O&G is doomed, sky is falling, blame stelmach, etc

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Canada's oilpatch to see 18 per cent boost in profits in '08 ...
The Canadian Press - 4 hours ago
CALGARY - Canada's oilpatch is in for another gusher of a year with profits rising by 18 per cent to nearly $23 billion, according to the Conference Board ...
Canadian oil industry poised for gusher year
Toronto Star, Canada - 6 hours ago
The Canadian oil industry is poised for another gusher of a year with 2008 profits rising 18 per cent to nearly $23 billion, the Conference Board of Canada ...
Record profits expected for Canadian oil industry
Calgary Herald, Canada - 3 hours ago
CALGARY - Surging production, particularly from expanding oilsands facilities, along with record-level prices are expected to push Canada's oil industry to ...
Oilsands to drive Canada's energy production
Financial Post, Canada - 4 hours ago
Bruce Edwards/Canwest News ServiceA heavy truck works in the oilsands near Fort McMurray. OTTAWA -- Canada's oilsands are taking over where conventional oil ...

Oil profits to jump by 18% this year: Conference Board
Ottawa Business Journal, Canada - 8 hours ago
By Ottawa Business Journal Staff Canada's oil extraction industry is forecasted to see profits jump by almost 18 per cent in 2008 as a result of strong ...

Oilpatch profits to hit $23B this year: report
CBC Nova Scotia, Canada - 7 hours ago
Record high oil prices and rising production from the oilsands should see profits in Canada's oilpatch hitting almost $23 billion this year, the Conference ...
Canada's oil extraction industry to enjoy another year of record ...
Canada NewsWire (press release), Canada - 9 hours ago
OTTAWA, Feb. 14 /CNW Telbec/ - Thanks to increasing oil sands production and record high oil prices, profits in Canada's oil extraction industry are ...

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oh no!

:drama:

Haha, wait for the next two years...

I know EnCana is not investing very much money in Alberta this year or the next. I am sure most other oil companies are doing the same.

Sask is apparently welcoming them with open arms.

and in 2 years is this when the big crash is coming? the one where we are all going to lose are jobs and our houses will be worth nothing?

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Originally posted by scortracer
and in 2 years is this when the big crash is coming? the one where we are all going to lose are jobs and our houses will be worth nothing?

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Let's hope the housing market crashes cause that's when I'll be looking to buy!

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Originally posted by scortracer
and in 2 years is this when the big crash is coming? the one where we are all going to lose are jobs and our houses will be worth nothing?

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Glad the ignorant are out to play.

Simply, no, it isn't going to crash. Things will be a lot slower than they are now. No new investments and no new jobs. You might have to go back to your job at Tim Hortons.

rediculars

I will have to go back to campus robbieries

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Originally posted by benyl

You might have to go back to your job at Tim Hortons.

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No i think even Tim Hortons needs their staff to know the difference between OUR and ARE.

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Originally posted by googe
I will have to go back to campus robbieries

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you can't do it alone... let me know if you need a partner

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Originally posted by googe
I will have to go back to campus robbieries

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haha yes.

fuck it, im moving to perth, they stronger then ever over there.

Nat. Gas and Oil have been on a TEAR the last couple days. Encana and other Nat. Gas producers will see much better profits this year if prices stay elevated. I'm long Nat. Gas right now...

The record profits are coming from projects that were set in motion 5 - 10 years ago. With the slowdown this year and last we you probably won't see an effect for a while yet.

Spending in oil sand will continue. And oil sand related upgrade will also continue.

I just saw Superstore's advertised hourly rate dropped a few bucks. So I guess people are losing jobs already. :D

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Originally posted by snowboard

fuck it, im moving to perth, they stronger then ever over there.

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I've been thinking that myself! Wicked city. Unfortunately, the housing prices there are even more ridiculars than in Calgary.

Oh great. I'm selling.

2 years? Sweet HAHA!...that's how long it will take me too lol...plus I wanna see how the real estate market will be back in Van after the Olymplics before I decide to spend the rest of my life in Cowtown...

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Originally posted by Xtrema
Spending in oil sand will continue. And oil sand related upgrade will also continue.

I just saw Superstore's advertised hourly rate dropped a few bucks. So I guess people are losing jobs already. :D

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I know that EnCana said that they would cancel $1 billion in projects in Alberta if Stelmach implemented the Royalty regime.

They have oil in Sask too...

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Originally posted by Xtrema
Spending in oil sand will continue. And oil sand related upgrade will also continue.

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If the US goes into recession and oil price drops, that's not for sure. And if the US stops buying "dirty oil" and the new royalties and carbon taxes kick in, it'll make it even harder. Some interesting things that most people don't know.

-On average, 1 million bbl/day of bitumen consumes 1 bcf/day of natural gas
-For oil sands mining operations (Athabasca Oilsands), it takes 50-120 gallons of fresh water to produce 1 barrel of bitumen
-For SAGD and CSS oil sands operations, it takes 130-175 gallons of fresh water to produce 1 barrel of bitumen
-The equivalent amount of ALL of the diluent produced in Western Canada is needed to mix with the bitumen to get it to flow down the pipelines to refineries
-When the current projects are completed, threre will be 1,000,000 bbls/day of mining production. That's about 10 million gallons of fresh, clean water PER DAY that's being drawn from the Athabasca river.
-Break even point to refine it to WTI crude standard is approaching $70/bbl


Keep in mind, the above is just to produce a barrel of bitumen. A lot more refining is needed to upgrade it to lighter useable oil.

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Originally posted by jay42w8
I wanna see how the real estate market will be back in Van after the Olymplics before I decide to spend the rest of my life in Cowtown...

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:werd:

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Originally posted by richardchan2002


If the US goes into recession and oil price drops, that's not for sure. And if the US stops buying "dirty oil" and the new royalties and carbon taxes kick in, it'll make it even harder. Some interesting things that most people don't know.

