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Nine Uncomfortable Canadian Energy Facts

May 9, 2018

Nine Uncomfortable Canadian Energy Facts

We’re not cutting emissions as much as we should, and we’re dependent on an increasingly expensive source of oil.

Bakken-Flare.jpg
Canada’s energy twilight: Canada can’t meet emission targets and expand bitumen or shale gas production at the same time, according to energy expert David Hughes. Photo by Jeff Peischl/NOAA.

Canadians are global energy pigs; we’re high emitters of carbon and certainly aren’t leaders in renewable energy.

In addition “aspirational” plans by Canadian politicians won’t deliver promised emission reductions on climate change without major reductions in energy consumption.

These are just some of the hard energy facts contained in Canada’s Energy Outlook, a new and encyclopedic report by David Hughes, one of Canada’s foremost energy experts.

Hughes, whose reliable research is cited by the likes of Bloomberg, Nature, The Economist and The Tyee, has been analyzing energy trends for industry and government for more than 30 years.

Unlike many environmentalists, Hughes does not believe that a transition to renewables or even reductions in greenhouse gases will be seamless, easy or cheap. Here’s why:

1) Canadians live high and large on largely fossil fuel-based energy.

On a per capita basis we consume energy at more than five times the world average. We even consume more energy than oil hungry Americans and twice as much as the average citizen in the Organization for Economic Co-operation and Development. Citizens in Germany, France, the United Kingdom and Japan, nations that don’t export oil, consume energy at less than half the rate of Canadians.

Canada consumed 2.5 per cent of the world’s energy in 2016, and that consumption has increased at .13 per cent per year over the past five years. Fossil fuels, of course, dominated Canada’s energy menu: oil and gas at 57 per cent; coal at five per cent; nuclear at seven per cent; hydroelectricity at 27 per cent and solar and wind at 3.1 per cent.

…click on the above link to read the rest of the article…

The Biggest Oil Story Of 2017

December 30, 2017

The Biggest Oil Story Of 2017

Oil

There have been plenty of eye-catching stories in the energy industry this year, but one notable development has been the rise of the U.S. as a crude oil exporter.

The ban on crude exports from the U.S. was lifted at the end of 2015, and exports ticked up in the following year, but only modestly. 2017, however, was the year that the floodgates opened.

In the first half of the year, there were several weeks when the U.S. topped 1 million barrels per day (mb/d), but exports averaged about 750,000 bpd between January and June.

(Click to enlarge)

In the third quarter, the export machine really kicked into high gear, and Hurricane Harvey was arguably the spark. It may seem odd at first blush that a disastrous storm that ravaged Texas would be the thing that spurred a rise in U.S. oil exports, but because so many refineries were damaged, a lot of the oil produced in Texas had to go elsewhere.

That surplus of crude and the temporary shortage of refining capacity was visible in the discount for WTI relative to Brent, a price differential that widened to as much as $7 per barrel after the storm, the largest disparity in years. If you are a buyer in say, China, paying $7 less per barrel than elsewhere is pretty appealing, even after factoring in high transport costs. As such, it is no surprise that U.S. oil exports to China surged this year.

U.S. oil exports hit a high at 2.133 mb/d in the last week of October, and have fallen back a bit since. In fact, it would seem to be a struggle for the U.S. to maintain such a high level of shipments. The more oil that is exported, the more likely the discount between WTI and Brent would narrow, which would essentially eat away at the competitiveness of U.S. crude.

…click on the above link to read the rest of the article…

Peak Oil: Just A Distraction Pt 3

February 23, 2016

Peak Oil: Just A Distraction Pt 3

… [T]here is no intellectually honest way to believe that the world can continue its near-total reliance on fossil fuels for much more than another decade — a paltry window of opportunity. We also know that we cannot wait until they go into decline before reaching for renewables and efficiency, simply because the scale of the challenge is so vast, and the alternatives are starting from such a low level that they will need decades of investment before they are ready to assume the load. The data is clear, and the mathematics are really quite straightforward. [1]

We’re not going to suddenly discover magical amounts of fossil fuel reserves though magical technologies because the Republican Party controls the House and/or because too many of its members are beholden to the industry. Energy resources don’t concern themselves so much with political ideology.

