Category: Drill, Baby, Drill

Jevons Paradox

“Every molecule of fossil fuel produced worldwide will be burned by somebody somewhere, and local efforts to restrict consumption merely relocate the enjoyment of that privilege.”

Prior to the widespread proliferation of the steam engine, mining for coal was back-breaking work. The industry relied on human and animal strength, with laborers using primitive tools, to extract the stuff from hand-dug mineshafts. The work was as dangerous as it was dirty, and fatalities were commonplace. Then, a revolution unfolded. A step-change improvement to existing steam engine design, engineered by James Watt, allowed miners to leverage machinery such as pumps, hoists, and ventilation systems to alleviate significant portions of direct human effort. Pumps that used Watt’s engines were particularly effective at draining water from deep mineshafts, making vast and previously inaccessible coal reserves economically viable. The genius of his invention was in delivering far more work per quanta of fuel.

What did these advances in energy efficiency do to the demand for coal? Did society limit itself to doing the same amount of work as it had done before, just more economically so? Quite the contrary.

This is a good one, worth sharing around. More discussion here.

Passing of a Southeast Saskatchewan oilfield legend

A few years ago the Weyburn Oil Show Board created a new honour called Southeast Saskatchewan Legends. There are a number of people who, over several decades, were key players in building the Saskatchewan oil industry. Many of them started and operated not one, but several oilfield service companies, and coincidentally, almost every single one of them farmed on the side. You could call them “serial entrepreneurs.”

Ron Wanner of Estevan was one of the first to be honored as a “Legend,” back in 2017. He started wheeling and dealing surplus oilfield equipment, and ended up having a trucking company, an oil company, a drilling rig and a service rig company. He passed away a few days ago. He also had a policy of buying long-term employees their own vehicle after a certain number of years. I remember around 2010 he bought a Hemi Challenger SRT/8 for the engineer who successfully built his oil company from nothing. This is his obituary, as published in Pipeline Online. They don’t make many like Ron Wanner anymore.

Newfie oil – delays and conversion

Geez, wonder who the federal government likes best? Federal government gives $86 million to convert Newfoundland oil refinery to biofuel.

And you know it likes Newfoundland because when they wanted to open up a major new oilfield, the federal Liberal government bit their tongue and said, “Sure!”

But now Newfoundland will also got a taste of what Alberta usually chews on – delays on energy projects. The Bay du Nord sailed through federal approvals (sailed – see what I did there?) , only to find out that Norwegian proponent Equinor is going to delay it three years. Didn’t they know the federal government is supposed to delay oil projects three years, not the oil company?

Y2Kyoto: State Of Anorexia Envirosa

If you live in Alberta, you may have noticed we are in the midst of a provincial election campaign. Regarding the potential outcomes, all I can say is this: I’m grateful to live near some natural gas wells. I’m grateful to step outside the city and be farmers and farmland and have clean water.

Taken together, by 2050, it seems quite probable that only those living amongst such a collection will be the last people standing.

Our two main combatants in the provincial election are, to the extent I am paying attention (not really), duking it out over who has the best emissions reduction plan, and who’s the most apt to lead to net zero 2050.

You want to run towards that light?

Trudeau says we shouldn’t burn oil, but process it. And build lots of nuclear

Trudeau speaks of supplying natural gas to #Germany, despite his government killing Energie Saguenay. And he wants to build lots of #nuclear, too. And he wants carbon capture, but his government won’t allow enhanced oil recovery incentives. We shouldn’t burn oil, but process it. 
And he said all this in front of the German president, months after he told the German chancellor there was “no business case” for LNG.

Down The Primrose Path

Russian Oil Now Trades Consistently Above $60

The increase in price above $60 means both that the cap is starting to fail and also shows that traders, buyers and shippers are getting increasingly more comfortable with handling Russian barrels and flouting western sanctions. It also demonstrates that a large and surprising cut in oil output by members of the OPEC+ producer alliance boosted the prices that Russian barrels are fetching (just as Russia and OPEC+ intended).

While Urals, Russia’s top export stream, remains just around $60 the weighted average of just $60 is well below international benchmarks. The US Treasury has long argued that its goal was to ensure Russian oil trades at discounts, not that there should be a strict adherence to the cap, which clearly is no longer working.

Leading indicators and closing indicators in Saskatchewan oil

An oil well abandonment near Bienfait in the fall of 2022.. Photo by Brian Zinchuk

One of the key leading indicators of oil and gas development is Crown land sales. And the Saskatchewan April sale saw increased interest in all four oil production areas of the province.