-On average, 1 million bbl/day of bitumen consumes 1 bcf/day of natural gas
-For oil sands mining operations (Athabasca Oilsands), it takes 50-120 gallons of fresh water to produce 1 barrel of bitumen
-For SAGD and CSS oil sands operations, it takes 130-175 gallons of fresh water to produce 1 barrel of bitumen
-The equivalent amount of ALL of the diluent produced in Western Canada is needed to mix with the bitumen to get it to flow down the pipelines to refineries
-When the current projects are completed, threre will be 1,000,000 bbls/day of mining production. That's about 10 million gallons of fresh, clean water PER DAY that's being drawn from the Athabasca river.
-Break even point to refine it to WTI crude standard is approaching $70/bbl


Keep in mind, the above is just to produce a barrel of bitumen. A lot more refining is needed to upgrade it to lighter useable oil.

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I guess you don't quite know your facts very well. Many of the SAGD projects recycle the water once it has been brought back up to surface. Maybe you should become an informed citizen rather than being like all of the other useless assholes spouting of "facts".

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Originally posted by USED1
I guess you don't quite know your facts very well. Many of the SAGD projects recycle the water once it has been brought back up to surface. Maybe you should become an informed citizen rather than being like all of the other useless assholes spouting of "facts".

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Mining projects recycle some of the water from the settling ponds. But the settling ponds in itself are a disaster. As for SAGD and CSS (more so for CSS - and there is more CSS production than SAGD) lots of water is lost in the reservoir to displace the oil.

All this is beside the point anyway - the fact is that's the amount of good fresh water it takes to produce 1 barrel of bitumen regardless of where the water comes from (whether it be recycled or not).

I'm not sure how much more informed I can be. I do this at work. I've been at site in Fort Mac. I'm doing courses in graduate studies on this right now at U of C. Maybe you should think before you troll in topics you know nothing about.

Regardless of this news it's not like people in Alberta won't be able to stay in Calgary/Alberta and work on projects based out of Sask.

There is a lot of work still to come for many, many years.

you guys also forget that the new royalty regime doesnt kick in until next year. so the backlash from Stelmach's plan wont actually come into play until 2009.

When the royalty review was passed 47 of 98 employees at my company was fired. By noon. I had to sell my condo for 70% of what I bought it at. None of my friends have jobs either... they all got fired too the day of the announcement.

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Originally posted by Super_Geo
When the royalty review was passed 47 of 98 employees at my company was fired. By noon. I had to sell my condo for 70% of what I bought it at. None of my friends have jobs either... they all got fired too the day of the announcement.

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that sucks

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Originally posted by Super_Geo
When the royalty review was passed 47 of 98 employees at my company was fired. By noon. I had to sell my condo for 70% of what I bought it at. None of my friends have jobs either... they all got fired too the day of the announcement.

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Wow that's terrible. Time to hop on the Suncor Voyageur train, that'll keep you busy for 2 years.

Yup, the company folded in about two days, and now the ex-CEO and I panhandle together on the streets. He's a pretty chill dude... guy has killer skills with a squeegee.

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Originally posted by Super_Geo
Yup, the company folded in about two days, and now the ex-CEO and I panhandle together on the streets. He's a pretty chill dude... guy has killer skills with a squeegee.

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Hahaha
How big is the company? Must be fairly small if it was drastically affected by the Royalty Review. Apply to bigger companies working on Suncor or Sycrude. The Oil Sands projects are still pretty strong and I highly doubt they cancel these projects for a $2B increase.

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Originally posted by JordanEG6



Wow that's terrible. Time to hop on the Suncor Voyageur train, that'll keep you busy for 2 years.

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You mean the time in design currently in one of the many EPC companies doing work on Voyageur - then the construction time, plus a direct contact from Suncor told me that they just signed another 2-3 Billion expansion project on top of what they are already doing. He told me that they should have enough work for at least 8-10 years on Voyageur alone.

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Originally posted by richardchan2002


As for SAGD and CSS (more so for CSS - and there is more CSS production than SAGD) lots of water is lost in the reservoir to displace the oil.

For SAGD and CSS oil sands operations, it takes 130-175 gallons of fresh water to produce 1 barrel of bitumen

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Sorry man, propaganda. Take it from me, I work in a SAGD plant.

Infact I work for the highest efficiency water recycle SAGD plant in the industry. The amount of Quench water we bring in (Raw water) is not very much. We have over 95% recycle rate. As for Water displacing the oil, we have a well setup as an experiment right now where Natural gas is being forced down to maintain the cavern pressure, while using LESS steam. This Nat. gas will be recoverable at the end also.

Steam displaces the cavern volume and it's also 1:1600 expansion ratio from water. Fuck I hate misinformation.

O&G is the devil, boohoo :rolleyes:

.

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Originally posted by 01RedDX
Go ahead, move to Saskatchewan. 99% of the tar sands are in AB

http://upload.wikimedia.org/wikipedi..._Sands_map.png

:rofl:

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That may be so but Sask has a huge play going on and that the Bakken oil play, that play alone generated a record land sale in Sask. and this play is just starting to get hot.

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Originally posted by Darkane


Sorry man, propaganda. Take it from me, I work in a SAGD plant.

Infact I work for the highest efficiency water recycle SAGD plant in the industry. The amount of Quench water we bring in (Raw water) is not very much. We have over 95% recycle rate. As for Water displacing the oil, we have a well setup as an experiment right now where Natural gas is being forced down to maintain the cavern pressure, while using LESS steam. This Nat. gas will be recoverable at the end also.

Steam displaces the cavern volume and it's also 1:1600 expansion ratio from water. Fuck I hate misinformation.

O&G is the devil, boohoo :rolleyes:

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I wouldn't be able to make a living in Calgary without O&G. I'd be screwed if it tanks. But facts are facts.

I won't argue with you that SAGD is one of the most efficient options. Too bad it only accounts for only between 1% and 10% of total bitumen production. Cyclic steam or mined bitumen will never see that kind of efficiency. And is your efficiency really 95%? How much of that is waterflood from acquifers? How can you realistically expect water (or even natural gas) with its high mobility and low viscosity inside a low permeability bitumen reservoir to have 95% recovery?

