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Venezuela oil industry is literally falling apart, the real amount of oil they could produce with lifted sanctions doesn't make much of a dent in global demand.

Oil markets are pretty tight to begin with- they're finely tuned to react to even marginal shifts in supply/demand. Have massive changes like the lockdowns or turn off a major supplier, you see equally massive swings in price, backwardation/contango levels, etc.

Their equipment is in bad shape because sanctions have prevented them from buying supplies, parts, tools, and services. When they're able to purchase those (which could be soon [0]), the equipment will be fixed.

All it took to get rid of sanctions on a nation that has never harmed or threatened anyone was for one of their competitors in the petroleum market to invade another nation...

[0] https://www.wsj.com/articles/u-s-officials-meet-with-regime-...

Industry sanctions started in 2018. Their production had been declining since 2014. It's not just an issue of equipment. Its also a brain drain, corruption, lack of a functional justice system, legal guarantees, property rights...

Competent Venezuelan oil professionals have been fleeing the country and can be found in Colombia, Brazil, and other oil producing countries farther away.

The Venezuelan regime is far, far from being harmless and nonthreatening, their human violations are numerous and nobody is suffering the consequences of their actions more than Venezuelans themselves. I've seen the plight of their people on the immigrants who fled to my own country.

Even their own PDVSA stars don't drink the Kool-aid... It was sad to share a table with disillusioned young, bright, venezuelan engineers at the SPE Latin America Heavy and Extra Heavy Oil Conference, so ask me how I know...

Sanctions on PDVSA started in 2014. Sanctions that effectively limited the import of medical supplies started in 2015. [0] The Venezuelan emigrants you see in your nation are fleeing the depression caused by those sanctions. After that stops, many of them will return to Venezuela.

[0] https://www.telesurenglish.net/news/Timeline-of-Half-a-Decad...

That timeline grossly misrepresents the nature of the sanctions and is nothing more that a hit piece by a propaganda arm of the Venezuelan government.

There is no freedom of press in Venezuela.

Their take on law 113-278 is blatantly false.

https://www.govinfo.gov/content/pkg/PLAW-113publ278/pdf/PLAW...

Venezuelan sanctions targeting PDVSA sanctions start in EO 13808.

https://home.treasury.gov/system/files/126/13808.pdf

The immigrants I see in my country are fleeing a dictatorship.

Absolutely! Venezuela's oil (or any) industry is not viable. And you are absolutely right. Oil markets are incredibly inelastic in the short run.

Think about your individual energy consumption. I assume you have to drive and heat your house, and how much you drive, and weather you heat up your house, does not, in the short run, vary much weather gas is 2 dollars or 3. Many many people behave the same way, thus we deem demand to be inelastic.

Something similar happens on the supply side. Oil projects are incredibly capital intensive, sometimes taking years to come online. Thus oil companies, in the short term, can only extract so much oil from the ground, regardless of the price.

A supply or demand shock, that is, displacement of either curve to the right or left, leads to a much larger change of the clearing price.

I'm genuinely curious about this, because it sounds like you have some first hand experience. My understanding is that this is not entirely true.

Capital intensive projects like Refineries, Storage and Shipment are inelastic, but actual drilling is relatively elastic. To the point where they leave wells sitting, pre-drilled ready to turn on in the event that they become profitable at some point. I'm assuming there is also excess capacity available in the inelastic parts of the system given that a lot of these infrastructure was built during times when the US was a larger extractor of oil.

Like many things, it depends. I think the pre-drilled thing was an artifact of relatively cheap money coupled to low oil prices. Some sort of underground contango hold. I remember this was a thing around 2015, when oil prices were below 50 dollars. The thing is, those wells were not ready to go, they needed to be completed (the process of perforating the casing to have contact with the formation) and fracked. I don’t know if we have a significant backlog of uncompleted wells anymore.

Wells vary much depending on the reservoir. For the most part, easy oil has already been tapped. There are still some places with low geological risk, in the Middle East, Venezuela, and such. A driller friend of mine in the Middle East was drilling a well a month, so there is that. This is why, every time there is a disruption, one hears discussion about OPEC’s spare capacity.

But even then, before the drilling actually happens, there needs to be a well design, and studies done on how better to drain a reservoir to maximize recovery. All that also takes time.

And all that assumes that these companies operate on fields that are already discovered. Fields have a production curve, the area under the curve is the recovered oil. They all, at the end, decline.

