Cramer's Mad Money (CNBC) Talks "Unconventional Carbons" with the Head of EnCana

6:50 EDT: Cramer leads with skepticism citing the Maass piece with a little contempt.  Head of EnCana says "yeah, we have to go to unconventional (more expensive) oil and natural gas." EnCana head talks about growth over time and makes it sound like everything was going to be ok.

This segment will re-air at 9:50p and 12:50a EDT.  Not all that interesting...but Cramer did say he expected some good quarters from these companies.

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The Lemming Head gets very confused when a Mad Man screams at it about money and profits and the wisdom of the markets. We generally train ourselves to flip right past "Those who use high-volume, fast-talking sound logic" to try and convince us of things that logically do not make sense.

The Lemming Head does not like Nonsense Noise that tries to throw it fairly off balance and into the blades of the spin zone. Spin zones get the head dizzy. Dizzy logic is not logic, our mamma always used to say.

Slowly-read, TOD logic might be logic ---if carefully evaluated.

I don't think Gwyn Morgan (CEO of EnCana) believes "everything will be ok" - the company strategy - moving away from what worked for decades - is a defacto admission that they don't believe that at all.

Over the past year EnCana has been divesting itself of all "non core" assets, including:

  • conventional oil, especially conventional international oil
  • natural gas storage facilities

and has been working on its "in-situ" oil sands production, aiming to be one of the lowest cost producers of bitumen.

Their strategy has appeared to me for a long time as recognition that hunting for oil internationally is going to be ever more complex and costly (inferred from actions) and that natural gas, with a more or less captive North American market, offers a better reward for the investment buck.

In essence they are betting the company that conventional natural gas production has peaked and that the unconventional is the only place any growth will come from. Its not an inconsequential bet: ECA is the largest producer of N.A. natural gas.

Besides, he wasn't asked if he thought the industry could generate enough growth from unconventional sources to meet demand and reserve declines. Not sure what his answer would be. The only Canadian CEO of a major on record as suggesting there might be a problem just around the corner is Talisman Energy's Dr. Jim Buckee, but he was strictly commenting on overall world capacity not on peak oil.

thanks for that mw...I meant to come back and type more on that, but I got distracted by something.  
Hmm, in the same program he ranted on about how corn is the new oil (re:ethanol production) and how ADM was a buy because they mused about making plastics out of corn.  Nuts

  • corn ethanol production uses roughly as much energy in inputs to produce and process  as ethanol output.  I was under the impression that only cellulose-derived ethanol has an economically favourable net energy ratio.

  • re: corn based plastics: As far as I know Cargill has most of the patents and marketshare around corn based plastics.

So I take what he's says re:oil and most other stuff with a gigantic grain of salt.
This morning on CSPAN they had a couple of EROI professors get up in front of the corn growers association to explain something that took a lot of guts in front of that crowd: why net output for ethanol does not produce a positive EROI when you consider all inputs. The corn growers had a lacky on the panel who refused to account for all inputs. In the end, it comes down to the "science" of accounting. Ah accounting one thing and you accounting another. :-)
Should use hemp instead. lots of easy cellulose there. Its also an oilseed crop. I think this plant is #1 to save our sorry asses.