Thread: Oil Market Report

Dr_Dubious wrote:

I did not quite understand this but I read they are going to add more of the lower grade crudes to the basket to lower the overall price. However, this will cause the higher grade crudes to cost more but the average price will go down. It also said that the base line price for Lightsweet will be $50 now. That may be why the $6.00 jump this week?

I agree with you. I don't understand that logic either. I think oil jumped due to the weather up north, the weaker dollar and an apparent change in pricing strategy by the Saudis.

At what price will higher lightsweet hurt stocks?

I don't think it is so much how high the price of lightsweet goes up as how long the market can sustain growth at higher prices. Something else to consider is the dollar and its relationship to oil. If the dollar continues to weaken, oil will only get more expensive for us. Add to that the fact that global consumption is rising and production is falling. We all know the dynamics of supply and demand. I suspect the Saudi's are abandoning their moderate pricing strategy based on the global market and not the US market as mentioned in the article. And it actually makes sense. Still, we'll have to see how it plays out in the longer term.

The article said if you add the poor quality crude as a higher percentage it will drop the basket price down. However since we can not use the poor crude because it costs to much to make useable the good stuff (high grade) will go up but the basket price will go down. I understand that know. It makes sense. Buy brentsweet crude contracts. Check!

The article also said that the Saudis are all most tapped out and they know they have to get all they can for what they have left. The article said that you need vegatation breaking down to replinish the removed supply. Since they are all sand the tap is running dry. The article pointed out there are no dinasours running around so it has to be vegetation.

I know in the oceans off the Philippines there have been near wars between China, Taiwan, The Phillipines, Indonesia and Singapore for moving rigs around to get at the oil off shore. Interesting post. I made me think, TY. G.

Here's a report that will make us all think a little more.

http://tinyurl.com/5dyoo

Yes, it looks like the tap is running dry. What will they do without oil? They have nothing else. Maybe that is why we are in Iraq? There is not that many gas pumps left. Thinking about it they were the lowest fruit to pick.

What a interesting time in history to be alive?

Higher oil prices doesn'taffect producers alone. We have a huge trucking industry that's affected as well.

http://www.thetrucker.com/stories/02...23_diesel.html

The Athabasca oil sands story
Monday, April 4, 2005
Updated at 12:19 PM EDT

For centuries; the sticky bitumen of northern Alberta was good for little more than caulking Chipewyan Indian canoes - and leading entrepreneurs astray.

The first attempt to exploit the oil sands came nearly a century ago, when oilmen tried drilling conventional wells in the area, convinced that the bitumen on the surface must be welling up from gigantic pools of crude deep in the Earth. Two dozen wells were drilled over 11 years, with zero success

Small-scale operations producing asphalt popped up in the ensuing decades, but cheper sources of the product elsewhere in the world eventually bankrupted every one of those efforts.

It was not until 1967 that the oil industry began to make a business out of bitumen, when the Great Canadian Oil Sands Project, which eventually became Suncor Energy Inc., began production.

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Swings in oil prices, particularly the collapse of the mid-1980s, left the sector's viability in continual question. In part because of shrinking opportunities for conventional exploration, interest in the oil sands grew, with tens of billions of dollar sinvested in the 1990s.

Despite a record of multibillion-dollar cost overruns, that investment has pushed production of bitumen and synthetic crude past one million barrels a day - with capital spending predicted to double that to two million barrels a day over the next five years, and perhaps to three million by the middle of the next decade.

Even with that soaring growth, there are decades, and likely centuries, of production in the oil sands. The best official estimate of oil that can be profitably extracted is 175 billion barrels - second only to the reserves of Saudi Arabia.

Oil sands projects

Shell Canada Ltd.,

Western Oil Sands Inc.,

Chevron Texaco Corp.

Athabasca Oil Sands Project - mining

Capacity: 155,000 barrels a day

Cost: $5.7-billion

Start of production: January, 2003

Canadian Natural Resources Ltd.

Horizon - Mining

Capacity: 232,000 b/d

Projected cost: $10.8-billion

Start of production: 2008

Syncrude Canada Ltd.

Stage 3 expansion - Mining

Capacity: 360,000 b/d, total

Projected cost: $7.8-billion

Start of production: 1978 for original operations

Nexen Inc., OPTI Canada Inc.

Long Lake - in situ

Capacity: 60,000 b/d

Projected cost: $3.5-billion

Start of production: 2006

Suncor Energy Inc.

