[scotian]

As you're all well aware, the price of oil tanked over the past year and hundreds of thousands of jobs all over the world were lost, particularly in regions where oil is more expensive to extract, such as the oil sands in Alberta. Things are pretty bad there, although most of the guys who moved to Alberta in the past few years after I wrote my oil sands thread are still working, its much slower and I decided to leave the province and the industry altogether and wait it out. People have asked me what my thoughts are and if it will pick up anytime soon, to which I replied that I don't really recommend moving to Alberta for oil work if you're a newbie and as far as the price of oil goes, I don't have a clue.

However, I recently had an hour and a half long Skype session with a Dubai based oil and gas executive who got in touch with me about three years ago after reading my thread, we've been in touch quite a bit over the years and he was able to fill me in on some oil and gas news from an insiders perspective. He was dropping so much knowledge that after an hour I decided to take some notes so here is some information that guys in the oil biz may be interested in.

General Overview: Multinationals shifted focus from high cost producing areas such as Canada (up to $80/barrel) to lower cost areas such as Saudi Arabia ($6-15/barrel) and West Africa. The cutbacks in exploration has resulted in the massive layoffs we've seen worldwide, with an estimated 35,000 in Alberta alone!

-The price has bottomed out and will only go up from here but it won't be quick, expect to see it pick up in the second quarter of 2016 and steadily increase up to the $60-70/barrel range over the next two years.

-Oil companies aren't spending any money on exploration these days (hence the major lay offs on the rigs), there is currently an oil glut in the world market but that will eventually even out and will also eventually result in there not being enough oil in the world market. Listed oil majors must announce their reserves and when they report that they haven't replaced their reserves, the price will increase.

-2018-2019: we could see oil going back up into the $100+/barrel range as it could take five years to replenish oil reserves.

What does this mean for an oil worker? Basically things will improve but it will be at a slow pace, now is a great time to upgrade your skill set either by doing exams for your trade or going back to school for a diploma or degree. If you can afford to take a 2-4 yer degree or diploma, now would be a great time to do so. I plan on taking more work related exams within the next two years.

Is the oil biz dead all over the world? Hell no, its still busy in some places and with the decrease in oil revenues, some areas are taking this opportunity to invest and upgrade their existing infrastructure and there are opportunities for guys to work abroad. Here's some of the OIL HOT SPOTS around the world to keep an eye out for:

Middle East: Ras Tunura refinery, KSA


Iran: Sanctions are coming off soon and Iran is getting ready to get back in the game but their infrastructure needs major upgrading and expansion, apparently they will need foreign workers and they are actively seeking western companies (USA, UK, Canada, etc) and want western workers.

Saudi Arabia: They are spending and upgrading big time to compete for market share with Iran, Hyundai of South Korea is building a massive 6 Billion dollar refinery there now: http://www.reuters.com/article/2014/02/1...B620140219

Iraq: The place is kinda fucked up right now because the government isn't paying the oil contractors, they owe $25 billion in the south and $5 billion in Kurdistan, they're using the money to fund the Iraqi military and Kurdish fighters against ISIS or whatever, so the oil guys fucked off.

Kuwait: They are spending big money to develop their heavy oil fields, lots of refinery expansion and drilling happening but its mostly done by Sinopec, China is huge there.

Abu Dhabi: Same as above, spending up to 700 billion expanding refining capabilities and drilling.

*All of these rich Arab gulf states are using their sovereign wealth funds to invest in their oil and gas infrastructure for when oil picks back up.

*Yemen is fucked; the Saudis, UAE and Iran are all backing rebels there to fight over Houti controlled territory. There are thousands of Latino private military contractors (mostly Colombian) over there fighting now: http://www.nytimes.com/2015/11/26/world/....html?_r=0

Africa:

Kenya: Half a billion barrels of proven oil reserves, as well as other east African nations but the infrastructure is severely lacking, American companies are heavily involved (Wood Group and Anadarko).

Nigeria: Still pumping out lots of oil but security in the Niger Delta area continues to be a concern.

Ghana/Gabon: Lots of proven reserves offshore but slow to develop

Asia:

Burma: Economy recently opened up, sanctions have been lifted and Exxon is heavily involved in exploration there.

