How Big Is The Canadian Oil Sands -- Motley Fool

Link here to Motley Fool:

Data points:

Production estimates (one London firm) for the Canadian oil sands:

• 1.7 million bopd in 2013
• 4.2 million bopd in 2025

The Kesystone XL would accommodate about 800,000 bopd. Many, many story lines there.

Stock recommendations (for investors):

Tyler recommends Suncor Energy, the largest oil sands producer in Canada, and goes on to pitch ConocoPhillips, which has gone all-in with the Canadian oil sands. ConocoPhillips will spend a large portion of its 2013 capex there through joint ventures with Total.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read at this site.

For Investors Only: Overview of Oasis, Year-End, 2012 -- Steve Zachritz -- Z Man

Link here to SeekingAlpha.com.

At the link:

Oasis Petroleum reported better than expected EIBTDA on pre-announced 4Q12 production. This is our pre-call note.

While 4Q12 production was pre-announced Oasis Petroleum exceeded consensus expectations for revenue and EBITDA and EBITDA per BOE hit $64.49 /BOE in the quarter, a new high. Strong cost control and contribution from the company's well completion segment offset sequentially lower oil prices (WTI averaged ~ $88 per barrel in the quarter, the lowest quarterly average of 2012). Moreover, given management's propensity for shying away from dilution, OAS recorded another new high in terms of production per share (see table at the bottom of this piece). While the name has risen from a 20 month sleepy period described in our last piece it continues to trade near its lows on an enterprise value to production basis (see graphs below).

And then this:

We often refer to Oasis as the "easiest to own name among the Bakken players". Costs continue to trickle lower and we expect 2013 to be a year of "beat and raise" as the quarters roll by. We continue to own the name as a top 5 ZLT position. On a forward TEV/EBITDA basis, the name trades at 5.8x 2013 estimated EBITDA and 4.4x 2014's number, which given the growth, the oiliness, and the resulting strong margins we find to continue to be appealing and augers for a move over the next 12 months above the $50 mark. 

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here. 

RBN Energy: Back to the Future

Updates

Later, 10;04 am: just after posting the original post, Bernanke delivered "the Fed" speech. Very upbeat remarks for the market but this talking point: consumers are being hammered by high price of gasoline. Cue up Connie Francis.   

Original Post

I keep coming back to Canadian oil sands, $60; Bakken, $75 - $100; WTI, $100; Brent/OPEC: $120.

I think of the recent Oil Drum article: the Precautionary Principle.

And finally, this article: imports from Saudi Arabia increased in 2012.

Those three data points/articles came to mind when I saw the RBN Energy post today: bridge over troubled waters.

The Deepwater Horizon explosion in April 2010 effectively halted new drilling in the offshore Gulf of Mexico (GOM). Between April 2010 and June 2012 production fell by 400 Mb/d.

At the same time the shale revolution led to increases in US production – up 790 Mb/d during 2012 – the largest annual increase on record. In the last quarter of 2012 GOM oil production began to recover and is forecast to increase to 1.5 MMb/d by the end of 2014. Today we look at the impact Macondo had on GOM crude production.

The April 20 2010 BP Macondo disaster had a momentous impact on the Gulf Coast regional crude oil production. The Federal government ordered a six-month moratorium on new deepwater drilling in US offshore waters (deepwater is considered to be greater than 500 feet deep). The moratorium also required existing permitted wells to stop drilling. The moratorium was lifted in October 2010 but it wasn’t until February 28, 2011 (314 days after Macondo) that the Interior Department approved the first new deep water drilling permit for an oil company.

[An aside: I remember blogging about the permitorium, the moratorium, and then the slow-rolling, receiving a lot of comments that I was wrong. RBN Energy summarizes that period very succinctly. Nice to see.]

Had there been no shale revolution during the events in the Gulf, things could be a lot worse. But the thing that jumps out at me, when drilling in the Gulf was shut down, there was no Plan B. The shale revolution was not a Plan B; it was simply fortuitous.

