Let's Have a Thread About Oil

[HiTempguy1]

Well, not really about oil, but the future of oil.

I was thinking about where I see myself in 30 years (retired). But retirement is intrinsically tied to your location in a lot of cases. Your job/your talent set, your home, your family, etc all can keep you in one place for various reasons. Some people are smart and diversify not only their investments, but also how liquid their assets/savings are so they can relocate. Being invested in 10 properties is great until you move across the country as an example.

So in Alberta, where do you see us in 30 years? Will oil still allow the province to be prosperous? While many are hurting, wages are still quite high for those that have jobs right now. Will they stagnate for the next decade? How about the oil industry itself, will it be dead by 2050? Or like the coal industry is now, or the forestry industry 15 years ago?

You think of places like Detroit and Chicago, going from being the economic engines of the USA to places where literal blocks upon blocks of the city are being torn up and demolished because everyone has left. Can this happen to Calgary and Edmonton?

I figured this was a finance thread as the PRICE of oil will be the largely determinant factor in all of this, combined with how it affects our own personal finances.

[max_boost]

DT Calgary has developed nicely and it would suck for it to turn into a ghost town. I do wonder who is gonna move into all those condo builds tho lol

[KPHMPH]

I have a sneaky suspicion that oil, over the next 50-200 years will go up and down depending on which political party is in. Some years we will have booms where people want to live here and other times it will be how can we get out of this damn province.

[HiTempguy1]

DT Calgary has developed nicely and it would suck for it to turn into a ghost town. I do wonder who is gonna move into all those condo builds tho lol

http://calgarysun.com/life/homes/new-homes-and-condos/heres-my-wish-list-this-year-santa


With a vacancy rate in the towers in the core at 25 percent, there has been talk about reducing that rate by turning some of the buildings into condo towers, so Santa, perhaps you could drop a note into the Christmas stockings of everyone at CED, asking them to think long and hard about this idea.

At the end of November, there were 1,159 newly built condo apartments sitting empty and unsold in the city, which is a very high number.

Add to that the 6,291 condo apartments under construction in Calgary, including 2,378 in the downtown core and Beltline, and it’s clear we don’t need more condo apartments, particularly downtown.

As of December, WOW. Did not realize it was that bad. How have prices not tumbled??

[tonytiger55]

Oil will still be around. I don't buy the scare stories. I remember being in high school in the early 90's and they said would should be running out of oil 2020.
The price will bump around depending on wars and political parties.

Planes will still need to fly, green peach activists will still use day to day products/vehicles that contain derivatives made from oil (e.g plastics, paint etc). Though I think the economy will be more diversified.

[Ekliptix]

I plan to stay in the O&G industry as long as possible and as long as I have a good work-life balance. Real estate or some self employment jobs are the only others I can think of that offer similar compensation. I agree that oil will always go up and down.
Still, I save a lot, always max my RSPs, distribute investments among real estate and shares. I consider that I'll get laid off any time which helps slow down my spending.

[mr2mike]

will go up and down depending on which political party is in.
This. Waiting for new govt's across the board.
Right now Canada is getting left in the cold when you see the price differentials between WTI and WCS. People quote $60/bbl. But definitely not in Canada.

[V6-BoI]

I can't see oil going away in my life time. Prices will probably go up and down.

What I would like to see are more companies doing things like this http://www.acceleware.com/press-release/Alberta-based-Acceleware-Awarded-Funding-to-Test-RF-XL I think this is the proper way to give incentives for "cleaner" energy instead of the carbon tax.

[Xtrema]

When human are done using coal (if ever) we will probably have used it for 300 years.

I see oil will have the same shelf life, oil is barely 160 years old.

But going forward, oil will be as enticing economically as coal right now.

[RealJimmyJames]

Oil will be a low cost and low prestige commodity after one more bull run. Next price spike will be very short lived.

[suntan]

Oil is still basically TINA. As a result it is highly inelastic in terms of demand.

Once the storage surplus is back to normal historical levels oil will spike. And thusly we go.