On the opposite end of the timeline is well abandonment and cleanups.  When the crap hit the fan for the industry when COVID-19 hit, there was a cry for some sort of relief program. That ended up being the Accelerated Site Closure Program, which properly abandoned inactive wells and facilities. That program just recently concluded, having been fully subscribed.

And on the other side of the country, Newfoundland’s Muskrat Falls hydro project is finally online. This project almost bankrupted Newfoundland, but the feds quietly bailed them out during COVID. That kinda got swept under the rug. Muskrat Falls was Newfoundland’s attempt at squeezing additional power out of the same river system as the massive Churchill Falls project, which produces about 50 per cent more power than the entire province of Saskatchewan on any given day. Quebec pays Newfoundland next to nothing for that power, and uses it domestically and sells it to the US and enormous margins. Muskrat Falls, at a much lower output, was basically Newfoundland’s F You to Quebec.

New World Order

Terry Etam: The axis of the world is shifting.

Here in the weird West, where we set aside our vast wealth, bountiful resources, technological prowess, best-in-history medical/safety establishments, and other assorted existential victories to get into fistfights about whether more racism will eliminate racism and who can go to the bathroom where, we are used to watching ancient conflicts take place on the other side of the world, shaking our head, and wondering either “Why can’t they all just get along” or “Well that’s unacceptable, better step in.”

The weird west has long gotten involved in many of these conflicts because of, well, o-i-l. It’s been that way since the 1950s, probably longer; the west’s insatiable thirst for hydrocarbons has driven a lot of international shenanigans and weird relationships. Recall that after a gang of terrorists hijacked four planes and flew them into the US’ most fundamental landmarks on home soil, and that more than half of those terrorists were from Saudi Arabia, the US promptly and expectedly retaliated – by invading two other countries, and going for tea with Saudi Arabia. Kind of transparent, that one.

But that established hydrocarbon-based camaraderie is fading fast, and it doesn’t look like the West has a game plan in response. That’s about as far as I’ll wade into geopolitics because the whole mess is grossly complicated (who hates who again this week?), other than to point out how rapidly things are changing and how that is impacting the energy world.

More: Saudi Arabia’s Crown Prince Mohammed Bin Salman (MbS) is no longer worried about pleasing the United States as his relationships with other global superpowers including China and Russia have strengthened.

It’s Probably Nothing

@WallStreetSilv

Within the past few hours, multiple OPEC nations have announced oil production cuts, total is over 1 million bpd. Russia has also announced 500,000 bpd cut.

Biden has already sold about half of our emergency oil supply reserve. He can’t counter this situation.

It will be very interesting to see where commodity futures open Sunday evening.

Bumped for update: Japan has broken the pact with the US and its Allies and has bought Russian oil above the price cap

Nobody saw that coming.

A million dollars isn’t cool. You know what’s cool? A billion dollars … from lithium

Here’s why Pipeline Online has been doing such a deep dive into lithium in Saskatchewan. If current lithium prices hold, the standard-sized lithium project (of which there are several) planned for Saskatchewan will result in just under a billion dollars (CAD) per year in revenue. That’s right – per year, each. If they can get direct lithium extraction to work, we’re talking about a multi-billion industry in this province in a few years time

Saskatchewan is aiming to provide the building blocks for the 21st century

Here’s how critical minerals are involved in a typical cellphone. Government of Saskatchewan

To provide the building blocks of 21st century technology, #Saskatchewan releases Critical Mineral Strategy. That includes helium, lithium, potash, copper, nickel, uranium, and a whole pile of rare earth elements. Saskatchewan wants to double its share of the mineral exploration pie in Canada.

In a related story, flow through shares would be great, if only they applied to helium exploration, says Royal Helium CEO.

But Saskatchewan’s Critical Mineral Strategy’s flow through shares are a big deal for junior mining company Buffalo Potash.

Calling out Biden on Keystone XL cancellation

This stirs up serious memories for me, as I was the Canadian reporter in 2016 who asked presidential candidate Donald Trump if he would approve the Keystone XL Pipeline. He said he would, but “he wanted a piece.”

Here we are in 2023, and a Canadian Press reporter challenged President Joe Biden on cancelling the Keystone XL and delaying the Line 5 project, but approving a new oil project in Alaska. And it turns out, math is hard.

I don’t know who that reporter was, but I’d buy him a bottle of 18-year old Scotch.

Also, there’s a hell of a lot said about energy in the joint statement released by Trudeau and Biden. And some in his speech to Parliament, too.

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