Crude Observations

Last week’s chart on drilling intensity of US tight oil versus Saudi Arabia spurred some thought about what the industry looked like in previous years.   For completely self-serving reasons (birthday or something), I decided to look back 50 years to 1965 to check some industry data and see what was happening in the world at the time. It is remarkable how much has changed since then but also how much of it maybe hasn’t changed all that much.   Interesting data-points to consider: In 1965, North America produced about 10.9 million bpd (32% of […]

The image below is an interesting follow up to the last several weeks’ discussion on the nature of US (and to a lesser extent Canadian) tight oil and natural gas economics.   Sourced from Schlumberger, It shows the number of wells drilled in the big three “10+ million barrel per day” producers for the year ended December 31, 2014, which is somewhat indicative of the level of activity required to sustain (never mind grow) production in those areas.   The message here is that to maintain productive equivalency with Russia and Saudi Arabia, the US […]

Well that was certainly exciting.   After pre-meetings and the formal session today, OPEC announced that it would… leave its current output quota unchanged at 30 million barrels a day. Which is wonderful, except that OPEC is currently producing an estimated 31.5 million barrels a day, which marks the 12th straight month that OPEC has produced above its quota that everyone seems so obsessed about. Which raises an interesting question – is this actually even a quota? Or is OPEC just producing as much as it can and calling it a quota to keep up […]

A slimmed down musing for the week, but some information to consider.   There are many differing points of view about the tight oil and shale gas “revolution” such as whether it will be long or short-lived or whether it’s a game-changer for US energy independence and spells the end of OPEC or the whole 100 year gas supply and all sorts of similar hyperbole. That is a discussion/debate for another day. What is undeniable though is the unprecedented amount of capital that has been poured into what is an expensive to produce resource play […]

As the week closes, we see oil prices poised to post their tenth consecutive weekly gain, something that apparently hasn’t happened since 2012.   What are we to make of this? Is it a breakout? Are prices stabilizing? Are we setting the stage for a sustained rally as production numbers decline in the US and rig counts continue to fall?   It’s hard to be a true believer just yet. At this stage, the market is trading off of marginal bullish signals and there is a capital reallocation happening from an over-valued US stock market. […]

As this is being drafted the sun is finally coming out and a well-deserved Canadian long weekend is upon us. Typically this is the time where Canadian service companies take some time to catch their breath and recharge after a frantic winter drilling season, I suspect this time it is more likely most will be reflecting on what the next few quarters are going to deliver as the industry tries to find its legs and recover from this latest cyclical downturn.   It was interesting to note in the last week some of the punditry […]

I know it has been awhile since this document came out, however it is now time to publish this on a regular basis again. I hope it hasn’t been missed too much.   The big news of the week by far was the election in Alberta of the provincial NDP party led by Rachel Notley, toppling the 44-year reign of the Progressive Conservatives. While the scale of the loss was unexpected, the result had generally been predicted by polls leading up to the vote. The NDP platform pledged to unwind most of the PC budget […]