US crude oil production topped 6 MMb/d by the end of 2012 up by 790 Mb/d during the year - the largest increase in annual output on record. Most of that increase was in the Bakken, Eagle Ford and Permian basins. Prior to the shale revolution increases in US crude production between 2007 and 2010 came from offshore GOM fields.

The Macondo accident in April 2010 halted GOM crude production growth and it is only just beginning to recover. The recovery proves that deepwater drilling risks are still considered worth taking by producers. GOM offshore production may not be headline news like shale oil but it still represents 20 percent of US production and that number looks set to increase in the next two years.

By the way, that's an interesting data point: the GOM represents 20 percent of US production; the Bakken represents about 12 percent. 

***************

Note to self: 76

Crude-By-Rail Sets Record; Crude Oil Loadings Up 250 Percent Over Previous Year

The Association of American Railroads is reporting:

AAR today reported that U.S. Class I railroads originated a record 233,811 carloads of crude oil in 2012, up 256 percent from the 65,751 carloads of crude oil originated in 2011. Crude oil in 2012 represented 0.8 percent of all U.S. Class I rail carloads, up from 0.2 percent in 2011.  AAR reports crude-only carloading data on a quarterly basis, with 4Q12 seeing 81,122 carloads.

Linked article spotted via CarpeDiem. 

Also via CarpeDiem, this trucking report:

The American Trucking Associations’ advanced seasonally adjusted For-Hire Truck Tonnage Index increased 2.9% in January after jumping 2.4% in December. (The 2.4% gain in December was revised down from a 2.8% increase ATA reported on January 22, 2013.) Tonnage has surged at least 2.4% every month since November, gaining a total of 9.1% over that period. As a result, the index equaled 125.2 (2000=100) in January versus 121.7 in December. January’s index was the highest on record. Compared with January 2012, the index was up a robust 6.5%, the best year-over-year result since December 2011.

“The trucking industry started 2013 with a bang, reflected in the best January tonnage report in five years,” ATA Chief Economist Bob Costello said. “While I believe that the overall economy will be sluggish in the first quarter, trucking likely benefited in January from an inventory destocking that transpired late last year, thus boosting volumes more than normal early this year as businesses replenish those lean inventories.”

Time For A New Poll: Are Crude Oil Imports From the Middle East to the US Increasing or Decreasing?

Since I am not ready for another poll so soon, here's the answer.

Increasing.

Financial Times is reporting:

The US was more reliant on the Middle East for its oil imports last year, underscoring the critical importance of the politically unstable region for the country despite the growing energy independence its shale gas revolution is bringing.

[R]ecent oil import trends from the Gulf region suggest why the US might continue to play a critical security role in the region. While domestic production increased the most in 150 years last year, Washington will confirm later this week that oil imports from the Gulf region continued to rise. By the end of November the US had already imported more than 450m barrels of crude from Saudi Arabia, more than it imported from Riyadh in the whole of 2009, 2010 or 2011, according to figures from the US energy department.

For the first time since 2003, Saudi imports accounted for more than 15 per cent of total US oil imports. The Gulf as a whole accounted for more than 25 per cent, a nine-year high. Other Gulf exporters are also seeing unusually strong US demand. By the end of November, Kuwait had shipped more oil to the US than in any year since 1998. Analysts are expecting annual figures to be released later this week to confirm the trend seen up to November. 

Oil produced in shale fields like the Bakken in North Dakota and the Eagle Ford in Texas is of a light high-quality variety. But Gulf oil is still vital for the US because many US refineries are set up to process heavier crude oils. So while imports of light crude from countries such as Nigeria have fallen dramatically, demand for Gulf crude has not.

The point of the article had to do with security concerns in the Mideast. The article did not mention the Keystone XL.

Perhaps it should have.  The dots are starting to connect. $60/bbl Canadian sands oil; $120/bbl OPEC oil. Analysts forecast the amount of oil the US imports from OPEC will increase.