Canada Shops Its Keystone XL Oil to China

Update

Canada's reasoned approach to this whole debacle (link here): 

"Put all our antagonisms behind us." Pragmatic, business-like approach

"U.S. demand is declining."  US influence is declining

"Asia's star is rising and it will dominate the 21st Century. We can guarantee national prosperity for a long time to come by supplying them with the energy that they need."  Screw the US

She said governments need to listen to environmental groups and First Nations, and not "shy away from criticism and disagreement." Alberta's premier said the environmental management systems developed in Canada, for intensive resource extraction like the oilsands, should be viewed as the world standard. "We should demand that our competitors are held to the same level of transparency and accountability."  Level playing field -- oilsands extraction ain't killing any whooping cranes or desert tortoises

Original Post

Link here.

This entire thing is incredibly stupid, the more one learns.

Mr. Harper, attending the Asian-Pacific Economic Cooperation summit in Honolulu on Sunday, repeated Canadian officials' disappointment at the decision, and he told reporters he remained optimistic the project "will eventually go ahead, because it makes eminent sense."

Canadian officials have said in the past that they would seek out other markets, particularly Asian ones, if the U.S. didn't approve the Keystone project. A separate line that would send crude westward to the Canadian Pacific coast, where it could be shipped to Asia by sea, is currently going through Canadian regulatory approval.

But Mr. Harper's language in Hawaii was particularly blunt.

"This does underscore the necessity of Canada making sure that we are able to access Asia markets for our energy products," Mr. Harper told reporters in Honolulu, according to a transcript provided by his office. "And that will be an important priority of our government going forward." Mr. Harper said he made that point in a meeting the day before with Chinese president Hu Jintao.

The Keystone decision comes as the latest in a string of irritants that have sparked friction between the U.S. and Canada, its largest trading partner.

Earlier this year, the White House reintroduced controversial "Buy America" provisions in proposed job-creating legislation that potentially shuts out Canadian firms from participating in government-funded infrastructure projects. Canada fought for the better part of a year to get similar provisions removed from an earlier Washington stimulus plan.

The White House then signed into law a U.S.-Colombia free-trade pact. That pact, which Canada wasn't a party to, included an unusual surcharge in its fine print on U.S.-bound Canadian and Mexican travelers. The charge was designed to recoup revenue lost from the elimination of tariffs on Colombian goods, and it angered some Canadian politicians.

The comments at the link are as interesting as the story.

At least we know who to blame this time when price of gasoline goes up, as it will next summer.

A $7 billion, shovel-ready project that would have put thousands of Americans back to work.

I.N.C.R.E.D.I.B.L.E.

And all those railroad tankers carrying oil across the entire Nebraska state, day in and day out.

Beautiful Bakken Evening -- Metrics -- Idle Ramblings -- The Bakken, North Dakota, USA

For investors worried about the EPA putting a stop to the Bakken: this is not rocket science. Split your hydrocarbon energy investments into two piles: one pile is for the Bakken; the other pile is for Big Oil (XOM, COP, and CVX).  Adjust the relative size of the two piles based on your reading of the "tea leaves." If it appears the EPA is going to stop the Bakken in its tracks, move your chips in the Bakken pile to your chips in Big Oil's pile. Big Oil doesn't have much in the Bakken, and with the end of fracking in the states, the price of oil will spike, going to Big Oil's bottom line. Of course, stopping the Bakken in its tracks (i.e., killing the domestic onshore oil industry) will push the US into a recession, if not a depression, but that's another issue, and above my pay grade. See disclaimer at the right; this is not an investment site.

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I just got back from a great walk in the Bakken. It was dusk when I started and pitch black by the time I returned. I walked along the Little Muddy, crossed 1804, and then crossed the railroad tracks to put me on the dike headed to the Missouri south of Williston. It was clear -- easy to see the evening star, Venus, on the way back home, no wind, no precipitation, and it must have been 50 degrees when I started out. A gorgeous evening. I noted a flare just west of the US Army Corps office along the dike -- memo to self, check out that well -- would it be 18311? That's the only one in the area; it has to be. Hard to believe it is still flaring; it was completed in December, 2009.

• 18311, 2,769, BEXP, Williston 25-36 1H, Catwalk, Bakken, cumulative 161,000 bbls; yup -- still producing 5,000 bbls/month and flaring all natural gas. Amazing. Two years of flaring. Price-wise, not worth capturing the natural gas, but it is interesting.

I spooked a flock of Canadian geese that had bedded down for the night. You could tell by their honking they enjoy the flaring also; they know they are home.  One can still end up in the wilds of North Dakota within minutes of walking despite all the oil activity.

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There have been quite a few articles written and a lot of chatter about the population of Minot and Williston going forward. It dawned on me that tracking the population is probably not the best metric to track. Would one rather have a city of 100,000 with 20 percent unemployment or 10,000 with full employment?  Would one rather live in a city where the average automobile was the equivalent of a Ford Focus or any mid-size sedan, not to pick on Ford, or the equivalent of a Ford F350 pickup? It will be interesting to track the population, partly because it's so easy, but I think a better metric might be dollars in building permits per capita or sales revenue per capita. Saying Williams County has sales receipts that nearly match those of Cass County grossly underestimates the true significance of those numbers.  The population of Williams County: 22,000; the population of Cass County: 150,000.

A Dead Cow -- EOG To Drill In Argentina -- Not The Bakken

From Mike Filloon:

In the first two parts of this series we covered Kodiak's  upside given the new record Whiting well in its Tarpon Prospect. This is obviously bullish for Whiting, along with Newfield and other players in the area. EOG Resources stated it had a very large resource find in the Bakken that has an estimated thickness of 900 feet.

Don noted that from the EOG transcript, EOG was referring to Texas, from the transcript:

Mark G. Papa

Yes, Let me have Bill Thomas address the thoughts on the Vaca Muerta.

William R. Thomas

Yes, Ray, we've got a well planned in the first part of next year. And the section we're targeting there, we've got data that shows that it's relatively thick, about 900 feet thick, and it's got about 150 million barrels per section of oil in place. So it's certainly a world-class potential rock. And we're planning a horizontal well, and we will be conducting microseismic on it to monitor the frac and do all the science work to fully evaluate how the well fracs. And certainly, we'll follow up that and see how the well produces. So our expectations are really high for it, but we'll just have to see how it goes when we get the well completed.

If the middle Bakken is 900 feet thick anywhere in the Williston Basin, that will be a story! At least we think EOG was referring to Texas: "Vaca Muerta" is Spanish for dead cow.

See first comment below: this is in Argentina. 

Houston-based EOG Resources  plans to begin drilling at the Vaca Muerta shale reservoir in Argentina's Neuquén basin next year, CEO Mark Papa revealed.

"We will drill our first two wells in 2012. Our target is the Vaca Muerta shale, which we believe will be oil productive," Papa said during the company's 2Q11 results webcast.

EOG has taken a position of 100,000 net acres (40,468ha) in the area after forming a business relationship with Argentina's largest oil company YPF.

The Steven Chu Effect, the Bakken, Joan Baez, Idle Ramblings --

Spot price of oil March 3 - 11, 2011:

West Texas Intermediate

94.91

97.51

97.19

99.70

99.70

99.70

100.7

I pulled that data because I wanted to go back and look at the "Steven Chu Effect."

Back in late February and early March, 2011, there was a lot of anxiety about the price of oil spiking to $100/bbl due to events in Libya, if I remember correctly. That was about the time the decision was made to tap the strategic petroleum reserve, which, of course, made no sense to me -- storage tanks at Cushing were as full as ever.

Now, we have melted up near $100 again ($99.22 on Friday, November 11, 2011) and there's very little media commentary. Interesting. And we're not even going into the summer driving season.

At that time I wrote (at the linked site):

Ideological policies (no drilling in Alaska, no drilling in the Gulf, delay drilling on shore, frustrate use of fossils through EPA regulations) have long term effects. It takes years to get drilling back on track.

We can now add one more thing to that ever-increasing list of decisions based on ideology: "no" on the Keystone XL.

I would revise that earlier paragraph to read:

Ideological policies (no drilling in Alaska, no drilling in the Gulf, delay drilling on shore, frustrate the use of fossil energy through EPA regulations, killing the Keystone XL, threatening to regulate fracture stimulation) have long term effects. It can take years to bring major energy projects on line and in a crisis, we don't have years to wait. 

And that's why oil will spike again if there's another perceived crisis in oil supply.  The Steven Chu effect: Plan A is to replace hydrocarbon energy with wind and solar energy. There is no Plan B.

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I would normally place this on one of my other sites, but it's nice (for me)  to listen to this while reading Bakken-related stories and comments.



Diamonds and Rust, Joan Baez

Listening to these words, brought a chill up my spine:

I'l be damned: here comes your ghost again.
But that's not unusual;
It's just that the moon is full
And you happened to call.

And here I sit
And on the telephone,
Hearing a voice I'd known
A couple of light years ago,
Heading straight for a fall.

As I remember, your eyes
Were bluer than robins' eggs.
My poetry was lousy, you said.
Where're you callin' from?
A booth in the midwest.

Ten years ago I brought you some cuff links.
You brought me something.
We both know what memories can bring:
They bring diamonds and rust.

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That sent chills up my spine. The background to the lyrics is very well known; the only private line, if there is one, is the one that comes early: "it's just that the moon is full, and you happened to call." Wow.

I am sure poetry and music this good is still being written and sung somewhere but I haven't run across it lately. At least not consistently.

The other night I watched much, but not all, of the Country Music Awards. I must have missed the good part. I did not recognize (m)any of the nominees, and certainly did not enjoy the music. It was hard for me to call much of it country. Time is passing me by.  And that's why I'm glad I have the Bakken. It brings me back to reality.

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The first time ever I mentioned the "Steven Chu effect" was in October, 2010:

West Texas Intermediate

76.87

76.87

76.87

76.76

78.11

78.52

76.97

Yup. Ideology has its consequences.

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An acoustic cover:


Diamonds and Rust, Judas Priest

For Investors Only -- Energy Companies

2) Paid subscription required at the linked site, but "initial" data free and might be of interest to investors looking for energy companies paying dividends >3% apr.

2) Santa Claus rally?

4) No brainer

2 + 2 = 4

This is not an investment site; see disclaimer at the right.