Canadian Railroads > Has the Bakken bubble burst?

http://www.railwayage.com/index.php/management/does-zero-bakken-crude-for-irving-oil-indicate-a-trend.html?channel=44

The Bakken is a big place, both horizontally and vertically. The cost of lifting the oil varies considerably from one operator to the next, and the cost of hauling the oil to market is considerable. Estimates are $8 to $14 a barrel, before government mandated stripping of gassy liquids, etc. If you're getting $32 in the spot market, and it costs you $14 to rail crude tio NJ, you're losing money.

Oil from Angola, in contrast, is quoted at about $3 a barrel delivery in NY off a base of about $45-46 before discounts

I've seen more ocean going tankers at the Phillips wharf in NJ in the past two months than I saw in the entirely of 2014.

(There's a lot of speculation about which crude drillers will default on obligations. Some of the late entrants paid top dollar for leases, and are losing a bundle.)

don't beleive so ... the opec producers are ramping and are going to continue to ramp up production ... right now Bakken production has somewhat been put on hold with no new wells being drilled and that'll stay that way until the price of oil makes drilling for it worth the price of getting it out of ground ... right drilling a new well would cost more that what comes out ...

Out_Of_Service Wrote:
-------------------------------------------------------
> don't beleive so ... the opec producers are
> ramping and are going to continue to ramp up
> production ... right now Bakken production has
> somewhat been put on hold with no new wells being
> drilled and that'll stay that way until the price
> of oil makes drilling for it worth the price of
> getting it out of ground ... right drilling a new
> well would cost more that what comes out ...

The US rig count (operating wells) is down considerably, year over year. But the amount of oil pumped is flat to up slightly, suggesting the more productive wells are pumping even more fuel.

What will definitely change for the rails is the full flow of the Double H pipeline from the Bakken to Guernsey WY. That brings oil west by pipe and into the pipe network.  In 2015, more oil will leave the Bakken by pipe than by rail, for the first time. Another pipe will be on line in early 2017, from what I understand.

Also, a major Canadian oil sands project has been shut down by the Chinese company Nexen. There doesn't seem to be a hurry to fix and reopen it.

Lackawanna484 Wrote:

> Also, a major Canadian oil sands project has been
> shut down by the Chinese company Nexen. There
> doesn't seem to be a hurry to fix and reopen it.

Nexen has not shut anything down, but in compliance with the government's orders has slowed to 75% production rates.  There's nothing really to fix, it's all an issue with paperwork not being correct, and the issue is being worked on as we speak.

greasemonkey Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
>
> > Also, a major Canadian oil sands project has
> been
> > shut down by the Chinese company Nexen. There
> > doesn't seem to be a hurry to fix and reopen
> it.
>
> Nexen has not shut anything down, but in
> compliance with the government's orders has slowed
> to 75% production rates.  There's nothing really
> to fix, it's all an issue with paperwork not being
> correct, and the issue is being worked on as we
> speak.

There seems to be a difference of opinion on this.  Here's what the Financial Post reported last week:



Nexen Energy is shutting down its Long Lake oilsands operations as it complies with a pipeline suspension order from the Alberta Energy Regulator.The company, a subsidiary of Chinese state-owned CNOOC Ltd., says it will take up to two weeks to complete the shutdown of the complex steam-assisted gravity drainage operation.On Aug. 28 the regulator ordered that the company cease operation of 95 pipelines in the province after determining that it was not complying with pipeline maintenance and monitoring regulations.

Nexen shuts down Long Lake oil sands

Lackawanna484 Wrote:
-------------------------------------------------------
> greasemonkey Wrote:
> --------------------------------------------------
> -----
> > Lackawanna484 Wrote:
> >
> > > Also, a major Canadian oil sands project has
> > been
> > > shut down by the Chinese company Nexen. There
> > > doesn't seem to be a hurry to fix and reopen
> > it.
> >
> > Nexen has not shut anything down, but in
> > compliance with the government's orders has
> slowed
> > to 75% production rates.  There's nothing
> really
> > to fix, it's all an issue with paperwork not
> being
> > correct, and the issue is being worked on as we
> > speak.
>
> There seems to be a difference of opinion on
> this.  Here's what the Financial Post reported
> last week:
>
>
>
> Nexen Energy is shutting down its Long Lake
> oilsands operations as it complies with a pipeline
> suspension order from the Alberta Energy
> Regulator.The company, a subsidiary of Chinese
> state-owned CNOOC Ltd., says it will take up to
> two weeks to complete the shutdown of the complex
> steam-assisted gravity drainage operation.On Aug.
> 28 the regulator ordered that the company cease
> operation of 95 pipelines in the province after
> determining that it was not complying with
> pipeline maintenance and monitoring regulations.
>
> Nexen shuts down Long Lake oil sands

http://www.aer.ca/documents/news-releases/AERNR2015-14.pdf    &    http://www.nexencnoocltd.com/en/AboutUs/MediaCentre/NewsReleases/News/Release.aspx?year=2015&release_id=0054150E5B094B95A078C8982EFAB376  

 

Thanks to each of you for the information.

I like the regulator's summary for broadcast use. That presents exactly what the regulator wants to communicate. And, doesn't have a reporter / editor trying to determine the money quote in a document.