Oil Crashing

[martinnordegg]

Oil is at $50.70 this morning. Hopefully it won't break the 50 buck floor.

[thunderheart]

Originally Posted by martinnordegg

Oil is at $50.70 this morning. Hopefully it won't break the 50 buck floor.

i am sure it will ... sure like to see edmonton prices for gas ..1.04 here

[79ford]

Oil will keep dropping probably. China bought an extra 160 million barrels to stock pile last month and the price of oil kept dropping almost daily. There is a tonne of oil out there sloshing around. The big export terminal in libya caught on fire last week and oil is still down 5$.

Everyone is just given'er pumping to make up for the decline and that is just adding to the decline.

Mexico and venezuela are giving 4$ discounts on heavy oil to fight with us for exports to the usa. Heavy oil posted sticker price is 37$ already, mexico is selling for 33$, we are going to have to start chasing that to keep exports moving.

Oil producers are fighting over customers and yeeeeaaaah, life is going to suck for high cost producers.

[Sundancefisher]

Hang on. A bumpy 2015 is coming for Albertans.

[avb3]

Originally Posted by Sundancefisher

Hang on. A bumpy 2015 is coming for Albertans.

Flush out a lot of people who, shall we say, should be flushed out. Very few smart ones will be hurt.... Too much money was made on the good times.

[Mackinaw]

Originally Posted by avb3

Flush out a lot of people who, shall we say, should be flushed out. Very few smart ones will be hurt.... Too much money was made on the good times.

Good to see you take peoples misfortunes so glib with any luck you will be one......

Mack

[79ford]

One year of prices this low represents 64 billion dollar revenue loss for alberta companies.... even six months means 32 billion. This adds up to 18% or 9% of total alberta gdp. That is a massive hit.

Considering most companies in alberta lose money or make pretty slim profit margins those billions will hit equipment and manpower hard. My work will keep running but i imagine stuff will probably not be getting fixed

Oil was one of the only good things going in the world so as all these oil states grind into recessions etc even more oil will be exported. Russia is a great example, the recession is expected to shave 500 000barrels per day out of their demand meaning an extra 500kbpd going to export... to make up for loss of price they are pumping harder and harder (new post soviet record in decemeber) to offset declines in revenue.

The whole circle is very vicious. Annnnd you cant forget speculators, the same guys that drove prices up in the good times are pulling out and another type of speculator is stepping in and driving prices lower.

You have to remember that this time instead of opec trying to keep prices up they want to run tarsands and shale out of town. So unless north america etc comes up with a way to slash 2-3million barrels in production life is going to get worse.

[Quinn]

Very good post above. The **** flingers on here are pathetic.

[avb3]

A good analysis of why particularly the Saudies are making this move. Essentially is the put high cost production producers, especially shale oil from the United States, under pressure.

Interesting, and also where he says that hundred dollar oil is artificial and it'll never get back up there again. Many will argue that.

PRINCE ALWALEED: Oil Is Never Going Back To $100 - Read at Business Insider: http://www.businessinsider.com/alwal...=bi-androidapp

[levigne25]

If anyone cares to know , I was just told by the head project manager here a the northwest redwater upgrader that low oil prices will not hinder this project in any way , if anything low oil prices will help . There's a huge demand for deisel and he says they can't keep up with demand , this is the reason for this new refinery

[martinnordegg]

Originally Posted by levigne25

If anyone cares to know , I was just told by the head project manager here a the northwest redwater upgrader that low oil prices will not hinder this project in any way , if anything low oil prices will help . There's a huge demand for deisel and he says they can't keep up with demand , this is the reason for this new refinery

That's great news. This company is definately thinking long, long term. Did your project manager tell you why there is such a big demand for diesel...for now anyway?