What’s left [and there are still substantial amounts left] is going to be harder to find, extract, and pay for. The quality and quantity will simply not be there in the manner we’ve come to expect. That’s the reality, and those are the facts.

What that means is that in time we’re going to have to make do with less just when we need it all more than ever, and just when millions more have asserted at this same time their needs and demands for the same finite amounts. Party affiliations shouldn’t be expected to change any of that.

The important issue is that no matter what words one uses or how the issues are characterized, the energy supply we’ve long relied upon to power our society to its impressive heights is no longer what it once was.

…click on the above link to read the rest of the article…

The Oil Crash Of 2016 Has The Big Banks Running Scared

January 19, 2016

The Oil Crash Of 2016 Has The Big Banks Running Scared

Running Scared - Public DomainLast time around it was subprime mortgages, but this time it is oil that is playing a starring role in a global financial crisis.  Since the start of 2015, 42 North American oil companies have filed for bankruptcy, 130,000 good paying energy jobs have been lost in the United States, and at this point 50 percent of all energy junk bonds are “distressed” according to Standard & Poor’s.  As you will see below, some of the big banks have a tremendous amount of loan exposure to the energy industry, and now they are bracing for big losses.  And the longer the price of oil stays this low, the worse the carnage is going to get.

Today, the price of oil has been hovering around 29 dollars a barrel, and over the past 18 months the price of oil has fallen by more than 70 percent.  This is something that has many U.S. consumers very excited.  The average price of a gallon of gasoline nationally is just $1.89 at the moment, and on Monday it was selling for as low as 46 cents a gallon at one station in Michigan.

But this oil crash is nothing to cheer about as far as the big banks are concerned.  During the boom years, those banks gave out billions upon billions of dollars in loans to fund exceedingly expensive drilling projects all over the world.

Now those firms are dropping like flies, and the big banks could potentially be facing absolutely catastrophic losses.  The following examples come from CNN…

For instance, Wells Fargo (WFC) is sitting on more than $17 billion in loans to the oil and gas sector. The bank is setting aside $1.2 billion in reserves to cover losses because of the “continued deterioration within the energy sector.”

…click on the above link to read the rest of the article…

Bypassing Big Oil’s Alliance with Government

May 25, 2015

Bypassing Big Oil’s Alliance with Government

New Orleans Environmental Attorney Creates ‘Shadow Agency’

In his almost 30-year career as an advocate for environmental justice, Louisiana attorney Stuart Smith has fought many of the biggest energy companies in the world and has come away victorious in his fair share of cases.

Smith tells the stories behind these cases in Crude Justice: How I Fought Big Oil and Won, and What You Should Know About the New Environmental Attack on America, a new book that is part memoir and part legal thriller. With energy companies acquiring even greater leeway to do as they please, Smith believed now was the right time to show the public how he successfully used the courts to gain some justice against corporate wrongdoers.

The book’s legal dramas take place primarily in the oil patch of the Gulf Coast states, where companies such as Exxon Mobil and Chevron spent millions of dollars defending themselves in cases brought by Smith and his fellow plaintiffs’ attorneys. One energy industry behemoth feared a loss in a single case brought by Smith in a small town in Mississippi would establish legal precedent and wind up costing the industry considerably more money down the road.

“Part of me understood exactly why they fought. We were looking to establish a brand-new area of environmental law, one that could gain a small measure of justice for workers and other citizens who’d been poisoned all across the oil patch of the Deep South and could cost Big Oil hundreds of millions of dollars,” Smith writes.

As a storyteller, Smith fills the book with intrigue and suspense, often leaving the reader to wonder how he and his outgunned colleagues will be able to claim a legal victory on behalf of their underdog clients.

