Crude Observations


One of the both great and (occasionally) annoying things about living and working in Calgary is navigating the annual all-consuming celebration of fun and cowboy hats that is the Calgary Stampede. Whether it’s surviving double-deep-fried scorpions coated in Oreo batter, boiled corn rolled in ground-up spicy Cheetos, mainlining mini-donuts or running the gauntlet of corporate gatherings, Stampede is a unique event in our city.


How unique? Well it’s got its own verb and language – that’s pretty unique.


“Have you been stampeding yet?”  “Sure have, we were at the chucks the other day and then were given ‘er at Ranchman’s for a bit. Maybe pede’ing the grounds on the weekend for the grandstand and of course plan on hitting the Stomp at the end of the week.” What?



Of course, in addition to being a well-known international tourist attraction, uniquely Calgarian cultural event and a kick-ass excuse for a 10 day party, the Calgary Stampede is also a (mud-spattered) window into how the local economy is doing. It’s both a lagging and leading indicator of the mood of the city and province’s business community, more specifically the energy sector.


In boom times, Stampede celebrations tend to be lavish, garish and quite often over the top – a true bacchanalian homage to the excesses that everyone associates with the energy sector.


In down years, the mood is decidedly somber, with many low key events. The focus is on restraint and charitable contributions and many of the invitations (even the emailed ones!) will be in black and white.


In between, in what I will call the “transition years”, the party struggles to find its footing. And quite often it rains.


Added into the mix is a whole kabuki theatre sideshow of municipal, provincial and federal politicians and leaders of national and provincial parties all vying for the attention of the media and public at large by trying to prove their cowboy bonafides by flipping an endless parade of pancakes, exposing for all to see their astonishingly poor fashion choices and delivering tired political messages in a cowboy metaphor infused version of a western drawl.


Seriously though, it just wouldn’t be Stampede without some federal Liberal controversy or another stiff and awkwardly dressed conservative flipping pancakes and posing for pictures with some children and First Nations people (all in one if possible!) before dashing off to have important closed door conversations with who knows who about who knows what. Interestingly, most politicians fail to grasp that not much gets done during Stampede except parties and that the person they are talking to is most likely on their way to getting drunk or is still feeling it from the night before.


At any rate, no amount of politicians flitting around, hosting breakfasts, building up or tearing down the economy and buying boots (seriously, is there anything more annoying than politicians doing their photo op boot purchases and sticking on their market study determined cowboy look?) can change the reality on the ground. The midway, the parties, the attendance, the rodeo, the chuckwagon races, the tarps for sale on the chuckwagons, the grandstand show – these all tell us what may or may not be going on.


So what is this year’s Stampede telling us?


Well I don’t know about the rest of Calgary, but for me, I am finding it hard to get a real grasp on what this year’s Stampede is all about and what it has to tell us about the state of the energy sector. It’s as confusing and full of conflicting messages as the Donald Trump White House.


I spent some time on the grounds and the crowds were pretty impressive, even with the bizzaro weather we have been having. They do seem bigger than the last few years, they were having fun and in general whooping it up as they are supposed to do, but ultimately it felt a little restrained and lacked direction and cohesion. Those events I was able to attend seemed more subdued than usual, but also a bit bigger and better attended. Spending time walking the midway and sampling the overwhelming amount of fried food, activity levels definitely seemed up, but I didn’t get that rush of excitement or buzz that I typically do when confronted with poutine, chicken wings and a pickle popsicle. Even the beef on a bun seemed forced. At times it felt like everyone was there, but they were going through the motions because they had to, hoping for something a little better to come along.


And the prices were high – inflation was readily apparent in costs for everything pretty much across the board.


On the other hand, we went to the chuckwagon races and the grandstand show and the attendees were all in for the event and the grandstand show was very aspirational and positive.


So outside of the midway moshpit, you could feel something different. Parties and get togethers were marked by measured fun and shared experience. “How was last year? A train wreck. But it can’t get any worse!” And the mood was neither panic nor capitulation. It was more tongue in cheek – “can you believe this is year 5 of this sh**?”


It’s hard to get a solid read on what is happening, it really felt like it could go either way.


Which I guess is kind of where the Alberta economy and more specifically the energy sector currently sits.


Politically we are at a cross-roads. Alberta has tossed the NDP to the side and is banking on the UCP to lead it to the promised land. We continue to feel the effects of the longest energy downturn in history, government finances are a bit of a mess and in our never ending search for someone to blame (damn you foreign interlopers!) we risk becoming a bit of a parody of ourselves. On the federal side we have a Liberal government already running for re-election in October and a conservative party that has the opportunity to make a significant dent in the Liberal armour if not win outright. But really no one knows what is going to happen and for that reason, the politicians are heavily invested in seeming to be “present”.


Jason Kenney was omnipresent early in the week before jetting off to the premiers’ meeting and Andrew Scheer has made several appearances. Even Justin Trudeau, who just announced an anti-pipeline crusader as a star candidate in Montreal is coming to town to make an appearance and close out Stampede – keep an eye out for that costume! The only politician missing it seems is Jagmeet Singh who has yet to figure out what it means to lead a national party.


On the energy side, we’ve got a commodity market that is somewhat adrift – a Goldilocks scenario that is neither too hot nor too cold. Rig counts are down, but expected to rally. Pockets of the industry are flat out busy while others can’t turn a wheel. The Permian is still in theory sucking the investment blood out of every other major play in the world, but even the mighty West Texas cash flow incinerator is starting to slow (which, by the way, is just about the best news in a long time).


