Well, this is exciting. This week, yours truly’s book of life finally turned from page 51 to 52. I am now one year old for each week in a year and I have managed to get my weight to less than 4 times my age. Not through any genius of diet mind you, just by lazily aging.

Speaking of lazy, and as a true reflection of my lack of desire to work on this blog on my birthday, here are 52 seemingly random, sometimes pithy things I’ve learned over the years about the oil and gas sector or formed some opinion about. There’s a lot of stuff rattling around in the old noggin and I needed to make some space.

1. The price of oil continues to disappoint. That said, I am pretty sure I said a couple of weeks ago they might hit $42. I apologize for that, it’s clearly my fault.
2. If you are at all interested, the natural gas industry is in many ways just as important to Canada as oil. Why do we ignore it so much?
3. If you think the Saudis are going to sit by and let their IPO get hijacked by low oil prices, I have a herd of camels to sell you. Note to media – the Saudis don’t appear to be worried, why are we?
4. North America has more than 3 million miles of oil and gas pipelines, split roughly 80/20 between the United States and Canada. That’s a lot of delivery infrastructure. Why are we so focused on 1200 miles of twinning?
5. Since I was born in 1965, there have been 3 major downward oil price shocks. Each time the market recovered. Go figure.
6. I am older than OPEC
7. In 1965, the American’s closest ally in the Middle East was Iran
8. The first real frac job ever recorded was in the late 1860’s in Titusville Pennsylvania when Civil War veteran Col. Edward A.L. Roberts lowered a torpedo into an oil well, covered it with water and detonated it, vastly improving the well’s yield. Luckily no died – that time.
9. The first commercial, non-explosive, hydraulic frac was in 1950.
10. Since that time, frac’ing has significantly improved, but the process is still the same – create unbelievably intense pressure inside the well until the rock fractures and the molecules flow to the surface. Biggest difference between now and then? Efficiency. And safety. I guess we can’t forget that. Boom.
11. The longest horizontal frac on record is about 18,500 ft, drilled in the Utica Shale, which is a natural gas play. Total depth was about 27,000 ft. So 1.5 miles down and 3.5 miles horizontally. 124 frac stages.
12. The largest frac job ever utilized close to 50 million pounds of sand or proppant in a Haynesville shale well in Louisiana. The lateral length of the well was about 10,000 ft. As a point of reference, the Eiffel Tower weighs 14 million pounds.
13. A new phenomenon called “frac hits” where laterally drilled wells start to run into vertical wells belonging to other operators. This is leading to much legal work. Seriously folks – 5 miles of feet drilled and held open by 3 and half Eiffel Towers worth of sand – is anyone really surprised companies are running into each other?
14. The use of sand in North America has doubled since 2014 with the advent of the mega/monster-frac
15. Canada has the 3^rd largest reserves of oil in the world and at least the 20^th largest reserves of natural gas
16. Canada is the only country in the world that has only one customer for its largest export. Ironically, the US is also the number 1 source of oil imports into Canada. Here’s a hint, it’s spelled p-i-p-e-l-i-n-e
17. The energy sector, broadly speaking, represents 15% of Canadian GDP.
18. Put another way, 15% of our national wealth depends on the exploitation of these reserves, our 500,000 miles of pipeline and the goodwill of one country. Sounds sustainable, doesn’t it? Can you imagine any other industry of that import where the government would be trying to tax it into decline?
19. Canada is recognized as having the most stringently regulated oil and gas industry in the world
20. As part of its recent energy sector deregulation, Mexico needed to copy best practices for energy regulation. After much research, they decided that the best in class was the AER – Alberta Energy Regulator. Hmm.
21. It is estimated that in Russia the equivalent of 50,000 bpd of oil is spilled annually (5% of production). That would be like half of the production of the massive Surmont SAGD facility in Fort Mac being dumped into the Athabasca River every day!
22. But Canada is the bad guy
23. Global spend in the oil and gas sector is about $2 trillion a year, about $200 billion more than Canada’s annual GDP
24. Of that, about a quarter is spent on exploration and new production, currently down 40% from pre-crash levels.
25. In Canada, capital spending in the oil and gas sector is expected to be $37 billion this year. Capital spend in the Permian alone is expected to be higher.
26. Of the $11 billion spent on environmental protection in 2012 (last year data available, gotta love government), 43% was spent by the oil and gas industry. The next closest industry spent 12%
27. Total spending on tangible environmental protection by Canada’s environmental lobby groups since I was born in 1965 has been about $0
28. The oil and gas sector is one of the largest employers of First Nations people in Canada
29. In 1965, global consumption of oil was just over 30 million barrels of oil a day. In 2018 it is expected to crack 100 million barrels a day.
30. In 1965, North America produced about 10.9 million bpd (32% of global production of 34.5mm bpd) and in 2017 that number is expected to be about 16.0 million (16%)
31. In 1965, the Middle East produced about 9.4 million bpd (27%) and in 2017 that number is 30.0 (30%). Total all-in OPEC production is currently about 33% of total global production
32. There are currently 250 million vehicles in the United States. At current rates of sales and production growth, it will take about 100 years to replace all of them with electric vehicles.
33. Alternatively, annual vehicle sales in the US are about 7 million. If all vehicles sold from this day forward were EV’s, it would take about 35 years to replace the fleet. And you’d still likely have about 150 million gas powered vehicles on the road. People like to have 2 vehicles.
34. There are about 120,000 service stations in the US.
35. The cost to install a DC Fast charging station for EV’s is estimated to be about $75,000
36. That’s $9 billion.
37. If the entire fleet of vehicles in the US alone were replaced by EV’s tomorrow, the installed electrical generation infrastructure in the US would need to expand by 30% or 1.1 Terrawatts.
38. If you built it as a solar power plant, that would cover between 7,000 and 8,000 square miles or an area larger than New Jersey
39. If you went nuclear, that would require 500 new nuclear plants at $6 billion a pop.
40. So the incremental generation would cost somewhere between $3 trillion and $5 trillion in the US alone. And we haven’t updated the grid.
41. It is estimated that to replace all the generating capacity in the world with renewables would cost in the neighbourhood of $100 trillion, more than the global GDP of some $85 trillion
42. It took more than 100 years to build out our current fossil fuel based infrastructure
43. In 2015, there were 1.7 million active oil and gas wells in the United States.
44. In 2015, there were 215,000 active oil and gas wells in Canada
45. In the United States it is estimated that the oil and gas industry supports around 10 million jobs or 5% of the labour force
46. In Canada, the similar number is 250,000 direct jobs and probably another 300,000 indirect jobs
47. In 2017, the US is expected to drill and complete some 20,000 wells and exit with liquids production of about 10mm bpd
48. In 2017, Russia is expected drill and complete about 8,000 wells and exist with production of about 10 mm bpd
49. In 2017, Saudi Arabia is expected to drill and complete 600 wells and exit with production of about 10 mm bpd and spare capacity of 2 mm bpd
50. Only half of a barrel of oil is used for gasoline, the rest is used in more than 6,000 common products including hand lotion, football helmets, insecticides, fertilizer and fidget spinners
51. The countries with the highest use of energy per capita also have the highest life expectancy, demonstrating that access to cheap and plentiful energy is critical to increasing life expectancy and pulling people and nations out of poverty
52. The energy industry is one of the most important industries in the world today and touches virtually all aspects of our lives, every day. The constant maligning, vilifying and deliberate misunderstanding of the energy industry and the blocking projects that improve our economy and collective social existence is nothing short of arrogance and hypocrisy and denies the reality on the ground that our privileged lifestyle depends on a healthy energy economy
53. Bonus extra muse – sometimes it takes a few extra years to figure things out.

