oil boom ending?

[RiCE-DaDDy]

anyone read the newsweek article? if the price of oil drops things should be interesting in calgary (mainly the drop in housing prices?)

http://www.msnbc.msn.com/id/15081350/site/newsweek/

[Super_Geo]

I don't know how much more it'll fall... it'll be cyclical, as it always has. As the prices drop, exploration decreases... new production slows down, demand overtakes supply, prices rise, exploration increases, new production increases, supply overtakes demand, prices drop, exploration decreases... etc, etc.

Personally I'm pretty happy with the lower oil prices... maybe now the housing market will re-adjust to a point where I can actually jump into the market. And it also ends the hiring frenzy that all the companies in oil/gas have been going through. Don't have to worry about a constant influx of new grads for the next few years Haha I'm just glad I got in the door just before it closed.

[Rockski]

well i dunno, my shop slowed down in may and its picking back up, were currently working on 3 oil production/refinery plants so as it sits right now theres still work out there and enough to say that i dont think its gonna happen for another 5 years, then we'll hit a major reccession

[bigboom]

i dunno guys...looking at how companies are cutting back on capital for the rest of 06 and possibly 07 a slow down is quite possible. the service companies have jacked their prices up so high that many companies cant even afford to drill a well. even large companies like CNRL, Conoco, Devon decided to cut their programs back. ALso if we have a warm winter like last year i dont see gas prices getting back up to $7 anytime soon and gas is what most companies are producing now a days.

[OneUpYou]

The winter season is always slow for oil, I hope it does not slow to much, I just got out of sait for piping design....I think it is just slowing down here(west canada) for a bit, supposibly(sp) in 10 years then it will really start slowing down all over the world. What I here from the people in industry.

[Aleks]

Originally posted by bigboom
i dunno guys...looking at how companies are cutting back on capital for the rest of 06 and possibly 07 a slow down is quite possible. the service companies have jacked their prices up so high that many companies cant even afford to drill a well. even large companies like CNRL, Conoco, Devon decided to cut their programs back. ALso if we have a warm winter like last year i dont see gas prices getting back up to $7 anytime soon and gas is what most companies are producing now a days.

Do you work for any of those 3 companies out of curiosity?

[QuasarCav]

We are seeing a large drop in the amount of data sales. This time last year sales were very high. We should be getting much more busy than we are.

[Ekliptix]

Dunno about that, I'm busy with it here. Maybe the're just growing less aggressively now.

[Lex350]

a slow down is possible....but keep it in context. This market has been over-heating for a while. It could use a correction but I don't think it's going to be that drastic. Maybe things will get to a managable point.


That said the company I work with increased sales by 43% last year. We are already over 35% ahead of that mark this year. THings haven;t slowed down at all for us.

[bigboom]

Originally posted by Aleks


Do you work for any of those 3 companies out of curiosity?

maybe, maybe not

but if Q4 of this year is any indication of what next year may bring you will see a slowdown. even look at rig utilization last year at this time it was pretty much 100% this year i believe rig utilization is down 40%...

[Aleks]

I agree the rig utilization is down. I heard in one of the meetings there are 100+ new rigs being built for next year. Someone might be in for shock.

[rc2002]

Originally posted by Aleks


Do you work for any of those 3 companies out of curiosity?

Originally posted by bigboom


maybe, maybe not

I can tell you. Paypal me $5 and I'll PM you the details.

[bigboom]

Originally posted by Aleks
I agree the rig utilization is down. I heard in one of the meetings there are 100+ new rigs being built for next year. Someone might be in for shock.

yeah service companies are having to lay rigs down pretty much on a weekly basis now until companies start their winter drill programs which again is definetly not as high as the last 2 years even. calgary could be in for a rough ride for the next couple years until things normalize...

[bigboom]

Originally posted by richardchan2002





I can tell you. Paypal me $5 and I'll PM you the details.

youre a jerk.