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Originally posted by Ntense_SpecV


You mean the time in design currently in one of the many EPC companies doing work on Voyageur - then the construction time, plus a direct contact from Suncor told me that they just signed another 2-3 Billion expansion project on top of what they are already doing. He told me that they should have enough work for at least 8-10 years on Voyageur alone.

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Excellent haha, good news for me. But I should've been more clear BTW, by 2 years I meant for my companie's scope of work to tie in P/L's to ETF/ATT, P/Ls to VU and Fresh Water P/Ls all to the Main Plant. Which takes up only $250M, a super small percentage of Suncors total budget of over $11B. The rest of the scopes from bigger companies are, like you said, much more busy and WILL continue to be busy for a long time. And now 8-10 years.

I'm the only designer in the department taking care of the instrumentation/PLC/cabinet design and metering for these lines, so my job is secure for awhile thankfully and so are many others in industry, so no, O&G isn't doomed, especially for the AOS.

Also, with all that in mind, I think the expansion was signed because of recent fires at one of Suncors plants and as well as Syncrude's plants, losing over 280, 000 barrels a day, so they'll need P/Ls to feed each other in case of such events happen again. However I could be wrong, but that was another announcement at my work this past month. I think I'll be doing the metering/instrumentation for that as well. *cross fingers*

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Originally posted by bigboom


That may be so but Sask has a huge play going on and that the Bakken oil play, that play alone generated a record land sale in Sask. and this play is just starting to get hot.

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Also Junior Oil Companies are more likely to establish in Saskatchewan in the next few years. Not only because of the Royalty Increase, but also because the competition in Calgary is just way too high to keep these Junior Firms running.

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Originally posted by richardchan2002


Mining projects recycle some of the water from the settling ponds. But the settling ponds in itself are a disaster. As for SAGD and CSS (more so for CSS - and there is more CSS production than SAGD) lots of water is lost in the reservoir to displace the oil.

All this is beside the point anyway - the fact is that's the amount of good fresh water it takes to produce 1 barrel of bitumen regardless of where the water comes from (whether it be recycled or not).

I'm not sure how much more informed I can be. I do this at work. I've been at site in Fort Mac. I'm doing courses in graduate studies on this right now at U of C. Maybe you should think before you troll in topics you know nothing about.

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I specifically said SAGD you fucktard. BTW, I am directly involved in SAGD projects and 90% of the water is recycled. Thanks for coming out.

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Originally posted by richardchan2002


I wouldn't be able to make a living in Calgary without O&G. I'd be screwed if it tanks. But facts are facts.

I won't argue with you that SAGD is one of the most efficient options. Too bad it only accounts for only between 1% and 10% of total bitumen production. Cyclic steam or mined bitumen will never see that kind of efficiency. And is your efficiency really 95%? How much of that is waterflood from acquifers? How can you realistically expect water (or even natural gas) with its high mobility and low viscosity inside a low permeability bitumen reservoir to have 95% recovery?

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We don't have bitumen Reservoirs per say. There is a "strip" of tar in the ground we focus on. Our wells are 75M deep and 300m from the heel to the toe. We have to "make" our own cavern by heating the formation with steam. Our well start ups take months. Down hole pressure brings the bitumen back up and the heat seperates it from the earth (sand). We should take this to Pm's actually :) I'd be more than happy to go into more detail.

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Originally posted by richardchan2002

Cyclic steam or mined bitumen will never see that kind of efficiency. And is your efficiency really 95%? How much of that is waterflood from acquifers? How can you realistically expect water (or even natural gas) with its high mobility and low viscosity inside a low permeability bitumen reservoir to have 95% recovery?

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Apparently your education at UoC isn't really working.

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Originally posted by USED1


I specifically said SAGD you fucktard. BTW, I am directly involved in SAGD projects and 90% of the water is recycled. Thanks for coming out.

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And if you read my initial post, you'd see that I was talking about oil sands in general instead of very small portion of the oil sands. Thank you for coming out.

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Originally posted by USED1


Apparently your education at UoC isn't really working.

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I just read what I wrote about the acquifers and was out to lunch. I should've reread that before hitting submit. Generally the waterfloods are used for conventional oil and have nothing to do with oil sands. But the idea is still the same - water being the most mobile fluid means you won't be able to recycle all of it.

This whole discussion on SAGD is sidetracked from my original intent of explaining how much water is used to produce oil from the oil sands. SAGD may be a water efficient method but it still is only about 5% of oil sands production. What about the water efficiency of the other 95% of oil sands production?

Way to resort to personal insults in such a casual discussion. Going through a rough patch in life?

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Originally posted by USED1


I specifically said SAGD you fucktard.

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personal attacks, great way to get your point across :rolleyes:

I'm heading there for the month of March to check things out on both coasts but mainly Perth as it has been booming since I was last there in 06.

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Originally posted by Super_Geo
When the royalty review was passed 47 of 98 employees at my company was fired. By noon. I had to sell my condo for 70% of what I bought it at. None of my friends have jobs either... they all got fired too the day of the announcement.

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Obvious troll is obvious

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Originally posted by Super_Geo
When the royalty review was passed 47 of 98 employees at my company was fired. By noon. I had to sell my condo for 70% of what I bought it at. None of my friends have jobs either... they all got fired too the day of the announcement.

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I call BS because nothing bad has ever happened and never will. Ever

See todays paper...Record profits for O&G...
Obscene amounts of money...and just as much greed!

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Originally posted by old&slow
See todays paper...Record profits for O&G...
Obscene amounts of money...and just as much greed!

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As said in the first page, profits in 2007 do not reflect what is happening today. They are a result of projects from the PAST and high commodity prices today.

The royalty rate is going to affect the amount of NEW projects being done. In any case, just because a company is making profit doesn't mean Alberta is benefiting from it. They are simply making their profits elsewhere.

