Despite the risk of sounding like an anti-shale lunatic, it’s important to counter the fan-boy mentality that’s gripped the media and swept away the common sense of analysts and commentators who might possibly know better. Any discussion about potential future global production shortfalls is dismissed with a hand wave and the ubiquitous “shale production will fill the void” nonsense. The same phenomenon existed 25 years ago with the “call on OPEC”, where it was universal knowledge that OPEC [Read more]
Energy education is sorely needed: A primer in weighing the alternatives
The energy business presents a challenge for the media to cover. Energy is wildly complex while the energy reporting business tends to have attention deficit disorder, or worse. Of course some other businesses are complex as well, but few have so many technical, economic and political aspects that are so globally intertwined. Specific aspects are also completely different. Natural gas is far different than oil, downstream businesses have more to do with chemical processing and marketing [Read more]
Venezuela vs. forest fires: mesmerized by minor market wiggles while global oil production threatens to implode
The consensus chatter on big media energy news sites is that the current oil price rally is for real, driven by production shortfalls in Canada (forest fires) and Nigeria (general mayhem). A few of the more exotic analyses get into storage statistics at Cushing, Oklahoma or Saudi Arabia’s latest attempt to jerk markets around to suit their mood. It’s all very interesting and great gossip material, but the proverbial piano is over our heads and we really should pay attention. Global crude [Read more]
Would a Trump energy policy be clever, ridiculous, or dangerous? Or will it be a footnote to his wrecking ball agenda?
Sometimes the best thing to do in life, when in a difficult spot, is to find something to laugh about. If there’s nothing you can do about the situation, why not see the lighter side? Which brings us, obviously, to the US presidential campaign. US politics has never been this interesting, and couldn’t be more so if it was a monkey vs. a minion. Which it is. No need to point out which is which, I presume. To be fair, Trump isn’t completely ape-like, but his responses can be; he might do [Read more]
No, the US is not an oil swing producer – there’s a pile of bankrupt companies to prove it
A recent article implied that the US is now the global oil swing producer. Actually the article more or less stated it, not implied it. The thesis was based on an interview with some random self-interested market commentator, yet is now well on its way to becoming an accepted truth because of Bloomberg's credibility. Not that half baked theories are anything new to the web, of course; such ill-documented speculation is what breathed life into the internet so stories like this shouldn’t be a [Read more]
Remediations Part II: Open-ended, massive clean up costs require cooperation or bankruptcy is at risk
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]