Crude Observations

Pre Holiday Tweet Storm

Look, I know it’s the holiday season and all of you are waiting breathlessly for me to do a blow by blow review of the latest Hallmark Christmas Movie lineup, but as I am reminded every so often I have a job to do. And that job is to share with you my wisdom and knowledge and ridiculously keen insight into the state of the energy market both here at home in the Province of Alberta as well as across Canada and around the world.


And since this is the last “non-holiday themed” blog of the year, I am of course obligated to do this for you.


But I recognize that covering the entire energy industry in one post is the blog equivalent of War and Peace and that not even my most loyal readers will have the patience or time to spend on that.


So to spare everyone the annoyance of having to learn all the characters, the sweeps of history and the pedantry of that novel format, I thought I would do it instead in the style of that dude we are going to miss so much come January 21, 2020 (assuming he actually goes away), one Donald J. Trump, President of the United States, soon to be past-President, soon to be Master of Ceremonies at the Mar-a-Lago Seafood Buffet and Revue.


In true Trumpian social media fashion, I have recently come to the conclusion that and all things can be described and explained in a well scripted twitter storm, not to exceed 50 tweets in a thread.


After all, why provide detail and substance when you can hashtag your way through life?


It is my sincere hope it all hangs together because there may be a point to all this. What some writers might call a “plot” or a good English major a “theme” or a frustrated blog reader “a point”.


Fortunately I have lots of practice getting to the point since as some of you know, my lovely wife has very little patience with my meanderings and frequently admonishes me to “get to” the proverbial point. Oh, happy birthday BTW! Sorry, I digress…


Word of caution, since I am channeling the Grande Orange, it is intentionally difficult to follow and there will be lots of innuendo, baseless claims, occasional typos and preening. But we will get there. It’s Tweet Storm!


  1. OPEC+++ just finished their December meetings and agreed to raise production, but not as much as people thought but didn’t cut and Libya is back, but 500k boepd is pretty much a rounding error so really they didn’t do much and appeased the UAE. #KSAalwayswins


  1. Oil price rally seems to be holding up thanks to OPEC++++ and good news on vaccines, but we must be wary of pandemic shutdown headwinds. #warningsigns


  1. Energy sector is up more than 20% since anti-energy President-Elect Joe Biden got the nod. Correlation? Causation? Celebration? I don’t know but when was the last time this sector traded on fundamentals? I’m #ridinBiden


  1. US Rig count is at its highest level since May with 5 rigs added there are now 246 oil-directed rigs in the US. Woohoo! Soon we’ll be back at 2018 levels, right? Nope. #hype?


  1. Production in the US is currently at 11.1 mm boepd. It’s a questionable number since the monthly numbers are way behind. Still 1.8 mm barrels behind the same time last year. When do we get an #accuratepicture? My twitter buddy Art Berman showed that at full drill capacity it takes 6 months to replace the production lost in a year. We are at 35% capacity. Do the math. Production has to fall. #TrustArt


  1. That said, DUC inventory still at all-time high. Completions slowly picking up but not enough to offset declines. 86 completions last month. What’s that – 100k boepd? Not nearly enough. Production will continue to decline. #thereckoningcontinues


  1. Never underestimate the ability of profit-seeking industry to destroy a good thing. If we stayed lower for longer activity-wise, the price appreciation would be such that many marginal players could turn cash flow positive. #nevergonnahappen


  1. Anyone else think there is a slow burn recovery underway but we need to very careful with it lest we cook the golden goose’s cousin’s friend. #weirdnurseryrhymereference


  1. Finally! The pace of bankruptcies appears to be slowing down. Unfortunately we see many of the same management teams getting recycled. #learnalesson


  1. Coming close to that time of year again when credit lines get reset. Who’s going to get caught this time? #nomoreeasymoney


  1. We all pile on the Permian, but the field has been producing since before WW2, do you really want short it that much? Quality players will be producing there for decades. #qualitymatters


  1. Cushing Storage is still high but consistently declining – market seems to have moved off storage as a panic button. Is this a smart development or deliberate ignoring of reality? Depends on pandemic arc really. #storagematters


  1. OECD storage was at an all time high in July. #longwaytobalance


  1. Continued OPEC compliance is no guarantee – these guys all hate each other. #Verysad


  1. Nigeria’s Delta Avengers militants recently made their first attack on infrastructure since the pandemic started. #anyoneelsemisstheseguys


  1. Libya – what’s going on? For months we had war and zero output, suddenly we have peace and accelerating production and they are pressing OPEC to allow them to skip quotas. #notneeded


  1. What does a Biden win mean for Iran? Everyone thinks he’ll cozy up and bring them back into a weaker nuclear deal. I think the old man is tougher than that. #smartenupiran


  1. If the world just shut in production for two or three days, the energy price problem would be solved. Weird to think of it that way huh? #radicalsolution


  1. The media is picking up all the wrong signals about the energy sector and preaching way too much doom and gloom. #becontrarian


  1. You get a write-off and you get a write-off. Everyone gets a write-off! In true Oprah fashion every energy company that hasn’t gone under has written down the value of their reserves. So now that all these accounting shenanigans are over and the playing field is level, let’s see who makes actual cash money. #freecashflow


  1. Supply Demand balance now not expected until late 2021. Do we even know what that means? Has this industry ever been balanced? #volatility