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Originally posted by Toms-SC


Obvious troll is obvious

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You should take him seriously, if it really happened then he might become an hero

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Originally posted by Schwa


As said in the first page, profits in 2007 do not reflect what is happening today. They are a result of projects from the PAST and high commodity prices today.

The royalty rate is going to affect the amount of NEW projects being done. In any case, just because a company is making profit doesn't mean Alberta is benefiting from it. They are simply making their profits elsewhere.

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The oilsands have yet to get into high gear...with prices remaining high they will reap many $.
I read that 50 to 60 $ was profitable for them.
I think they will be doing fine in the future.

Another year will prolly bring Natural Gas back up!

pretty sure it's 30$, but can't remember off hand..

Actually, I think u r right, the 50 to 60 was gravy money!

Heres some facts:

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All existing and approved oil sands projects will
withdraw less than three per cent of the average
annual flow of the Athabasca River.

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Operating costs to produce a barrel of oil from
bitumen averaged about $18 in 2004.

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It takes approximately 2 to 3 barrels of water to
produce one barrel of bitumen. However, this is
total water use, including recycled produced
water. Total make-up water required per barrel
of bitumen is much less; usually 0.5 or less
once full recycling facilities are in place.

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It takes about two tonnes of oil sand to produce
a barrel of oil.

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It’s estimated that 82% of the total bitumen
ultimately recoverable will be via in-situ
techniques.

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^^ Current techniques (SagD, Css etc..) are only producing 5-15% of in-situ bitumen.
I think THAI is supposed to get it up to 60-70%?

http://www.energy.gov.ab.ca/OilSands/954.asp

http://www.energy.gov.ab.ca/OilSands...t_OilSands.pdf



EDIT:
Oooooooooooohh

And another interesting Tid Bit I read in this magazine: 'Oil & Gas Network' - www.oilgas.net

I think it was in the second to last issue that came out. Something about all of the conventional (conventional heavy oil ie css, sagD etc..) extraction techniques for heavy oil are only getting 5-15% of the bitumen in place and in 10 years unless some other new technology is created that can produce a higher percentage of the bitumen that PRODUCTION WILL ACTUALLY START TO DECLINE SHARPLY.

Anyone else read that? I looked and cant find it online...

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Originally posted by benyl


I know that EnCana said that they would cancel $1 billion in projects in Alberta if Stelmach implemented the Royalty regime.

They have oil in Sask too...

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i did a job for a guy that does research and etc for encana.

He said when the stelmach gov mentioned raising rates,... the very next day the head of encana cancelled 1billion of proposed future projects.

crazy!

Well we are building at least three transmission lines for four companies who are building plants (don't ask me what I am electrical) up near Conklin, Brazeau (near Drayton Valley), Scotford is upgrading and a couple others.

StatOil Hydro has some big pockets, I am pretty sure they wouldn't have bought NAOSC if they didn't think there was money here, or I doubt suncor would have negotiated royalty's with the government if it wasn't useful.




SuperGeo, I am sorry to hear about your layoffs but I am a little confused as to why they closed shop like that? If you saw encana's stock it barely even moved the day the royalties were confirmed. So to me there was no IMMEDIATE effects from the announcements, just some uncertainty.

To me it almost sounds like your upper management just wanted out and saw this as a good excuse.

A little subcontractor for Colt I used to work for (we did the electrical, PLC, and SCADA design) has pushed from 13 people when I started in November two years ago, to 30 when I left in April, and are now over 45 with plans to hire two more electrical technologists this graduating year. So I am not sure what end of it you guys were in but I know there are little guys surviving let alone growing.

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Originally posted by barmanjay



i did a job for a guy that does research and etc for encana.

He said when the stelmach gov mentioned raising rates,... the very next day the head of encana cancelled 1billion of proposed future projects.

crazy!

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Encana has projects in SK and BC. Also work in the US.

Pretty sure encana is on the east coast too, and god knows where else..

I'm sure we'll be fine for a few more years ;)

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Originally posted by brendankharris

A little subcontractor for Colt I used to work for (we did the electrical, PLC, and SCADA design) has pushed from 13 people when I started in November two years ago, to 30 when I left in April, and are now over 45 with plans to hire two more electrical technologists this graduating year. So I am not sure what end of it you guys were in but I know there are little guys surviving let alone growing.

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For every success story there are 4 failures. I know several people who were riding the options wave last year and are screwed now. The majority of juniors are hurting. If they haven't shut up shop they're having a hard time retaining people because no one is willing to take on share based compensation right now.

As a few people have mentioned, investment in Alberta has been cut back dramatically. I think NE B.C. and Sask will have a mini-boom this year. I don't think a slow down for Alberta is all bad...we just have to wait and see if all of the drastic tax / royalty changes drag investment to a halt.

Some More Facts for ya'll:

1.) Stelmach is already reviewing 4 types of wells:
Deep Foothills and 3 other types. The royalty rate will be adjusted on these wells to make them more economically feasible.

2.) The slowdown we are experiencing right now has nothing to do with Royalties but Im sure everyone will blame the Royalties. It has to do with collusion of O&G companies to lower service company prices, it has to do with the drop in NG prices from their 14$ high, it has to do with the Income Trust Rules changing.


3.) NG Production in Alberta is at a 6 year LOW expect prices to rise soon as well as drilling activity.


4.) All of the companies that are going to be drilling up Sask and BC (which had the biggest BC land sale in 40 years around Dawson Creek in 2007) are based in Alberta.

I think we'll be just fine!

With Nat. Gas prices on the rise, that will only help the smaller drillers.

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Originally posted by brendankharris

SuperGeo, I am sorry to hear about your layoffs but I am a little confused as to why they closed shop like that? If you saw encana's stock it barely even moved the day the royalties were confirmed. So to me there was no IMMEDIATE effects from the announcements, just some uncertainty.

To me it almost sounds like your upper management just wanted out and saw this as a good excuse.