Thailand/Malaysia: Lots of activity in the Joint Development Area offshore: https://en.wikipedia.org/wiki/Malaysia%E...pment_area

Indonesia: Continued oil and gas extraction but not booming, government is retarded.

Vietnam: Schlumberger is drilling there but not too much else going on at the moment.

Singapore: Booming, major investments in LNG terminals, lots of expansion of existing petro-chemical infrastructure, Singapore continues to be a safe bet as an international hub, their refining capacity is huge. They take oil from Petrovesa in Venezuela for example.

Not So Hot Spots:

North America:


Canada, US, Mexico- As mentioned before the oil can be costly to produce so there isn't much investment going on. On the bright side, the amount of oil being extracted from the oil sands and sent to the US refineries hasn't ebbed, but the Keystone pipeline was cancelled and some oil majors, such as Shell, cancelled a major project at Carmen Creek: http://www.theglobeandmail.com/report-on...e27010471/

-With the excess labour and technology floating around as a result of the slow down in the Canadian oil patch, some oil companies abroad have signed deals with Canadians companies, such as Transcanada pipelines recent agreement to build and maintain pipelines in Mexico: http://www.theglobeandmail.com/report-on...e27208449/

Mexico: State owned oil company is difficult to deal with and there are obvious security concerns there

South America:

Venezuela: Still producing lots of oil but the government is retarded and scaring away investors.

Brazil: Again, shitty government and rigs have been cancelled in recent months, not looking too good.

Russian/FSU: Nothing major happening in Russia other than some crazy geo-political stuff. Major expansions in Khazakstan and Azerbaijan currently happening.

So that's about it guys, obviously the oil industry is hurting all over the world but we're still using oil, its still being produced so there's still work out there. As I said all along in my oil sands thread, its the guys on the exploration (upstream) side who feel the pain first and are currently hurting the most. If you're involved in the down stream side of things then you're better off but its still slow, now is a great time to invest in yourself so you're better prepared to take advantage of opportunities that will come when oil goes back up, or to leave your country for greener pastures abroad with the skills that you've acquired in your home countries.

[TheFinalEpic]

How do you think the outcome of the Paris climate conference that is going on right now (if they do sign a deal to limit carbon emissions) will affect the industry in the coming 2-5 years?

Great data sheet, if I could +1 you again, I would.

[jake1720]

This accurately reflects what I have been seeing and hearing.

[Jnx]

If we've truly hit a bottom, now is the time to take full advantage of discounted assets related to the oil field and hunker down until we see the raise back to $100/barrel in a few years.

Thanks for the insider perspective

[Laner]

Another thing I keep hearing from long time, very experienced field hands in the drilling side is that their wages are down to 1990's rates, personal vehicle allowance went from $1200 to $400 (while that Big Brother speed control system is rammed down their throats) and due to huge layoffs are now being forced to drill on skeleton crews. With Christmas coming up its going to be a showdown I think. Other little things that companies are doing is

Big Oil is being run more and more by accountants in Houston. Being a field guy, middle management, or any other lesser totem guy, you are only as happy as your boss is decent.

[Off The Reservation]

Good info

[redbeard]

(11-29-2015 08:46 PM)Laner Wrote:  

Another thing I keep hearing from long time, very experienced field hands in the drilling side is that their wages are down to 1990's rates, personal vehicle allowance went from $1200 to $400 (while that Big Brother speed control system is rammed down their throats) and due to huge layoffs are now being forced to drill on skeleton crews. With Christmas coming up its going to be a showdown I think. Other little things that companies are doing is

Big Oil is being run more and more by accountants in Houston. Being a field guy, middle management, or any other lesser totem guy, you are only as happy as your boss is decent.

This is 100% true. Even if you're working, your wages, perks, and bonuses have been slashed. This is not the happy-go-lucky industry seen just years ago.

[el mechanico]

Congrats on the low warning level, there's a bunch of of us struggling to get where you are.

About the oil. Fuggetabout!

Donald trump may just say hey you clowns well just pay the 5 per for " domestic " oil and go suck a dick and sell your junk ass shit in Africa or whatever. We've payed that before so no big cause he'd be honest and say fuck these niggaz let them drown in there own shit.

