# Oil off everyone's radar?



## Pluto (Sep 12, 2013)

Now that oil seems to be off most people's radar maybe it is time to take a look. 

http://www.marketwatch.com/story/wh...-for-a-devastating-oil-shock-ahead-2017-07-03

As the article indicates there has been a steep drop in oil and gas investment. The article claims such a drop has never occured before. True? 

Thoughts, critiques anyone? Is this a good time to pick away at some oil company survivors?


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## AltaRed (Jun 8, 2009)

There have been other instances of steep drops in O&G investment before. In the early 80's for example. Been there, done that in real life. If an oil price crash comes, the cash flow starved and/or the balance sheet challenged companies cut investment first (the banks insist), then if the crisis lasts more than a year, the next tranche of companies have to pull back when their bankers insist, and eventually even the integrated majors have to do likewise to maintain balance sheet A to AAA ratings.

The problem is there is not a consensus or clear view on the precise series of parameters that turns money on, or off, amongst the vast array of O&G companies. It is all modelling based on sometimes faulty assumptions that keep changing. The US oil shale industry has shown it can turn the taps off and on quickly with less than a one? year cycle from investment decision to oil production sales, and they have shown they can do it at ever decreasing oil prices. Add in wild cards from places like Libya, Nigeria, Russia and even Syria, what you have is a ouija board. I suspect oil prices can stay lower longer than many of the companies can stay solvent...and more importantly, investors can remain patient.

I have no intention of being in the game (beyond my indirect ex-Canada ownership via VTI, VGK, etc.). Others can ride that Six Flags roller coaster.


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## Pluto (Sep 12, 2013)

^
A dicy six flags roller coaster indeed. I was through it in the 80's with Brit Oil. shares plunged at one point, and was terrified, but held on (due to their emense oil assets it didn't seem like they would go broke). When it was all said and done, managed to sell at a profit, and regretted not buying more after the plunge. that's when I started clueing into the idea I should be buying when I was most terrified.....


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## AltaRed (Jun 8, 2009)

Everyone has their own level of tolerance for motion sickness and the use of gravol. Mine has dissipated to not even getting on a playground teeter totter any more.


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## tygrus (Mar 13, 2012)

I read somewhere that oilsands costs of production have been drastically reduced in the past few years. Like under $20.


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## Nerd Investor (Nov 3, 2015)

I've still got some Suncor and Crescent Point. Hoping for at least a mini-recovery to cash out on the Crescent Point. I'm less anxious about Suncor, I'd be comfortable holding that longer term if it makes sense.


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## nobleea (Oct 11, 2013)

Shale oil has really been a game changer. Barring a war or something like that, there is such an overhang of production available, that it's going to be hard to get out of the 40-50$ oil range for some time. Our estimates are for that range until late 2018.
There's still a bit of inventory floating in oil tanker storage, a huge amount of drilled, but uncompleted shale oil wells. All those wells produce NG at the same time, so that price is expected to stay low for quite some time.

All North american producers have gotten leaner and more efficient.


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## tygrus (Mar 13, 2012)

I am betting dollars to donuts US and Canada takes the oil market or whats left of it. We have gotten much more efficient and our countries rely less on oil income for govt revenues. Russia, Saudi, etc all need oil so much higher because they pay for all their services with one industry. I mean what else does Saudi and Russia have. Venezuala out of commission. Other countries saddled with corruption. Drilling around the globe stalled. 

However, have to watch out for the electric revolution. Likely a decade away. Maybe one last gasp in this business. We need to diversify away.


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## zylon (Oct 27, 2010)

tygrus said:


> I read somewhere that oilsands costs of production have been drastically reduced in the past few years. Like under $20.


I suggest you stop reading that source immediately.


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## zylon (Oct 27, 2010)

Here's another questionable source - not linked.

I think people just make shite up.



> I read and heard this week that Suncor will stop spending on capex resource growth due to Canadian government carbon penalties and environmental attacks. They will instead focus on paying out cash flow to shareholders in higher distributions. In long run, this will cut their revenue/distributions as they will deplete supply- functioning much like a depleting oil royalty trust.


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## zylon (Oct 27, 2010)

What was actually said:


> “Through our 2017 capital spending program, we’ve earmarked the capital required to bring two major growth projects, Fort Hills and Hebron, to completion while at the same time investing in our existing assets to ensure continued safe, reliable and efficient operations,” Suncor president and CEO Steve Wiliams said in a release.


http://business.financialpost.com/c...ding/wcm/d879f0f9-3a64-4003-bcf2-1042bea7b301
Last Updated November 17, 2016


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## AltaRed (Jun 8, 2009)

tygrus said:


> However, have to watch out for the electric revolution. Likely a decade away. Maybe one last gasp in this business. We need to diversify away.


It will take a lot longer. A massive re-investment in the electric transmission grid and municipal distribution system, never mind peak generating capacity, will have to be made before electric EV makes much of a dent. Imagine all those commuters coming home after a day's work and plugging in their cars. Norway has had major growing pains and they have only reached 50% in new car registrations going to EV this year (and something like a current penetration rate of 10% or so - I forget that number). 

That said, Canada may soon reach a peak in gasoline sales though not holding my breath just yet. http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trade37c-eng.htm


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## zylon (Oct 27, 2010)




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## Pluto (Sep 12, 2013)

http://www.cbc.ca/news/business/costs-down-oilsands-1.3824106

more regarding cost reductions.


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## zylon (Oct 27, 2010)

> *Energy Stat: Is "Fake News" Driving Down Oil Prices?
> Today We Debunk the Top Ten Oil Myths
> July 3, 2017*


http://www.raymondjames.com/frankmcdonnell/resource.asp?page=energy_stat.htm


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## james4beach (Nov 15, 2012)

Energy has chronically been a weak part of the TSX since 2008. I have trouble buying into it any more than the index currently weights it at (you're already getting a healthy dose of energy/oil with the TSX index).

Additionally, the strategies that have under-weighted energy such as ZLB have done spectacularly well in recent years.


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## AltaRed (Jun 8, 2009)

IMO, oil prices will be influenced by inventory numbers and what happens in individual producing nations, including USA, not by technical charts. By the way, Brent Crude (actually now formally a blend of 15? oil field crudes) is rapidly losing significance in NW Europe. North Sea production has fallen from just under 6 million barrels per day in 2000 to about 2.5 million barrels per day currently (and only 0.5 million barrels per day from the whole UK sector, not just the Brent field). I think the Brent Crude marker will lose its meaning within 10 years since so much of NW Europe's oil into Rotterdam et al will come from elsewhere.