A little subcontractor for Colt I used to work for (we did the electrical, PLC, and SCADA design) has pushed from 13 people when I started in November two years ago, to 30 when I left in April, and are now over 45 with plans to hire two more electrical technologists this graduating year. So I am not sure what end of it you guys were in but I know there are little guys surviving let alone growing.

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Consulting engineering really didn't take much of a hit from the royalty review. Some projects got throttled back and some shelved, but most companies were already so busy they had more work in house than they had people to do it. That was true of the company I work for before the review, and it's still true now. Some companies did take a bit of a hit, but the market for engineers and technologists is still so hot that it only helped out the companies that were and are still so desperate.

The guys who got smacked were the drilling outfits and the service companies, and some of the smaller outfits doing exploration and development. And in most of those cases the royalty review isn't the only factor to blame in that happening, it's just one of them. Cost of construction, uncertainty relating to federal clean air regulations, new and tighter environmental regulations and a host of other factors are all weighing heavily at the moment. But even with natural gas and conventional oil taking a hit, there's still so much tarsands work going on that the bottom isn't likely to fall out any time soon with the price of oil where it is.

[/B][/QUOTE]

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2.) The slowdown we are experiencing right now has nothing to do with Royalties but Im sure everyone will blame the Royalties. It has to do with collusion of O&G companies to lower service company prices, it has to do with the drop in NG prices from their 14$ high, it has to do with the Income Trust Rules changing.

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Do you seriously think the CEO's of top oil companies get together at the Petroleum Club over a few bottles of 40 year old scotch and decide that they'll all cut their capital budgets to lower service company prices? Get real!! The slowdown actually has quite a bit to do with the royalties because when reservoir engineers look at the economics of a well they definitely include royalties costs. No economics, no well. I do agree that the drop in NG prices and Income Trust rules have also had a great impact, but that's not the reason companies are allocating their capital budgets to BC, Sask & overseas.

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3.) NG Production in Alberta is at a 6 year LOW expect prices to rise soon as well as drilling activity.

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Hate to break it to you but Alberta isn't the only place in the world with NG. I think the price will stick between $8-11. The gas storage levels are still extremely high and several large LNG projects will be completed over the next few years.

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4.) All of the companies that are going to be drilling up Sask and BC (which had the biggest BC land sale in 40 years around Dawson Creek in 2007) are based in Alberta.

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The companies are based in Alberta, yes. The rig hands and service companies that will be drilling these wells are not. The drill pipe, compressors, and other consumables will come from closer to the project.

As I've said before, I don't think a slow down is necessarily a bad thing. I just think there have been so many different variables affecting the industry that the 'cuts' may be too deep and adversely affect things. Just yesterday I heard from 3 more people who lost their jobs.

It's common knowledge that they put a squeeze on service companies to lower prices.. So yes they did get together and decide that, in one way or another..

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Originally posted by davidI


Do you seriously think the CEO's of top oil companies get together at the Petroleum Club over a few bottles of 40 year old scotch and decide that they'll all cut their capital budgets to lower service company prices? Get real!! The slowdown actually has quite a bit to do with the royalties because when reservoir engineers look at the economics of a well they definitely include royalties costs. No economics, no well. I do agree that the drop in NG prices and Income Trust rules have also had a great impact, but that's not the reason companies are allocating their capital budgets to BC, Sask & overseas.

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Yes I seriously do. Maybe you should get real. The slow down started in late Q4 2006 and was full on in Q1 2007. This had NOTHING to do with the royalty report which was not made public until the summer. It had everything to do with the price of Nat Gas dropping 50%, all of the income trusts going bust over night in November of 2006, and the collusion between the operators (i think the petroleum club is closed now isnt it?)

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Hate to break it to you but Alberta isn't the only place in the world with NG. I think the price will stick between $8-11. The gas storage levels are still extremely high and several large LNG projects will be completed over the next few years.

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There is trillions of CF of NG in the shale in BC. Right around Dawson Creek, which is right by Grande Prairie, right next to one of the largest in situ oil projects in the world in Peace River.

11 dollars for gas is almost 14 when things were going insane. The royalty scheme is going to be adjusted, they have already announced after the huge backlash (constructive feedback) they received from the operators that some wells would be reconsidered.

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The companies are based in Alberta, yes. The rig hands and service companies that will be drilling these wells are not. The drill pipe, compressors, and other consumables will come from closer to the project.

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So which drilling contractor do you know that operates out of BC or Sask?? Dont be silly. Everything comes from Nisku. All of the service companies have huge bases and supplies in Alberta, there is not much in BC or Sask unless you want to count the little fenced yards that are in FSJ or FN or LLOYD which are still owned by the service companies that are based in AB. Most of the rig hands are from Alberta (and im talking about the rigs that are working in BC and SASK right now). The other half of the rig hands are from NFLD. I can count the number of BC boys i met on the rig in three years on two hands.

anyhoo I like constructive talk lets keep the information coming

Heres some more knowledge I'll drop on y'all, draw your own conclusion.

Sourced from: http://www.slb.com/modules/rigcounts/default.aspx

http://i274.photobucket.com/albums/j...m/RigCount.jpg



Notice that the rig count starts to decline steadily starting Sept 2006. There two random months in early 2007 that are above average, but then the rest of 2007 is in the crapper.

The royalty Review wasn't made public until Aug/Sept 2007 as I remember. Maybe the O&G companies had ESP? Or maybe it was a combination of dropping energy prices, changing rules on energy trusts, and high service costs.... But what do I know.

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Originally posted by broken_legs
Yes I seriously do. Maybe you should get real. The slow down started in late Q4 2006 and was full on in Q1 2007. This had NOTHING to do with the royalty report which was not made public until the summer. It had everything to do with the price of Nat Gas dropping 50%, all of the income trusts going bust over night in November of 2006, and the collusion between the operators (i think the petroleum club is closed now isnt it?)