[T78Supra1]

I have been to a number of EUB meetings in the last month and what the national board is saying is that there is a surplus in oil right now, bringing the price down. Since all the big companies made a killing in the summer they have choosen to slow down to get rid of the surplus. This will then bring the oil price back up, hopefully by december. Also for companies like Husky, Nexen, CNRL the price of gas is rising like crazy so its more economical for them to drill for Gas not Oil.

As for the person that said it is slower in the winter this is not true the winter is the craziest time of the year. Winter is when the ground is frozen, this inturn allows the trucks to get to the rig.

[fast&dangr]

That article barely scratches the surface. There is no shortage of oil, its all just alarmists and speculators blowing smoke up everyone's ass. For one thing, people look at world oil reserves and hear about peak oil theory and start building arks, ready for The End Times. The thing is, a reserve isn't "proven" until its well into production. Only then can a reasonable estimate on a reservoir's reserves be properly estimated. The other thing is all the unconventional reserves being tapped. The oilsands currently powering Alberta's growth were only officially recognized and added to Canada's proven oil reserves in 2002, despite the fact that the oilsands have been producing since 1968. As soon as this happend, the CDN dollar got very "boyant" and is now sitting at around $0.90US. Why? because Canada's net worth just got a huge shot in the arm. Overnight, the loonie became a petro doller. Just last month, the US added a bombastic 50% to its proven reserves with the successful Jack2 well in the Gulf of Mexico. A single well in a single field did that. Guess US oil production didn't peak in '78 after all. *pop* there goes peak oil theory!

Turning to natural gas, in a much publicised issue the largest hedge fund in the US found out what happens to energy speculators who bet on commodities they know nothing about - by losing an astounding $6BILLION on a bad natural gas play. Nat. gas is in the toilet and shows no signs of coming out. They bet on another bad hurricane season. Hurricanes. Like the worst hurricane season in 100 years was going to repeat itself the very next year. You dont need a meteorologist to tell you they bet on some long odds. And you know they arent the only losers with gas down some $10 a cube in the last year. The thing about gas is its everywhere in huge quantites underground, there never was a shortage. If you want a window on the industry, Exxon, the world's largest oil company, is the company to watch. They are known for their shrewdness and seldom make a mistake. For example, they pulled the plug on the Alaska pipeline last year when gas was trading at $12/cube because they said costs were getting out of control and they wanted the pipeline to be profitable at $2.50/cube. Everyone involved said they were crazy. Gas is struggling to stay above $5/cube - so who's crazy now? And Coal-Bed Methane is yet to be officially considered in reserves so there's a huge source that's also not being considered because its "unconventional" despite the fact it now comprises an estimated 8% and growing US supply.

Back to oil, there's an interesting rift in prices. Because there's alot of production in mature fields and unconventionals, there is also a massive glut of heavy, sour crude on the market. Few refineries at this time can refine the stuff so the market is flooded with dirt cheap bitumen which a properly equipped refinery can process with an excellent margin. That's why there's such a scramble in Fort Mac to build refineries - you build a heavy oil refinery, refine all the cheap bitumen on the market for the next oh 10 years, then tap into your oilsand reserves after that. Cost overruns be damned - they'll build the refineries. Heavy oil refiners will be the industry standout going forward. Suncor already has costs below $9/bbl. Do the math, thats big money! Iran and Saudi have tankers sitting at anchor loaded to the gills with heavy sour crude. It was estimated Iran alone had 200 million bbls of heavysour sitting in tankage on its coast this summer.

Another sign of the times occured this spring when the BC government ceremoniously opened is ecologically sensitive coastal waters up for offshore exploration, then opened up the Bowser basin in NW BC and another huge basin estimated to hold ~5 billion bbls west of Williams Lake. What did the oil industry do? Celebrate? No, they yawned. Those fields are 25 years away from production. Why? because the oil comapnies already have their hands full in other better proven areas. They've only scratched the surface of the offshore fields in eastern canada, too. Ask any old time eastern coal miner - they used to mine underground right under the ocean. The mines were full of crude oozing out of fissures. And all these are plays in N.America. There are even bigger fields just sitting there all over the world that are not officially considered or not slated for production until well into the future.