Headwinds are strong in terms of new pipeline projects, but the TransMountain expansion has been approved, contracts awarded and work is starting. Line 3 is delayed but moving forward, Keystone XL is in perpetual limbo but is currently on the maybe side of the ledger. LNG Canada is underway and construction of it and the Coastal Gas Link pipeline are being fast tracked. Yet… Yet… Obstructionist, governments are still trying to block 15% of the national economy at every turn. It’s all so weird, it seems like the momentum has never been stronger to actually get something done, yet pessimism remains.


It truly feels like something wants to happen, like the sector wants to bust out of its stupor and race ahead but it’s still shackled to low prices, curtailment and a lack of confidence in the market turning around.


I have never before been confronted by this conflicting sense of optimism for the future and pessimism about our prospects, often in the same day, sometimes even in conversation with the same individual!


And I feel the mood at this year’s Stampede reflects that – it’s similarly adrift, floating in its bubble of parties, some of which are genuine expressions of fun, some of which are just going through the motions and mailing it in.


I hope no one is thinking I am being overly critical of the Stampede by the way. I am in no way suggesting that the Greatest Outdoor Show on Earth is anything but – I love Stampede, warts and all. But the reality is, and always has been, that the Stampede is a reflection of the mood of the city and that, as the city gets larger and more “sophisticated”, its personality and that of the Stampede gets more complicated and nuanced. And under it all is a manic and barely restrained energy – the dynamic, entrepreneurial, get it done spirit that is Calgary at its finest – just waiting for a spark. An attitude of “enough of this crap, time to get busy.”


Case in point, since moving here in 1998 (yes, yes, I’m an import too), I have never (EVER) gotten any serious or actual work done during Stampede. People who hate Stampede regularly leave. Clients and advisors are unavailable or not in any condition to talk. Vacations are in full swing. This year though, it’s different. Less play, more work. Even taking the middle of the week off. The phone has been ringing. Conversations have been real. Deals are getting advanced. It’s down to business, headwinds be damned.


Where does this all lead? Well, based on my rather unscientific observations, I feel the city and the energy sector is ready to get onn with it. The starting gun has been fired. As the Rangeland Derby announcers say “And they’re off”  – we just missed it. It’s Canadian firms like CNRL stepping up in the oilsands. It’s unconventional basins that rival anything in the US. It’s a political environment that is fluid and dynamic but waking up to the reality that it needs a vibrant Alberta and energy sector to power a lot of the country. It’s young, energetic management teams taking over in the service sector. It’s deals getting done. It’s gradually solving the egress issues. It’s Calgary shaking off close to 60 months of being downturned, downsized and downtrodden and saying enough is enough. It’s a Stampede seemingly adrift but getting its legs under itself for what could be an extended run of what looks to be steady, not heady, growth.


It’s getting better. It really is.


And no, I’m not coming from a party.


In fact, I have a party to get to.


See you next week.





Prices as at July 12, 2019

  • Finally oil prices rally!
    • Storage posted a decrease week over week
    • Production was down marginally and remains higher than last year this at this time
    • The rig count in the US and Alberta improved slightly while the rig count in Saskatchewan was down.
    • Natural gas storage was down, but remains higher than this point last year
  • WTI Crude: $60.26
  • Western Canada Select: $48.17
  • AECO Spot : $2.28
  • NYMEX Gas: $2.468
  • US/Canadian Dollar: $0.7660



  • As at July 5, 2019, US crude oil supplies were at 459.0 million barrels, a decrease of 9.5 million barrels from the previous week and 53.7 million barrels above last year.
    • The number of days oil supply in storage is 26.5 compared to 22.9 last year at this time.
    • Production was down up for the week at 12.300 million barrels per day. Production last year at the same time was 10.900 million barrels per day.
    • Imports fell to 7.302 million barrels from 7.585 million barrels per day compared to 7.431 million barrels per day last year.
    • Exports from the US rose to 3.048 million barrels per day from 2.990 million barrels per day last week compared to 2.027 million barrels per day a year ago
    • Canadian exports to the US were 3.945 million barrels a day, down from 3.642
    • Refinery inputs rose during the during the week to 17.438 million barrels per day
  • As at July 5, 2019, US natural gas in storage was 2.471 billion cubic feet (Bcf), which is about 5% lower than the 5-year average and about 13% higher than last year’s level, following an implied net injection of 81 Bcf during the report week
    • Overall U.S. natural gas consumption fell by 1% during the report week
    • Production for the week was flat week over week. Imports from Canada decreased 4% from the week before. Exports to Mexico were up 1%
    • LNG exports totaled 44.0 Bcf
  • As of July 12, 2019, the Canadian rig count was down 3 at 117 (AB – 62; BC – 10; SK – 39; MB – 3; Other – 3). Rig count for the same period last year was 194.
  • US Onshore Oil rig count at July 12, 2019 is at 784, down 4 from the week prior.
    • Peak rig count was October 10, 2014 at 1,609
  • Natural gas rigs drilling in the United States was down 2 at 172.
    • 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 up 2 to 26.
    • Offshore peak rig count at January 1, 2015 was 55

US split of Oil vs Gas rigs is 80%/20%, in Canada the split is 67%/33%


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