Prices as at June 23, 2017 (June 16, 2017)

• The price of oil continued to fall during the week as the market continues to lose confidence in OPEC cuts.
  • Storage posted a decrease
  • Production was up marginally
  • The rig count in the US continues to grow
• Natural gas fell marginally as the heat wave subsided

• WTI Crude: $43.1- ($44.71)
• Nymex Gas: $2.929 ($3.027)
• US/Canadian Dollar: $0.7553 ($ 0.7565)

Highlights

• As at June 16, 2017, US crude oil supplies were at 509.1 million barrels, a decrease of 2.4 million barrels from the previous week and 9.1 million barrels ahead of last year.
  • The number of days oil supply in storage was 29.5, behind last year’s 32.4.
  • Production was up for the week by 20,000 barrels a day at 9.350 million barrels per day. Production last year at the same time was 8.677 million barrels per day. The change in production this week came from a decrease in Alaska deliveries and increased Lower 48 production.
  • Imports fell from 8.025 million barrels a day to 7.876, compared to 8.439 million barrels per day last year.
  • Refinery inputs were down slightly during the week but still strong at 17.152 million barrels a day
• As at June 16, 2017, US natural gas in storage was 2.770 billion cubic feet (Bcf), which is 8% above the 5-year average and about 10% less than last year’s level, following an implied net injection of 61 Bcf during the report week.
  • Overall U.S. natural gas consumption was up 2% during the week – as a large increase in power offset declines in retail, industrial and commercial demand
  • Production for the week was flat and imports from Canada were up 5% compared to the week before. Exports to Mexico were down 7% due to maintenance on the pipeline.
• As of June 19, the Canadian rig count was 145 (23% utilization), 90 Alberta (21%), 23 BC (32%), 29 Saskatchewan (25%), 2 Manitoba (13%)). Utilization for the same period last year was just above 10%.
• US Onshore Oil rig count at June 23 was at 758, up 9 from the week prior.
  • Peak rig count was October 10, 2014 at 1,609
• Natural gas rigs drilling in the United States was down 3 at 183.
  • 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 flat at 21
  • 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

• During its “Investor Day” presentation in Toronto, Cenovus CEO Brian Ferguson announced his retirement, sending the stock of the company down 10% in early trading. So, after trashing the stock and questioning management competence following Cenovus’ aggressive oilsands acquisitions, the market punished the company yet again when it got what it presumably wanted. This is the state of markets in the oil patch.
• Total Energy Services announced the completion of its acquisition of Savanna Energy Services
• Trump Watch: Is it just me, or is the first of what could conceivably be called a “slow news week”? Senate health care act was released, but that’s not Trump. Oh wait, here’s a tidbit – in a campaign style speech in Iowa, Trump addressed questions about his “high net worth” cabinet by saying he prefers not to have poor people in those positions – taken in or out of context, it’s a puzzling way to appeal to your base.