Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on February 19, 2015
Canada’s Oil Industry ‘In Near-Death Condition
Russian state-owned energy giant Rosneft is responding to sanctions slapped on it by the Harper government by talking down Canada’s oil industry.
“In Canada the [oil] industry is in a near-death condition,” Rosneft spokesperson Mikhail Leontiev told the Russian News Service, as quoted at the Moscow Times.
“This was sanctions against the departed, and I don’t mean Rosneft, I mean Canadian oil production.”
The Harper government announced late Tuesday a new round of economic sanctions targeted against 17 Russian companies, including Rosneft, an oil and gas giant majority-owned by the Russian government.
Prime Minister Stephen Harper said the sanctions were in response to “escalated acts of aggression” by Russian-backed rebels in Ukraine, in particular an assault on the city of Mariupol on Jan. 24.
Rosneft’s Leontiev suggested Harper is trying to win over ethnic Ukrainian voters.
“Canada is a country preoccupied with its Ukrainian diaspora, a large part of which are [nationalists], that’s well-known. There is a very strong lobby there,” Leontiev said.
Canada’s oil industry has suffered in the wake of the oil price collapse, with the IEA recently downgrading its 2020 forecast for Canadian oil production by 10 per cent. CIBC recently predicted a “mild” recession for Alberta.
But Russia, being more dependent than Canada on oil exports, stands to make out far worse in the low oil price environment. Russia is the world’s third-largest oil producer, behind the U.S. and Saudi Arabia, and produces more than twice as much as Canada.
An analysis in the Wall Street Journal in December (when oil prices were still higher than they are now) suggested Russia’s economy is roughly four times as exposed to falling oil prices as Canada’s.
At that point, when Brent crude had fallen to US$71, the decline in oil prices from their peak was equivalent to 4.7 per cent of Russia’s economy, but only 1.2 per cent of Canada’s economy.
Rosneft has business interests in Canada. It owns 30 per cent of the Cardium tight oil project in Alberta, run by Imperial Oil and ExxonMobil Canada.
32 Comments on "Canada’s Oil Industry ‘In Near-Death Condition"
BobInget on Thu, 19th Feb 2015 10:45 am
Before buying or increasing ones positions
it’s a grand idea to express fault in whatever you are interested in.
Here’s the latest rundown. In terms of
reserves; Saudi Arabia comes in SECOND.
Second to Venezuela. Canada trails at number three in the World.
China cornered future Venezuelan exports. This leaves Canada open for sale.Canada and Venezuela. All the rest, except deep-sea,
is window dressing.
Bloomberg) — For debt investors betting Venezuela will default this year as oil slumps, there is one big wildcard that threatens to sink the trade: China.
The Asian nation, whose $3.9 trillion in foreign reserves are the world’s largest, has a history of lending out money to Venezuela, having doled out $45 billion over the past decade. And it has a strong incentive to provide more — Venezuela sits on the world’s biggest oil reserves while China is the top crude importer.
When President Nicolas Maduro headed out on an overseas trip last week in search of cash to shore up the reeling economy and help stave off default, China was his first stop. He spent four days there and left saying he had won pledges for $20 billion in new investment. Maduro needs money fast as the six-month, 56 percent plunge in oil has derivatives traders betting there’s a 75 percent chance that Venezuela will default in a year and 97 percent probability that it will happen within five years.
Financing from China could reduce the “liquidity pressures,” Daniel Chodos, a strategist at Credit Suisse Group AG, said by phone from New York. He still retains an underweight recommendation on the country’s debt. “We’re not saying this solves Venezuela’s problems but at least in the near term it reduces the risk of default.”
‘Sufficient Oxygen’
Three days after leaving China, Maduro said he was also lining up “various” billions of dollars for 2015 and 2016 from lenders in Qatar. “We’re finalizing a financial alliance with important banks from Qatar that will give us sufficient oxygen to cover the fall in oil prices,” Maduro said in comments carried on state television.
But it’s China that’s seen as Venezuela’s best chance for emergency cash. Maduro said Jan. 7 that the Chinese investment will be for economic, energy and social projects. He didn’t say how quickly the money could come in or provide other details. Much of the previous loans were arranged to be repaid by Venezuela in oil supplies.
Maduro is “an old and good friend of the Chinese people,” and China supports his efforts to restructure the economy, President Xi Jinping said in a Jan. 8 speech.
Prices on Venezuela’s benchmark dollar-denominated bonds due in 2027 sank 50 cents in the past six months to 37.27 cents on the dollar, sending their yield over 25 percent. The securities fell 1.44 cents on the dollar today, headed for the lowest close since 1998. And traders charge a higher rate to insure Venezuelan bonds against a default than they do on debt from any other nation.