[max_boost]

http://calgarysun.com/life/homes/new-homes-and-condos/heres-my-wish-list-this-year-santa



As of December, WOW. Did not realize it was that bad. How have prices not tumbled??

Used condo prices have dropped but some of these new builds are selling like hot cakes!

A gf of mine bought a 650sq.ft unit in the Royal for $450K! LOL :eek:

[Xtrema]

A gf of mine bought a 650sq.ft unit in the Royal for $450K! LOL :eek:

Can't get over that Royal used Janice Beaton as attraction clip art and she had totally left the area after the stunt she pulled. Hipster moved in will be sad there is no great cheese shop in area.

[adamc]

they're planning on redeveloping the back side of the block that faces 17th, or they WERE when I was looking at the plans back in the day. Isn't it supposed to have a massive Loblaw also? The flagship loblaws in Toronto have incredible deli/cheese/meat shops built right in.

[Xtrema]

they're planning on redeveloping the back side of the block that faces 17th, or they WERE when I was looking at the plans back in the day. Isn't it supposed to have a massive Loblaw also? The flagship loblaws in Toronto have incredible deli/cheese/meat shops built right in.

I thought that Loblaws is in East Village, not in Mount Royal.

[a social dsease]

Fact 1: Oil will continue to be an in-demand product for the next 30 years (and probably much longer)
Fact 2: Alberta has one of the largest oil reserves in the world

Based on these two facts, there is incredible potential for Alberta to continue to prosper economically from this resource. However, just because there is demand for a product, and a certain region has supply of that product, it doesn't necessarily mean that region will automatically be able to capitalize on the opportunity. A good example is the Democratic Republic of Congo - this country sits on some of the vastest natural resources in the world, yet they are poor as shit. This is because they have an extremely corrupt and incompetent government that is unable to capitalize on that opportunity.

Getting back to Alberta, the real question is therefore, do we have a government that will allow us to capitalize on our opportunity? Currently the answer is no, and if the existing provincial/federal regimes were allowed to continue governing in perpetuity (as corrupt African governments do), my outlook would be extremely pessimistic. However I believe that in a democratic society governments, like most things, are cyclical, and while the government situation is poor right now, I think at some point in the future (hopefully in 2019 when we have both a provincial and federal election) the situation will improve, and thus oil wealth will return. Over the next 30 years there will probably be several peaks/valleys as good/bad governments come and go, but as long as Fact 1 & Fact 2 hold true (which they will for at least the next 30 yrs) then the potential remains, and barring an absolute worst-case scenario on the government front, I don't see Alberta stagnating/dying/becoming a ghost town etc. Actually, I think things are pretty much as bad as they could be (ie worst possible government -> we've hit our economic floor) and yet most people are still doing all right. Things should hopefully only get better from here on (starting in 2019 once Notley and Trudeau get the boot).

[vengie]

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As of December, WOW. Did not realize it was that bad. How have prices not tumbled??

They have! My condo assessment was $30,000 less than last year or a 10% drop.

[ExtraSlow]

We used to worry about peak oil production, and now we worry about peak oil demand. Myself, I think peak oil demand is at least 10 years in the future. Really from an Alberta perspective, what we are struggling with instead is peak oil employment.

Western Canada used to sustain a fleet of 800 drilling rigs, now it's down to 623 and still falling. I could absolutely see us getting to a fleet of 450 rigs within 5 years.
Oil and gas used to employ around 250,000 people in Canada, and based on the recent PetroLMI publication it's down to about 165,000. It's possible that will go back up somewhat, but my money is on it staying pretty stable around there.

In an environment where employment is flat or falling, it makes sense that wage growth would be flat, and the foolishly high salaries and bonuses we saw in the past would not be required.

Anyone still employed, I think there's no reason to run out and quit the business, it's probably sustainable for quite some time. Anyone looking to break into it, I'd encourage you to keep your eyes open to other industries.