I say yeah I'll pay up to soak those dirtbags anyway..

So then we fire up the machine with no fucks given. The Saudis will show their true colors by getting irate.

Then we say Whuutt? You punk ass hoes thought you were running barter town? That crap ass oil you sell us at a discount is umm on hold for now but when we need it you'll know cause we're tired of your clown activities and well can just take all of it in two days so fuck off and go back to whatever you were doing before you started pissing off non camel fucking people.

[Lateapex]

Yeah, we're busier than most other places here in West Texas but it's still pretty slowly. Things picked up quite a bit over the past couple of weeks, but I'm sure it'll slowdown again here pretty soon. Been wanting to travel for awhile now but I'm holding off and trying to save as much as I possibly can in case I get out of the industry like you did. Contemplating on going back to school for 2 year associates degree and/or a 4 year degree. Another thought was possibly starting up a side gig while I keep working, but I'm skeptical on investing in something big in case things slow down even more. What type of work were you doing in the industry?

[SunW]

Singapore

What are some strong companies in Singapore from your experience? I'm aware that the city is a port, but didn't think of it being a refinery or oil city.

Anyone is welcome to chime in.

[LE50]

Thanks for the insight. Can I ask something about the long term outlook on oil here?

(If not just ignore the post)

I once read that Shell expects all natural resources to be gone by 2045 and that they have two scenarios planned out when that happens (blueprint & scramble). I don't have to tell anybody what that would mean for the world, but is it true?

Maybe it's old info, disinformation or just inaccurate. What is your opinion on that?

[thoughtgypsy]

Thanks for sharing with us! In light of this insight, any ideas how to trade regarding oil stocks? I doubt oil will go much lower than it already is, but I'm still apprehensive to invest just yet. A lot of oil companies are insanely leveraged and seem to be on the cusp of bankruptcy.

I'm waiting for the next equity recession to hit before investing, but I'm worried if I wait that long I might miss the boat. I'm watching SDRL and XOM (Exxon hasn't ever cut their dividend from what I've read) for the bounce.

[scotian]

(11-29-2015 02:46 PM)TheFinalEpic Wrote:  

How do you think the outcome of the Paris climate conference that is going on right now (if they do sign a deal to limit carbon emissions) will affect the industry in the coming 2-5 years?

Great data sheet, if I could +1 you again, I would.

I try not to pay too much attention to these climate conferences as I just see them as a waste of time and taxpayers money where a bunch of UN dickheads get together to party and never accomplish anything concrete, such as Kyoto, Copenhagen, etc. So long as major polluters such as China, Russia, etc aren't obligated to cut back (Kyoto) then it won't have much effect and is basically a "socialist money sucking scheme meant to transfer wealth from rich nations to poor ones" as Stephen Harper once said. That being said, under our new federal government, Canada seems to be committed to looking good on the world stage and will probably throw the oil and gas industry under the bus, but not too much as it is a cash cow for them. The new emissions plan launched by the Alberta government is being supported by oil sands majors, we'll see how it plays out but they really do need to build more pipelines in the country, they also want to upgrade more bitumen in Alberta and I"m fine with that.

(11-30-2015 06:51 AM)SunW Wrote:  

Singapore

What are some strong companies in Singapore from your experience? I'm aware that the city is a port, but didn't think of it being a refinery or oil city.

Anyone is welcome to chime in.

I don't know much about industry in Singapore but a quick Google search tells me that its home to the seventh largest refinery in the world, its owned by Exxonmobil and can refine 592,000 barrel per day, that's huge! Most of the heavy industry there is located on Jurong Island, the place is full of refineries and petro-chemical plants.

(11-30-2015 08:43 AM)LE50 Wrote:  

Thanks for the insight. Can I ask something about the long term outlook on oil here?

(If not just ignore the post)

I once read that Shell expects all natural resources to be gone by 2045 and that they have two scenarios planned out when that happens (blueprint & scramble). I don't have to tell anybody what that would mean for the world, but is it true?

Maybe it's old info, disinformation or just inaccurate. What is your opinion on that?