Millennium, Firebag (latest expansions) - Mining and in situ

Capacity: 225,000 b/d, total

Cost or Projected cost: $3.4-billion for Millennium expansion

Start of production: 1967 for original operations

Imperial Oil Ltd.

Kearl Lake - in situ

Capacity: Up to 300,000 b/d

Projected cost: $5-billion to $8-billion

Start of production: 2009

Husky Energy Inc.

Sunrise Thermal Project - in situ

Capacity: 200,000b/d

Projected cost: Undisclosed

Start of production: 2008

Petro-Canada

MacKay River SAGD project - in situ

Capacity: 30,000b/d

Cost: $300-million

Start of production: Fall 2002

Athabasca area

At 40,000 sq. km. It is Alberta's largest and most accessible reserve of bitumen. Some of the oil sands near Fort McMurray are close to the surface and can be mined, but less than 20 per cent of the total area can be developed this way. In-situ techniques, which melt the bitumen and pump it from underground, are needed for deeper deposits.

Peace River area

The smallest of Alberta's oil sands areas at 8,000 sq. km, its deep deposits are also being recovered with in-situ methods.

Cold Lake area

At 22,000 sq. km, it is the province's second-largest reserve of bitumen. Its deep deposits are being recovered using in-situ technology.

Extraction and refining

Mining

The mining process begins with the removal of vegetation, muskeg and a thick layer of clay, silt and gravel. (The soil is saved to build the tailing ponds that will hold the sands once bitumen has been extracted.)

Oil sands are mined using shovels with buckets that hold 100 tonnes of soil, loading huge 240- to 360-tonne trucks. The mine delivers about 450,000 tonnes of oil sand a day to the ore preparation plants, with two tonnes needed to produce one barrel of synthetic oil.

Crushers and sizers in the preparation plants prepare the ore for delivery to primary extraction through pipelines after the ore has been mixed with water.

Primary extraction plants on both sides of the Athabasca River separate raw bitumen from the sand.

In secondary extraction, the bitumen is cleaned by removing fine clay particles and water. The thick bitumen is diluted with naphtha and treated to remove remaining minerals and water. It is then stored in holding tanks and delivered to the upgrader for processing.

The water, clay, sand and tailing (residual bitumen) are pumped to holding ponds where they are treated to speed up the reclamation process that will restore the landscape.

In situ

Unlike mining, in-situ production does not disturb the top soil. Instead, steam-assisted gravity drainage (SAGD) technology uses underground wells to inject steam into the oil sands deposits, melting the bitumen and allowing it to be pumped above ground. The recovered bitumen is sent by pipeline to be upgraded.

Upgrading

In upgrading, naphtha is removed and recycled back to extraction. The bitumen is heated in furnaces and sent to drums where petroleum coke is removed. Coke, which is similar to coal, is used as a fuel source for the utilities plant.

Depending on customer requirements, sulphur can be removed by hydrotreating the products. Sulphur is recovered and sold to fertilizer manufacturers.

The utilities plant provides steam, water and power for the rest of the operation. Additional steam and power is supplied through TransAlta's natural gas-fired cogeneration plant and two steam turbine generators.

Refinery-ready feedstock and diesel fuel is shipped by pipeline to customers and commercial and industrial markets throughout North America.

SOURCE: STAFF RESEARCH, SUNCOR ENERGY, REGIONAL MUNICIPALITY OF WOOD BUFFALO, OIL SANDS DISCOVERY CENTRE, NATIONAL ATLAS OF CANADA

I'll pay someone to provide me with Crib Sheets on these reports...............

Nobody can see the alternative for fossil fuel, all that has been mentioned, not one time did I here the word NUCLEAR. New tech in this field combined with the despirate need of energy and BINGO we have a winner!

Dr_Dubious wrote:

Yes, it looks like the tap is running dry. What will they do without oil? They have nothing else. Maybe that is why we are in Iraq? There is not that many gas pumps left. Thinking about it they were the lowest fruit to pick.

What a interesting time in history to be alive?

I am thinking this is what everyone needs as high fuel prices will get you to do what you should have done 20 years ago. If you think oil is going to run you out of house and home the R&D is already taking an effect. The new cars run on what they call an E85 fuel, I believe any car past 2002 will run on this. What is E85 it is an ethonal fuel which is 85% alchol and 15 % gas it is selling here for around $1.54 a gallon. All you need to do is use up some cheap corn.