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## Pluto (Sep 12, 2013)

https://ca.finance.yahoo.com/news/aramco-ceo-sees-oil-supply-072611762.html

1. another article on the sharp drop in new discoveries and investment. 

2. I really don't see electric taking over anytime soon. Not in 10 years anyway. I talked to a guy with a Tesla. asked him how he would make out on a 1000 mile road trip. (My thinking was stay in a motel every 240 miles to charge up over night.) But he deftly avoided answering. It's clearly a commuter car so far - drive to work and back to the burbs. Hybrids are a more likely option.


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## AltaRed (Jun 8, 2009)

I don't think the link gives enough credit for reduced cost structures nor for conservation momentum that is building. Global oil productive capacity declines in the order of 4-5% per year in the absence of significant new investment (development). That is in the order of 4-5 million barrels per day. At some point, crude oil prices will increase enough to $60?/bbl to justify enough invesment to at least slow the decline, if not offset it completely. But with momentum building to reduce oil consumption, it is entirely possible demand will roll over and start to decline enough to remain in balance, even with supply declines. Absent short term spikes due to political events, it seems to me that oil could be range bound, potentially for the long term. I am not optimistic about the business.


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## bgc_fan (Apr 5, 2009)

Pluto said:


> https://ca.finance.yahoo.com/news/aramco-ceo-sees-oil-supply-072611762.html
> 
> 1. another article on the sharp drop in new discoveries and investment.
> 
> 2. I really don't see electric taking over anytime soon. Not in 10 years anyway. I talked to a guy with a Tesla. asked him how he would make out on a 1000 mile road trip. (My thinking was stay in a motel every 240 miles to charge up over night.) But he deftly avoided answering. It's clearly a commuter car so far - drive to work and back to the burbs. Hybrids are a more likely option.


Interesting timing. 2 people just drove from California to New York in 51 hrs.

https://www.theverge.com/platform/amp/2017/7/9/15938028/tesla-model-s-cannonball-run-record

It is possible with careful planning with a route that includes stops at supercharger stations.


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## AltaRed (Jun 8, 2009)

There are two successful ingredients necessary to accomplish this: 1) mapping out supercharging stations along the way, and 2) not getting held up without a feasible detour or 'stuck in traffic' delay that could wreck the mapped out plans in 1). This bloody well would not work on Highway 1 through Roger's Pass or the Coquihalla (both in BC). Hence the worst of all evils... hybrids to negate those outcomes.


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## OnlyMyOpinion (Sep 1, 2013)

In addition to long distance challenges, where I am currently, it seems the norm to have 3 cars per household - 2 in the driveway (because the garage is full of sh^t) and one on the blvd (so as to not illegally block the sidewalk). And sometimes its 4, or 5! Its ludicrous. How I wonder, will these households plug in and charge 3 cars per night when the new world order arrives? 
As AltaRed has noted elsewhere - show me the 'infrastructure'.


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## fatcat (Nov 11, 2009)

AltaRed said:


> I don't think the link gives enough credit for reduced cost structures nor for conservation momentum that is building. Global oil productive capacity declines in the order of 4-5% per year in the absence of significant new investment (development). That is in the order of 4-5 million barrels per day. At some point, crude oil prices will increase enough to $60?/bbl to justify enough invesment to at least slow the decline, if not offset it completely. But with momentum building to reduce oil consumption, it is entirely possible demand will roll over and start to decline enough to remain in balance, even with supply declines. Absent short term spikes due to political events, it seems to me that oil could be range bound, potentially for the long term. I am not optimistic about the business.


i certainly agree ... i live in bc with a bunch of hippies so that naturally colours my opinion but i think the environmentalists are winning, they certainly seem to be in canada ... our prime minister looks hog-tied and weak on the energy bit ... trans-mountain is dead i think

combine this with advances in alternative tech, higher carbon taxes and reduced consumption ...

i think tesla has just announced that they can double the output of their $35K sedan


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## bgc_fan (Apr 5, 2009)

AltaRed said:


> This bloody well would not work on Highway 1 through Roger's Pass or the Coquihalla (both in BC). Hence the worst of all evils... hybrids to negate those outcomes.


I don't know about that. There seem to be a number of supercharger stations along Hwy1, all well within range according to Google Maps: Merrit, Kamloops, Revelstoke, Golden. I am not familiar with BC geography, but it doesn't seem impossible on this particular route.


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## doctrine (Sep 30, 2011)

Oil growth is not even close to stopping. In the developed world, yes. Perhaps peak oil consumption has been reached in Canada and the US and other developed countries already, because of increased efficiency and also declining birth rates.

HOWEVER, this is absolutely not the case in the rest of the world, which represents more than a majority of humans. The average developed human uses less than 5% of the oil that we use, and that is changing fast, even with efficiency. A base case has oil consumption doubling over the next 50 years and that includes all the efficiencies you can imagine. 

Calling for oil's death is surely presumptuous. There is a severe medium term crunch coming, as the last of the real investment in oil virtually disappears next year. This really isn't priced in yet; perhaps a crazy increase in shale in places other than the US might dampen the blow. But I don't think any country, other than Canada, is capable of replicating the US success. 

Oil is definitely under the radar. And could be one of the best investments over the next 5 years or so.


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## zylon (Oct 27, 2010)

I don't know how much headway T. Boone is making in his quest to convert big rigs from diesel to natgas in USA; neither do I know if other countries are trying to do the same. 

Watch just three minutes of this video (from 1:25 to 4:25) and tell me how in thee hael these rigs can be run on renewables. This is just in USA, but as we know, they run on every continent, 'ceptin Antarctica where it's fly in or ship in.

"Big Rig" FULL Movie

https://youtu.be/lJ45iaQgJjk?t=1m15s










Image source: http://www.onlyinyourstate.com/iowa/worlds-largest-truck-stop-in-ia/


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## AltaRed (Jun 8, 2009)

bgc_fan said:


> I don't know about that. There seem to be a number of supercharger stations along Hwy1, all well within range according to Google Maps: Merrit, Kamloops, Revelstoke, Golden. I am not familiar with BC geography, but it doesn't seem impossible on this particular route.


It is a problem if one is stuck for 3 hours in a snowstorm within 10km from Merritt and then one is forced to turn around and go back to Hope (or Kelowna) as the case may be. Happened to us on the stretch between Hope and Merritt on April 2nd this year.

Or get within 10km of Revelstoke and an avalanche or land slide or auto accident sends everyone back to Golden. In the wintertime, Highway 1 experiences closures on a regular basis, sometimes 3-4 days per week. In BC, there are few options, if any, for detours. I never, for example, head out on any of those long stretches with anything less than half a tank of gas. It would be a huge gamble with an EV.