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The reason service rig company prices have gone down during booms has nothing to do with collusion between oil companies. It's usually because the companies get more rigs & crews going to keep up with demand and then they reach a point of over-supply and prices go down. If anything, during the most recent high-priced environment, it was the service companies colluding to maintain smaller fleet sizes and keep prices high. I read several reports that companies were not building up their fleets so as to keep demand high and prevent over-supplying the market as they had done in the past.

You are correct that the royalty report was not released until the fall (September 18th, 2007 to be exact). What you fail to take into account is that the fact a review was going to take place was announced Feb. 16 of 2007. The uncertainty of that (along with environmental policy questions regarding carbon emission costs, both federal and provincial) paired with the high operating costs and decrease in the price of gas is what really caused a drop in spending & the # of rigs. If the economics are there, oil companies will drill. I work for one of the largest Canadian Oil Companies and have several friends who work within the planning groups for expenditures. I'll tell you right now that those are the reasons capital is being re-allocated. You're correct that the income trust tax change had a large impact on companies, but it affects all Canadian Energy trusts the same way. There are several trusts that are still around and doing ok, and they're still spending money - just not in Alberta! I don't think oil companies are really hurting, but I am saying there will be a slowdown in Alberta as capital is spent in places with better RORs. Just look at the increase in land sale activity in BC & Sask. How can that be attributed to lower gas prices & changes to the tax structure for income trusts???

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There is trillions of CF of NG in the shale in BC. Right around Dawson Creek, which is right by Grande Prairie, right next to one of the largest in situ oil projects in the world in Peace River.

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Doesn't that support what I said in regards to the price staying between $8 & $11? If there is adequate supply, which there is, there will not be some huge price increase that is going to jump start shallow gas drilling in Alberta. It's nearly spring which usually causes for prices to drop even lower. I probably should have said between $7-10 in the near term (ie. 6 months).

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11 dollars for gas is almost 14 when things were going insane. The royalty scheme is going to be adjusted, they have already announced after the huge backlash (constructive feedback) they received from the operators that some wells would be reconsidered.

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I don't understand how 11 dollars is 'almost' 14 dollars. 11 dollars is 11 dollars. If a well is not economic at 11 dollars, the company doesn't say "meh, it's almost 14 dollars so it's almost economic so I guess we should drill it". If the royalty review does adjust rates for lower production wells and wells with multiple horizontal legs producing out of 1 vertical well bore (which they certainly should) it should increase drilling activity in Alberta again. Unfortunately, that won't be until 2009 since most companies have already announced their '08 budgets.

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So which drilling contractor do you know that operates out of BC or Sask?? Dont be silly. Everything comes from Nisku. All of the service companies have huge bases and supplies in Alberta, there is not much in BC or Sask unless you want to count the little fenced yards that are in FSJ or FN or LLOYD which are still owned by the service companies that are based in AB. Most of the rig hands are from Alberta (and im talking about the rigs that are working in BC and SASK right now). The other half of the rig hands are from NFLD. I can count the number of BC boys i met on the rig in three years on two hands.
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Lots of companies work out of BC & Sask. Their head office may be based out of Alberta but that doesn't mean they don't have corporate entities in BC & Sask. Also, the workers may be 'from' AB and NFLD, but if they are working in BC & Sask or are living in BC & Sask then guess where they're spending their money (and possibly paying their taxes).

Once again, I'm not necessarily against a slow down...I actually think Alberta needed to slow down for things to be sustainable to any degree. I just know things are slowing down and now it's just a matter of how much things slow down. I can't recall a time in the last few years where I received 3 e-mails in the same day from friends who were layed off prior to the long weekend.

I enjoy the different view points and I'll admit I like to play devils advocate quite often. I do think there will be more layoffs and the economy will cool off substantially (can also be seen in housing starts). Your chart is great and I think it supports the fact that things have been cooling off since '06.

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Originally posted by davidI


The reason service rig company prices have gone down during booms has nothing to do with collusion between oil companies. It's usually because the companies get more rigs & crews going to keep up with demand and then they reach a point of over-supply and prices go down. If anything, during the most recent high-priced environment, it was the service companies colluding to maintain smaller fleet sizes and keep prices high. I read several reports that companies were not building up their fleets so as to keep demand high and prevent over-supplying the market as they had done in the past.

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Wow. that seems kind of counter-intuitive don't you think? If you were a service company in the middle of a huge boom what would you do?
a.) Keep your work force small and charge a higher margin, provide crappy service to a small number clients and thus limit your market share and profits or
b.) Hire as many people as you can and buy as much equipment as you can and try to gain market share and make more money serving more clients albeit it at a lower margin

Most service companies were understaffed because there WAS NO STAFF TO HIRE. I speak from experience as I work for a service company and know many people in service companies.

Currently there is a bigger shortage in labour because the activity dropped and a lot of people quit and found better jobs in town. Why work on the rig for 18/hr when you can make 15/hr at Chicken on the Way?

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You are correct that the royalty report was not released until the fall (September 18th, 2007 to be exact). What you fail to take into account is that the fact a review was going to take place was announced Feb. 16 of 2007. The uncertainty of that (along with environmental policy questions regarding carbon emission costs, both federal and provincial) paired with the high operating costs and decrease in the price of gas is what really caused a drop in spending & the # of rigs. If the economics are there, oil companies will drill. I work for one of the largest Canadian Oil Companies and have several friends who work within the planning groups for expenditures. I'll tell you right now that those are the reasons capital is being re-allocated. You're correct that the income trust tax change had a large impact on companies, but it affects all Canadian Energy trusts the same way. There are several trusts that are still around and doing ok, and they're still spending money - just not in Alberta! I don't think oil companies are really hurting, but I am saying there will be a slowdown in Alberta as capital is spent in places with better RORs. Just look at the increase in land sale activity in BC & Sask. How can that be attributed to lower gas prices & changes to the tax structure for income trusts???

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OK so the Royalty review was announced in Feb 2007. But as I have been saying the slow down started in late 2006 so this point to me at least is moot. I'm trying to show that slowdown was a natural retraction from the high in activity due to the high price of natural gas and rising price of oil and rediculars prices of service companies.

