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Most of Canadian petroleum production, approximately 283,000 cubic metres per day (1,780,000 bbl/d), is exported. Canada is the largest single source of oil imports into the United States.
The petroleum industry in Canada is also referred to as the Canadian "Oil Patch"; the term refers especially to upstream operations (exploration and production of oil and gas), and to a lesser degree to downstream operations (refining, distribution, and selling of oil and gas products). In 2005, almost 25,000 new oil wells were spudded (drilled) in Canada. Daily, over 100 new wells are spudded in the province of Alberta alone
Oil isn't going anywhere in our lifetimes or our kids lifetimes. I know some of you remember the oil scam in the '70s, tankers full of oil were told not to pump off.
Peak Oil – the maximum sustainable rate of global oil production - happened in 2012. That’s one of the main conclusions of a new report, Fossil and Nuclear Fuels – The Supply Outlook, released in March 2013 by the Energy Watch Group (EWG).
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Based on close examination of data from all over the world, EWG concludes that the world reached its maximum level of oil production in 2012. The report also states that US natural gas production has gone about as far as it can go, and the world will see peak everything – the highest level of fossil-fuel production globally – by the end of this decade.
Despite all the news stories about oil gluts and booming shale oil plays, the price of oil refuses to drop accordingly. Today, in fact, it hit new recent highs. The irony is that higher oil prices -- supposedly spurred by better economic news -- tend to drag down the improving economy.
West Texas Intermediate climbed to its highest intraday level in 10 weeks on signs of economic recovery in the U.S., the world’s largest consumer of crude, and concern that Middle East exports may be disrupted.
WTI advanced to the highest since April 2 and is set for a second weekly gain. U.S. retail sales rose the most in three months in May, while jobless claims dropped last week, data yesterday show. [...] “The U.S. recovery has been consistent for a while now,” said Guy Wolf, global head of market analytics at Marex Spectron Group in London. “It’s not booming, but it is sustained. Oil prices are reasonably well supported at these levels. However, markets have been wedded to stimulus for some time now.”
WTI for July delivery climbed as much as 61 cents to $97.30 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.04 as of 11:58 a.m. London time. The volume of all futures traded was 3 percent above the 100-day average. The contract gained 81 cents, or 0.8 percent, to $96.69 yesterday, the highest settlement since May 20. Prices are up 1 percent this week.
Brent for August settlement was up 35 cents at $105.30 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $8.01 to WTI for the same month. The July North Sea contract expired yesterday.
There's plenty of oil if that's the direction we want to go. Problem is, there are also way too many hands in the cookie jar. We can just expect ridiculous prices regardless of how many new oil discoveries we make. If we found a way to make it from thin air by waving a magic wand, you can bet that big government and big corporations would find a way to keep the price climbing.
With oil price volatility are near-record levels, high prices could tank the economy and low prices could tank the industry. It's darned if you do, darned if you don't. Now even Forbes is predicting the shale oil boom might not be the panacea the boosters were promoting it as. Shale oil wells need ~$85 oil at least to make enough profit to attract investors.
America’s oil producers are nervous. They’ve had a great run the past few years. Domestic oil production is up 43% since 2008 to 6.5 million barrels per day, the highest level in decades. The majority of that 2 million bpd jump comes out of the two most successful new oil fields, the Bakken and the Eagle Ford. To develop these and all the other fields nationwide, the top 50 operators invested $186 billion in 2012, according to Ernst & Young. That was a record level of spending, up 20% over 2011.
You’d think that with drillers getting better, honing techniques and driving down costs, that a 20% increase in investment would bring about a more than commensurate increase in oil and gas production volumes, right? And yet according to Ernst & Young, total U.S. oil and gas production was up “just” 13% on the year.
It’s bad enough to be spending more and more to generate ever less growth. It’s worse when that growth doesn’t even translate into profits. Oil and gas companies have spent hundreds of billions acquiring acreage, drilling wells, booking reserves, boosting supplies, but in 2012 they proved too good at their job, found too much gas and cratered the gas price. That made vast shale fields uneconomic to drill at all. In 2012 those 50 biggest companies recorded $26 billion in asset impairment charges. That basically means that natural gas reserves that were worth $26 billion the previous year became worthless because it cost too much to drill them. This led to a 58% decline in after-tax profits in 2012 over 2011.
And you’d better believe the same thing could happen to oil reserves.
It’s all a function of price. West Texas Intermediate crude has been bopping around between $88 and $98 a barrel this year and the front month futures price is at $96 this week. Its high of the last two years was $109 and its low $77. As I wrote here recently, there are plenty of reasons why oil prices should be heading up, not down.
But it’s worth thinking about what could happen to the American Oil Boom if oil prices slipped just 10-15% from where they are now. Oil drilling is generating hundreds of billions of dollars of value to the United States right now, in terms of jobs and equipment, and especially the benefit to the national balance of payments of not having to spend $200 billion a year buying foreign oil. But it must be said that when you take into account all the costs incurred in acquiring and developing unconventional oil fields today, many plays are already balanced on the knife-edge of profitability, and any down draft in oil pricing could dry up activity real quick.
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