Added: EV's have a place for sure, but there are places where they will rarely, or never, make any sense. They certainly won't work in isolated communities or activities in the wilderness. Most people will have one IC vehicle for decades to come.


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## AltaRed (Jun 8, 2009)

doctrine said:


> HOWEVER, this is absolutely not the case in the rest of the world, which represents more than a majority of humans. The average developed human uses less than 5% of the oil that we use, and that is changing fast, even with efficiency. A base case has oil consumption doubling over the next 50 years and that includes all the efficiencies you can imagine.


I used to think that way too but I think the developing world will do a much better job at hydrocarbon efficiency per capita than we ever imagined..by orders of magnitude. Just like developing countries missed most of the landline cycle for telephone. They went from nothing to cell phones. This could happen with transportation in such countries too. The big "if" is whether they can put the electrical infrastructure in place soon enough to take advantage of moving directly to EV. None of us really know the answer.


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## bgc_fan (Apr 5, 2009)

AltaRed said:


> It is a problem if one is stuck for 3 hours in a snowstorm within 10km from Merritt and then one is forced to turn around and go back to Hope (or Kelowna) as the case may be. Happened to us on the stretch between Hope and Merritt on April 2nd this year.


Well I guess the question is how much range do you think you require on full charge. Less than 200 km means pretty much staying within town, i.e. Nissan Leaf. But what about 350 km or 450 km which a variant of a Tesla Model 3 may have?



AltaRed said:


> Added: EV's have a place for sure, but there are places where they will rarely, or never, make any sense. They certainly won't work in isolated communities or activities in the wilderness. Most people will have one IC vehicle for decades to come.


If you plan on meandering off the beaten path, then yes, you would probably stick with an ICE car only because of the infrastructure that favours gas. That being said, I recall some article about a small rural town in Quebec which has a high proportion of electric cars.
https://www.google.ca/amp/www.cbc.ca/amp/1.4056100


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## AltaRed (Jun 8, 2009)

The Tesla 3 would be at risk in a Highway 1 Rogers Pass or Coquihalla incident, especially in winter when there would be significant draw for the heater. We need to get to 1000km range for anyone to truly risk travel in certain situations. Likely to be an issue in -30C AB/SK/MB winters too. I just think we have to be realistic about what can potentially work and what makes no sense given what we know today. We may well have an EV someday for the bulk of our travel, but I would never risk it on long distance highways in this part of the country.


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## ian (Jun 18, 2016)

It depends on your driving. If we needed a commuter car we might look at it IF the numbers were right. We often drive Calgary-Vancouver, Calgary-Edmonton/Ft. Mac. Would not even consider a Tesla for that.

We have been delayed too many times in remote areas because of snow, avalanches, accidents, what have you. It is is why we always keep our gas tank topped up. It is one thing to be stuck on the side of the road for hours, it is another to be stuck in a vehicle with no juice/no heat/no air/no tunes/no lights.


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## fatcat (Nov 11, 2009)

doctrine said:


> Oil growth is not even close to stopping. In the developed world, yes. Perhaps peak oil consumption has been reached in Canada and the US and other developed countries already, because of increased efficiency and also declining birth rates.
> 
> HOWEVER, this is absolutely not the case in the rest of the world, which represents more than a majority of humans. The average developed human uses less than 5% of the oil that we use, and that is changing fast, even with efficiency. A base case has oil consumption doubling over the next 50 years and that includes all the efficiencies you can imagine.
> 
> ...


but we have to get it out of the country in a timely and price efficient way and it seems to me that this is now becoming more and more difficult to make happen ... the momentum against fossil fuels is growing and ar has said, things can happen very quickly nowadays, the number of industries and businesses who have found themeselves blindsided by events and technology is now very long


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## AltaRed (Jun 8, 2009)

Other than India and China who will still be building coal fired generating plants for awhile yet, it would be an incompetent Board of Directors elsewhere that would approve funding for a new coal fired plant (with a 40 year life) these days. Locally, Capital Power is an example of stupid decision making a decade ago (last coal fired unit coming on stream circa 2012). I also cannot imagine anyone is going to build a new oil fired generating plant either...except those which may be necessary in isolated communities not connected to the grid. So it is really transportation demand that will be the major determinant in the direction oil goes.


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## nobleea (Oct 11, 2013)

AltaRed said:


> The Tesla 3 would be at risk in a Highway 1 Rogers Pass or Coquihalla incident, especially in winter when there would be significant draw for the heater. We need to get to 1000km range for anyone to truly risk travel in certain situations. Likely to be an issue in -30C AB/SK/MB winters too. I just think we have to be realistic about what can potentially work and what makes no sense given what we know today. We may well have an EV someday for the bulk of our travel, but I would never risk it on long distance highways in this part of the country.


There are Supercharger stations at Canmore, Golden, Revelstoke, Kamloops, Hope. I'd have no problems taking a Tesla from Edmonton to Vancouver. We never drive through the mountains in the winter. We go skiing, but that's to canmore or banff area and there's supercharger coverage for that. Jasper would be risky.


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## AltaRed (Jun 8, 2009)

Then you have not likely experienced multi-hour delays, or worse, having to backtrack after getting 80% of the way to one of those with 100-150km between locations with no detour possible nor any living souls along the highway. Try watching 'Highway to Hell' for a sample of the risks on the Coquihalla. It would be the same risk on any long stretches of remote highway.


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## treva84 (Dec 9, 2014)

What about pipelines? Their valuations have become more attractive as of late, but I think there's far less volatility in their revenues as they are essentially a toll bridge with long term fixed contracts, with a very limited number of toll bridges coming online in the future. Perhaps not high growth, but very stable cash flows. 

Thus, although I avoid commodity companies due to the volatility and swings, I'll invest in a pipelines. I think the valuations of a few big players (i.e. PPL, and to a lesser extent ENB) are becoming attractive. I think ENF is fairly attractive, and it has green energy exposure to boot. What do you guys think?


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## AltaRed (Jun 8, 2009)

I like pipes too but I believe their multiples assume too much growth. Where is all that growth going to come from, especially in Canada? It is my opinion that once Horizon and Fort Hills is operating out of the oil sands, we will see only marginal growth in our oil production, and perhaps none at all. We don't seem to have the political will to build major new pipelines, and without the TRPs and ENBs being able to build new takeaway capacity, there is no room for the regionals to grow.


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## bgc_fan (Apr 5, 2009)

AltaRed said:


> The Tesla 3 would be at risk in a Highway 1 Rogers Pass or Coquihalla incident, especially in winter when there would be significant draw for the heater. We need to get to 1000km range for anyone to truly risk travel in certain situations. Likely to be an issue in -30C AB/SK/MB winters too. I just think we have to be realistic about what can potentially work and what makes no sense given what we know today. We may well have an EV someday for the bulk of our travel, but I would never risk it on long distance highways in this part of the country.


