Alberta's Riches -- September 4, 2022

Link here.

Canadian dividends, link here:

Canadian Shale -- EIA -- 2015

Link here.

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Inflation? What Inflation?

Bananas at Target this morning: 49 cents/pound, and they have so many, they will have to be marked down unless they plan to throw out a lot.

I have four grocery stores to choose from, all within biking distance, the nearest two minutes away and the farthest ten minutes away.

Tom Thumb: local regional; low-rent; last choice for me of the four; only went when we lived at our previous apartment; would never go there again; expensive; shoddy; owned by Albertson's just down the street.

Albertson's: nationwide grocer. A bit more upscale. Somewhat competitive. Much better meat selection than any other in the area. Outstanding rotisserie chicken, and still priced at $6.99. It's the only place I can find the fruit and fresh vegetables that my wife wants.

Walmart: everyone knows Walmart. No need to discuss.

Target: wow, what can I say! This store is incredibly busy. Tom Thumb is generally devoid of customers; Albertson's doing better but parking lot is really quite empty, considering. Target: parking lot is always full. People arrive before the store opens and wait for doors to open. I can bike there in less than two minutes. No exaggeration. Probably slightly more expensive than Walmart but a better shopping experience. It seems about the right size. For just a handful of items, it's a real trek to go to Walmart. I don't think Target has hot rotisserie chicken but it does have "cold" rotisserie chicken in the deli section, or whatever it's called. The meat / fish selection does not compare at all to what we get at Albertson's. But wow, that store is incredibly busy. They seem to have the right mix of self-checkout and checkers. But sometimes the self-checkout line gets really long. 

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Playing In The Mud

In the photo below, Corky and Jilly Bean. Correct spelling.

Sophia was painting a picture of a fairy castle or some such thing.

Sophia's mom was about to move Corky and Jilly Bean closer so they could see the painting better. 

Sophia yelled out: "No! They're playing in the mud." 

Social Media: Getting Interested In Canadian Oil -- March 10, 2021

Link here. 

Twitter is getting excited about Canadian oil stocks. Despite the Keystone XL being killed.

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

This is being posted for the archives. This has nothing to do with recommendations.

You may recognize some of these names from the blog; you may recognize some of these names from the Bakken.

It's Now The Biden XL -- January 23, 2021

This argument is a good example of folks talking past each other. This argument falls on deaf ears (those of environmentalists).

The argument above (in the black box) is true in the short-term. But the environmentalists have a strategic plan.

They will give let atmospheric CO2 rise in the short term to get to less CO2 in the long run.

They are moving step-wise from A to Z.

A: 100% coal

Z: 100% solar / wind

Steps along the way: make oil so expensive that people are forced to switch from ICEs to EVs.

By eliminating pipelines, it makes oil very, very expensive to ship.

But this is the problem. As oil becomes more expensive, transportation costs become less of an issue.

There's probably an ECON-101 graph that shows two lines: price of oil and cost of producing/bringing that oil to the consumer.

There are many components that determine the price of oil Transportation is just one of them. As long as the price of oil stays above the total cost of production/delivery, oil will still reach the consumer.

The anti-pipeline folks are hoping the lines cross, with the price of oil dropping below the cost to produce / deliver oil.

Interestingly enough, my hunch is it's still much "nicer" to produce and deliver oil by CBR from North Dakota than from places like Libya. Saudi Arabia et al can't survive on $50 oil.

So, at the end of the day, I don't see stopping pipelines a a viable solution for the environmentalists in their attempt to get from A -- 100% coal to Z -- 100% solar/wind.

Somewhere along the line, the environmentalists need to stop CBR. That's the next step. Stop the pipelines, then stop the trains. That I think is impossible. Oil is so much less hazardous than many other products shipped by rail, including radioactive waste.

Meanwhile, on the policy side, the environmentalists will mandate transition to EVs where they can -- at the federal level (military) and at the state level (California).

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The Canadian Perspective

The Globe and Mail is considered by many Canadians to be their "newspaper of record.

The Globe and Mail is reporting that "the Biden XL decision hurts, but it's not a surprise and it's not fatal to the oil patch.

U.S. President Joe Biden’s rejection of the Keystone XL pipeline is a blow to the psyche of Canada’s oil patch as it seeks to recover from last year’s oil-price crisis, but it is not a knockout punch.

The biggest surprise is how surprising this was to many Canadians given Mr. Biden’s long-stated opposition to the project. It is symbolic of his new administration’s emphasis on pulling the United States back into the global climate-change fight – regardless of the actual impact on emissions Keystone XL might have had.

The quest to build it is worthy of a Russian novel. It has been in the works for 13 years, facing regulatory reviews, federal and state legal challenges, demonstrations, rejection, approval and now rejection again. The company has for years touted its job-creating ability and relative safety in comparison with moving oil by rail.

But in that time the market evolved. The Canadian oil industry has gained other options for moving crude to its biggest customer and is also dealing with the growing realization that a transition from fossil fuels – gradual though it may be – is under way.

For me, the Biden XL has become a non-story. It encouraged US refiners to maintain legacy refineries optimized for heavier oils rather than move to new refineries optimized for lighter shale oils (the Permian and the Bakken). For me, the real issue has always been jobs. But as we've noted, joblessness is not a real issue for the political elite in Washington. Nor apparently is it for many voters. 