Where there's coal, there's oil and gas. And that brings up my next point - China. The phantom demand from India and China has been negligible. Furthermore, both countries are beginning to tap huge offshore reserves. In Addition, China has vast coal reserves and is building huge coal liquefaction plants capable of producing synthetic fuels using a proven process that fueled the German luftwaffe in WWII and currently produces almost all of S.Africa's fuel needs. Again, starting to sound like a broken record, another unconventional technology that's not yet officially considered as proven production even though it has long since reached the commercialization stage. N.America sits atop a huge continuous coal seam from Alaska right down into central america. Anybody hear about Tumbler ridge? The coal mining town in BC that had houses for sale for $3000 because the mine closed down? Well, that mine is operating again and the folk who bought in at 3k are looking very smug indeed. Alberta alone is sitting on something stupid like a 200+ year coal supply. Edmonton has old coal mines still loaded with coal under the city. New clean coal technologies can displace huge quantities of oil if needed as well as supply only slightly more expensive synthetic liquid fuels.

So why did prices get so high? Well there were supply issues and tight stockpiles. It started out as a good old fashioned supply/demand scenario which has recently been blown out of proportion by speculators who have failed to notice suppply is once again outpacing demand and there is no shortage of the stuff in the ground or technology to get it out. But the speculators have been getting hosed by the markets lately and rightly so. Commodities of any kind is risky business. This latest correction should dry up some of the mad money thats been floating around.

Don't fret the global supply reports. They are VERY VERY conservative. And thats a good thing, but its easy to get concerned if you want to twist the numbers. At $70/bbl you can afford to drill DEEEEP. One industry analyst said "If you drill deep enough, you could find oil in your own backyard." Will the oil industry collapse? Hardly, they've weathered price crashes before. Prices will simply return to more sustainable levels. For example, the US Energy Information Agency, a federal department, estimates that by 2012, oil will be back at $35/bbl, based on supply and demand estimations. There is oodles of supply coming online from about 2008-2015. $35 is more like it. And dont believe the hype that OPEC will make production cuts. That's just speculators who've lost their shirts hoping for one last run. If you sell lemonade for $12/glass and prices drop to $8, you don't pack up and close down for the day when you know you're profitable at 10 cents a glass! Some marginal production might dry up but at these prices, the oil will flow full-bore, there's too much money to be made. Making threats will keep prices from totally tanking so who could blame them, but the threats are empty. When the suckers realize this, prepare for another sell-a-thon.

There have been many oil conspiracy theories lately and I particularly like this one: Bush is a big oil man and no sooner was he elected than oil prices started to rise. It is thought he has policies to buy up any excess oil on the market and store it in depleted oil reservoirs in the US south to give his oil buddies a boost. But the storage has to run out sometime and when it does, theres going to be quite alot of oil floating around for quite some time. There have been many estimates that the oil boom will last until at least 2009, which is interesting because that's the year Bush leaves office. Something to chew on.

[DoubleLP]

At my work place we are seeing a slow down and my greedy bosses are getting anxious about it. The company took off in sales in the last five years and now it is slowing down a bit...or levelling off. We have all seen this coming and I am glad to see it because things will finally level off and hopefully it will be the end of the 50% housing price increases over a year.

[Billet]

Originally posted by fast&dangr
That article barely scratches the surface. There is no shortage of oil, its all just alarmists and speculators blowing smoke up everyone's ass. For one thing, people look at world oil reserves and hear about peak oil theory and start building arks, ready for The End Times. The thing is, a reserve isn't "proven" until its well into production. Only then can a reasonable estimate on a reservoir's reserves be properly estimated. The other thing is all the unconventional reserves being tapped. The oilsands currently powering Alberta's growth were only officially recognized and added to Canada's proven oil reserves in 2002, despite the fact that the oilsands have been producing since 1968. As soon as this happend, the CDN dollar got very "boyant" and is now sitting at around $0.90US. Why? because Canada's net worth just got a huge shot in the arm. Overnight, the loonie became a petro doller. Just last month, the US added a bombastic 50% to its proven reserves with the successful Jack2 well in the Gulf of Mexico. A single well in a single field did that. Guess US oil production didn't peak in '78 after all. *pop* there goes peak oil theory!
.