Just out of curiosity, where does the 1000 km range come from? I assume your current car doesn't have that range as most cars are probably around 600-700 km range on a full tank.

Too be honest, it isn't a tech probelm, but an infrastructure problem. It isn't that ICE cars are superior, it's just that generally speaking there are usually gas stations every 30-50 km along highways. If we had the similar setup for supercharger stations, would that not resolve the range issue?


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## treva84 (Dec 9, 2014)

AltaRed said:


> I like pipes too but I believe their multiples assume too much growth. Where is all that growth going to come from, especially in Canada? It is my opinion that once Horizon and Fort Hills is operating out of the oil sands, we will see only marginal growth in our oil production, and perhaps none at all. We don't seem to have the political will to build major new pipelines, and without the TRPs and ENBs being able to build new takeaway capacity, there is no room for the regionals to grow.


Using ENB as an example, I agree the P/E multiple is crazy (at time of writing it's 44). There is no way there is going to be enough earnings growth to justify this multiple.

As an investor, I would buy ENB for it's cash flow, not necessarily it's earnings growth. Specifically, I'm buying for it's dividend yield and growth, not necessarily it's earnings growth / capital appreciation. Of course, dividends are a cash expense and not necessarily on the income statement (other than as a decrease in shareholders equity). If you look at ENB from a cash flow perspective, it's trading at a P/OCF of about 10 (or, a 10% cash flow yield), and this cash flow has been growing at a 14% annualized basis over the last 10 years. Couple that with a fairly wide moat, and I'd say ENB is looks quite attractive, even with a P/E of 44.


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## OnlyMyOpinion (Sep 1, 2013)

bgc_fan said:


> ...It isn't that ICE cars are superior, it's just that generally speaking there are usually gas stations every 30-50 km along highways. If we had the similar setup for supercharger stations, would that not resolve the range issue?


Sounds like a plan. I sure hope I'm not number 7 or 8 when I arrive at the Hope 6-unit supercharging station. Twiddle my thumbs for what 30 minutes to 4 hours, plug in, twiddle my thumbs for another 30 minutes to 4 hours. Of course the Dairy Queen is right there, and I never need to get anywhere by a particular time. 
I'd really look forward to my frequent cross-country trips going from the usual three 14 hour driving days to what 5 days?
At the old gas station its a few minutes tops, unless some a$$hole leaves their car parked at the pump and goes in to get a coffee. I don't suppose that will happen with the supercharging stations though, people will wait right by their leaf or tesla twiddling their thumbs and move on just as soon as its charged.
With luck I'll be part of some carbon fibre component when the future arrives.


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## lonewolf :) (Sep 13, 2016)

Going into the 2008 top in oil international money flow resulted in the phase transition which will result in the top being historic like the Tokyo stock market top in 89 & gold in 80. Each of these markets the phase transitions results in most thinking the trend is up for ever & this thinking sticks around for longer then normal as investors get slaughtered as the trend turns the thinking is long term trend always up. Never want to be on wrong side when they top out. Vancouver & TO real estate has put in a phase transition top


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## treva84 (Dec 9, 2014)

OnlyMyOpinion said:


> Sounds like a plan. I sure hope I'm not number 7 or 8 when I arrive at the Hope 6-unit supercharging station. Twiddle my thumbs for what 30 minutes to 4 hours, plug in, twiddle my thumbs for another 30 minutes to 4 hours. Of course the Dairy Queen is right there, and I never need to get anywhere by a particular time.
> I'd really look forward to my frequent cross-country trips going from the usual three 14 hour driving days to what 5 days?
> At the old gas station its a few minutes tops, unless some a$$hole leaves their car parked at the pump and goes in to get a coffee. I don't suppose that will happen with the supercharging stations though, people will wait right by their leaf or tesla twiddling their thumbs and move on just as soon as its charged.
> With luck I'll be part of some carbon fibre component when the future arrives.


Imagine wireless charging infrastructure built right into the roads. It wouldn't be that difficult to do - roads need to be re-paved on a regular basis and once the technology matures costs will come down. Also the technology exists for vehicles - the recently released Audi A8 E tron has wireless charging technology. With major up take you would never have to stop to fuel up!

Or, solar charging panels on the vehicle's roof, as Tesla has suggested.

I agree though the frictional costs are too high at present to make it a viable option for long distance highway driving.


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## AltaRed (Jun 8, 2009)

bgc_fan said:


> Just out of curiosity, where does the 1000 km range come from? I assume your current car doesn't have that range as most cars are probably around 600-700 km range on a full tank.
> 
> Too be honest, it isn't a tech probelm, but an infrastructure problem. It isn't that ICE cars are superior, it's just that generally speaking there are usually gas stations every 30-50 km along highways. If we had the similar setup for supercharger stations, would that not resolve the range issue?


1000 km is arbitrary on purpose, i.e. it places due consideration on range anxiety when one is travelling through a mean blizzard on some remote mountain highway with the defrosters blasting and headlights on. Your 30-50km quote for gas station intervals along highways shows your lack of knowledge of primary (never mind secondary) highway travel in much of the West. There are usually highway signs posted when distances between gas stations exceed 100km. 

FYI, there is no gas station between Golden and Revelstoke, nor is there one between West Kelowna and Merritt, nor is there one between Merritt and Hope, nor is there one between Kamloops and Merritt. My 2 ICE vehicles have circa 650-750 km range on a tank of gas (circa 9 litres/100km), but I don't use any additional gas to run the heater/defroster the same way a EV must use additional battery power. FYI2, I would never go on any of those stretches without at least half a tank of gas....because if I am stuck on the road for 5 hours or have to cycle back, I sure do want to know that fuel needle is well above E. Ian explained it well.

Bottom line: EVs won't cut it in much of the far West, and certainly not in the Northern reaches of the western provinces.


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## AltaRed (Jun 8, 2009)

treva84 said:


> Using ENB as an example, I agree the P/E multiple is crazy (at time of writing it's 44). There is no way there is going to be enough earnings growth to justify this multiple.
> 
> As an investor, I would buy ENB for it's cash flow, not necessarily it's earnings growth. Specifically, I'm buying for it's dividend yield and growth, not necessarily it's earnings growth / capital appreciation. Of course, dividends are a cash expense and not necessarily on the income statement (other than as a decrease in shareholders equity). If you look at ENB from a cash flow perspective, it's trading at a P/OCF of about 10 (or, a 10% cash flow yield), and this cash flow has been growing at a 14% annualized basis over the last 10 years. Couple that with a fairly wide moat, and I'd say ENB is looks quite attractive, even with a P/E of 44.