Perk Earl on Thu, 19th Feb 2015 10:47 am
The East/West line is being drawn in the sand in the Ukraine. Maybe like Germany after WWII we should split it into two halves.
BobInget on Thu, 19th Feb 2015 10:57 am
The next big three-way will be battling for
Canada’s oil sands.
The biggest players; Suncor and Exxon
US/Russia/China bidding starts when we hear spines of crude short sellers snapping.
(hedge funds closing)
This game is for pros only.
Remember ‘they’ are out to screw anyone
that gets in the way. Don’t believe anything you read. (including biased longs, like myself)
Plantagenet on Thu, 19th Feb 2015 11:01 am
As long as obama blocks the Keystone XL pipeline, the export market for Canada’s oil sands is limited. Taken together with the oil glut and low oil prices, Canada’s oil industry is dealing with a 1-2 punch to the gut.
ghung on Thu, 19th Feb 2015 11:15 am
Sure, Plant. See the David Suzuki article:
“Vanessa Gray, a 22-year-old member of the Aamjiwnaang First Nation, mobilized other young people to campaign against Enbridge’s Line 9 pipeline proposal to transport oilsands bitumen through Sarnia, Ontario, to Montreal for export. She continues to speak out about refinery pollution and host “toxic tours” of Canada’s Chemical Valley, where 63 petrochemical plants surround her community.”
Easier to blame Obama, eh? It’s Canadian oil, Canadian profits. Let Canadians build their own pipelines across Canadian soil, or not. Meanwhile, Canadian production and exports have been at all time highs:
https://upload.wikimedia.org/wikipedia/commons/b/b8/Canadian_Oil_Production_1960_to_2020.png
Cry me a freakin’ river. And ask US oil producers how exited they are to get the KeystoneXL built these days; to have a ‘glut’ of Canadian oil to compete with.
Plantagenet on Thu, 19th Feb 2015 11:56 am
@gung
You aren’t very well informed if you don’t even know that obama is blocking the Keystone XL oil pipeline.
rockman on Thu, 19th Feb 2015 12:05 pm
“As long as Obama blocks the Keystone XL pipeline, the export market for Canada’s oil sands is limited”. There is no restriction of Canadian exports to markets outside the US. All the foreign markets need do is buy it. Every one of the hundreds of millions of bbls of Canadian oil sands production shipped into the US every year could be loaded onto tankers at the port of Houston and shipped overseas…as it has been done for a while now. Everyone here is aware that some Canadian oil sands production is being shipped overseas out of US ports, aren’t you?
Rival Enbridge Inc shipped several cargoes of Canadian crude to Europe earlier this year, after opening a reversed pipeline from Oklahoma to Freeport, Texas. Opportunities to re-export oil sands crude will expand significantly over the next few months as more pipelines designed to carry Canadian oil to the Gulf Coast come on line. And the pipelines they speak of don’t include the border crossing section of KXL but the new lines being built from the US mid-west to the Texas coast.
In fact, President Obama’s team just made that easier; one of the potential problems was the occasion mixing of US produced oil and the Canadian production. Now the new reg is; no harm…no foul. Accounting for this incidental contact might make it easier for pipeline companies and other midstream handlers of crude oil who manage crude that is re-exported.
The problem foreign buyers have purchasing Canadian production isn’t access to it but the fact that US refiners are outbidding most of them for it. Just as they’re outbidding for oil imports from other countries: about 3 million bbls per day of oil refined in the US is being exported overseas since there is no ban on exporting such commodities.
And yes ghung: US oil producers are more strongly opposed to KXL then any environmental organization. We just understand it would have been a waste of time and energy expressing our position.
shortonoil on Thu, 19th Feb 2015 12:29 pm
But Russia, being more dependent than Canada on oil exports, stands to make out far worse in the low oil price environment.
Russia, with its huge, but aging, conventional fields can still probably turn a profit on $50 oil. Canada, with its $80 production costs is losing its shirt. But according to the author Canada is better off. Must be one of those new definitions of “better off”.
Bitumen with an ERoEI of 5:1 in a world that requires at least 6.9:1 to keep the wheels turning is definitely a real big asset. Harper must be taking lesson from Washington now how to sick your head were the sun don’t shine!
