In one of my previous articles, I looked at some of the issues related to the well abandonment/reclamation (A/R) process in Alberta. One of the biggest problems is that A/R costs are a bit like an iceberg. What is visible with respect to an abandonment or reclamation is a small piece of what’s involved. The rest could be anything. An iceberg's hidden part is beautiful clear ice, the unseen part of an old oil spill is generally somewhat less attractive. To make matters worse, the full extent of … [Read more...]
Alberta’s inactive well problem: Incentives needed to kickstart reclamations as who can afford to sign blank cheques?
Alberta currently has a big problem, aside from its decimated economy. Thousands of non-producing wells dot the landscape, many drilled decades ago. Pressure is growing to reclaim these sites due to new environmental concerns, and also ironically because landowners are losing surface rental income as companies go bankrupt. The pressure is unfortunately building at a remarkably bad time. The problem began in the late 1940’s and early 50’s as major new discoveries meant lots of drilling. Since … [Read more...]
Are Canadian oil sands the United States’ unofficial strategic oil reserve?
With oil markets currently in an over-supplied situation, it’s easy to get caught up in the perception that things will never get better, that this glut will last forever. US shale is rewriting the global supply story,and so on. However, shale resources are definitely finite and being blown out as fast as possible, and not always wisely. But regardless, they form only a fraction of global production. From the perspective of global energy players, what are the key building blocks over the next 20 … [Read more...]
Can 90 drilling rigs maintain 80 billion cubic feet per day?
Anyone currently in the energy business has to deal with the effects of low oil and natural gas prices. It’s not pretty. Companies are reporting dreadful results or going bankrupt. People are losing their jobs in staggering numbers, and banks are oddly silent even though the whole world can see what’s happened to the value of their energy portfolios. Even green energy companies are suffering as the comparative economics of renewable energy melt like ice caps. It’s easy to catch the pessimism … [Read more...]
Why do insignificant changes in energy statistics move markets when half the world’s data is suspect?
In North America and Europe, we tend to be quite good at measuring certain things, such as natural resource production and consumption. This is a characteristic of market-based economies where transparency is critical for properly functioning capital markets. People maintain great faith in a statistical ability to extrapolate from historical data. This habit becomes a problem when we extend that assumption of accuracy to the other parts of the world. We forget (or ignore) that many countries … [Read more...]
Saudi Arabia is borrowing money, burning through cash, and drilling wells at a record pace; this should get interesting
After nearly a decade of oil prices averaging over $70 per barrel, you’d imagine that OPEC members would be swimming in money. But through some astonishing feats of financial ineptitude they seem to have blown the windfall. Even the wealthiest member, Saudi Arabia, appears to be hitting up capital markets for a loan. A recent report in Reuters pointed out that Saudi Arabia is about to borrow $6-8 billion. What's more, six oil-exporting nations in the Gulf region plan to borrow $20 billion. How … [Read more...]
Reducing methane emissions: for politicians and environmentalists a blessing in the skies, for industry a blessing in disguise
Recently, US President Barack Obama and Canadian Prime Minister Justin Trudeau discussed the importance of reducing methane gas emissions from oil and gas operations. Both countries have plans to limit fugitive gas emissions, which are far more complicit in greenhouse gas effects than carbon dioxide. Predictably, responses were split along the established and boring battle lines, with environmentalists cheering and energy industry groups lowering the flags to half-mast. Rather than get caught up … [Read more...]
OPEC a spent force? No, but the world has no oil supply cushion
For 30 years, OPEC has been busy manipulating the price of oil towards whatever deviant objective is on their minds. They’ve been pretty good at it, but the recent oil price collapse has led to a general conclusion that OPEC is dead, that shale oil production has robbed the cartel of its power. This near-uniform consensus is reminiscent of the sheep-like positive view of the US housing market circa 2006, and it may well have consequences that are just as severe. OPEC has finally and … [Read more...]
For Alberta, which four letter word is more damaging – debt or coal? It’s time to allocate scarce resources wisely
Alberta's NDP government is proposing to phase out coal fired power plants in the province by 2030, with replacement electricity coming from renewable sources like wind and solar. Ontario has a similar feel-good plan, however the multi-billion dollar price tags of these initiatives raise some questions about the best way to achieve the goal of reduced emissions. Frankly, it's been a fiasco for Ontario, with a debt problem bigger than California's being compounded by effortless spending on … [Read more...]
Canada supplies an abundance of raw materials that the world requires, as cleanly and efficiently as possible. You’re welcome!
There are regions in the world that have low population densities in conjunction with voluminous amounts of raw materials. Others, the opposite. One of the wonders of the global trade system is that these imbalances are efficiently sorted out. Not always however, without a few hiccups. The logistical hiccups are understandable and that's what engineers are made for. The ideological or baseless ones are far more irritating, the result of misguided initiatives that have cleverly captured the … [Read more...]