added proven???? hahahaa


Before you go gaga for Devon, though, consider this: Yes, after spiking to an all-time high on the news, the stock has now fallen six bucks to $66. But it's up more than threefold over the past five years. And then there's the real question: Just how big is the field? "Of course this discovery was great news for Devon," says Fadel Gheit, veteran Oppenheimer oil analyst. "But all we know now is that Devon has a fish on the line. Is it 500 pounds or five pounds? It's too early to tell."

Just finding the oil represents a major technological breakthrough. More than five miles below the surface of the gulf, the wells will be the deepest on earth. Less than a decade ago this oil would have been considered untouchable. But in 2000, new-generation drill ships were launched that allow for exploration in water up to 10,000 feet deep. And the seismic technology that penetrates the thick salt layer that covers this section of the gulf oilfields is also brand-new. "Before that technology you'd just have been drilling blind," says Nichols.

I happen to be reading Matthew Simmons's Twilight in the Desert, which describes how Saudi Arabia in particular and the world in general are running out of oil. This "peak theory" of oil (as in, the world has achieved peak production) would seem to be off base with the discovery of a 15 billion--barrel oilfield. And, as Nichols points out, oil alarmists have been sounding the same bell for decades.

But I'm not sure that we should be so quick to dismiss the peakists. At some point they will be right, and I believe it's important to act as if they already are. Pursuing petroleum at any cost overseas, and even domestically, exposes us to all sorts of risk and merely makes it easier to avoid the tough steps that could reduce our dependence on oil. So congrats to Larry Nichols and his partners. I hope they get 15 billion barrels out of the gulf and more. But I'll be even more fired up when some engineer builds me an SUV that gets 100 miles to the gallon.

[97'Scort]

Originally posted by OneUpYou
The winter season is always slow for oil, I hope it does not slow to much, I just got out of sait for piping design....I think it is just slowing down here(west canada) for a bit, supposibly(sp) in 10 years then it will really start slowing down all over the world. What I here from the people in industry.

Winter is the busiest season for oil, especially in Alberta! McMurray and all those heavy oil deposits near Wabasca and Bonnyville turn into big swamps during the warm months, so no construction can take place. Once they ice over, you can do all your piping work.

The oil boom will end one day, but I wouldn't hold your breath. There are, at present, four new upgraders planned to be built around the Edmonton area alone, with at least two more in the Ft. McMurray area. Several more are in the works, possibly stateside, but Alberta area design firms will be getting the work since we will already have maintenance for the existing upgraders.

These are forecast to provide upwards of 2000 new jobs in basic plant operations alone, not counting contractors.

With current infrastructure development schedules, it'll be four years or so before the new units are fully online. In that time, as well, two major pipelines will probably go in: one to the coast to export bitumen to China and another through Edmonton to the US.

In Ft. McMurray, there are also plenty of government/First Nations held land with oilsands deposits - major ones at that - that have not yet been mined due to current expansion capabilities. As well, when in-situ extraction methods improve, there are another few billion barrels that can be extracted from existing mines.

[fast&dangr]

Originally posted by Billet


added proven???? hahahaa


Before you go gaga for Devon, though, consider this: Yes, after spiking to an all-time high on the news, the stock has now fallen six bucks to $66. But it's up more than threefold over the past five years. And then there's the real question: Just how big is the field?

I'm not going gaga for Devon, far from it. Jack2 is impressive, but its just a drop in the bucket and when you think of it, more supply is a bad thing for the oil industry right now. Look at any O&G stock - most of them peaked in April despite rising prices - something is rotten.