Plantagenet on Thu, 19th Feb 2015 12:35 pm
@rockman
1. You are right that there is no legal impediment to Canada exporting oil. The impediment is physical—the lack of infrastructure places limits on the amount that can be exported. There are also safety concerns—-oil trains are more dangerous then oil pipelines. The Keystone XL pipeline would address both of those concerns
2. You are right that US oil producers like to set limits on imports that compete with their own products. However, that isn’t the way the US economy works—US car manufacturers, Apple, and every other business has to compete with foreign imports. The US oil business shouldn’t be walled off from competition and allowed to set artificially high prices any more than any other US business.
3. There is probably a trillion dollars in refinery infrastructure in south Texas and Louisiana already built to deal with Venezuela heavy crude. It just makes sense to take the Canadian heavy crude to the US refineries that can deal with it, rather then building an entirely new set of expensive refinery infrastructure somewhere else.
CHEERS!
ghung on Thu, 19th Feb 2015 12:51 pm
Plant: “@gung
You aren’t very well informed if you don’t even know that obama is blocking the Keystone XL oil pipeline.”
Another asinine Plant comment. Of course I know the history of Obama’s opposition to keystone, Plant. I also don’t read bullshit into other folks’ comments.
For you oh-so-weak-of-minders, my point is that plenty of Canadians have opposed building their own pipelines that don’t involve imposing eminent domain on US citizens’ properties, and that Canadian oil producers haven’t been suffering much.
baptised on Thu, 19th Feb 2015 1:00 pm
Thanks short for clearing this article up.
BobInget on Thu, 19th Feb 2015 1:04 pm
Maybe, it all depends on how much a person actually NEEDS diesel or jet fuels?
Some ‘grand cabal’ can make highfalutin sounding
forecasts that sound authentic enough. Throw in a few charts and we forget ALL about Islamic States or Russia or China or even India’s
1.252 Billion or Nigeria’s 176 Million 51% of the population, urban (91,834,051). Median age in Nigeria is 17.8 years.
(a nation of poverty stricken, under-educated, teens) What could possible go wrong?
The mainstream has yet to properly explain why of all the planet’s nations in economic disorder the only ones the US is deeply concerned over are oil rich states. In fairness, theses very states are the only ones of interest ti the so called Islamic State.
Plantagenet on Thu, 19th Feb 2015 1:13 pm
The EIA reports a new global oil production high—i.e. the oil glut is still getting worse.
More bad news for the Canadian oil industry. Might as well pencil in a recession for Alberta, and maybe the rest of Canada as well.
Northwest Resident on Thu, 19th Feb 2015 1:28 pm
ghung said: “I also don’t read bullshit into other folks’ comments.”
He does that to EVERYBODY, ghung, as you are no doubt aware.
It is a technique that the gross troll uses to spread rancor and confusion. The gross troll certainly doesn’t use that technique because IT is here to engage in meaningful debate, nor to seek the truth. That technique as used by the gross troll is very much like the squirt of ink that a squid uses to cover its retreat.
When you’re as thoroughly dumb as the gross troll is, and you’re accustomed to having your idiot assertions disproven and outright rejected for their sheer stupidity, then the technique of false accusation counterattack serves you well to temporarily confuse and change the subject.
We are actually blessed to have the gross troll working his “magic” on this forum. We get to observe fist hand how true idiots think and operate. Not that it isn’t repulsive to observe, of course…
Plantagenet on Thu, 19th Feb 2015 2:07 pm
@Nordent:
Obama is blocking the Keystone XL pipeline.
It isn’t some person in Ontario who lives next to 63 petrochemical plants who is blocking the pipeline, as Ghung oddly suggested. The facts are clear on this—Obama is responsible for blocking the Keystone pipeline.
You can fulminate all you want, but the facts remain the facts.
Cheers!
.
Northwest Resident on Thu, 19th Feb 2015 2:20 pm
Plant — You unwittingly illustrate my point just made. But most of what you write appears to be inspired by a certain deep level of witlessness, so no surprise. Please, carry on. Cheers.
Plantagenet on Thu, 19th Feb 2015 2:30 pm
@Nordent
Try using your finger to help you read. Move your finger from word to word until you understand each one, and then try to understand the entire sentence. Once you understand a sentence, then move on to the next one.
Here…start with this sentence:
Obama is blocking the Keystone XL Pipeline.
Then, when you understand that idea, try this one:
The world is experiencing an oil glut.
OK? Got it now?
CHEERS!
dave on Thu, 19th Feb 2015 2:58 pm
Canada’s nasty tar sand goop is likely to succumb to the laws of economics, for it is not only an environmental disaster but it just too darned expensive. Let Harper explain to Canada what others in the world have already figured out. Cheap natural gas and renewables are going too f@#k up this market big time in the coming years imho.
