Quote:
Originally Posted by DizzyEdge
One thing that I am surprised I rarely read in the paper is the future of Alberta's O&G economy. With gas prices being so low for so long (and with US shale gas doesn't seem like it will be going up anytime soon), and with occasional reports on how the US might be an oil exporter in the new few years (or maybe this year: ), you'd think it would be a sky is falling scenario. All you hear though is how our oil is discounted so we aren't making as much money as we like. Anyone care to comment on what the industry outlook actual is?
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It's a sign of how healthy the industry is that it can sustain these low oil prices for so long and still be rapidly expanding. Also keep in mind US is the only customer right now.
Keeping in mind that even now the industry is healthy, there are several developments which could improve the situation even more:
- a pipeline project is approved to cheaply get oil to another customer besides the US
- there are huge investments in technology in oil sands, several different kinds of breakthroughs are possible across the stages of the extraction process to make it significantly cheaper to extract
- oil demand is surging in developing countries, which is likely to cause prices to increase, even if the us is a net exporter they are still a top importer, and for all the demand US is losing on importing, China is more than picking up the slack the other way
There are several challenges however. With the US as our only customer, we've had trouble getting our oil into refineries. There are only a few refineries appropriate for the crude oil coming out of Alberta, and Saudi Arabia and other countries can play price fixing games to make sure their oil undercuts oil sands oil by enough to make oil sands oil seem less competitive than it really is.