For the rails, it's a godsend. 

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If I Recall Correctly, The New Mexico Vote For Biden Was Huge

Meanwhile in New Mexico, Reuters is reporting that New Mexico Amerindians are seeking an exemption from Biden drilling pause. 

By the way, that's an incorrect headline: there is no drilling pause. There is a leasing pause. Quit with the "fake news" already.

Link to Reuters here. 

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Houston Pipeline Futures Soon To Launch?

Bloomberg is reporting that "pipeline Giants' Houston oil futures seen launching in months.

A new futures contract for the physical delivery of crude in the Houston area may only be a few months away from launching.

Enterprise Products Partners LP and Magellan Midstream Partners, the pipeline companies responsible for delivery of Houston’s two active futures contracts, said, they are joining forces to create a broader benchmark. That may happen in a few months, said Bruce Heine, a Magellan spokesman.

The Houston contracts reflect a shift in the oil industry’s focus from the storage hub in Cushing, Oklahoma, the delivery point for New York-traded futures, to the Gulf Coast. A global appetite for U.S. crudes resulted in a new web of pipelines and terminals to connect the Permian Basin of West Texas and New Mexico to the world.

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Not All That Big! LOL

Meanwhile it turns out that the one-billion-dollar-lottery winner this past week did not set a record. It's only the third largest in US history.

Three Wells Coming Off The Confidential List -- October 8, 2020

I'm back. Sorry for the late start. I had to take our car in for annual inspection and because I'm home alone, had to get the bike on the carrier, and then ride the bike home. Reverse the process later today.

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US crude oil imports, link here. 

OPEC basket, link here: pretty much levels off at $40.45 despite issues in Norway, US Gulf.

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Back to the Bakken

Active rigs:

$41.09	10/8/2020	10/08/2019	10/08/2018	10/08/2017	10/08/2016
Active Rigs	13	56	64	59	33

Three wells coming off confidential list -- Thursdy, October 8, 2020: 11 for the month; 11 for the quarter, 676 for the year

• 36979, drl/A,  Kraken, Hobart 34-27 2H, Oliver, t--; cum 153K 8/20; a 34K month; a nice well;
• 36669, drl/A,  Hess, TI-Ives-157-94-0601H-7, Tioga, t--; cum 71K 8/20;
• 34293, loc/NC, BR, State Double Dodge 1A TFH-ULW, Dimmick Lake, no production data,

RBN Energy: Covid-19 slowing progress on LNG Canada project. Archived.

When plans for LNG Canada, a big LNG export project on the British Columbia coast, were sanctioned two years ago this month, the move came as a welcome sign that Western Canadian natural gas producers might finally be able to break their long-standing reliance on just one export customer: the U.S. Access to Asian and other overseas gas markets became a high priority, in part because U.S. demand for Canadian gas had been sagging for years as production in the Marcellus/Utica and other U.S. plays came to meet the vast majority of domestic needs. But while construction on LNG Canada has steadily advanced, there are signs that delays could be mounting. Today, we begin a two-part update on this all-important Canadian LNG export project and its accompanying Coastal GasLink pipeline.

From the early days of gas market deregulation in the 1980s, Canada enjoyed an expanding love affair with its southern neighbor in the form of growing natural gas exports. With U.S. domestic gas supplies looking to be heading toward terminal decline in the early 2000s, Western Canada’s abundant supplies and rising gas prices throughout North America appeared to be locking in a vast, profitable, and long-term gas export relationship. Also, a number of LNG import terminals were developed in the U.S. in anticipation of shipped-in gas supplies from overseas.

That all changed with the Shale Revolution, which turned the U.S. into a gas production powerhouse. Steadily expanding U.S. gas supplies over the past decade reduced the need for Canadian gas and sent Canada’s gas exports into a sort of terminal decline of their own. The share of U.S. gas demand met by Canadian supplies collapsed (on a net basis) from 10.5% (~7 Bcf/d) in 2010 to just 5.1% (~4.3 Bcf/d) through the first seven months of 2020, based on data from the U.S. Energy Information Administration (EIA). At the same time, some of those U.S. LNG import terminals were re-purposed as export terminals  deal with the new abundance of U.S. gas supplies.

Peak Oil? What Peak Oil -- March 2, 2019

We talked about this just a few weeks ago: for investors, how to value a company based on reserves?

Rigzone weighs in.

The article doesn't answer that question. In fact, the article hardly addresses that question.

Instead, the article is about global reserves in general. Data points:

• current estimated global oil reserves: 1.7 trillion bbls
• global demand, about 100 million bbls/day
• doing the math: 45 years at current demand and no further addition to reserves
• since 1980, we've extracted about 950 billion bbls -- let's call it a trillion bbls -- and during that period proven oil reserves have soared by over one trillion bbls
• why peak-oil production is wrong: the US has had a reported oil supply lifetime ("reserves-to-production" of just 8 - 14 years reported every year since the end of WWII. This suggests we should have run out of oil many decades ago. Yes ,over 50 billion bbls and 12 million bbls/day, proven reserves and total crude oil production are the highest in US history
• why peak-oil production is wrong: there is little economic incentive to look for resources that will not be needed for many decades
• global shale and deepwater opportunities are overwhelmingly under-explored but will become more attractive as demand continues to mount
• most people do not know that 60 - 70 percetn of a reservoir's OOIP remains stranded after primary and second operations because it is so difficult to extract
• tertiary recovery -- CO2-EOR could be the next oil revolution in the US after shale

By the way, something to think about.