Doing a full field development can take decades after discovery, and discovery can take years too. From prospection, to seismic, to the drilling of wildcat and delimiting wells. Moreover, investment in exploration has declined, and more and more new discoveries are in remote places, needing great investments in infrastructure.

A potential stopgap could be the adoption of fracking in places like Europe, but it is banned over there. It baffles me. The simple exercise of calculating the enthalpy of combustion of methane vs carbon (coal) makes it incredibly obvious that natural gas is a much better fuel from a carbon emitting perspective, and this is without accounting for the efficiencies of combined cycle vs steam cycle.

> The most geopolitically stable supplier of heavy and super heavy crude oil is just north of our border. Canada. The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked.

You act as if that was the only pipeline from Canada. There are several others. Here's a start: https://en.wikipedia.org/wiki/Enbridge_Pipeline_System

The US' energy needs don't rise and fall on the approval of one single pipeline project.

If we get really desperate, expanded drilling off the coast of California along with building another refinery near Santa Barbara could also be part of the solution. Of course many of us in California would oppose this, for understandable reasons.

It’s kind of shocking that it takes 10 years to build something like this, no? Seems like there should be a way to streamline this process.

We have an EPA. China doesn't. It's easier to build these things in places where people are too poor to care about the environment or don't get to (because their governments don't) care about the environment.

There's no way to protect the environment but by making a new refinery take ten years?

Right or wrong, that is basically what happens.

Then it’s not the good justification for the ten year lag you were presenting it as. I really don’t know what you think that comment was contributing.

China has environmental protection agencies, they just aren't so incompetent that they take a decade to process a application.

"The competent department of environmental protection administration under the State Council shall conduct unified supervision and management of the environmental protection work throughout the country."

http://www.china.org.cn/english/environment/34356.htm

If the Chinese agency plays the delay, deny and harass game they will likely be replaced by an agency that is capable of protecting the environment without standing in the way of industrial progress.

When the EPA plays the delay, deny and harass game they amass brownie points with politicians.

Likewise it's probably safe to assume that the Chinese agency is much more set up (and well practiced at) making sure things actually get done on defensible timelines.

It's more than just the environment. The more engineers & scientists you have, the faster you can build it. The more people you're willing to crush beneath your wheels, the faster you can build it.

It is an enormously complex factory with a high probability of going boom if you do something wrong, so not really, no.

There probably are ways to do it using modular components. They did this with natural gas power plants (see Wartsila power plants for example.) In that case, you can probably get it down to 2-3 years.

Natural gas power plants are relatively modular, and we can chain together units to make a bigger power plant. There is no such equivalent modular unit for petroleum processing. Each plant is highly customised to deal with a specific mix of different kinds of input oil, and to deliver a specific mix of output petroleom products. They can be reconfigured within a narrow range, but they're not highly flexible.

Goes to reason that heavy crude refineries should be able to process light crude just fine since light crude is just a fraction of the heavy one.

What likely is the issue is the cost - refineries will make less money refining light crude oil as part of them will be underutilized.

One thing that article did not mention is that perhaps refineries have setup to refine heavy crude because of Canada's tar sands and XL pipeline.

Does that con on Canadian oil apply to all Canadian oil or just oil extracted from tar sands?

Just tar sands.

> The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked.

The Keystone XL pipeline was meant to take Canadian oil to the Gulf of Mexico to refineries intending to export it. Very little of the refinery infrastructure at the terminal end of the pipeline was equipped to redistribute it domestically. Something like 70% of the oil transported by Keystone XL would have been for export.

Also as a Canadian I'm a little baffled why we should be prioritizing building pipelines that run north to south to export our oil when we can run pipelines east to west to supply our own people and export on our own shores.

Many reasons:

Because the market is bigger and demand is greater

Because Quebec is powered by hydro and doesn't need oil and doesn't want the pipeline going east because they sell power.

The eastern provinces get oil from offshore locally or from Saudi/middle east so the cost doesn't make sense.

The oil is going south anyways on trucks. The pipeline took so many trucks off the road.

>Because Quebec is powered by hydro and doesn't need oil and doesn't want the pipeline going east because they sell power.

Quebec uses tons of oil every day, whenever they fill up their cars. Most of it comes from Saudi Arabia, brought into the Irving Refinery in New Brunswick. Irving would use Canadian oil if they could get it.