What if cash flow growth stalls? How is it going to continue to grow if shippers are no longer willing to underwrite new pipeline capacity? There cannot be dividend growth without cash flow growth without transportation capacity growth. That is really the point. Too many people think pipelines will continue historical growth into the future. It won't likely happen here in Canada and probably why the big boys are buying their way into US infrasructure.


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## doctrine (Sep 30, 2011)

EVs are getting better, but have a long way to go. In Canada, even farther. It takes less than 5 minutes to fill up a typical gas car for 600-700 km range. And they are cheaper to buy. Range on EVs is definitely less in winter - anywhere from 30-50% less on colder days. And with gas being cheap, the cost delta is less. Even with massive, massive subsidies, they are not really there yet. I think you have to start seeing 600-700 km ranges for EVs, with costs around $20k without subsidies, before you really see movement in takeup. Plus, supercharger stations across North America every 30-50 km - tens of thousands of them. It's a tall challenge. This isn't happening in 5 years - not even 10 years. 

There is more, of course. Early adopters have to pay through the nose. Late adopters will have to pay more to fill up, as gasoline taxes disappear, they *will* be replaced by electric taxes. This will not be insignificant - those EVs need roads, and are no easier than gasoline cars. Goodwill and rainbows won't repair potholes.


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## fatcat (Nov 11, 2009)

doctrine said:


> EVs are getting better, but have a long way to go. In Canada, even farther. It takes less than 5 minutes to fill up a typical gas car for 600-700 km range. And they are cheaper to buy. Range on EVs is definitely less in winter - anywhere from 30-50% less on colder days. And with gas being cheap, the cost delta is less. Even with massive, massive subsidies, they are not really there yet. I think you have to start seeing 600-700 km ranges for EVs, with costs around $20k without subsidies, before you really see movement in takeup. Plus, supercharger stations across North America every 30-50 km - tens of thousands of them. It's a tall challenge. This isn't happening in 5 years - not even 10 years.
> 
> There is more, of course. Early adopters have to pay through the nose. Late adopters will have to pay more to fill up, as gasoline taxes disappear, they *will* be replaced by electric taxes. This will not be insignificant - those EVs need roads, and are no easier than gasoline cars. Goodwill and rainbows won't repair potholes.


on the other hand, if you live in victoria and aren't really a road tripper they are a perfect choice


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## bgc_fan (Apr 5, 2009)

AltaRed said:


> FYI, there is no gas station between Golden and Revelstoke, nor is there one between West Kelowna and Merritt, nor is there one between Merritt and Hope, nor is there one between Kamloops and Merritt. My 2 ICE vehicles have circa 650-750 km range on a tank of gas (circa 9 litres/100km), but I don't use any additional gas to run the heater/defroster the same way a EV must use additional battery power. FYI2, I would never go on any of those stretches without at least half a tank of gas....because if I am stuck on the road for 5 hours or have to cycle back, I sure do want to know that fuel needle is well above E. Ian explained it well.
> 
> Bottom line: EVs won't cut it in much of the far West, and certainly not in the Northern reaches of the western provinces.


Fair enough, I already mentioned that I am not familiar with the geography in BC. I am more familiar with Ontario and Quebec where there are a number of small towns between the big cities where they usually have at least one gas station.


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## afulldeck (Mar 28, 2012)

Another angle to consider----as a motorcycle rider who's bike had a range of roughly 400 Km, I know first hand that you need to carry extra canisters gas while travelling in many regions of North America. Even in areas where you would not expect to run into a lack of fuel, you could find yourself rolling into a region that is gas starved or the local gas station has closed down. Ontario and Quebec are no exception. Long haul travel is certainly an archilles heel of EV tech especially in less populated areas of the country.


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## treva84 (Dec 9, 2014)

AltaRed said:


> What if cash flow growth stalls? How is it going to continue to grow if shippers are no longer willing to underwrite new pipeline capacity? There cannot be dividend growth without cash flow growth without transportation capacity growth. That is really the point. Too many people think pipelines will continue historical growth into the future. It won't likely happen here in Canada and probably why the big boys are buying their way into US infrasructure.


I agree, and your comment about buying US infrastructure is bang on. ENB is working to diversify away from oil because they see the writing on the wall - not only are they moving into natural gas transmission with the Spectra deal (which I think would now make up close to 40% of their revenue stream) but they are also moving into green energy assets (European Wind Farm). 

From S&P Capital IQ data, analyst expectations re cash flow growth appears to be about 8% in the next two years. This is obviously far less impressive than 14%, but even so the cash flow yield is 10% today, which still implies an ~18% return. Even if the cash flow growth is halved - 4% - that's still a ~ 14% return.


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## Eclectic12 (Oct 20, 2010)

^^^

True ... though with ENB buying into US and Canadian wind farms in 2011, 2009 and 2006 (plus other years) - it isn't a new tactic on their part.


Cheers


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## AltaRed (Jun 8, 2009)

treva84 said:


> From S&P Capital IQ data, analyst expectations re cash flow growth appears to be about 8% in the next two years. This is obviously far less impressive than 14%, but even so the cash flow yield is 10% today, which still implies an ~18% return. Even if the cash flow growth is halved - 4% - that's still a ~ 14% return.


Key point is investors need to lower their expectations for growth. I suspect most of the pipelines have nor yet come to grips with the liklihood of slower growth either.


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## Pluto (Sep 12, 2013)

this article claims Suncor has reduced costs to 22.55 a barrel.

https://ca.finance.yahoo.com/news/investors-loading-suncor-energy-inc-132259460.html


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## AltaRed (Jun 8, 2009)

Be very careful of any analysis done by Motley Fool. They get their math wrong a lot of the time (at least on some companies I've double checked on in the past). While Suncor's opex has gone down in their own operations, Suncor's costs went up with the Syncrude acquisition because Syncrude's opex is higher than Suncor's legacy assets. They may be counted wrong since Syncrude remains a corporate JV and is likely handled differently in the financials. IOW, do your own math.


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## doctrine (Sep 30, 2011)

Pluto said:


> this article claims Suncor has reduced costs to 22.55 a barrel.
> 
> https://ca.finance.yahoo.com/news/investors-loading-suncor-energy-inc-132259460.html


Oil Sands and Syncrude are reported separately. From their Q1 report: 

"Syncrude cash operating costs per barrel in the first quarter of 2017 were $45.15, an increase from $31.35 in the prior year quarter due to the loss of production combined with higher maintenance and natural gas input costs."