For decades oil companies have said CO2 is not an issue. Now they are changing their story. Sure, they are being forced into political correctness. But didn't this work out just great? All of a sudden CO2 will be needed for tertiary production.

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Canada 

Relaxing production cuts. Will bring more heavy oil to market just when it's most needed.

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China

Says massive shale oil reserves found in northern China. Doesn't amount to a hill of beans, yet, and won't for decades. But, then again, it will add to global reserves. See first article above.

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Venezuela

Colluding with Russia. Venezuela will move its European headquarters to Moscow.

Back in the USSR, The Beatles

The Market, Energy, Political Page, Part 3, T+46 -- December 21, 2018

Loony tunes: Don wrote early this morning: This is the first time I have seen the value of the loonie below $0.74.

• Canadian dollar: $0.7373.

Don follows this stuff closer than I do and has been following it longer than I have, so he would know. [Actually, the loonie has been lower and it has been trading in a range for the past couple of years, but Don's point is well taken -- the Loonie says Canada is closed to business.]

I remember going to Canada when I was a Boy Scout -- best part of trip -- buying Canadian toffee and I remember how much one could get for an American dollar. My introduction to global finance. Laugh. Had I paid attention, I might have beat George Soros. LOL. See this note from July 26, 2016. Wow, I wrote some "good stuff" back in the day. Not so much any more, it appears.

Loony tunes: I have no trouble "understanding" the gyrations of the stock market. What I do not understand is how economists (not Trump) can go from talking about a GDP of 6% just six months ago to a recession six months from now. Feels like a lot of manipulation going on. But that's fine. If so, this, too, will burn itself out. Meanwhile, some folks are going to do very, very well -- as usual. [Later: perhaps US market manipulation is "our" equivalent of the "Yellow Vest" movement in France, which, by the way, appears to have burned itself out.]

Disclaimer: this is not an investment site. Do not make any investment, financial, job, relationship, or travel decisions based on what you read here or what you think you may have read here.

Speaking of travel: this from the Drudge Report. I did not click on the link; I have not read the article. Simply the screenshot:

LOL. Ninety-nine percent of young folks, when asked why they don't want to join the military, cite "frequent moves" as one of the top ten reasons why they don't want to enlist.

When we returned to the US, back in 1997, after thirteen consecutive years overseas we were surprised that some folks had never lived anywhere other than the county they were currently living in. Most had never even lived in more two different homes. And those that had -- generally same town/city if not the same neighborhood.

Our first stateside posting after returning to the US was LA: lower Alabama.

When our older daughter said she had just moved from Turkey, one of her classmates thought that was a city in northern Alabama; she was asked if they had a mall in Turkey, Alabama. I kid you not. For me, moving from Texas to California would be "living abroad." Same with folks moving from Boston to Texas. Or Nebraska to Portland (Oregon). Bernie won't even move back to Russia.

But if a third did leave, that would leave a lot of room for all those migrants that want to come in. But LOL, a third of Americans "thinking about leaving the US to live abroad." Maybe I misread -- the screenshot simply says "country." Maybe the article is about Venezuela. Or Honduras.

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Time For A Bit Of Organ Music

E. Power Biggs

Canada's SAD Agency Kills Exxon's Plan For Huge LNG Export Terminal Off British Columbia -- December 20, 2018

If one does a "word/phrase" search on the blog for "closed for business," this is the first hit --

KMI, Suggesting Canada Is Closed For Business, To Sell All Canadian Assets -- September 17, 2018.

It appears ExxonMobil has also figured that out -- that Canada is closed for business. This is absolutely incredible.

Don sent me the link. Thank you.

From Reuters:

U.S. oil major Exxon Mobil Corp has withdrawn its WCC liquefied natural gas (LNG) export project in Canada from an environmental assessment.

British Columbia rules require large projects to obtain an Environmental Assessment Certificate before they can be developed.

An examination of the project by the Canadian Environmental Assessment Agency has been going on since February 2015.

LNG demand is growing but environmental groups say exports will boost carbon emissions in Canada, both through gas extraction and the liquefaction process.

Let's see, simple arithmetic suggests that as of February, 2019, the Canada's Stop-All-Development Agency, will have held up this project for four years.

But unlike TransCanada, it appears that Exxon has learned to cut its losses.

Exxon is taking advantage of projects where they might actually be built. From the article:

Exxon’s decision signaled it is concentrating on LNG projects with Qatar Petroleum and a proposed expansion of its chilled-gas operation in Papua New Guinea.

Well, duh.

As a side note: Qatar again shows up in the news. 

Meanwhile, look at what is happening in the US:

One can assume that these projects would have never gotten this far along by now (or would have been killed outright altogether) had Hillary been elected president.

I count eighteen LNG projects in the graphic above.

The Market, Energy, And Political Page, T+23 -- November 29, 2018 -- Mexico To Drill 40 Onshore Conventional Wells For $1.47 Billion

From Ice Age: "mini-ice-age" in a matter of months?  Probably not. I guess it depends on how "matter of months" is defined. For the archives.