[Deer Hunter]

Originally Posted by levigne25

If anyone cares to know , I was just told by the head project manager here a the northwest redwater upgrader that low oil prices will not hinder this project in any way , if anything low oil prices will help . There's a huge demand for deisel and he says they can't keep up with demand , this is the reason for this new refinery

Because the project manager is being paid for by the govt...

This refinery was supposed to cost 4 billion and be completed by now. Costs have escalated forcing the Alberta Government to get involved and pay for it. Read tax payers. Last estimated at $8.5 billion last summer, don't be surprised if this thing hits 10 billion when it all said and done.

This is a classic no risk to CNRL, the big EPC's and the operator; all risk on the tax payer - project.

http://www.macleans.ca/economy/econo...in-the-making/

Look at Joffre. Built in long ago out of assets from the Alberta Government, which ended up in Nova, pressured by the credit crisis and their inability to finance ended up being bought/given to the abu dabi's. The taxpayer fleeced once again.

http://www.financialpost.com/analysi...0-c4d2f923a994

Derail over.

Enjoy the work.

[javlin101]

Interesting article

http://www.msn.com/en-ca/news/world/...fer/ar-AA86uXH

[martinnordegg]

Originally Posted by javlin101

Interesting article

http://www.msn.com/en-ca/news/world/...fer/ar-AA86uXH

It is interesting article. Lots of people weighing in on this topic from all corners of the World.

[martinnordegg]

Originally Posted by Deer Hunter

Because the project manager is being paid for by the govt...

This refinery was supposed to cost 4 billion and be completed by now. Costs have escalated forcing the Alberta Government to get involved and pay for it. Read tax payers. Last estimated at $8.5 billion last summer, don't be surprised if this thing hits 10 billion when it all said and done.

This is a classic no risk to CNRL, the big EPC's and the operator; all risk on the tax payer - project.

http://www.macleans.ca/economy/econo...in-the-making/

Look at Joffre. Built in long ago out of assets from the Alberta Government, which ended up in Nova, pressured by the credit crisis and their inability to finance ended up being bought/given to the abu dabi's. The taxpayer fleeced once again.

http://www.financialpost.com/analysi...0-c4d2f923a994

Derail over.

Enjoy the work.

Thanks for posting Deer Hunter. Very interesting.

Maybe some of the cost over runs were caused by high paying construction workers participating on Forums while on the job.

Seriously this type of debacle is part of the reason the Province is in the financial state it is.

[levigne25]

Originally Posted by martinnordegg

Thanks for posting Deer Hunter. Very interesting.

Maybe some of the cost over runs were caused by high paying construction workers participating on Forums while on the job.

Seriously this type of debacle is part of the reason the Province is in the financial state it is.

Wy the negativity , I'm not working I'm onsite in a classroom , we have breaks and downtime in the classroom

[levigne25]

Originally Posted by martinnordegg

Thanks for posting Deer Hunter. Very interesting.

Maybe some of the cost over runs were caused by high paying construction workers participating on Forums while on the job.

Seriously this type of debacle is part of the reason the Province is in the financial state it is.

High paying construction worker yes , I make 43$ an hour for 10 hours a day , Saturday and Sunday I make 86$ an hour and the compagny pays me 9$ an hour additional for every hour I work to go towards my pension , instead of being jealous and negative come join our team before they give it to TFW then youl have another reason to cry lol

[Arty]

Originally Posted by Deer Hunter

Because the project manager is being paid for by the govt...

This refinery was supposed to cost 4 billion and be completed by now. Costs have escalated forcing the Alberta Government to get involved and pay for it. Read tax payers. Last estimated at $8.5 billion last summer, don't be surprised if this thing hits 10 billion when it all said and done.

This is a classic no risk to CNRL, the big EPC's and the operator; all risk on the tax payer - project.

http://www.macleans.ca/economy/econo...in-the-making/

Look at Joffre. Built in long ago out of assets from the Alberta Government, which ended up in Nova, pressured by the credit crisis and their inability to finance ended up being bought/given to the abu dabi's. The taxpayer fleeced once again.

http://www.financialpost.com/analysi...0-c4d2f923a994

Derail over.