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Doesn't that support what I said in regards to the price staying between $8 & $11? If there is adequate supply, which there is, there will not be some huge price increase that is going to jump start shallow gas drilling in Alberta. It's nearly spring which usually causes for prices to drop even lower. I probably should have said between $7-10 in the near term (ie. 6 months).


I don't understand how 11 dollars is 'almost' 14 dollars. 11 dollars is 11 dollars. If a well is not economic at 11 dollars, the company doesn't say "meh, it's almost 14 dollars so it's almost economic so I guess we should drill it". If the royalty review does adjust rates for lower production wells and wells with multiple horizontal legs producing out of 1 vertical well bore (which they certainly should) it should increase drilling activity in Alberta again. Unfortunately, that won't be until 2009 since most companies have already announced their '08 budgets.

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OK i dont think I really made a point in that statement it was 1 in the morning... LOL

You are absolutely right that budgets have been adjusted to include the new Royalty structure, however agian I'm just trying to show that we had already peaked in activity in 2006 and the Royalty review was the 4th (and last) part of a perfect storm so to speak.

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Lots of companies work out of BC & Sask. Their head office may be based out of Alberta but that doesn't mean they don't have corporate entities in BC & Sask. Also, the workers may be 'from' AB and NFLD, but if they are working in BC & Sask or are living in BC & Sask then guess where they're spending their money (and possibly paying their taxes).

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Most of the rig workers come 'from'* AB period. They drive to where the rig is working or get flown in by their drilling contractor. Currently there are lots of rigs working in BC and Sask, and again most of the people on those rigs are FROM AB. Yes im sure a few more people will end up working in those other provinces, but the infrastructure and operations for all the large service companies are in AB. You still pay taxes in AB. You spend your perdium in a shitty hotel in Sask.

*From: Meaning they live and work and pay taxes in...

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Once again, I'm not necessarily against a slow down...I actually think Alberta needed to slow down for things to be sustainable to any degree. I just know things are slowing down and now it's just a matter of how much things slow down. I can't recall a time in the last few years where I received 3 e-mails in the same day from friends who were layed off prior to the long weekend.

I enjoy the different view points and I'll admit I like to play devils advocate quite often. I do think there will be more layoffs and the economy will cool off substantially (can also be seen in housing starts). Your chart is great and I think it supports the fact that things have been cooling off since '06.

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I think you're right but I see a recovery starting late 2008 and 2009. I see service companies charging MORE money for the same services they were forced to cut prices on before. I also see oil dropping in price save any more geopolitical nonsense and refineries in Texas exploding. This causing some layoffs among operators. I see a slowdown in the GP area as I believe it heavily linked to NG drilling, however, its the natural hub for any new work taking place around Dawson and Peace River will go through the roof soon as well as everything Sure Northern owns between there and Ft Mac.

But who knows really... This whole business could change just as fast as it all started.

So to sum things up the slowdown was already going due to other factors before the Royalty Review was announced.

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Originally posted by benyl


Glad the ignorant are out to play.

Simply, no, it isn't going to crash. Things will be a lot slower than they are now. No new investments and no new jobs. You might have to go back to your job at Tim Hortons.

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Will that mean that coffee prices drop to match other provinces? You know there is inflation in Alberta when it's cheaper to get an extra large double double in B.C.

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Originally posted by broken_legs

Wow. that seems kind of counter-intuitive don't you think? If you were a service company in the middle of a huge boom what would you do?
a.) Keep your work force small and charge a higher margin, provide crappy service to a small number clients and thus limit your market share and profits or
b.) Hire as many people as you can and buy as much equipment as you can and try to gain market share and make more money serving more clients albeit it at a lower margin

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I agree it's counter-intuitive. That's probably why I remember reading about it so well - it was interesting from a management perspective. I wish I had the articles somewhere...I think they were in the Petroleum News or on the DOB. Anyways, they basically said that in the past whenever there were booms the service companies invested in more service rigs and more crews to grow in size and accommodate the demand (makes sense, right?). I guess the issue they were having was that all of the service companies would do this and supply would increase to meet the demand and prices would fall. So quite quickly, the prices fell back into check and they were operating with more rigs and more crews at the same old rates. Still good for the service companies because they were making profits at their old rates and now they're making profits on even more rigs. Apparently, the problem always was that with every boom comes a bust and when the bust came around, there was all of this idle equipment that still hadn't been paid off. The jist of the article was that the service companies had learned their lessons in the past and although the prices were high, they were resisting the growth that they used to strive for. Interesting business case..

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OK so the Royalty review was announced in Feb 2007. But as I have been saying the slow down started in late 2006 so this point to me at least is moot. I'm trying to show that slowdown was a natural retraction from the high in activity due to the high price of natural gas and rising price of oil and rediculars prices of service companies.

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I agree that the slowdown started in 2006. My point is that the Royalty Review has caused for things to slow even more. Things pulling back cannot be attributed to one thing, it's a combination of variables.

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You are absolutely right that budgets have been adjusted to include the new Royalty structure, however agian I'm just trying to show that we had already peaked in activity in 2006 and the Royalty review was the 4th (and last) part of a perfect storm so to speak.

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Agreed. I'm not sure if it's the last part of the storm though. If there is a Global Recession then oil prices may also fall. I don't think it's likely in the near term but it's certainly a possibility.

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Most of the rig workers come 'from'* AB period. They drive to where the rig is working or get flown in by their drilling contractor. Currently there are lots of rigs working in BC and Sask, and again most of the people on those rigs are FROM AB. Yes im sure a few more people will end up working in those other provinces, but the infrastructure and operations for all the large service companies are in AB. You still pay taxes in AB. You spend your perdium in a shitty hotel in Sask.

*From: Meaning they live and work and pay taxes in...