Some interesting reading on the topic available from PetroLMI - http://www.careersinoilandgas.com/en/publications

[Hallowed_point]

As long as people keep buying V8 GM/Subaru boxer engines, oil consumption will continue to be a thing.

[Xtrema]

Fact 1: Oil will continue to be an in-demand product for the next 30 years (and probably much longer)
Fact 2: Alberta has one of the largest oil reserves in the world

Based on these two facts, there is incredible potential for Alberta to continue to prosper economically from this resource. However, just because there is demand for a product, and a certain region has supply of that product, it doesn't necessarily mean that region will automatically be able to capitalize on the opportunity. A good example is the Democratic Republic of Congo - this country sits on some of the vastest natural resources in the world, yet they are poor as shit. This is because they have an extremely corrupt and incompetent government that is unable to capitalize on that opportunity.

Getting back to Alberta, the real question is therefore, do we have a government that will allow us to capitalize on our opportunity? Currently the answer is no, and if the existing provincial/federal regimes were allowed to continue governing in perpetuity (as corrupt African governments do), my outlook would be extremely pessimistic. However I believe that in a democratic society governments, like most things, are cyclical, and while the government situation is poor right now, I think at some point in the future (hopefully in 2019 when we have both a provincial and federal election) the situation will improve, and thus oil wealth will return. Over the next 30 years there will probably be several peaks/valleys as good/bad governments come and go, but as long as Fact 1 & Fact 2 hold true (which they will for at least the next 30 yrs) then the potential remains, and barring an absolute worst-case scenario on the government front, I don't see Alberta stagnating/dying/becoming a ghost town etc. Actually, I think things are pretty much as bad as they could be (ie worst possible government -> we've hit our economic floor) and yet most people are still doing all right. Things should hopefully only get better from here on (starting in 2019 once Notley and Trudeau get the boot).

It's not about we don't need oil. It's about supply and demand trend and ROI that will attract capitals to keep to world's interest in investing in the sector.

Right now the mentality of this town is, we won't invest unless we have to and have to get it out of the ground for $25/bbl or less, regardless where the price is at.

And it's not Alberta government's fault when we can't get pipelines out to tide waters. This is what we need because US is no longer our customer but competitor. We have predicted this even back in 2011-2014 run that if our only customer is US, we will be screwed by 2020. 2019 election won't change anything even if Conservatives retake both governments other than giving a few $ of tax break to the rich and may be cut some costs. They won't magically increase revenue.

We will NEVER be as competitive as US and US now has more oil than us via fracking. Unless fracking is banned in US (I doubt), even if we have more reserve (and most of our reserve isn't accessible anyway), we couldn't compete regardless which government is in play.

[suntan]

Let's see how big the Permian really is.

No one fracks unless they need to. That boom might end sooner than people think.

[ExtraSlow]

Much in the way that low oil prices are the cure for low oil prices, I feel like dramatic USA production growth is the cure for dramatic USA production growth.

Long term of course.

[Feruk]

We used to worry about peak oil production, and now we worry about peak oil demand. Myself, I think peak oil demand is at least 10 years in the future. Really from an Alberta perspective, what we are struggling with instead is peak oil employment.
Either you're right, or we are Trump's coal miners who don't see the end is near. Hopefully you're right.

[CompletelyNumb]

Bullish http://edmontonjournal.com/commodities/energy/oils-rout-is-over-hail-the-return-of-100-crude-maybe-gadfly/wcm/650429a3-9967-41f2-8c82-40aff637cdd0

[BerserkerCatSplat]

As long as people keep buying V8 GM/Subaru boxer engines, oil consumption will continue to be a thing.

The oil downturn was really caused by Mazda shelving the rotary. :(

[ExtraSlow]

We used to worry about peak oil production, and now we worry about peak oil demand. Myself, I think peak oil demand is at least 10 years in the future. Really from an Alberta perspective, what we are struggling with instead is peak oil employment.
Relevant discussion on peak oil demand buried in this article
http://business.financialpost.com/commodities/energy/export-constraints-to-crimp-future-oilsands-gains-amid-rising-global-supply-risks-iea

[nzwasp]

What is your opinion of this article ExtraSlow http://calgaryherald.com/pmn/business-pmn/us-oil-expected-to-meet-most-of-worlds-growth-in-demand/wcm/64cb1878-b160-4e1f-a89d-d119de5e82f2

[Xtrema]

What is your opinion of this article ExtraSlow http://calgaryherald.com/pmn/business-pmn/us-oil-expected-to-meet-most-of-worlds-growth-in-demand/wcm/64cb1878-b160-4e1f-a89d-d119de5e82f2

http://www.canadianbusiness.com/economy/what-happens-when-america-doesnt-need-canadas-oil/

Nothing we don't know for more than 5 years. You think Shell/Conoco sold off Canadian asset without knowing that US play is much more profitable and easier to move products?

[mr2mike]

http://www.canadianbusiness.com/economy/what-happens-when-america-doesnt-need-canadas-oil/
5 years after that article was written and we're still in the same boat. Nothing has changed, if anything it has gotten worse. Canada is lying to themselves if they think we're more than just a resource selling country. Lumber, Water, Oil, Gas, Weed. The manufacturing industry in Ont and Que is net negative year over year, but held up by guess what... the sale of natural resources.

[ExtraSlow]

This doesn't really fit here by topic, but maybe by context.

Can the federales really impose a carbon tax on unwilling provinces?
http://business.financialpost.com/opinion/kevin-libin-trudeaus-carbon-tax-is-close-to-blowing-up-in-his-face

[HiTempguy1]

I think it fits here. While oil is a global commodity, the national/provincial industry is immediately affected by things like this. And it certainly affects our job prospects in the field when taxes like this cause all the investment dollars to dry up.

I've always wondered how the feds can FORCE a province to pay a tax. Probably easier to do on the ones that were dumb enough to sign up for HST.

[ExtraSlow]

We used to worry about peak oil production, and now we worry about peak oil demand. Myself, I think peak oil demand is at least 10 years in the future. Really from an Alberta perspective, what we are struggling with instead is peak oil employment.

Sometimes old quotes sound smart. Just don't look back at anything else I said.

BP predicting the end of demand growth.
https://www.bloomberg.com/news/articles/2020-09-13/bp-says-the-era-of-oil-demand-growth-is-over
94130

[Masked Bandit]

With exactly ZERO years of O & G industry experience under my belt and no inside information whatsoever...I'm not convinced that dino-juice is done for. It may very well be but here's why I think literally nobody can say one way or the other with any degree of certainty what's going to happen. Back in 2005-2008 the price of oil was climbing almost daily to new heights and I was very aware of that fact because every time I filled up my truck it cost me more and more. At the very peak when oil was $150 BBL I think fuel here in Calgary was something like $1.50 per litre. Bloody painful when you're driving a half ton back & forth to the office! At the peak of that craziness I remember the president of Ford saying that the days of people owning a half ton as a personal vehicle are over. WOW...was HE wrong on that one! So much so that Ford has all but abandoned cars in favour of trucks and SUVs because that's what people want. So, if a guy like that can be so wrong about his own industry how can anyone REALLY be sure they know what's going to happen with O & G over the next 10 - 20 years?

[Xtrema]

With exactly ZERO years of O & G industry experience under my belt and no inside information whatsoever...I'm not convinced that dino-juice is done for. It may very well be but here's why I think literally nobody can say one way or the other with any degree of certainty what's going to happen. Back in 2005-2008 the price of oil was climbing almost daily to new heights and I was very aware of that fact because every time I filled up my truck it cost me more and more. At the very peak when oil was $150 BBL I think fuel here in Calgary was something like $1.50 per litre. Bloody painful when you're driving a half ton back & forth to the office! At the peak of that craziness I remember the president of Ford saying that the days of people owning a half ton as a personal vehicle are over. WOW...was HE wrong on that one! So much so that Ford has all but abandoned cars in favour of trucks and SUVs because that's what people want. So, if a guy like that can be so wrong about his own industry how can anyone REALLY be sure they know what's going to happen with O & G over the next 10 - 20 years?

Read BP article again, it says no more growth. We will still need dino juice but investing into the production of it will be as attractive as investing in a Canola farm in the prairies.

- Exxon has been taken off Dow Index.
- WFH has proven to have minimal impact on productivity, if not actually increase in some cases and surprises even some hard core butt-in-seats managers/executives.
- I doubt we will see another China coming up, and if there is oil, it may not be as necessary.

Look, all it takes is Trump to drop a bomb and start a war somewhere and the industry is back. But based on market trends, it's going to be a hard comeback for oil.

[killramos]

The Oil Company that doesn’t want to be an oil company any more due to political pressure predicts that pulling out of oil is a good idea.

Quell surprise.

Them and equinor are just political investment entities at this point.

[ExtraSlow]

Yeah, and even without any demand growth, there's ~100 million barrels a day being burnt that needs replacing by some number of drilling rigs and frac spreads. Honestly, I don't even see flat demand as that big of a deal.

Now if the eco-visionary crowd achieves their goals of 20%+ year over year demand shirnkage, then we're talking big stuff. I don't believe that part though.

[killramos]

Yeah, and even without any demand growth, there's ~100 million barrels a day being burnt that needs replacing by some number of drilling rigs and frac spreads. Honestly, I don't even see flat demand as that big of a deal.

Now if the eco-visionary crowd achieves their goals of 20%+ year over year demand shirnkage, then we're talking big stuff. I don't believe that part though.

I haven’t been that big of a fan of the perpetual growth/sell model oil co’s anyway. Nothing wrong with generating a sustainable cash flow generating business.

[ExtraSlow]

I haven’t been that big of a fan of the perpetual growth/sell model oil co’s anyway. Nothing wrong with generating a sustainable cash flow generating business.
Most oil and gas companies should be working on a utility model really. Growth model hasn't worked out great for the last ~10 years or so in Canada, and the last 5 in the USA. I swear half the companies are pump-and-dump schemes. Has madea lot of people a lot of money I guess. Not me though, hahahahah, sigh.

[Xtrema]

Now if the eco-visionary crowd achieves their goals of 20%+ year over year demand shirnkage, then we're talking big stuff. I don't believe that part though.

I don't think shrinkage will come for another decade or 2. Global coal demand flat lined since 2010 and we only started to see shrinkage in 2020.

And oil is way more versatile than coal.

But the days of spare no expense oil projects are over.

[ThePenIsMightier]

If coal starts to get crazy cheap, I want a coal furnace for my house.

/Severe off topic.

[mr2mike]

If coal starts to get crazy cheap, I want a coal furnace for my house.

/Severe off topic.

China has built a number of coal plants in recent years. So it's cheap for sure. More coal plants built than O&G plants built in Canada in the last 2 decades. 57.5% of China's energy is from coal. But we should hate on those Nat Gas producers in Canada. :guns:

I can't wait until O&G is hated for "gouging" people on prices in 10 years because demand trumping production and we're all hated on again. And the fact that climate change would continue regardless of any human activity.

At least at that point we'll all have Lambo money and sleep soundly on our yachts.

[Buster]

The Oil Company that doesn’t want to be an oil company any more due to political pressure predicts that pulling out of oil is a good idea.

Quell surprise.

Them and equinor are just political investment entities at this point.

I dont know much about the oil business, but I could see this is the case from a mile away. There is much to be gained by BP talking down oil demand, with not much to be lost. It's not like what they say now will actually impact demand in the future.

If oil demand looks like the projections in that bloomberg article, it won't be because of technology marvels, its because the world economy is turbo fucked.

[mr2mike]

Agreed. BP has a lot of investment to gain in saying this. It can change and no one need be accountable.
Like how China has said its going to move away from coal. (But secretly, they're not)
Like how China still uses CFC's despite it being agreed upon to ban it worldwide.