Enjoy the work.

Big projects like that regularly get under-estimated up front so they can get off the ground at all. Once you get into the billion-dollar project range, there's so many politics involved with so many vested interests with their fingers in the pie that promoters have to run with numbers which can be pushed through review committee.

Of course it must be clearly recognized the only way to grow the Alberta economy properly is to increase local value-added of all product mined or harvested. Not just to yank it out of the ground raw and ship it out wherever for pennies.

Every economist knows the key to regional survival is to climb up the value-added chain as high and quickly as possible. That's why China is now the world's biggest economy, with all the private Rolls-Royces and private jets and electric high-speed rail systems etc which were unimaginable 30 years ago in the dirt-peasant Mao-Tse-Tung years.

If it means [re]-investing capital into Alberta infrastructure for the long term, so be it. But people jumping into and out of a few temporary large-scale mining construction projects then bitching about natural slowdowns or layoffs at the end or about any corporate or government reinvestment through taxes is just extremely short-sighted.

Get educated, and directly involved with government politics to promote overall vision and responsible efficiency. Government is not something that you just pick up your license plates from. With our provincial resources, we can push through legal changes making it mandatory to ONLY export finished product like diesel, lube oil, or polyethylene plastics for example. Just like the americans passed laws 40 years ago making it illegal to export crude oil out of their country. Remember the NEP? Lougheed had all the wells shut in because he pointed out those belonged to Alberta, not someplace east of Winnipeg.

Alberta Gas Trunk (Nova) was a brilliant idea when initially set up, with addition of petrochemicals in the 1970's. A very good move. Same with the NW Upgrader. But corporate 'partners' have to be managed better and tighter. All sorts of questionable behaviour by the old Nova management led to problems:

"...Nova's wrong turns include: moving its headquarters to Pittsburgh from Calgary a decade ago, which inflated its costs, cut it off from the Alberta oil and gas boom and its political and community connections; diversification into styrenics, which swelled its debt and piled up losses; not paying down debt when business was good; not investing in its money-making Alberta and Ontario assets while funnelling money into its losing businesses..."

Almost sounds to me like corporate lobbyists and foreign interests managed to waltz right in and screw up a going concern so that billions could be made by them elsewhere. Probably wouldn't have happened if some Alberta guard dogs were there watching out a little closer.

[Wild&Free]

Arty, you raise good points. Alberta, and Canada in general needs to face the fact that it is responsible for upgrading infrastructure and trade routes. Privatization places that responsibility in the hands of Profit first thinkers, not future vision thinkers. CN rail has needed massive upgrades and modernization for decades now. High speed rail from coast to coast would be a wonderful thing to have, but the ROI for a private company is too long and deemed unnecessary.

[The Elkster]

I just wish gov'ts could/would work to be more counter cyclical to the trend of the day. IMO forget about debt during a depression. This is the time gov't should be spending on needed projects. It'd make for cheaper labor and provide some steady work for many during down times. Then throttle back and go into debt payment mode once O&G kicks back in and royalties/wages rise. I think we'd get far more for our money this way.

[Deer Hunter]

Originally Posted by Arty

Big projects like that regularly get under-estimated up front so they can get off the ground at all. Once you get into the billion-dollar project range, there's so many politics involved with so many vested interests with their fingers in the pie that promoters have to run with numbers which can be pushed through review committee.

.

The province is lending the Northwest Upgrader group the money asking for a 5% rate of return to be paid back over time based on the tolls collected from the provinces (royalty) oil. The province will have no ownership in the project yet provided the money and the oil commitment to push it forward, all while being 100% over budget and behind schedule.

This is the only way refineries get built in Alberta. I hope they don't build another one, as there is no way for taxpayers to benefit beyond the 5% return. CNRL shareholders, and the people building it, they are the winners here.