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For the most part I agree. I'm a rotator out of the Middle East after all. Most people I work with live in Calgary but work over here. My point was more that housing prices in Saskatchewan are projected to increase faster than in Alberta this year due to people moving from AB there for work. People will always chase the 'next' boom and since corporate investment is going there and the cost of living hasn't been inflated like it has in AB, a lot of people who now find themselves out of work will be looking at that next opportunity.

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I think you're right but I see a recovery starting late 2008 and 2009. I see service companies charging MORE money for the same services they were forced to cut prices on before. I also see oil dropping in price save any more geopolitical nonsense and refineries in Texas exploding. This causing some layoffs among operators. I see a slowdown in the GP area as I believe it heavily linked to NG drilling, however, its the natural hub for any new work taking place around Dawson and Peace River will go through the roof soon as well as everything Sure Northern owns between there and Ft Mac.

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Tough to predict. You may be right and things could pick up in '08. I think it will take a few more years as too many people have been burned by investing in the small caps that were destroyed by government policy. Similarly, I think the pressure for environmental policy change will cause for continued uncertainty until the government steps up and makes a decision. From my discussions with a couple of the big wigs, they'd prefer the gov't just come out and make a policy (even if it costs companies more) so that they have a framework to make decisions within. Right now, it's tough for them to make major capital investments as they don't know what the worst case scenario is.

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Originally posted by davidI


I agree it's counter-intuitive. That's probably why I remember reading about it so well - it was interesting from a management perspective. I wish I had the articles somewhere...I think they were in the Petroleum News or on the DOB. Anyways, they basically said that in the past whenever there were booms the service companies invested in more service rigs and more crews to grow in size and accommodate the demand (makes sense, right?). I guess the issue they were having was that all of the service companies would do this and supply would increase to meet the demand and prices would fall. So quite quickly, the prices fell back into check and they were operating with more rigs and more crews at the same old rates. Still good for the service companies because they were making profits at their old rates and now they're making profits on even more rigs. Apparently, the problem always was that with every boom comes a bust and when the bust came around, there was all of this idle equipment that still hadn't been paid off. The jist of the article was that the service companies had learned their lessons in the past and although the prices were high, they were resisting the growth that they used to strive for. Interesting business case..

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So perhaps there was a service company here or there that followed this mantra. However I think the vast majority or service companies saw opportunity and went after it, and thus we had the massive round of layoffs. If they really followed this counter-intuitive business plan to any real degree we wouldn't have seen a massive migration of skilled workers from OFS into other jobs. I work for a service company and I cna tell you that we were hiring people like crazy and taking every job we could get. Canada is a tight market there is lots of competition for all the high volume low tier crap jobs we have here.

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I agree that the slowdown started in 2006. My point is that the Royalty Review has caused for things to slow even more. Things pulling back cannot be attributed to one thing, it's a combination of variables.

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Good were agreed. :)

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Agreed. I'm not sure if it's the last part of the storm though. If there is a Global Recession then oil prices may also fall. I don't think it's likely in the near term but it's certainly a possibility.

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Well I am a believer that the price of oil will drop and see some high 60s sometime soon. When that happens in conjunction with the collapse of the world financial markets we'll be hurtin and then everyone will blame the royalty scheme just like everyone blamed the last big (world) recession that affect Alberta on the National energy Program. But it's all too hard to predict, just tossin around some ideas for now.

haha As I write this: OPEC announces they will consider cutting production, oil hits 98/barrel today...

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For the most part I agree. I'm a rotator out of the Middle East after all. Most people I work with live in Calgary but work over here. My point was more that housing prices in Saskatchewan are projected to increase faster than in Alberta this year due to people moving from AB there for work. People will always chase the 'next' boom and since corporate investment is going there and the cost of living hasn't been inflated like it has in AB, a lot of people who now find themselves out of work will be looking at that next opportunity.

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Well I'm glad you agree here. However I'll have to challenge your assumptions on housing prices in Saskatchewan. Speaking from experience (as I know many people who invest in real estate at work) most of them bought houses in Saskatoon and Regina last year. That market is being driven partly by uranium and Agriculture, but I believe that the majority of the appreciation in real estate prices there is due to speculation and a large inflow of investment dollars from equity rich Albertans, just like whats happening in BC. (see real estate driven economy FTL)

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Tough to predict. You may be right and things could pick up in '08. I think it will take a few more years as too many people have been burned by investing in the small caps that were destroyed by government policy. Similarly, I think the pressure for environmental policy change will cause for continued uncertainty until the government steps up and makes a decision. From my discussions with a couple of the big wigs, they'd prefer the gov't just come out and make a policy (even if it costs companies more) so that they have a framework to make decisions within. Right now, it's tough for them to make major capital investments as they don't know what the worst case scenario is.

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Again those are some of my ideas, i'd love everything to be busy and happy for everyone. However I think we've gone too far too fast and the world is ready for a big correction. MAybe someone whos more upto date on technical analysis of things can comment but the high volatility in world markets seems to me like a sign that things are going to crash soon.

:thumbsup: Good Discussion

I dont pretend to know it all im just learning as I go it's nice to consider different points of view

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Originally posted by 4wheeldrift
Consulting engineering really didn't take much of a hit from the royalty review. Some projects got throttled back and some shelved, but most companies were already so busy they had more work in house than they had people to do it. That was true of the company I work for before the review, and it's still true now. Some companies did take a bit of a hit, but the market for engineers and technologists is still so hot that it only helped out the companies that were and are still so desperate.

The guys who got smacked were the drilling outfits and the service companies, and some of the smaller outfits doing exploration and development. And in most of those cases the royalty review isn't the only factor to blame in that happening, it's just one of them. Cost of construction, uncertainty relating to federal clean air regulations, new and tighter environmental regulations and a host of other factors are all weighing heavily at the moment. But even with natural gas and conventional oil taking a hit, there's still so much tarsands work going on that the bottom isn't likely to fall out any time soon with the price of oil where it is.

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Good point. I am no longer really invovled in scoping my own projects so for how busy things are and where the work is coming is pretty much a mystery to me.

Your post makes sense though. :clap: