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Busting The “Canadian Bakken” Myth

Busting The “Canadian Bakken” Myth

The financial pages of Canadian newspapers have been full of headlines lately announcing the potential of two large shale oil fields in the Northwest Territories said to contain enough oil to rival the Bakken Formation of North Dakota and Montana.

The report by Canada’s National Energy Board (NEB) evaluated, for the first time, the volume of oil in place for the Canol and Bluefish shale formations, located in the territory’s Mackenzie Plain. It found the “thick and geographically extensive” Canol formation is expected to contain 145 billion barrels of oil, while the “much thinner” Bluefish shale contains 46 billion barrels.

Related: More OPEC Oil Coming When Iranian Sanctions Removed

The report did not estimate the amount of recoverable oil, but points out that even if one percent of the Canol resource could be recovered, that represents 1.45 billion barrels. The calculation immediately had reporters comparing Canol and Bluefish to the Bakken, where the latest USGS estimate shows 7.4 billion barrels of technically recoverable oil (this includes the Three Forks Formation underlying the Williston Basin straddling North Dakota, Montana, Saskatchewan and Manitoba).

“Northwest Territories sitting on massive shale oil reserves on par with booming Bakken field in U.S.,” enthused the Financial Post. “NEB and GNWT study finds 200 billion barrels of oil in the Sahtu,” gushed CBC News, referring to a region of the sprawling territory that cuts across three provinces and touches the Arctic Ocean.

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Cold Shoulder For Russia Could Hint At OPEC Decision June 5th

Cold Shoulder For Russia Could Hint At OPEC Decision June 5th

Before the November 2014 OPEC meeting in Vienna, the head of Russia’s state-owned oil company Rosneft flew to Vienna to meet with OPEC members. The meeting demonstrated Russia’s interest in stopping oil prices from falling further, as it pushed OPEC to cut back on oil production. But little came of the meeting, since Russia was not prepared to participate in any decrease in output.

With OPEC set to meet again on June 5, the Wall Street Journal reported that Russian officials again held secret discussions with OPEC. Once again, the meeting, apparently held on May 13, concluded without any agreement.

Related: Three Eagle Ford Stocks Worth A Look

Russia is overwhelmingly dependent on oil. Around half of its budget revenues come from oil and gas, and for this reason Russia is particularly desperate to see a return to higher oil prices. A disproportionate dependence on oil revenues is something shared by most, if not all, of the members of OPEC.

But the two sides are operating in different circumstances. For example, the de facto head of OPEC, Saudi Arabia has a vast war chest, somewhere on the order of $700 billion in reserves.

Ultimately, however, the big difference is that Saudi Arabia plays the long game. There are multiple concerns in Riyadh that factor into its strategic decision making over oil output. The near to medium term concern is maintaining market share, which it is pursuing by keeping oil production levels high. Saudi Oil Minister Ali al-Naimi said on June 1 that the strategy was working, and with an eye on stagnating US shale production, he said the markets are moving “in the right direction.”

 

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