From twitter this morning:

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New England Natural Gas Hookups Update

I had forgotten all about this but the moratorium on new natural gas hookups in Boston and the eastern half of Massachusetts continues. Most of the stories are behind a paywall but if interested google boston moratorium on natural gas hookups update. The ban is effectively "destroying" development in eastern Massachusetts, some say. The moratorium is the result of devastating natural gas explosions earlier this year. MarcellusDrilling calls this a "police state" run amok and I thought my blog was a bit bombastic at times.

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Canadian Update

Canadian crude oil output continues to grow despite all its problems -- Bloomberg. Data points:

• daily average output "will" average about 4.59 million bopd
• 22,000 bopd more than forecast
• this despite two big producers curtailing production by about 160,000 bopd

Okay, folks this is the lede for that story:

Canada’s lingering crude glut isn’t hindering the country’s growing oil output, according to the National Energy Board’s most recent forecast.

Now this line in the second paragraph:

The raised production outlook comes even as pipeline bottlenecks have driven Canadian crude prices to record lows and prompted some producers, including Canadian Natural Resources Ltd. and Athabasca Oil Corp., to reduce output by about 160,000 barrels a day, according to estimates by TD Securities Inc.

It's hard for me to accept the writers' premise when they say "Canada's lingering crude glut isn't hindering the country's growing oil output."

It certainly appears that by their own reporting the glut is "hindering" at least 160,000 bopd from reaching the market.

Whatever.

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Mexico

Yesterday from the blog:

From Platts:

• Pemex (Mexico) doubles Ixachi oil and gas reserves to 750 million boe
• production to peak at 80,000 beopd
• development cast estimated at $1.5 billion

When I first saw the headline that Pemex "doubles" its reserves at Ixachi, I was excited. Then I saw the numbers: max production at 80,000 boepd and, reserves increased to 750 million boe. Not exciting.

The Bakken currently produces about 80,000 boe in 90 minutes. Bakken reserves: for those with exuberant "feelings" about the Bakken, as much as 50 billion boe, maybe more.

750 million / 50 billion = 1.5%. And that's just the Bakken.

I wonder if we should start measuring pools of oil in "Permians." For example, the Bakken would be estimated to be 0.25 Permians. The Ixahi reserves would be 0.00375 Permians. At 268 billion bbls (wiki), Saudi Arabia's reserves would be 1.34 Permians. I would like to use the Bakken as the "unit of measure" for any number of reasons, but I would be voted off the island -- "everyone" would vote for the "Permian."

And then the day we have a massive carbon tax and no one can afford oil at all -- sort of like the yellow vests in France -- we can take oil off the "Permian standard."

So, yesterday, Platts says Pemex "doubled its estimate for the Ixachi oil field, putting oil and gas reserves at 750 million boe.

Today, this story from Bloomberg: Pemex has more than tripled its estimated reserves in its Ixachi field. Data points:

• the onshore field in Veracruz is now estimated to contain 1.3 billion boe in proven, probably and possible ("3P") reserves
• the story sticks with max production at 80,000 bopd (see Platts above, and my comments
• the field is currently producing about 2,000 bpd of condensate; hopes to get to 5,000 bpd of condensate by end of 2019
• development costs for Ixachi: $1.47 billion for 40 wells = I've done the math three times -- see if you get a different number -- $1.47 billion for 40 wells = $36,750,000 / well 
• this is Mexico's most important onshore field in 25 years, Pemex says -- if so, Mexico is in a heap of trouble .. 2,000 bbls of condensate a day and that gets them excited
• Mexico currently produces about 1.8 million bopd, down from a recent target of 1.95 million bopd

Screenshot from the article:

Random Update On Canadian Oil / Natural Gas Resources -- Rigzone -- November 28, 2018

Link here.

At around 4.5 million barrels per day (MMbpd), Canada is the world’s 5th largest oil producer. Some 75 percent of Canada’s production occurs in the western province of Alberta, having a massive deposit of heavier, harder-to-produce “oil sands.”

Canada has a nearly unlimited hydrocarbon resource, so importing oil nations around the world are increasingly seeking the country to supply resources. Canada’s biggest advantage may be its widening capacity to export. A slow growing population and mature energy demand market make incremental domestic needs rather low.

Currently, most of Canada’s petroleum production is exported, and almost all of that gets shipped south to the U.S. This overreliance on the U.S. market has become a problem for Canada because a shale revolution has meant surging U.S. oil production amid its flat demand. As such, Canada needs to find new growing markets for its domestic oil industry to flourish.

Canada’s natural goal is to reach Asia, responsible for about 70 percent of new oil demand in the world. Exporters are banking on cheaper transport. It takes a little over a week for a ship to reach Tokyo Bay from Vancouver, for instance, compared to nearly three weeks from the U.S. Gulf Coast.

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Gelato --  Main Street -- Grapevine, TX

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The Book Page

I'm in my "historical" Bible phase.

The books that are top shelf on this subject:

• The Book of J, translation by David Rosenberg, commentary by Harold Bloom
• The Bible: A Biography, Karen Armstrong, one of many entries;
• The New Oxford Annotated Bible, New Revised Standard Version With The Apocrypha, Fourth Edition;
• Jesus and Yahweh: The Names Divine, Harold Bloom, c. 2005
• Where Shall Wisdom Be Found, Harold Bloom, c. 2005
• The Torah: The Five Books of Moses, the New Translation of the Holy Scriptures According to the Traditional Hebrew Text

Cheap Oil? Really, Really Cheap Oil And Canada Has It -- November 11, 2018

What does it mean for Canada with the demise of the Keystone XL (again)? Well, for one thing, it means really, really cheap oil: Western Canadian Select -- now known as Western Canadian Landlocked -- is trading for less than $16/bbl.

From Investor Village:

Canada, the world's fourth-largest producer of crude oil, missed out on a recent global recovery in energy prices, and is now taking it on the chin as prices fall.

Crude prices in Canada briefly dropped below $16 a barrel on Friday, after a U.S. federal judge blocked construction of a key pipeline needed to transport oil from Alberta to Nebraska.

That means Canadian crude is going for a fraction of supplies elsewhere, even as U.S. prices have tumbled 21% from last month's highs to about $60 a barrel . In October, Canadian crude traded at its largest-ever discount to U.S. oil of more than $51.

Because of the steep discount, Canadian producers are leaving 40 million Canadian dollars, or $30.65 million, a day on the table. Energy accounts for nearly 11% of the country's nominal GDP, according to government figures.

The Canadian market was dealt a fresh blow Thursday, when a federal judge ruled that TransCanada Corp. couldn't advance its Keystone XL pipeline without a supplemental environmental review. Completed, the pipeline would carry up to 830,000 barrels a day to Nebraska, where it could then be carried to the Gulf Coast.

Whistling Past The Graveyard -- SeekingAlpha -- Update On The Trudeau Pipeline Expansion Project

See this post for background to this story.

From SeekingAlpha, "be happy, don't worry."

• Trans Mountain expansion faced a big setback today when the Federal Court of Appeal quashed the government's approval to build the expansion;
• but valuation matters and Canadian heavy oil producers have already discounted the wider-than-normal spreads into the current price;
• crude by rail (CBR) remains the key catalyst to narrowing the discount near term, and this setback for Trans Mountain can actually push producers to ink multiyear crude by rail deals;
• With TMX now uncertain, Canadian oilsand capex will keep decreasing, which would push lower Canadian oil production, resulting in less global oil supplies. This could tighten global oil balances further;
• Because of the discounted valuations, we're bullish on Canadian heavy oil producers as we don't believe this is a material setback on fundamentals. Rather, it's only a setback on sentiment

The writer of that story is betting on the wrong horse. The winner in this race: the Canadian railroads. 

Eh, What Just Happened? -- August 30, 2018

Update

August 31, 2018: a reader who is well versed in legal matters and who has followed this case closely (he/she has relatives in Burnaby) sent me a note with comments and questions. I won't post that but here is "my-not-ready-for-prime-time" reply. From the reply you can probably guess the issues in the original note:

1. I was a bit hasty in suggesting inadequate documentation by the pipeline companies regarding First Nations. You are correct.

2. I strongly believe that the judge in this case had her decision made long before the final judgement was published. It was just a matter of framing it (the arguments/conclusions) to fit the decision.

3. Legally, I am sure the contract reads that the deal is consummated pending a majority vote by the Kinder Morgan shareholders (that occurred yesterday after the judge's verdict; the timing was coincidental). So, even if money has not traded hands, it's a legally binding contract, I'm sure. But it's a man-made contract (not on two stone tablets) so there would be ways, I assume, to "renegotiate."

4. However, Canada needs the pipeline more than anyone is suggesting. They can get the oil out on rail if no other alternatives, but this is a huge sovereign issue -- as I've said, Canada is getting the reputation that a) it's greenness is killing the economy; and, b) "the country can't close a deal."

5. I'm sure some cartoonist will come up with a name for the pipeline that Orca killed.

6. Speaking of which, Trudeau's second mistake (his first mistake was using the orca to kill the Enbridge pipeline some years earlier): he knew this case was in court and would likely suffer the very same fate (nothing was different between the two cases). He should have published an executive order once Canada bought the pipeline stating clearly that Canada would take all necessary precautions to save the Orca and would donate "X" amount of money to environmental clubs dedicated to saving the whale.  The judge only said the company's response was inadequate. An executive order and a tweet by Trudeau would have solved the problem. Assuming, of course, the judge was unbiased going into the case -- a huge, huge assumption.

Original Post 

Wow, I knew this was going to be a huge story, but I think it's a bigger story than most realize. This is going to be fascinating to watch.

See this post for background.

I haven't read the newest stories yet, but as you go through this, remember:

• Trudeau killed the Enbridge Northern Gateway pipeline to British Columbia some years ago by playing the "orca" card -- when it was "cool" to be against pipelines;
• he had to have known that the "orca card" would kill Trans Mountain;
• when he convinced Canadians to buy the Trans Mountain Pipeline he did not tell them that the environmental study was so flawed, one could drive a Canadian Pacific locomotive through it;
• nor did Trudeau tell them that the case was in court and it wouldn't take a rocket scientist to see the flawed environmental study;
• and the flawed environmental study involved exactly what? yes, you guessed it, the "orca"
• the "orca" killed the Enbridge Northern Gateway;
• it will take some interesting legal footwork by Trudeau's government to convince folks that, "hey, this time it's different"; the Enbridge pipeline would have killed the killer whale but the Trans Mountain would not
• bottom line: Trudeau knew all about the orca issue and he knew it from the beginning when he convinced Canadians to buy the pipeline

The interesting thing is that Trudeau could have stopped this from going to court in the first place with some legislative language. But I think he was in India when this story was developing some months ago.

If the articles mention the environment at all, they don't mention (or hardly mention the "orca") and they don't reference the case that set the precedent -- the Enbridge Northern Gateway case.

Alberta pulling out of federal climate change plan until pipeline construction resumes, CBC.

• "we are winning: several BC First Nations celebrate Trans Mountain victory
• the ruling suspends construction on the pipeline indefinitely
• this story says it is a $7.4 billion project

five things about the Trans Mountain pipeline ruling, Vancouver Sun

• this source says it is a $9.3 billion project
• fails to mention the real reason the project was killed

a video, Global News
another video, Global News
another video, Global News
fighting words, CTV

I wonder if Trudeau can sell the pipeline back to TransCanada?

Trudeau Batting A Thousand; What Goes Around Comes Around -- August 30, 2018

See this link for background.

Part 2 of this note is here.

Canada: the country that can't close a deal.

Oil: Canada's big income generator. Now landlocked. Four Canadian pipelines killed outright or stalled.

• Enbridge: Northern Gateyway -- killed by Trudeau.
• Enbridge Line 3: stalled in Minnesota by friends of Trudeau, Obama
• TransCanada: Keystone XL, killed by Obama
• TransCanada: TransMountain stalled but ....

... death knell for Trans Mountain Pipeline expansion project? Some will say yes, some will say no.

But here's the CTV headline: court ruling quashes approval of Trans Mountain.

You can go with the headline or read all the "what ifs", "buts" and, "maybes" in the story ....

This may be most concerning:

The Federal Court of Appeal has quashed Ottawa's approval of the contentious Trans Mountain pipeline expansion.

The decision means the National Energy Board will have to redo its review of Kinder Morgan Canada's project.

In a written decision, the court says the energy board's review was so flawed that the federal government could not rely on it as a basis for its decision to approve the expansion.

Wow, what if the new review suggests that the project could do irreparable harm to British Columbia?

I can't imagine this getting resolved within two years, and, wow, the First Nations have huge leverage and are in a win-win -- either they kill the project and get a psychological victory, or they cash in. Not telling what they will do, but I can guess.

Investors? Yawn. Apparently the share price was baked into the court ruling. On a down day for the market, TRP is down about half a percent. Yawn.

Back to Trudeau. Maybe time to "work" with Trump on trade.

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Idle Rambling

There seems to be a consistent story line when it comes to oil companies / pipeline companies and "First Nations" (generic): a failure on the part of the oil companies / pipeline companies to maintain really, really good notes and really, really good documentation.

It seems that "First Nations" seldom enter the process early on -- for whatever reason -- and then only after the decision affects them ("First Nations") do they get actively involved.

The oil companies / pipeline companies need to aggressively get the "First Nations" involved from the get-go and if they get no cooperation, get the courts involved early, and keep great, great documentation.

And, as noted, early in the blog -- wow, I must have written this a decade ago -- "First Nations" can and will claim "ownership" on any land in the western hemisphere.

Canadian Heavy Oil Selling At Nearly $30 Discount To WTI -- March 16, 2018

Link here.

On Thursday, Western Canadian Select was trading at a discount of US$27 a barrel to WTI. The discount widened to the biggest level, US$30.55 a barrel, in four years on February 5, after a selloff following the temporary shutdown of Keystone in mid-November.

...as additional storage capacity in Alberta and data about lower crude-by-rail shipments added concerns over the domestic oil glut, as TransCanada’s Keystone Pipeline has yet to return to normal pressure levels following a leak and temporary shutdown last November.

Global warming causing much of the trouble:

This week, market participants were digesting news about increased storage capacity and January crude-by-rail data. Crude-by-rail exports out of Canada fell by 11.3 percent month on month in January to 140,959 bpd, according to the latest data by Canada’s Crude Oil Logistics Committee, quoted by Platts. Analysts had expected rail crude exports to be either flat or down, because Canadian rail operators and customers had reported delays in shipments due to extreme weather.

And new storage comes on-line early:

In addition, Kinder Morgan Canada and Canadian midstream operator Keyera said earlier this week that they added two additional tanks at the Base Line Terminal for service ahead of schedule. The two tanks add an additional 800,000 barrels of crude storage to the 1.6 million barrels currently in operation.

Much more at the link.

It goes without saying that the Keystone XL was a huge deal for Canada.

It's hard to imagine oil in North America selling for about $30/bbl. For Canada, something has to give. I can't imagine many producers able to stay afloat selling crude oil for $30/bbl.

The Market And Energy Page, Part 3, T+4 -- January 25, 2018

I"ll get back to the Bakken, energy, and market in a few minutes, but let's start with this screen shot:

Okay, back to the Bakken, energy, and markets.

Disclaimer: Again, remember: this is not an investment site. Do not make any investment, financial, job, travel, or relationship-related decisions based on anything you read here or think you may have read here or anything that you were told by someone who said they read something on this site.

Wow, today has been so busy, all I can do, is link the article and then perhaps come back to it later.

So here goes.

The new Baker Hughes: developing its own identity. From The Houston Chronicle:

Baker Hughes said Wednesday that it narrowed its fourth quarter loss to $29 million from $104 million in the third quarter -- its first three months as a merged company.

Baker Hughes revenues, however, fell shy of the $5.9 billion generated by Halliburton as the Houston rivals compete to be world's second largest energy services company after Schulmberger, which has one of its four principal offices in Houston.

These guys are nuts: over at Bloomberg, the "dark side of American rise to oil superpower." I can only assume that Javier Blas is a pseudonym for Andrew Ross Sorkin. Even Andrew Ross Sorkin (who has probably named his first son Andrew Ross Sorkin II) wouldn't want to be associated with this article. One almost wonders if we will see it re-printed in The Economist.

How's the blog doing? Glad you asked:

Buckeled. From The Financial Post, Canadian oil prices buckle after railway refuses to be "swing shipper." Premier (don't you just love the word, "premier" -- slightly higher in the pecking order than "president" -- wasn't Mr Krushchev the "premier of the USSR? -- but I digress -- does anyone under the age of 25 know his first name -- no, it was not Putin) Trudeau is in deep trouble. His lackadaisical attitude toward his country's energy sector (about the only think the country has going for it, except recently opened borders) has resulted in CAVE dwellers stopping economic progress:

With new pipelines at least three years away, transportation capacity is so tight in Canada’s oil industry that every twitch in the system appears to be blowing out the discount. 

World oil prices are recovering, but Western Canadian oil prices are falling back to depressed conditions, the result of transportation capacity so tight every twitch in the system appears to be blowing out the discount.

Western Canadian Select (WSC), the Canadian benchmark, was changing hands for $33.57 a barrel Tuesday, after losing about $8 in two days, while West Texas Intermediate (WTI) was trading for US$64.75, up US$1.35 over the same period.

The latest scare to push down Canadian oil prices came from Canadian Pacific Railway Ltd. late last week, which said it has no interest in carrying big quantities of Western Canadian oil while producers wait for pipelines to get built.

“We understand crude is only going to be here for a limited period of time,” CP Rail CEO Keith Creel said to analysts in a conference call Thursday to discuss fourth quarter results. “We are looking for strategic partners with long-term objectives that allows us to have a more stable book of business.”

The railway expects its crude volumes to increase this year, to 60,000 carloads from 48,000 in 2017, but Creel said space would go to those who “appreciate that capacity” and CP will not allow itself to be “commoditized.”

We've talked about this so often I'm not going to say anything else. For now. Except to say this: very cheap heavy oil from Canada is going to replace heavy oil from Venezuela for US refineries optimized for heavy oil.

Buckeled. Tesla ... from CNBC/SeekingAlpha -- let's just put a bunch of phrases together and see if you can put together a coherent story. It shouldn't be too difficult:

• Model 3
• delays
• worsen
• shares fall 2%
• when does SEC get involved?
• Nevada gigafactory problems worse than "owner" previously owned up to
• factory resorting to having some batteries made by hand
• comments suggest that this is a fake CNBC news story 
• here's the CNBC link
• employees also said that quality control workers were not experienced, and two said that some batteries are leaving the factory with a potentially serious defect, a claim that Tesla vigorously denies.
• other comments, probably not accurate
• looking at bringing in donkeys from Mexico to help move raw components to where they are needed (probably not accurate; easier to bring in day laborers)
• borrowing scores of workers from suppliers to assist with manual assembly (okay, that's probably accurate)
• the comments are the best part of this story, or should we say, debacle
• gigafactory..gigglefactory...bespoke factory
• prospective owners can order hand-made batteries lined with custom redwood and leather packagine

The year of the fracker. In China, it's the year of the dog. From The Houston Chronicle:

Oil companies are on track to produce a record 10 million barrels of American crude a day, a milestone that could be reached as soon as February largely due to another record that is expected to fall in coming months.

By the end of the year, fracking intensity is projected to exceed levels reached in 2014 - the height of the so-called shale revolution - as hydraulic fracturing operations use more sand, more water and more pumping horsepower than ever before to free oil and gas from shale rock.

The result: U.S. crude production should reach an all-time high with just half the number of drilling rigs used at the peak of the last energy boom.

Welcome to the year of the fracker. The controversial technology that transformed the U.S. energy industry and reshaped global oil markets has advanced to a new level, becoming more science than art as fracking operations run round the clock, target ever smaller sections of wells with greater precision and greater force, and squeeze more oil out of every well.

"It never stops," said David Adams, senior vice president for completions and production for Halliburton of Houston. "We're pushing the limits."

To infinity and beyond.

Canada Aims To Fully Phase Out Coal Power By 2030 -- November 27, 2016

Spokesman:

Coal power in Canada currently represents close to 10% of greenhouse-gas emissions coming from four provinces—Alberta, Saskatchewan, Nova Scotia and New Brunswick. Provinces will have the option to choose between phasing out coal entirely and replacing it with lower-emitting resources, or using carbon capture and storage technology.

Does it matter?

This is easier for Canada than the U.S. because half its power already comes from waterfalls; Canada gets 10% of its electricity from coal versus about 31% in the U.S. But it’s still a big chunk of coal, and one among many that’s weakening in a secular way. 

Canadian energy link here. 

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China May Waste Half Trillion Dollars On Unneeded Coal Plants

Bloomberg link here. Data points:

• $490 billion: coal power plants than it needs
• currently: 895 gigawatts of operating coal capacity being utilized less than half the time
• another 205 gigawatts under construction
• installed a record 46.9 gigawatts of solar and wind last year 
• additional coal capacity beyond existing plants is only required by 2020 if power generation growth exceeds 4% / year and coal plants are run at a utilization rate of 45% or less
• even existing capacity may come under financial pressure by 2020

East Canadian Refineries To Use ONLY US Oil Going Forward -- This Seems To Be Somewhat Newsworthy; Meanwhile, OXY USA Won't Drill In California If Folks Don't Want Them To Drill -- Strong Words From The CEO; Parting Shot As OXY USA Gets Ready To Leave California

Bloomberg is reporting:

Suncor Energy Inc. and Valero Energy Corp. are poised to use only North American crude in eastern Canada by 2015, helping to displace overseas imports.

Suncor’s Montreal refinery will reach that point in 2015 and Valero’s Quebec City plant by the end of this year, the companies said April 29. Imports to Quebec, Ontario and Atlantic provinces from outside North America dropped by more than 50 percent in November from a year earlier.

Enbridge Inc. plans to start a pipeline late this year allowing oil to flow to Montreal from fields in North Dakota and Alberta, further reducing higher-priced supplies from Europe and Africa.

U.S. crude production reached a 26-year high in April, increasing stockpiles in the U.S. to the highest since 1931, while Canadian output is forecast to rise 4.1 percent this year. A shift of oil to eastern Canada, coupled with future potential to export crude, could help alleviate the glut and bring domestic prices to an “equilibrium” with international levels, said Tom Finlon, director of Energy Analytics Group Ltd.

"Within a very short period of time, there won’t be any barrels coming into eastern Canada from overseas,” John Auers, senior vice president of Tuner, Mason & Co., an industry consultant in Dallas, said by phone April 30. “Those shipments will be completely displaced by North American crude.”

Since the beginning of 2011, U.S. benchmark West Texas Intermediate crude has averaged $14.02 a barrel less than Brent oil, the international marker, after being at parity over the previous four years. The WTI-Brent spread was $8.34 yesterday, based on settlement prices. 

Couple this with the news coming out of Saudi today (reported earlier) and things start to get interesting.

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[Update: a reader reminded me that OXY USA already announced it is moving from Los Angeles to Houston. I probably posted that once upon a time and forgot. I'm not going to take the time to change the post below -- for now. Just note that OXY USA is moving to Houston.]

Maybe this is why OXY USA hasn't left North Dakota yet. The tea leaves some months ago suggested OXY USA was going to leave the Bakken, but OXY USA is as active as ever in the Bakken. Either they have long term plans in the Bakken, or they are continuing to "stage" their Bakken assets for a future sale.

With this story, one thinks there may be a reason for OXY USA to stay in the Bakken. Bloomberg is reporting:

Occidental Petroleum Corp. Chief Executive Officer Steve Chazen said the company’s California spinoff will have plenty of places to drill that won’t be hindered by a growing anti-fracking movement in the state.

The new company, which will be spun off to shareholders as California Resources Corp. by year end, won’t drill in communities that oppose oil and gas activity or hydraulic fracturing, known as fracking, Chazen said in a call with investors today. Occidental can avoid communities such as Beverly Hills, which have passed limits on fracking, he said.

“To the extent that towns don’t want us there, we won’t be there,” Chazen said, noting that some communities that oppose drilling have high unemployment rates. “Maybe the people in Beverly Hills should park their Rolls Royces and ride bicycles going forward. You can see why I’m not going to be part of the California company.”

Management of the new company will be named in the third quarter. Chazen has said he’ll remain as CEO of Occidental.

OXY USA's corporate headquarters are located on Wilshire Avenue, Los Angeles, California. My hunch is that once the spin-off is complete, OXY USA will move its headquarters to its offices in Dallas.  By the way, if that happens, I opined on that a long, long time ago, that it was just a matter of time before OXY USA leaves California. Remember: the three big plays in the US right now -- the Permian, the Eagle Ford, and the Bakken.

Canadian Oil Production To Double

The Financial Post is reporting (note the date -- June 26, 2013:

Canada’s oil industry continues to expand and will see production more than double over the next two decades, says a forecast released by the Canadian Association of Petroleum Producers (CAPP). 

Crude oil production in Canada is expected to increase to 6.7 million barrels per day by 2030, up from 3.2 million barrels per day in 2012, according to CAPP’s 2013 Crude Oil Forecast, Markets and Transportation report released this month. This includes oil sands production of 5.2 million barrels per day by 2030, up from 1.8 million barrels per day in 2012.

With oil sands representing the majority of Canada’s crude oil reserves, it is the primary driver of future overall growth. However, production will grow more rapidly in in situ (drilling) in the oil sands versus mining.

"Trending" has been updated.