…click on the above link to read the rest of the article…

The Latest Casualty In Energy’s Hardest Hit Industry

May 14, 2015

The Latest Casualty In Energy’s Hardest Hit Industry

Another coal company bites the dust. Again.

Patriot Coal, a miner of coal in several Appalachian states, filed for Chapter 11 bankruptcy on May 12. Patriot said it is “in active negotiations for the sale of substantially all of the Company’s operating assets to a strategic partner.”

The move comes just a year and a half after the company emerged from its previous bankruptcy. At the time, some secured creditors received repayments, but shareholders bore the brunt of the restructuring.

The initial bankruptcy came as Patriot struggled with high costs during a downturn in the coal industry. But after the company came up with a restructuring plan that included a cut in labor costs and the closure of high-cost mines, Patriot thought it would rebound. But it wasn’t to be. As Taylor Kuykendall of SNL Energy notes, “Patriot was plagued by a union strike, infrastructure failures, fatal accidents and persistently weak coal markets that ultimately resulted in the company again filing for Chapter 11 bankruptcy reorganization.”

Related: 5 Solar Stocks That Should Be On Your Radar

In one sense, the problems at Patriot Coal were unique to the company. It was originally a spin off from Peabody Energy, which unloaded healthcare liabilities onto the newfound Patriot Coal. That weighed down the company from the start, freeing Peabody from the costs. SNL’s Kuykendall chronicles a series of mishaps in 2014, from lawsuits for environmental damages to a series of safety accidents. Patriot’s CEO called it “one of the worst years in Patriot’s recent history.”

The poor performance affected output. In the first three months of this year, Patriot produced 4.1 million tons of coal, a 15.1 percent decline from the first quarter in 2014.

…click on the above link to read the rest of the article…

 

 

No Surprises: Obama’s Fracking Rules Upset Everyone

March 24, 2015

No Surprises: Obama’s Fracking Rules Upset Everyone

The Obama administration’s new rules on hydraulic fracturing, or fracking, are being denounced by the energy industry as impeding a US oil renaissance and by environmental groups who call them too weak to be effective.

The Interior Department and the Bureau of Land Management (BLM) drew up the rules for the technology used in extracting oil and gas from underground shale formations. Interior argues that they’re years overdue, and that they can be a guide for many states working to develop their own rules for the practice.

Fracking’s advantage is that it provides drillers with a new way to extract oil and gas that was previously inaccessible because it was locked deep underground in shale. It’s more expensive than conventional drilling, requiring injections of water mixed with chemicals to break up the rock.

Related: Three Reasons Why US Shale Isn’t Going Anywhere

Fracking could help the United States become the world’s largest producer of oil and gas, but it has also raised concerns that the chemicals – each drilling company has its own secret mix – could poison nearby groundwater supplies for both people and wildlife. As a result, states are struggling to develop their own rules to cover private and state-owned land, where most fracking is practiced.

The new federal rules will formally cover only federally owned land, where only about 10 percent of fracking occurs in the United States, according to the Interior Department. But it says it can help states address their own approach to fracking rules.

 

…click on the above link to read the rest of the article…

Oil Plunge Hits Office Market, But “So Far” No Apocalypse

February 12, 2015

Oil Plunge Hits Office Market, But “So Far” No Apocalypse

“Here in Houston a number of projects have been canceled. Engineers are put on ‘hold.’ There have been some contract engineers laid off, and hiring has been suspended. Everyone is waiting for the other shoe to drop.” That’s how an engineer in the energy sector saw it. And it captured the mood.

So the sky isn’t quite falling on the Houston property market. Not yet. With 18.4 million sq. ft. of office space under construction, the epicenter of the US energy industry is far ahead of number two, New York City with 7.6 million sq. ft. under construction. Dallas is number four with 7.5 million sq. ft. Much of the growth in Texas over the last few years has been spawned by the “shale revolution.”