I'm not sure about that, over the past fifteen years, Shell has invested billions into the oil sands and operates two large mines there as well as an upgrader and a very large refinery downstream in the Edmonton area. Usually these projects have a life span of 75 years, I guess we'll have to wait and see. One thing for sure is that they're not afraid to pull up stakes and shut down construction projects if they're not economically feasible as we saw when they kiboshed an oil sands site that was being built a couple of months ago. The cited a lack of pipeline infrastructure to get their oil to world markets as a reason for shutting the project down. Shell is actively involved in the R&D of cleaning up oil and lowering emissions, if the oil industry does clean itself up it will be due to private industry and not some Greenpeace hippies, that's for sure.

(11-30-2015 09:12 AM)thoughtgypsy Wrote:  

Thanks for sharing with us! In light of this insight, any ideas how to trade regarding oil stocks? I doubt oil will go much lower than it already is, but I'm still apprehensive to invest just yet. A lot of oil companies are insanely leveraged and seem to be on the cusp of bankruptcy.

I'm waiting for the next equity recession to hit before investing, but I'm worried if I wait that long I might miss the boat. I'm watching SDRL and XOM (Exxon hasn't ever cut their dividend from what I've read) for the bounce.

I don't invest in oil stocks directly, my pension fund does and I have some mutual funds which I"m sure are but I don't own any myself. Last year when oil was at $100 I was considering buying about $20,000 worth of Canadian oil stocks (Suncor, CNRL) but decided not to, I was advised by another RVF member to buy a Canadian lumber stock, didn't do that either but should have because that particular stock went up by 20% in the past year!

If you're thinking of going back to school, all I can suggest is getting into a trade or a field that isn't limited to just oil. For example, instead of taking petroleum engineering, take mechanical engineering so at least your skills are transferable to other industries. Myself I do QA/QC weld inspection and I can work in any industry because they all need weld inspectors, I'm currently working in ship building, its pretty good but if oil does go back up, I'll probably go back as I really enjoy the lifestyle of only working half the year, winter sucks.

[thebassist]

Bit of a specific question, but what engineering sectors within the oil industry are currently the healthiest? I'd assume that drilling and completion engineers have been the hardest hit due to the decline in exploration.

I'm a year and a half away from finishing a petroleum engineering degree, hence the question.

All insights would be very much appreciated!

[Kdog]

Thanks for this thread Scotian. Shines some hope on a really slow time in the industry. My buddy works on a rig and managed to get some work with his company this winter because he has been loyal to them in the past. He took a 10% rate cut and he tells me there are drillers from other companies and other higher up rig guys roughnecking on his rig! Pretty crazy times.

[lex the impaler]

Great post. I follow some of the news in the O&G industry regularly, and I knew that all these major recent capital invenstments into new refineries, plants etc were for a reason. I myself I'm hoping to hop on some of the East African developments, as I have ties from that area. Same thing with all the gas developments that are coming up in the region as well.
As an aside, do you have any specific insight into the natural gas (LNG) space? How do you think the upcoming LNG projects and supply will affect the oil industry. I'm guessing there's a very large push for LNG, as a "cleaner" fuel.
For the guys thinking about engineering, consider working in the field at these plants, whether in operations or maintenance. The world will always be in need of guys to run and maintain these facilities.

[scotian]

(11-30-2015 01:05 PM)thebassist Wrote:  

Bit of a specific question, but what engineering sectors within the oil industry are currently the healthiest? I'd assume that drilling and completion engineers have been the hardest hit due to the decline in exploration.

I'm a year and a half away from finishing a petroleum engineering degree, hence the question.

All insights would be very much appreciated!

See the post below

(11-30-2015 01:43 PM)lex the impaler Wrote:  

Great post. I follow some of the news in the O&G industry regularly, and I knew that all these major recent capital invenstments into new refineries, plants etc were for a reason. I myself I'm hoping to hop on some of the East African developments, as I have ties from that area. Same thing with all the gas developments that are coming up in the region as well.
As an aside, do you have any specific insight into the natural gas (LNG) space? How do you think the upcoming LNG projects and supply will affect the oil industry. I'm guessing there's a very large push for LNG, as a "cleaner" fuel.
For the guys thinking about engineering, consider working in the field at these plants, whether in operations or maintenance. The world will always be in need of guys to run and maintain these facilities.