Plantagenet on Thu, 19th Feb 2015 3:16 pm
Yes, in the middle of an oil glut Canada’s tar sands oil looks expensive. But don’t count on this oil glut continuing forever.
At some point we’ll start to run short of oil, and then the tar sands oil will become increasingly important to the world.
dave on Thu, 19th Feb 2015 3:35 pm
Plant, sorry fella, but given all it’s pitfalls, in maybe be sometime before this source of energy looks attractive again. In the meantime, the alternatives are looking better and better. One should never say never for sure, but no Keystone pipeline at this juncture shouldn’t be seen as a big deal, unless you listen to too much Fox news of course.
dave thompson on Thu, 19th Feb 2015 3:36 pm
Obama was smart to set the record strait. Here is some info for the uninformed. http://www.dailykos.com/story/2015/02/19/1365516/-Fox-News-Bill-O-Reilly-The-holy-war-is-nbsp-here
Apneaman on Thu, 19th Feb 2015 4:10 pm
O’Reilly really seems to have matured over the years.
https://www.youtube.com/watch?v=b59gQHjjbns
Apneaman on Thu, 19th Feb 2015 4:20 pm
Canada faces high risk of terror attack, Jason Kenney says
In first major speech, Defence Minister Jason Kenney warns that Canada faces “high probability” of terror attacks
http://www.thestar.com/news/canada/2015/02/19/canada-faces-high-risk-of-terror-attack-jason-kenney-says.html
I wonder why ?
Canada’s Iraq mission has cost $122 million, military says
Defence department breaks weeks of silence and reveals that Canada’s Iraq mission has cost $122 million to date.
http://www.thestar.com/news/canada/2015/02/16/cost-of-canadas-war-against-isil-estimated-at-122-million-and-counting.html
Apneaman on Thu, 19th Feb 2015 4:26 pm
Who needs oil when you have debt.
$250M U.S. customs plaza to be paid for by Canada
http://www.cbc.ca/news/canada/windsor/250m-u-s-customs-plaza-to-be-paid-for-by-canada-1.2962166
antaris on Thu, 19th Feb 2015 5:36 pm
If Iraq has cost $122 million what was Afghanistan worth?
GregT on Thu, 19th Feb 2015 5:52 pm
“what was Afghanistan worth?”
About a half a trillion per year in the opium trade.
Apneaman on Thu, 19th Feb 2015 6:47 pm
“what was Afghanistan worth?”
Depends who you ask. Family and friends of dead soldiers probably have different opinions than disinterested consumer zombies. Same goes for survivors of dead Afghani civilians who’s homes are rubble. Junkies appreciate the cheap heroin. The $122 million is just the start. Who knows how long it will go. Most Canadians are oblivious to the fact that Stephan Harper is a dual Fundie: Neo liberal and Dominionist.
Davy on Thu, 19th Feb 2015 7:01 pm
Afghanistan was a monumental victory for the late anti-Human Bin the Ladden. Wait anti-American no more inhuman than a drone operator in Kansas. Calm down please, thank you.
My point is one man cost the U.S. its empire, treasure, and blood. Never in the history of man has one man done so much damage to one country, the world, and including Muslims. Everyone has suffered the insanity of the war on terror. There are a few winners on both sides but mostly losers.
antaris on Thu, 19th Feb 2015 7:08 pm
Davy, you are talking about GWB right?
Davy on Thu, 19th Feb 2015 7:21 pm
Ant, you have a great point but GWB would never have been given a loaded gun except for Bin the Ladden jihad.
I guess my point is most of humanity lost something. Think about the opportunity cost that a peaceful 2000’s could have produced.
Well it doesn’t matter much because collapse is bake into the cake whether there was a war on terror or not. Overshoot is what it is and oil is finite so all the rest is just a side show.
Makati1 on Thu, 19th Feb 2015 8:09 pm
The North American Union is alive and well. Harper is owned by the same elite who own DC. The same Ministry of Truth BS is flowing out of Canada as out of the US. Nothing more. Nothing less. BobInget is the more accurate picture of the situation, I think.
Amvet on Sat, 21st Feb 2015 9:03 am
The EIA did not report a new global oil production high. They report increased storage in OECD countries. These countries use less than half of global oil. The developing countries use most and their demand is increasing. The global oil production glut is a sham to damage Russia, Iran, and Venezuela. Collaterial damage…..Canada, the US shale industry, Mexico, Norway, Nigeria, and so on.