But the layoff announcements in the oil-and-gas sector are hailing down on the industry.

Weatherford International – headquartered in Houston – announced last week, after reporting a quarterly loss of $475 million, that it was axing 5,000 employees, or 8.9% of its global workforce, to save $350 million per year. Yesterday, Halliburton announced 6,400 job cuts, on top of the 1,000 announced in December. Baker Hughes, which is being acquired by Halliburton, announced 7,000 job cuts. In January, Schlumberger announced 9,000 layoffs. This brings the layoff announcements of the four largest oil-field services companies to 28,400. It’s all about cash flow, now that pricing chaos has swept over the once flush industry.

Oil majors and smaller companies have chimed in with their own layoffs. Privately held companies might quietly proceed with cuts. And many of these folks would have needed some office space.

 

…click on the above link to read the rest of the article…

Another 5,000 Victims Of The Plunge In Oil Prices

February 9, 2015

Another 5,000 Victims Of The Plunge In Oil Prices

Yet another energy company is struggling to save money in the face of unexpectedly low oil prices. Weatherford International, one of the world’s largest oilfield services company, will cut 9 percent of its global workforce in the next two months to save more than $350 million a year.

The vast majority of the layoffs – 85 percent, or 4,250 workers – will be felt in the United States and Western Europe. The company, which has operations in more than 100 countries, now has about 56,000 employees. Weatherford also will offer voluntary buyouts to certain eligible employees to reduce its workforce further.

“We will focus the entire organization on ensuring we are cash-flow positive in 2015,” the Swiss-based company’s CEO Bernard J. Duroc-Danner said in a statement late Wednesday. “This means that for every dollar of revenue we lose due to reduced activity and pricing, we will make up for it in cost, capital expenditure and working capital reductions.”

Because of the drop in oil prices, oil companies and ancillary services like Weatherford are losing business. Nevertheless, Duroc-Danner said Weatherford will keep its eye on ensuring a positive cash flow throughout 2015. Last year it began selling off subsidiaries and cutting costs in other ways, raising about $1.8 billion in cash, most of it to pay down debt.

…click on the above link to read the rest of the article…

 

Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds

January 12, 2015

Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds

If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer.  As I write this, the price of U.S. oil is sitting at $45.76 a barrel.  It has fallen by more than 60 dollars a barrel since June.  There is only one other time in history when we have seen anything like this happen before.  That was in 2008, just prior to the worst financial crisis since the Great Depression.  But following the financial crisis of 2008, the price of oil rebounded fairly rapidly.  As you will see below, there are very strong reasons to believe that it will not happen this time.  And the longer the price of oil stays this low, the worse our problems are going to get.  At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before.  So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead.  Because if not, the price of oil is going to absolutely rip the global economy to shreds.

What amazes me is that there are still many economic “experts” in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.

The only precedent that we can compare the current crash to is the oil price collapse of 2008.  You can see both crashes on the chart below…

…click on the above link to read the rest of the article…

 

As Oil Prices Fall, Banks Serving the Energy Industry Brace for a Jolt

January 12, 2015

As Oil Prices Fall, Banks Serving the Energy Industry Brace for a Jolt

Banks have been lending hand over fist to companies in the nation’s energy industry, underwriting bonds, advising on mergers, even financing the building of homes for oil workers. All of this has provided a boon to banks that have been struggling to find more companies and consumers wanting to borrow.

Yet with the price of crude oil falling below levels sufficient for some energy companies to service their huge debts, strains are being felt and defaults are likely. While it may take some time for the crunch in the oil industry to translate into losses, one thing already seems clear: The energy banking boom is over.

The Price of Crude Oil Over the Last 9 Months

“At the least, you are talking about a slowdown in loan growth for the banks in the energy-producing states,” said Charles Peabody, a banking specialist at Portales Partners. “That, we feel pretty strongly about.”

…click on the above link to read the rest of the article…

 

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