By avoiding upstream (exploration) work and focusing on midstream (pipelines, storage facilities) or downstream (upgraders, refineries, petro-chemical plants, etc) you can limit your exposure to market fluctuations, as Lex wrote, these plants need to be ran and maintained.

Lex I don't know too much about LNG but the world seems to have plenty of it, Canada and Australia have a lot, Qatar, Russia and as you know, East Africa.

[Lateapex]

Yeah, I'd go back for a two year "petroleum technology" degree, and/or go the four year route and major in business or mechanical engineering with a minor in business. I've done Frac, wireline, and almost 6 months ago I started doing coiled tubing. Out of the three I like coiled tubing the most, and I'll probably stick to this if I don't go back to school so I can go run tools. Our damn tool hand makes like $300-400k a year even with all the paycuts.

[LeBeau]

Regarding many of the topics discussed above, I believe a lot of you guys would enjoy this book:

http://www.amazon.com/Oil-101-Morgan-Dow...0982039204

[pitt]

I was thinking to do an electrician course but that is 3 years in my local college. That is a very long time. Anybody knows of any electrician course that would qualify you in a shorter time and then you will be able to get a job with it?

[EuroSlumming]

Hey Scotian how reliable has this guys info been over the three years that you've been in contact? This would put his future predictions into a better context.

[scotian]

(12-01-2015 02:06 PM)pitt Wrote:  

I was thinking to do an electrician course but that is 3 years in my local college. That is a very long time. Anybody knows of any electrician course that would qualify you in a shorter time and then you will be able to get a job with it?

Pitt that's kinda hard to answer as every jurisdiction is different, there's a 12 week course at the school in Alberta that I went to and that would get you in as a first year apprentice (you'd have to go to school for 8 weeks each year for 4 more years to be a journeyman) but of course, Alberta is slow now so that isn't the best option. It also depends on what type of electrican you want to become: residential, commercial or industrial.

(12-02-2015 12:14 AM)EuroSlumming Wrote:  

Hey Scotian how reliable has this guys info been over the three years that you've been in contact? This would put his future predictions into a better context.

To be honest I don't recall him making any predictions before, most of the time we were chatting, oil was in the $85-120 range so every thing was all good and we'd just talk about how great it was, all of the options, etc. I do remember him stressing how fucked up the oil biz can be but I already knew that it was cyclical and could crash at any time so I planned accordingly. I also remember saying something like "I should be good in the oil sands, these big oil companies have invested billions in Alberta, its not like they'd just pull out". He corrected me by saying "these oil companies make really bad decisions all of the time, don't put too much faith into their actions, they're fucking retarded".

At around this time last year when I spoke with him, his advice was just to wait to see how things pan out because everyone was panicking. As we know, oil went down pretty low to the high $30s but in April/May it bounced back up to the $65 range but then plummeted again after the Iranian sanctions announcement and here we are at about $40/barrel. It seems that this is the new reality and over the past year, companies have adjusted accordingly. Many office staff have been cut (designers, planners, project managers, etc) as they're usually the first to go in a down turn but even the maintenance guys like me are seeing pressure put on companies to reduce costs and my union may be striking soon over it (wage reductions, OT rates cut, etc).

Hopefully his predictions of a strong recovery in 3-5 years come true, I just spoke to my property manager in Edmonton and my condo has lost about $40,000 in equity in the past six months which is a huge kick in the nuts so I'm going to hold onto it in hopes that it does go back up, only time will tell.

[EuroSlumming]

Thanks Scotian, if you look at the last gap between $100 oil it was 25 years from 1981 to 2007 and oil dropped a lot lower than $40 a barrel during that period. With the continued high production levels and the switch to lower cost production what would be the impetus to push prices back up, especially to $100+ levels?

[Lateapex]

Drilling is about to pick up a good bit from a couple reliable sources I spoke to here in Texas.

[redbeard]

(12-05-2015 08:32 PM)Lateapex Wrote:  

Drilling is about to pick up a good bit from a couple reliable sources I spoke to here in Texas.

Why?

What has changed?

What part of Texas?