  1. So what happens when we are back in so-called balance? All bets are off? Back to reckless production and start the cycle again? Has the pandemic made that much impact on demand? Do vaccines start air traffic again? #unasweredquestions


  1. Doesn’t look good for greenfield Cdn oilsands without sustained price ^ or costs come down. Step up Canada, technology needs to play a role. That said, don’t count out the big boys in Fort Mac. #FortMacStrong #CNRL #Suncor #Cenovus
  2. Canadian pipelines infrastructure is back in the news. We seem to be on a bit of a run. Please no one mention KXL to Joe Biden, especially conservatives. #nobrainer #egress
  3. Line 3 received final permitting in Minnesota. This means that Enbridge needs to get moving right away on this project that was supposed to be done in 1634, sorry 2018. #egress
  4. TransMountain Expansion keeps going. Some guy is in a tree protesting – he knows pipelines are underground right? #egress
  5. Crews mobilized on Coastal Gas Link across BC. Nat gas pipeline is full speed ahead. #egress #LNG
  6. KXL recently sold a chunk of its pipeline project to First Nations. Without First Nations, Joe Biden doesn’t win Arizona and the presidency is in doubt. Is TC Energy being strategic? #believeitwheniseeit
  7. Yeah, but what about PEAK DEMAND? No one wants oil anymore because everyone will be driving an electric vehicle. Oil is a failing commodity. #energyconversion


  1. Sorry, did I say solar and wind? I meant hydrogen. It’s the future! What about storage? Isn’t hydrogen like, explosive or something? Shush. #hydrogeneconomy #notdangerousatall


  1. All the international majors greenwashing themselves isn’t going to solve the climate crisis, but at least it puts the right guys (energy companies instead of bureaucrats) at the forefront of the battle. #trusttheoilguys #notkiddingatall


  1. Just saw 2 4casts on oil demand by 2050 – one at 120 mm bpd and one at 35 mm. Guess which one will be right? Neither. #projectionnotprophecy


  1. FAKE NEWS Media says Alberta can’t do oil at low prices. That we’re finished and a one-trick pony. I beg to differ. #morethanapumpjack Pretty sure most people don’t know what a pumpjack is. #itpumpsoil
  1. We already have a Job killing carbon tax in theory killing Canada’s competitiveness (I’m a skeptic). So why the rush with Clean Fuel Standard and Border Carbon Adjustment. Wait to see if the first one works, will ya? #norush


  1. Canada has access to some of the best oil and gas resources in the world. All will be well. #simplythebest


  1. Short term problems though – too much equipment, lousy sentiment. #getittogether


  1. We aren’t going to see much of an upstream/drilling activity rally this year, but midstream and infrastructure will keep many people busy #silverlining


  1. If Alberta’s energy sector had its own Hallmark Christmas Movie, it would be called “A Pipeline to Christmas, Kenney’s Yuletide Journey” #Laceychabert


  1. Jobs recovery post pandemic and post price crash is going to be slow. Alberta took it on the chin and the solar plexus and needs time and things to break the right way. If I see another comparison to Quebec or Ontario or BC, I’m going to blow my top. DUMB. #itsnotjustwhitecollar #lookbeyonddowntowncalgary #morethanserviceandretail


  1. Is anyone else tired of constantly hearing how investment is “leaving Alberta”? On the back end of this people will again realize Alberta has unparalleled quality of life compared to other places. #affordablewithskiing


  1. LNG Canada is the largest single infrastructure project in Canadian history! I say this all the time. Why is no one, I mean NO ONE talking about it? #outtasightouttamind


  1. Is ESG flavour of the day, passing fad or new reality? Probably here to stay but even if it isn’t, shouldn’t we all try to make some money off it? Climate-proofing a business, measuring its social scores, improving governance – these will all be rewarded by cold hard cash seeking a home. #cha-ching


  1. US exports of oil still chugging along at elevated levels – where does it all go? #mysterybuyers


  1. As long as the US exports oil its refiners don’t want, Canada has the easiest to access market of any major oil producer. #winning #egress


  1. There’s a new sheriff in town and his name is Biden. He’s one of those newfangled Eastern types who likes the environment, but he’s also big on jobs. May not be as bad for the energy sector as people think. #notsofast


  1. From 2008 to 2016 the US oil and gas industry expanded production and infrastructure at the fastest pace since the post-war boom. VP Biden was there for that. #ridinBiden


  1. So what if he bans fracking on federal land, kills new offshore leases and deep-sixes the proposed devastation of the ANWR? The US has plenty of energy bounty to go around. #giveittime


  1. Gas rally is stalled on weather and lower draws, but don’t let it fool you, the long term fundamentals are strong in this carbon atom’s rally #gasbullatheart


  1. Bottom line – We are not out of the woods by any stretch. Pandemic. Vaccine. Demand destruction. Energy Conversion. Policy uncertainty. Waiting for egress. There are bigly risks all around. Look before you leap. Aim for the river. Hope you can swim. Be optimistic. #covfefe


  1. #crazy #volatile #risky #mostfunbusinessintheworld #Justanotherdayattheoffice


Ah, Twitter. Hope you all enjoyed that. Come to think of it, I spend a lot of time on Twitter. Give me a follow.


@Stormontenergy #bloggy

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