Sorry but this is factually incorrect. The majority of Quebec's oil is from Alberta, with some small amount being from the US and only a tiny portion coming from the Irving refinery.

https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/pr...

"Line 9 has been delivering crude oil from Sarnia, Ontario to Montreal since its reversal became operational in December 2015. The line has a capacity of 300 Mb/d and transports a combination of oil from western Canada and the U.S. Midwest.

In 2018, deliveries of imported and eastern Canadian crude oil on the Portland-Montreal Pipeline fell to an average 2.5 Mb/d, less than 1% of its capacity." (italics mine)

That being said, GPP is partially correct: Quebec is the highest electricity producer and consumer in Canada, but it's almost entirely hydroelectric and their electricity is cheap. "Quebec’s emissions per capita are the lowest in Canada at 9.4 tonnes CO2e – 52% below the Canadian average of 19.6 tonnes per capita."

With the highest electric vehicle uptake in the country, and the lowest greenhouse gas emissions, seems Quebec has the right to be smug (see https://www.youtube.com/watch?v=AnFAAdOBB1c)

Anyways, please don't spread political disinformation. Quebec is not a significant consumer of Saudi oil, despite what Jason Kenney has to say about it.

>Quebec’s emissions per capita are the lowest in Canada at 9.4 tonnes CO2e – 52% below the Canadian average of 19.6 tonnes per capita."

Only because they don't count any emissions that come from Hydro. We have no idea what they actually producing because they don't test any of the dam reservoirs for methane emissions.

>Quebec is not a significant consumer of Saudi oil, despite what Jason Kenney has to say about it.

Not my province, so I don't consume anything he says. Considering the biggest refinery in Quebec (Valero refinery in Levis, 265M barrels/day) refines sweet crude, I sincerely doubt it's getting the majority of it's oil from Alberta.

As a non-Albertan, I'm baffled by why Alberta thinks that building east-to-west pipelines to prop up their economy, while saddling their neighbours with all the risks is good policy.

I mean, I understand that may be a good policy for an Alberta, but there's no reason why anyone else should think it's a good policy for them.

In what way is a pipeline riskier than truck/rail/ship?

False dichotomy. It's not a choice between pipeline and rail, it's a choice between pipeline, rail, and nothing. Since its neighbours receive nothing but liabilities, regardless of which option is taken, I'll go with nothing.

Tar sands oil is an endless, pointless jobs program. It's barely afloat when oil prices are high, and a rock around the neck of the Canadian economy, and GHG commitments when they aren't. I'm not interested in drastically cutting back on my energy usage, to balance the books with one of the dirtiest fuel producers in the world.

Pipelines do nothing for me, but encourage this economically-destructive industry to expand. For every dollar of wealth it generates, it destroys a dollar and a dime.

I'm looking at it through a lens of least impact overall and totally agree about the tar sands. Trucking is wasteful, shipping and trucking don't have a very good ecological safety record. A good step in reducing environmental effects of oil is to stop exporting it as that just moves the problem elsewhere. Being self sufficient and weaning ourselves off of oil & gas is a step in that direction. We need to fix the problems at home before telling others what to do.

Absolutely, 100%. And the distortions that "rip and ship" makes in the economy aren't worth it when oil prices are high. It makes some people rich but most of us just suffer net effects and I'm not even talking about climate change.

I've lived in Edmonton during oil-boom times, and during not-oil-boom times.. and the corrosive effect of the boom and bust cycle on the Albertan economy, it's not pretty.

And a high per-barrel price in Alberta does nothing good for manufacturing in the rest of the country, dragging our dollar up and making our exports less attractive and the costs of production higher. When the dollar is high also makes my labour as a software engineer more expensive, without much benefit to me.

Ah well, enough ranting, off to go pick up sushi in my electric car and I'm not even joking.

"Tar sands oil is an endless, pointless jobs program."

That point alone makes me confident you aren't that familiar with the industry.

Given that break even for the tar sands has been in the $100/barrel range only recently (with process upgrades) may be as low as $40 (very optimistic in my books). It's certainly appears to need subsidies to survive.

Where did you get $100/bbl from? It was $40-50/bbl a decade ago for some companies.

This source states an average of $40 today across all oil sands producers.

https://oilprice.com/Energy/Crude-Oil/Breakeven-Price-For-Ne...

