So this is Christmas. And what have I done? Another year older and a new one about to begin. But really, John Lennon aside, this is it, the last of my lazy Christmas/holiday season blogs. I mentioned earlier that this is the time of year I get lazy, well it’s also the time of year I take a brief hiatus.

So next week, you all get a well-deserved break from me. No Friday cranky screed, no pipeline-anger, no rage against electric vehicles, no eye-rolling at US shale production forecasts, no sarcasm directed at any of three levels of Canadian governmental incompetence, no unrestrained pokes at his Donaldness or any of his Trumpkins, no OPEC/Putin conspiracy theories, no desperate pleas for the natural gas market to wake up (it will – guaranteed, just not sure when!), no speculation about capex, no nothing. Nope, I am off recharging the old anger meter, getting ready for a new year.

So just sweet, sweet, virtual silence. Ahhhh.

It’s nice isn’t it?

OK, now that I have you all calm and relaxed, I offer you the following poem, feel free to read it to your children.

A Christmas Ode to the Patch

‘Twas the night before Christmas, and all through the patch
not a rig-hand was stirring, no need to dispatch.
The pumpers were parked by the fence-line with care,
in hopes that new capex soon would be there.

The welders were nestled all snug in their beds,
while visions of pipelines danced in their heads.
And Rachel in her ‘kerchief, and Trudeau in his cap,
had just settled down for a carbon tax nap.

When out in the market there arose such a clatter,
I sprang from my desk to see what was the matter.
Away to check prices I went with a flash,
Hoping the market would not again crash.

The price of oil seemed to be rallying a bit,
Seems OPEC’s extension of cuts was a hit!
Then what to my wandering eyes should appear,
but warm winter weather, low gas price I fear.

With tight oil production, the signals are mixed
But I knew in a moment the market was fixed.
More rapid than eagles, the forecasts do change,
As the analysts opt out of their old trading range.

“Now OPEC! Bin Salman!
Now Carbon and Notley!
On Trudeau! On Trump!
On Saudi and Putin!
To the end of the world!
To the end of the glut!
Give it up! Give it up!
The oil patch is up!”

No more slagging of oilsands, plastics and pipe.
Export markets are open, the timing is ripe.
But up to their rigs the frackers they flew,
Drill baby drill, we want our cash too!

And so, in a panic, I think this can’t be,
Will greed cut oil’s rally off at the knee?
Are the prospects for my sector as dour as they say?
Peak demand is a thing? Are we done for the day?

Fossil fuels done for – green power they say,
and coal is a goner, by sometime in May.
The wind it blows turbines that spin all around,
and the sun warms up panels, not just worms on the ground.

The world it is changing! Adapt now we must!
The future’s renewable, opportunity robust!,
Who cares if my taxes go up, up, forever,
Our leaders know all, since they are so clever.
The fate of our industry held tight in their hands,
While advantage is gifted to far, far off lands.
Yet even at that, I hold firmly to hope,
that when all’s said and done, surely we’d cope?

The prices drift round, there’s no rhyme and no reason,
yet with OPEC in play, the rally’s plainly in season.
A simple cut here plus India and China’s demand,
Three years of no spending – we’ll be back in command.

For this sector is fickle and it sure is some work,
it gyrates and plunges but then turns with a jerk.
The bears’ time is done for, the prices will rocket,
and then I’ll have plenty of cash in my pocket .

So doomsters take heed, your view is short-sighted,
The market I know is no longer blighted.
So here I exclaim, ‘ere I drive out of sight,
“Happy Christmas to oil, and to all a good night!”

Merry Christmass and Happy Holidays to all of you and your families. Looking forward to a dynamic and prosperous 2018 as the energy economy continues to improve. Who knows, maybe this will be the year for gas, but I guess you’ll just have to wait for my Fearless Forecast – coming soon to a inbox near you.

Prices as at December 22, 2017 (December 15, 2017)

• The price of oil rallied during the week on as investors got all wound up about shale, inventories, pipeline outages and OPEC
  • Storage posted big decrease
  • Production was up marginally
  • The rig count in the US was up by a rounding error
• Natural gas failed to rally during the week – primarily on weather – c’mon gas, we need you!

• WTI Crude: $58.47 ($57.32)
• Nymex Gas: $2.667 ($2.620)
• US/Canadian Dollar: $0.7871 ($ 0.7765)

Highlights

• As at December 15, 2017, US crude oil supplies were at 436.5 million barrels, a decrease of 6.5 million barrels from the previous week and 49.0 million barrels below last year.
  • The number of days oil supply in storage was 25.6 behind last year’s 29.5.
  • Production was up for the week by 15,000 barrels a day at 9.795 million barrels per day. Production last year at the same time was 8.786 million barrels per day. The change in production this week came from an decrease in Alaska deliveries and a rise in Lower 48 production.
  • Imports rose from 7.363 million barrels a day to 7.834 compared to 8.471 million barrels per day last year.
  • Exports from the US rose to 1.858 million barrels a day from 1.086 and 0.557 a year ago
  • Canadian exports to the US were 3.568 million barrels a day, up from 3.302
  • Refinery inputs were up during the week at 17.063 million barrels a day
• As at December 15, 2017, US natural gas in storage was 3.444 billion cubic feet (Bcf), which is 2% lower than the 5-year average and about 5% less than last year’s level, following an implied net withdrawal of 182 Bcf during the report week.
  • Overall U.S. natural gas consumption was down 8% during the week, influenced by decreases across all sectors and warmer weather
  • Production for the week was up 1%. Imports from Canada were up 7% compared to the week before. Exports to Mexico were up 2%.
  • LNG exports totalled 14.7 Bcf.
• As of December 18 the Canadian rig count was 196 – 147 Alberta, 16 BC, 30 Saskatchewan, 3 Manitoba. Rig count for the same period last year was about 200.
• US Onshore Oil rig count at December 22 was at 747, unchanged from the week prior.
  • Peak rig count was October 10, 2014 at 1,609
• Natural gas rigs drilling in the United States was up 1 at 184.
  • Peak rig count before the downturn was November 11, 2014 at 356 (note the actual peak gas rig count was 1,606 on August 29, 2008)
• Offshore rig count was unchanged at 19
  • Offshore rig count at January 1, 2015 was 55

• US split of Oil vs Gas rigs is 80%/20%, in Canada the split is 56%/44%

Drillbits

• Russia’s second liquefied natural gas (LNG) project, located in the Arctic region on the Yamal peninsula, loaded its first LNG cargo in early December. Capacity of the first train is 0.7 BCF and second and third trains are expected to come on line in late 2018 and mid-2019 respectively. Canada, please take note.
• Aramco, the Saudi National oil company is apparently looking to invest in the United States, primarily in LNG infrastructure and supply. Canada, please take note.
• As governments dither on pipeline approvals, Canadian producers face massive constraints on shipping as pipelines are full and rail companies become reluctant to commit resources given uncertainties with pipelines. The perverse result? Prices for Canadian heavy crude are now trading for less than what they were when the WTI price was lower. As delays mount, discounts and spreads get bigger, go figure.
• Inter Pipeline Ltd. says it has decided to go ahead with a $3.5-billion petrochemical project in an industrial area north of Edmonton. The complex will convert propane into polypropylene, a plastic used in the manufacturing of products such as automobile parts, containers and Canadian bank notes.
• Trump Watch: The Trump and GOP tax plan has been passed and signed into law. History will judge who is correct in their assessment of how much this plan will hurt or hinder the US economy (mainly because no one seems to have read the plan), but one thing is certain – it was a decidedly ugly process that got it done…