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There is no valid economic reason for $70 oil or $5 natural gas........other than a surplus of capital flooding the markets in search of speculative returns.
You think the Oilsands get a bad rap... check out this.
http://www.cbsnews.com/stories/2009/10/01/60min...
Has anyone seen the new 30 second commercial tripe from The Bank of Silly Notions.......eerrrr......The Bank of Nova Scotia........?
In a dark twist on the Century 21 "Suzanne knows what is best" commercial they now have their own blatantly sexist and demeaning towards women variant, designed to embarrass females into letting hubby throw all their hard earned savings away on some heavy fee earning (for the bank anyways) stupid mutual funds, ABCP garbage or other stock market investment with one of their "Scotia Advisors".
Basically, what you have is a couple sitting in front of their "Scotia Advisor" and hubby is trying to explain to wifey that the market is where the great returns are, and that they get nothing in GIC's.......etc.....(well, I wouldn't exactly call the preservation of capital "nothing", would you ?? LOL !!) but I digress......
Anyways, the rocket scientist, errrr "Scotia Advisor", (I wonder it that should have "TM" behind it like REALTOR does.......LOL !!!) says "he's right" to his wife......and hubby rips off his shirt to expose underneath that he is wearing at-shirt with HE'S RIGHT written on it and he proceeds to run around the bank screaming in victory.
Classy........
But for at least the next few years prices will be depressed by the fear of the market being swamped by shale gas.
We get a new supply swamp every few years. Last time it was LNG's. Whatever happened to LNG's?
Exactly. The markets mindset right now is that the market is "flooded" with NG. True to a point, but that will change as demand overcomes the supply. Shale gas is a totally different beast and only the big majors can play in that sandbox. As you said, it takes many many many wells and infrastructure, ALOT of water, etc. Not to mention land and environmental negotiations that can take years to define.
Bottom line is it will be years and major major!! dollar investment before any substantial shale gas volumes hit the market.
Price of Nat gas collapsed today. Watch our precious O and G stocks follow in the next couple of weeks then oil then the dollar then real estate.
Meanwhile interest rates will jack up to where they were in the 80s (23%) and you can press rewind on our house prices.
This will end badly. You betcha
Alberta has gone from being significant in the area of natural gas to really being insignificant. It's amazing what new drilling techniques can do.
Natural gas reserves may grow
There is just one kink in the armour though and that's they think that they can can be profitable at $4.00 or $5.00 US nat gas prices. They are basing this on estimated ultimate recoverable (EUR) rates. They are hoping that those prices will be sufficient to pay off the initial investment, ongoing operating costs and still give them a 15% return on investment (ROI). The jury is still out on this because there is not enough EUR data that backs up these wells. So if their wrong on their EUR's estimates are not right they will have pissed away all the capital in the last year for not.
If you didn't know what is currently saving all the bigger shale gas players is that they have hedged out at least 75% of their 2009 production at $7 to $9, so they only have around 25% of their production exposed to these low prices. In 2010 the hedging will not be there so we should start seeing whether or not these wells are actually profitable at these low prices. If the big gas companies are right and they are profitable, good for them but if they're not, you will see shale gas drilling come to a skretching halt until gas prices recover. What the price is required will be anyone's guess but it will be a lot higher than they currently are, that's for sure.
PS: The big shale gas players have put together a very well funded lobby organization to target the US government and the media to increase consumption of natural gas. They are trying very very hard to knock coal off it's top spot in the electric generation market. Right now nat gas electricity generation is only used during peak periods, they're trying to change that to full time and are painting coal as the green house gas boggy man. It looks like they seem to be make some headway.
Thanks!
Mike
These are just some of the main things that your typical beret wearing communist MF'er sitting in some dank and dark Parisian basement whilst reading Marx by candlelight has come to hate, as they go against all the tenets of their warped and totally fucked up belief system.
At any cost they will avoid, deter and derail efforts to make this kind of energy source truly green friendly. Cars today are 1/1000 better emission wise than cars of 50 years ago. The morons that run "Kalimexiforniastan" are stumped because everytime they pass a green law that they think will impune the automobiles prgoress, the manufacturer's beat them at their own game by designed theri way ouf ot the problem. Technology has not yet been pushed to see what can be done with the shale problem Mr. Happy postedabout, nor some of the other things, instead, and for example, nutbars like Michael Ignatieff, the liberal leader, want to invest billions in only green technology, "but", as the whackjobs on the left see it. They are all like that........
Don't write off cheaper natural gas or oil just yet.........
We get a new "unlimited" supply of energy every few years, and they never materialize, so I'm not going to write off the Alberta oil patch just yet. However, if this economic collapse keeps getting worse (which it is, despite the retoric from Washington), who knows how low gas prices can go? It will take a while for drilling stand-downs to rebalance the market.
Interesting trend. Where to now?
Interesting when Calgary has had a 6.8% decrease in prices YoY. Edmonton followed Calgary's RE boom, so will Calgary then follow Edmonton's RE bust?
As an example he cites Fairborne's play in the Wilrich formation at Marlboro, northeast of Edson in northwestern Alberta where the company is drilling its third horizontal well.
Fairborne's first Wilrich well came on at more than four mmcf a day, and was still producing more than three mmcf a day after four months. A Wilrich horizontal well has a 10-15% rate of return at an AECO price of $3.50 per gigajoule, VanSickle said.
http://www.nickles.com/ntm/extra.asp?article=NT...
I hope Danielle Smith wins the Wild Rose leadership this weekend.
Also, the CREA release points to the fact that inventory has declined steadily. Builders are leaving the market and are building less. The supply has been constricted since the recession started.
The biggest play left in the RE market over the next few yrs is the behaviour of those baby boomers who were considering retirement. If they decide to cash out en force from the current stock market jump and to downsize I think we could be seeing a lot of RE being made available in the next few yrs.
Mike
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Recession Will Be 'Full-Blown Depression': Strategist
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This article sort of goes in hand with some other articles I've read lately about some of the new all electric vehicles that will be coming out by the major manufacturers. Some of them are very cool and my guess is we are at the beginning of the electric car revolution. Most of them are touting at least 160 Km driving range between charges.
A perfect storm's brewing to cool petroleum demand
Germany's Coming Energy Revolution