Typically when oil prices drop (they were <$40 in early 2020), the oil sands companies put production on standby. It's like most oil exploration - it's either feast or famine depending on global prices.

Alberta mines & refines oil that every other province uses, and is saddled with all the pollution from that. Why should Alberta prop up the economies of all the other provinces and have to deal with the actual consequences of that?

Huh? No. The refining of Alberta oil generally happens elsewhere. The Albertan oil consumed in Ontario and Quebec is refined in Sarnia and the port of Montreal, respectively. Comes in via line 9 and is refined in province.

The chemical industry pollution in Sarnia is pretty bad from what I hear.

https://en.wikipedia.org/wiki/Environmental_impact_of_the_ch...

Largest refineries in Canada that refine Canadian crude are in Alberta, Imperial's 191M barrels/day and Suncor's 142M barrels/day, both in Edmonton and then you can add on Fort Saskatchewan's 100M barrels/day, just outside of Edmonton. There's a west coast city that is nearly entirely dependent on Albertan crude oil & refining.

Sarnia is refining an already upgraded bitumen though, so it's only getting half of the garbage. Also Line 9 goes from Sarnia to Montreal, Enbridge Mainline goes from Alberta to Sarnia.

Because our federal government is entirely self serving (from a western perspective).

https://en.wikipedia.org/wiki/National_Energy_Program

Seems like axe grinding to mention a policy that ended 35 years ago.

Why do you think this is not already the case? Just curious, because it seems like many people in my birth province of Alberta aren't aware that we already have these pipelines, and think that people here in Ontario and in Quebec are burning Saudi oil.

Line 9 runs practically right behind my house, and since it was reversed some years ago it feeds facilities in Ontario (and Quebec) with Alberta oil. Line 5 runs under the great lakes, all the way from western Canada to refineries in Sarnia (and is currently under threat from Mich. governor, but that's a separate topic)

90ish percent of Ontario's oil consumption is domestic oil depending on time of year and so on. The remainder is mostly from the US. Small % from middle east.

Oil from Alberta makes it all the way to refineries near Montreal. Last I looked 70% of Quebec's oil is domestic origin.

Politicians in Alberta have become masters of ignoring this key fact in their rabble rousing.

Could capacity be increased? Maybe. Is it strictly necessary? I don't know. Should we be reducing consumption anyways? Yes.

See map here, on Enbridge's website, zoom in to Ontario:

https://www.enbridge.com/reports/2021-liquids-pipelines-cust...

Now, the Atlantic provinces, that's another story. But a much smaller market.

I was curious about this so I looked around. From what I can tell it looks like what you're saying is part of a political disinformation campaign started by Kirsten Gillibrand.

https://www.politifact.com/factchecks/2017/apr/16/kirsten-gi...

https://www.lsu.edu/hss/english/files/university_writing_fil... (Page 5)

If I understand these summaries correctly:

1. Countries in Latin America are developing and therefore using more oil so they have less to share with us.

2. We are consuming slightly more oil.

3. Oil obtained from hostile and unreliable regions should be replaced.

The effects would be that oil consumed from the pipeline would be cheaper, it would be more reliable, and while not being totally for domestic use would make a significant dent in our oil consumption in the right categories.

Edit:

Opposition to the Keystone XL likely would have been more effective if it focused on (potential) environmental impacts as well as the spill that occurred in 2017. I think that's what the Biden administration focused on when it cancelled the permits.

PolitiFact's article is foolishly splitting hairs. The concern about Keystone XL's exports was never about the oil but the refined products (gas, etc). The Texas refineries that would have been at the XL's terminus already export a majority of their refined products.

They're not the only refineries that handle heavy crude but they are the ones with the easiest access to the export markets of Central and South America.

> It is true that exports of petroleum products from Gulf Coast refineries have increased considerably in recent years. That’s part of why PolitiFact rated a similar statement by Obama Mostly False in 2014. While the trend adds a grain of truth to her claim, it does not mean all of the oil that will come from the Keystone XL pipeline will be immediately exported.

I don't think it's splitting hairs, that's the main point of the conclusion. What she said:

    The Keystone XL pipeline "doesn’t even have any oil for America."

is verifiably untrue.

So what percentage would you state would be destined for export?

Well, the Keystone XL doubles our capacity in the US but pales in comparison to overall demand. Based on what I read I'd expect that most of the pipeline would be used to replace hostile and unreliable sources at a minimum.