ago, Bobby P said:

Oh Tom! Big day for Alberta as we have a crucial provincial election! it is not looking too good for the incumbent socialist government in Alberta (Anti-oil crowd) and the front runner is Conservative leader Jason Kenney (Pro-Oil!) and he has threatened to sue these so called environmental groups such as greenpeace for spreading mis-information and lies regarding the oil sands, he has threatened to "Cut-off" oil supply to the British Columbia coast if they continue to obstruct the transmountain pipeline expansion project, has promised to repeal the "carbon tax", has promised to hold referendum on equalization payments if the federal Liberals don't scrap bill C-69 and C-48 (ridiculous and stupid bills to basically "Keep oil in the ground"), promised to cut corporate taxes from 12% to 8% (would be the lowest in North America), cut and streamline approval processing times of new wells and major projects. How many promises will be keep? Who knows? But he has a very good chance of being elected the next Premier of the most wealthy oil jurisdiction on the planet. 

 

 

It will be an interesting night. Honestly, I’m suspicious that the Alberta Party will steal enough seats to ensure a UCP minority, but I could be way off base. 

That wouldn’t be the worst case. Minority governments are great - it healthy to have to beg/cajole somebody to see things your way. 

As for the NDP folks, although they’re not totally to blame, I truly hope they find unemployment as unsatisfying as the rest of us have

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17 hours ago, Ian Austin said:

It will be an interesting night. Honestly, I’m suspicious that the Alberta Party will steal enough seats to ensure a UCP minority, but I could be way off base. 

That wouldn’t be the worst case. Minority governments are great - it healthy to have to beg/cajole somebody to see things your way. 

As for the NDP folks, although they’re not totally to blame, I truly hope they find unemployment as unsatisfying as the rest of us have

As the now Ex-energy minster of Alberta stated "Those who can't find work in Alberta, should move to BC". 

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4 hours ago, Bobby P said:

As the now Ex-energy minster of Alberta stated "Those who can't find work in Alberta, should move to BC". 

As if we can all just “up and move”. What a tool she was...

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