As I was thinking about last week’s soapbox tap dance, I started to think more about other popular perceptions of the oil and gas industry. Or should I say more generally how the oil and gas industry is perceived in the managed message we all hear on a regular basis.

And that message we hear is that the fossil fuel industry is dirty.

Sure – 100% agree. It is dirty. Fossil fuels are found underground and require tremendous amounts of energy and dirty, hard work to remove. And once they are out of the ground, the transportation and use of these fuels leaves a significant footprint unless properly regulated. Or put another way, just because the energy supply is cheap and plentiful doesn’t mean it shouldn’t and can’t be responsibly developed.

That is why a comprehensive set of environmental regulation is required to allow companies to operate. And different jurisdictions have different sets of rules.

So it’s all relative and each country is unique.

And all things considered, I would consider Canada a leader which is why it is particulalrly frustrating when I hear Canadian production of energy constantly derided by people who, quite frankly, should know better.

Consider for example the following:

Last week, Conoco Philips experienced a condensate (natural gas liquids) release (oil and gas for spill) at a pipeline right of way at their Resthaven gas plant near Grande Cache, Alberta. It is estimated that 353 cubic metres of condensate was spilled.

To assess the damage and start the cleanup, Conoco initiated its emergency management plan, shut down the pipeline, mobilized 150 people, put a wildlife barrier in place and brought in a wildlife biologist.

Five days later, with the clean up well underway, the company had brought in a night shift, added more resources and announced that it had captured four spoonhead sculpins outside the contaminated area and released them at a pre-approved location and, as well, had relocated one at-risk toad. Let me say that again – they had relocated a toad. Back when I was growing up and going to my parent’s cabin in rural Quebec we used to treat toads like pesly insects. But here is a multi-national oil and gas company resucing them – because the law says they have to!

I have to ask – who else has these rules and where else in the world does this happen? Answer? NO ONE and NOWHERE!

I think there is a major knowledge gap in Canada when it comes to the regulatory regime that oil and gas companies need to adhere to. It’s not all Mordor and the oilsands. Even the majority of the oil sands aren’t surface mineable (only 4% of the deposit) so most of it is minimally invasive SAGD development.

Where’s the real mess? Look around the world where regimes with lax rules and minimal rule of law and rampant corruption talk a good game but consistently fail to deliver. Even the United States has its issues. On a worldwide ranking of regulatory and environmental regimes for the energy sector Canada and Australia basically tied for first place

Don’t believe me? Take a look at some of these pictures:

This first picture is a Russian oil spill. Greenpeace estimates that the Russian oil industry spills, leaks or dumps the equivalent of 30 million barrels of oil a year in land, with about 4 million barrels of that ending up washed into the ocean. To put that in perspective, that is six times the size of the Deepwater Horizon oil spill of 2010.

Lake Maracaibo or the Maracaibo Basin in Venezuela is the epicentre of the Venezuelan energy bounty. It is also among the most polluted bodies of water in the world. It has been producing for close to 100 years and is also a cesspool of toxicity. 25,000 kms of pipline criss-cross the bottom of the lake, much of it rusty and leaking and leaching oil rises to the surface. The lake also bubbles from leaking gas pipelines. It is estimated that 50% of the basin’s gas production is lost to leaks.

Oil produced in California (pictured to the left) is actually the “dirtiest” oil in North America and is produced in fields in close proximity to the Los Angeles area, home to more than 10 million people. The Deepwater Horizon disaster in the Gulf of Mexico in 2010 spilled about 5 million barrels of oil.

The Niger delta is in a near constant state of oil spillage, whether coming from acts of militant, criminal and terrorist sabotage or lax standards, corruption and poor enforcement of existing rules. While no official tally exists, it is estimated that somewhere in the range of 5 million barrels of oil is spilled annually. This degradation has been going on for decades.

Look, I’m not saying that bad things can’t happen in Canada, because they have and they can again.

Nor am I saying that Canadian oil is “ethical oil” (mainly because I hate that term – it’s relatively meaningless – oil is oil). But if you are getting your oil somewhere, wouldn’t you prefer to know that it is sourced and processed under an enforceable set of standards? Or does that really not matter, because that’s someone else’s problem?

Rather than constantly deride Canadian energy companies for being the vanguard of the armies of darkness, we should instead celebrate that we have a best in class industry that follows rules that rigourous and strictly enforced.

So next time you see a picture of the oilsands comparing them to Mordor, I would encourage you to think of the rescued  Alberta toad and how happy he must feel that he lives in Canada.

Prices as at June 17, 2016 (June 10, 2016)

• The price of oil ended the week down slightly after falling through the week
  • Storage posted a decrease
  • Production was down
  • The rig count was up marginally and has bottomed out
  • Conitnued production declines in the US are helping keep prices up as are the production shut-ins around the world
  • Oil above $50 is not sustainable in the short term. Expect a pull-back for a period of time until the realities of the supply situation in Nigeria and Venezuela become clearer
  • Drilled but unclompleted potential in the US is misunderstood and keeping prices low
• Natural gas rose during the week on bullish weather

• WTI Crude: $48.10 ($48.92)
• Nymex Gas: $2.623 ($2.556)
• US/Canadian Dollar: $0.7769 ($ 0.7835)

Highlights

• As at June 10, 2016, US crude oil supplies were at 531.5 million barrels, a decrease of 1.0 million barrels from the previous week and 63.6 million barrels ahead of last year.
  • The number of days oil supply in storage was 32.6, ahead of last year’s 28.5.
  • Production was up marginally for the week at 8.716 million barrels per day. Production last year at the same time was 9.588 million barrels per day. The change in production this week came from a small decrease in Alaska deliveries and a drop in lower 48 production.
  • Imports remained elevated at 7.622 million barrels a day, compared to 6.940 million barrels per day last year
  • Refinery inputs were down marginally during the week at 16.317 million barrels a day, but strong for this time of year
• As at June 10, 2016, US natural gas in storage was 3,041 billion cubic feet (Bcf), which is 30% above the 5-year average and about 26% higher than last year’s level, following an implied net injection of 69 Bcf during the report week.
  • Overall U.S. natural gas consumption was up 2% during the week with increases across all major sectors
  • Production for the week was flat but imports from Canada rose to meet demand.
• Oil rig count at June 17 was at 337, up 9 from the week prior. Before people get too wound up about a potential rally, we have a long way to go
  • Rig count at January 1, 2015 was 1,482
• Natural gas rigs drilling in the United States was up 1 at 86.
  • Rig count at January 1, 2015 was 328
• As of June 13, the Canadian rig count was at 68 (10% utilization), 43 Alberta (9%), 6 BC (8%), 18 Saskatchewan (16%), 1 Manitoba (50%)). Utilization for the same period last year was about 15%.
• US split of Oil vs Gas rigs is 80%/20%, in Canada the split is 20%/80%
• Offshore rig count was unchanged at 21
  • Offshore rig count at January 1, 2015 was 55

Drillbits

• TransCanada was awarded a $3.6 billion natural gas pipeline project to connect US shale gas from Texas to Mexico – hmm
• Tervita bought itself some time to manage its balance sheet after it managed to renegotiate its senior subordinated debt
• The National Energy Board began its official review of the Energy East project. It will be an exhilirating 21 months.
• The Quebec government approved the drilling and fracking of horizontal exploratory wells on Anticosti Island.
• Drumpf Watch – There are no words to describe the past week in Trumpland. That said, a new term emerged to describe his buffoonness – Cheeto Jesus