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## AltaRed (Jun 8, 2009)

Indeed, I double checked the earnings release... $C22.55/bbl excl Syncrude. That is good progress.


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## Pluto (Sep 12, 2013)

AltaRed said:


> Indeed, I double checked the earnings release... $C22.55/bbl excl Syncrude. That is good progress.


TY. Appreciate your input on oil industry.


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## Pluto (Sep 12, 2013)

AltaRed said:


> I like pipes too but I believe their multiples assume too much growth. Where is all that growth going to come from, especially in Canada? It is my opinion that once Horizon and Fort Hills is operating out of the oil sands, we will see only marginal growth in our oil production, and perhaps none at all. We don't seem to have the political will to build major new pipelines, and without the TRPs and ENBs being able to build new takeaway capacity, there is no room for the regionals to grow.


This is a scary thought with merit....no room to grow, so what will happen to multiples when that dawns on investors....? 
Reportedly IPL, for example, is considering a 3 billion investment in some type of petrochemical plant. what might happen is that...if they can't get the oil out, process it, and sell the finished product. That could be one route.


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## AltaRed (Jun 8, 2009)

Pluto said:


> Reportedly IPL, for example, is considering a 3 billion investment in some type of petrochemical plant. what might happen is that...if they can't get the oil out, process it, and sell the finished product. That could be one route.


Actually IPL would be doing the right thing by diversifying into petrochemical plants in the Alberta heartland near Edmonton. If you cannot grow with new pipelines, diversify elsewhere. They take the raw feedstock (natural gas in this case) available locally and make value added products that can then be shipped by rail. 

The problem has always been whether value added products (from either crude oil or natural gas) can be made economically in Alberta, so far away to be competitive with the huge advantage US companies have along the eastern and Gulf regions of the USA. Such value added Canadian projects typicaally are not competitive without government subsidies and/or with landlocked (captive) feedstock that cannot otherwise 'escape' Canada cost efffectively. It's a problem most Canadians cannot understand. It simply costs to much to build and operate value added facilities in Canada most of the time. The petro-chemical plants that were built by Nova in the '70s near Red Deer had huge subsidies from Peter Loughheed's gov't to get going.


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## fatcat (Nov 11, 2009)

AltaRed said:


> Actually IPL would be doing the right thing by diversifying into petrochemical plants in the Alberta heartland near Edmonton. If you cannot grow with new pipelines, diversify elsewhere. They take the raw feedstock (natural gas in this case) available locally and make value added products that can then be shipped by rail.
> 
> The problem has always been whether value added products (from either crude oil or natural gas) can be made economically in Alberta, so far away to be competitive with the huge advantage US companies have along the eastern and Gulf regions of the USA. Such value added Canadian projects typicaally are not competitive without government subsidies and/or with landlocked (captive) feedstock that cannot otherwise 'escape' Canada cost efffectively. It's a problem most Canadians cannot understand. It simply costs to much to build and operate value added facilities in Canada most of the time. The petro-chemical plants that were built by Nova in the '70s near Red Deer had huge subsidies from Peter Loughheed's gov't to get going.


good points, from my vantage point in victoria where a new government was just sworn who campaigned on a platform of stopping kinder-morgan however they can, things do not look good

the environmentalists in canada really feel they have the wind at their backs and big-hair is proving weak and not up to task of providing the leadership that is needed to get new routes for product delivery in place

i think it would be a huge mistake to underestimate how determined the greenies are to shut down ALL resource extraction in this country


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## zylon (Oct 27, 2010)

I've taken up playing in the USA energy patch. Companies there prolly have their share of drama, but at least I don't hear it on the news every hour and half hour, how hard done by they all are.

One that I've started a position in, and looking to add more, won a judgement today from an appeals court.

*Enterprise Products (EPD nyse)* owns 82,000 km of various types of pipelines, plus a mess of other goodies. Makes me laugh, sans mirth, at the efforts of Canadian companies trying anything new.

EPD assets: https://en.wikipedia.org/wiki/Enterprise_Products#Assets


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## treva84 (Dec 9, 2014)

Pluto said:


> This is a scary thought with merit....no room to grow, so what will happen to multiples when that dawns on investors....?
> Reportedly IPL, for example, is considering a 3 billion investment in some type of petrochemical plant. what might happen is that...if they can't get the oil out, process it, and sell the finished product. That could be one route.


I think a more prudent way to invest in high depreciation industries (i.e. pipelines) is to look at cash flows rather than earnings, as high depreciation is a non cash expense that negatively affects earnings (that's why all of these companies have crazy P/Es). As mentioned in a previous post, pipelines are very attractive based on cash flow metrics at present. Besides, the day to day operations of a business (i.e. cap ex spending) comes from cash, not earnings.


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## AltaRed (Jun 8, 2009)

treva84 said:


> I think a more prudent way to invest in high depreciation industries (i.e. pipelines) is to look at cash flows rather than earnings, as high depreciation is a non cash expense that negatively affects earnings (that's why all of these companies have crazy P/Es). As mentioned in a previous post, pipelines are very attractive based on cash flow metrics at present. Besides, the day to day operations of a business (i.e. cap ex spending) comes from cash, not earnings.


That is true in the short term of 1-5 years, maybe 10 years in some cases. But over the long haul, earnings are the key metric to ensure shareholder return. ROE is an important metric over the long run as is ROCE. Too many companies are 'wasting' their capital with poor full cycle economics, never mind a ton of goodwill on the books that, at some point, must be dealt with. The numbers don't lie and the warts don't go away on their own.

Added: Every financial analysis will tell you that market indices cannot move up materially or consistently without earnings either leading the way, or following. The key word is 'earnings' because that is how shareholder value is measured.


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## treva84 (Dec 9, 2014)

AltaRed said:


> That is true in the short term of 1-5 years, maybe 10 years in some cases. But over the long haul, earnings are the key metric to ensure shareholder return. ROE is an important metric over the long run as is ROCE. Too many companies are 'wasting' their capital with poor full cycle economics, never mind a ton of goodwill on the books that, at some point, must be dealt with. The numbers don't lie and the warts don't go away on their own.
> 
> Added: Every financial analysis will tell you that market indices cannot move up materially or consistently without earnings either leading the way, or following. The key word is 'earnings' because that is how shareholder value is measured.


Thanks for the response, I appreciate the discussion!


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## Pluto (Sep 12, 2013)

http://www.bnn.ca/trans-mountain-project-on-track-to-begin-construction-in-september-1.809242

Trans Mountian pipline project to begin construction soon. that's a relief.


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## AltaRed (Jun 8, 2009)

That is intentionally timed to flush out the new NDP premier...who has said he will do everything he can to stop the expansion. Kinder Morgan has fired a shot across the bow to nudge the Premier into becoming more specific on his intentions so that KM can fine tune its responses and actions. 

The key issue is the issuance of provincial and municipal permits needed for road and utility crossings, etc. How long can local governments sit on this applications without taking actioon to frustrate the project? It costs money for equipment and resources to sit idling waiting for these permits and eventually project costs start to spiral out of control. KM is likely going to have to go to the courts to seek 'timely processing' of such applications. It is going to get very messy before it gets better. 

The bigger question is where will the Feds be on this? Will Ottawa withold budget transfers? infrastructure funds? or use other tactics to apply the lumber to the side of Horgan's head? At some point, Feds williing, enough heat could be applied to singe the hair off Horgan's head. It may take a Supreme Court action to force the province to cooperate in a national project of strategic importantce.....etc, etc.


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## Pluto (Sep 12, 2013)

^
Interesting drama unfolding. With any luck Horgan won't do anything and the alliance with the Greens will tear.


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## fatcat (Nov 11, 2009)

AltaRed said:


> That is intentionally timed to flush out the new NDP premier...who has said he will do everything he can to stop the expansion. Kinder Morgan has fired a shot across the bow to nudge the Premier into becoming more specific on his intentions so that KM can fine tune its responses and actions.
> 
> The key issue is the issuance of provincial and municipal permits needed for road and utility crossings, etc. How long can local governments sit on this applications without taking actioon to frustrate the project? It costs money for equipment and resources to sit idling waiting for these permits and eventually project costs start to spiral out of control. KM is likely going to have to go to the courts to seek 'timely processing' of such applications. It is going to get very messy before it gets better.
> 
> The bigger question is where will the Feds be on this? Will Ottawa withold budget transfers? infrastructure funds? or use other tactics to apply the lumber to the side of Horgan's head? At some point, Feds williing, enough heat could be applied to singe the hair off Horgan's head. It may take a Supreme Court action to force the province to cooperate in a national project of strategic importantce.....etc, etc.


not to mention that the greenies are all hopped up and ready to try a version of the dakota protests here in more friendly canada ... they are going to mass and do their best to stop progress

this is where big-hair needs to make a clear and unequivocal statement of the feds intention to do what is necessary to see that the legally approved twinning takes place

as ar points out, this will be a war of attrition ... i am not optimistic


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## AltaRed (Jun 8, 2009)

Pluto said:


> ^
> Interesting drama unfolding. With any luck Horgan won't do anything and the alliance with the Greens will tear.


The extent of the drama will depend on the boldness/reslouteness of the 2 key players.... JT and Horgan. Unfortunately, I think the Trans Mountain expansion is by no means a done deal since I am not convinced JT wishes to spend the political capital required to whack-a-mole Horgan in his place... while Horgan has potentially nothing to lose.


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## fatcat (Nov 11, 2009)

AltaRed said:


> The extent of the drama will depend on the boldness/reslouteness of the 2 key players.... JT and Horgan. Unfortunately, I think the Trans Mountain expansion is by no means a done deal since I am not convinced JT wishes to spend the political capital required to whack-a-mole Horgan in his place... while Horgan has potentially nothing to lose.


i would not say that horgan has nothing to lose ... the ndp are on thin ice already with northern and interior voters who tend to vote liberal 

to the degree that obstructing the pipeline sends the "ndp kills good-paying jobs in the resource sector" message, it can hurt the party's image and add to the impression that the ndp doesn't know how to create good paying private sector jobs, horgan is sensitive to this image problem

of course, the ndp is extremely good at creating high-paying ... public sector ... jobs, but unfortunately for them not enough of them are made in the interior and the north

i don't think they are capable of thinking about anything other than their union buddies ... especially their public sector union buddies


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## AltaRed (Jun 8, 2009)

fatcat said:


> i would not say that horgan has nothing to lose ... the ndp are on thin ice already with northern and interior voters who tend to vote liberal
> 
> to the degree that obstructing the pipeline sends the "ndp kills good-paying jobs in the resource sector" message, it can hurt the party's image and add to the impression that the ndp doesn't know how to create good paying private sector jobs, horgan is sensitive to this image problem


Underlined part... Let's hope so. It was an economic disaster the last 2 times the NDP were at the helm. Regardless, I think Horgan is generally satisfied with his electoral representation for the most part so I don't know how much of a factor resource development would work in his playbook. The GVA and the Island is where he really wants to keep locked down and resource development isn't necessary in that equation. IOW, I am not convinced....unless he does feel the heat from the 3-4 ridings he holds outside of the Lower Mainland/Coast.


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## Pluto (Sep 12, 2013)

Oil had nice rally yesterday. Over 3%

http://www.marketwatch.com/story/wh...heir-biggest-one-day-rally-of-2017-2017-07-25

Reportedly more drops in exploration is a factor.


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## humble_pie (Jun 7, 2009)

Pluto said:


> Oil had nice rally yesterday. Over 3%
> 
> http://www.marketwatch.com/story/wh...heir-biggest-one-day-rally-of-2017-2017-07-25
> 
> Reportedly more drops in exploration is a factor.



it's early days, lots of blips & reportedlies, no clear trend in sight imho

forum seems to have no interest that malaysia's Petronas yesterday announced the cancellation of the planned & permitted LNG terminal at prince rupert? i'm far outside BC but that news should be a bigger downer than friction over kinder morgan, i would think

it's the low world price of energy, petronas said. But if that were their only reason, petronas could have gone lower key, announced merely delays & puttings-on-hold.


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## fatcat (Nov 11, 2009)

humble_pie said:


> it's early days, lots of blips & reportedlies, no clear trend in sight imho
> 
> forum seems to have no interest that malaysia's Petronas yesterday announced the cancellation of the planned & permitted LNG terminal at prince rupert? i'm far outside BC but that news should be a bigger downer than friction over kinder morgan, i would think
> 
> it's the low world price of energy, petronas said. But if that were their only reason, petronas could have gone lower key, announced merely delays & puttings-on-hold.


it is sinking silently into the night because, with the election of the ndp it (robust lng development) was on shaky ground

the ndp have said they conditionally support lng but the greens are opposed and the greens are needed to make any significant moves

it's part and parcel of a general malaise and lack of focus that is allowing resource development to wither and die

the environmentalists are clearly winning and we will surely see it in bc with challenges to trans mountain based on the recent supreme court decision

good bloomberg article: https://www.bloomberg.com/news/arti...esh-blow-as-world-exits-canada-s-energy-patch


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## AltaRed (Jun 8, 2009)

Most BC residents seem to forget where a significant portion of tax/royalty revenue comes from to pay for all those wonderful goods and services. The bulk of lower mainlanders must think it comes from a money tree.


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## Pluto (Sep 12, 2013)

humble_pie said:


> it's early days, lots of blips & reportedlies, no clear trend in sight imho
> 
> .


Yes, no clear trend showing - The reaction upward, apparently in response to a huge drop off in exploration, is anticipatory of an upward trend...


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## fatcat (Nov 11, 2009)

tesla s goes 670 miles on a single charge

https://www.inverse.com/article/351...ew-record-for-distance-traveled-on-one-charge


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## bgc_fan (Apr 5, 2009)

fatcat said:


> tesla s goes 670 miles on a single charge
> 
> https://www.inverse.com/article/351...ew-record-for-distance-traveled-on-one-charge


In fairness, driving like a hypermiler at an average speed of 23 miles/hr isn't that useful.


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## fatcat (Nov 11, 2009)

bgc_fan said:


> In fairness, driving like a hypermiler at an average speed of 23 miles/hr isn't that useful.


of course, it falls into the proof of concept category, technological solutions will quickly solve the electric vehicle range problem i suspect


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## fatcat (Nov 11, 2009)

i confess i am deeply pessimistic about the future of resource development in this country and this article moves me from despair to despondency

http://nationalpost.com/news/politi...-say/wcm/2e4ff1f6-ca02-4027-9374-07f508245979

big-hair is preparing a major overhaul of the environmental review process that supposedly is going to bring clarity to the review process and it is not looking promising to say the least, so many people are given a say in any and all projects that we are likely to see all major extraction and transportation projects permanently stalled

you know you are in trouble when the resource review process must include a "gender-based analysis"

i would be curious to see what others think about the future of our usually steady and reliable pipelines, not too mention extraction of oil and other resources

i am looking for the exit on mine, i think this is very bad news

from the article:


> As McKenna put it in her speech, the new system would be produced in a “co-development process” with an Assembly of First Nations committee that would “guide and inform policies and guidelines that will underpin the environmental assessment and regulatory review.
> 
> The discussion paper’s guiding principle is that review going forward will go far beyond assessing the environmental impacts but will also consider the social, health and economic aspects of a project, as well as requiring a gender-based analysis. Wall called the inclusion of new impact assessment criteria “subjective” and “nebulous.”


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## AltaRed (Jun 8, 2009)

It has been the trend of this federal government to essentially neuter decision making processes and to wash their hands of responsible leadership in a variety of matters. Foreign based multi-nationals have already voted with their feet. Nothing of material national significance is likely to be developed* in the future. If/when one or more of Line 3 replacement, Keystone XL and/or Trans-Mountain expansion get built (already supposedly have all approvals), that will likely be it. 

* Good luck as well on massive expansion of renewable generation (and especially hydro) and transmission systems to meet JT's carbon objectives.

Added: Little of the proposed EA processes will affect smaller projects that much of our junior and mid-sized O&G producers are involved in, but those are of little national significance anyway.

Edit: A little pre-mature. Line 3 still needs US regulatory approval (Wisconsin I think) although Enbridge has just started construction on some Canadian sections. Keystone XL still needs Nebraska approval (hearings ongoing this week).


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## fatcat (Nov 11, 2009)

yes, ar, it is leadership-by-twitter, doing absoutely nothing while appearing to do everything, IF we get one or more of the 3 projects you mention, and i think it is an ... if ... though i thought line 3 has a decent chance, it will likely be the last


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## OnlyMyOpinion (Sep 1, 2013)

Here ya' go Jargey. This blurb's for you:

_The great oil glut is receding and 'ingredients for a powerful rally are in place'. 

_http://business.financialpost.com/c...ingredients-for-a-powerful-rally-are-in-place

Buy at your own risk. Cash sales only. No returns. No warranty offered or implied.


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## AltaRed (Jun 8, 2009)

Some contradictory chatter in that FP article. Russia talks about potential easing of the 1.8 million cutback in the 2Q18-4Q18 period. That is an eternity for those on life support. That also precludes increased production from Iraq and Syria as ISIS is finally banished (as early as the end of this year), and increaases from Libya and Nigeria. Now come no one is talking about that?

Also another notable 'bear' omission. Demand for oil goes down as the driving season ended on Labour Day. Nuttall omitted the fact that while US oll production is flat so far the past 5 months, it is equivalent to its peak in 2014/2015 and perhaps nowhere to go but up?

I'd suggest that if anyone is still hanging on to highly leveraged companies with balance sheet issues, it could be a long winter.....long spring.....and hari-kari summer 2018. Another retreat into the $30 range before next summer could put the knife through more oily hearts.


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## jargey3000 (Jan 25, 2011)

OnlyMyOpinion said:


> Here ya' go Jargey. This blurb's for you:
> 
> _The great oil glut is receding and 'ingredients for a powerful rally are in place'.
> 
> ...


_I KNEW IT!!...woohoo!!_


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## jargey3000 (Jan 25, 2011)

AltaRed said:


> Some contradictory chatter in that FP article. Russia talks about potential easing of the 1.8 million cutback in the 2Q18-4Q18 period. That is an eternity for those on life support. That also precludes increased production from Iraq and Syria as ISIS is finally banished (as early as the end of this year), and increaases from Libya and Nigeria. Now come no one is talking about that?
> 
> Also another notable 'bear' omission. Demand for oil goes down as the driving season ended on Labour Day. Nuttall omitted the fact that while US oll production is flat so far the past 5 months, it is equivalent to its peak in 2014/2015 and perhaps nowhere to go but up?
> 
> I'd suggest that if anyone is still hanging on to highly leveraged companies with balance sheet issues, it could be a long winter.....long spring.....and hari-kari summer 2018. Another retreat into the $30 range before next summer could put the knife through more oily hearts.


_DOH!!!_


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## AltaRed (Jun 8, 2009)

jargey3000 said:


> _DOH!!!_


There are as many proponents talking about how inventory will continue to fall and crude prices to firm up as there are proponents that see a continuing surplus for some time yet. Good companies with clean balance sheets will hold their own, even grow. Leveraged ones are on the knife edge should oil fall into the '30s again. Betting on the likes of PGF, BTE, etc. is very much a roll of the dice. Speculative like penny mining stocks.


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## Pluto (Sep 12, 2013)

Nice to see oil above 50 again. Lot of optimism about oil in the media. but there is one guy who is on BNN from time to time who is predicting a "waterfall" soon, a serious final sell off in oil stocks. Hmmmm.


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## Borat (Apr 28, 2017)

I bought XEG at 10.92, oil can keep on climbing.


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