May 2010

[Ally]

Shift in natural gas prices `bodes well`

EDMONTON — Sustained "realistic" natural gas prices of $6.50 to $8 could persuade Atco Power to accelerate the conversion of its Alberta coal-fired power plants, the annual meeting of parent company Canadian Utilities heard Thursday.

The fundamental shift in prices caused by huge shale-gas reserves starting to hit the market "bodes well" for converting the Sheerness and Battle River plants to natural gas, Atco Power president Rick Brouwer said.

"It`s not a viable option to shut them down early, and we`re a ways away from making carbon capture viable."

The problem is getting gas suppliers to sign long-term contracts at lower prices, rather than keep it in the ground until the price goes up, chairman Ron Southern said.

Building a 1,000-megawatt gas-fired plant doesn`t make sense if you can`t be sure what your fuel costs will be, he said.

Read the full article here.

 

[Ally]

CNRL sees costs soaring as firm faces inflation with oil sands expansion

CALGARY - Canadian Natural Resources Ltd. on Thursday said it is bracing for a return to runaway cost inflation and possible labour shortages as producers scramble back into expanding oilsands production.

Speaking at the company`s annual meeting in Calgary, company president Steve Laut said the oilsands revival could once again pose cost pressures while it begins to consider expansion of its newly inaugurated Horizon oilsands mine.

"I think that`s one of our concerns," he said. "I think it`s quite likely everyone will get confident at the same time and you could have that overheated, highly inflationary environment once again. That`s why we`ve got to make sure we`re ready for it and have a plan to deal with it."

Canadian Natural is expected to have detailed cost estimates for the second and third phases of Horizon ready by the end of the year for possible sanctioning in 2012. Laut said the big lesson from the initial Horizon project is to have highly detailed engineering prepared ahead of time. "That`s why we have to have a very robust execution strategy," he added.

Read the full article here.

 

[Ally]

Gulf of Mexico oil spill makes oilsands more appealing

WASHINGTON — The safety benefits of importing Canadian oil by pipeline should be a consideration in formulating United States energy policy in the wake of the BP oil spill currently polluting the Gulf of Mexico, a senior State Department official said Thursday.

"It`s certainly true that oil that comes by pipeline has far less potential to cause economic damage of that scale because if the pipes are properly constructed, there is an ability to shut them off if there is an explosion or leakage," David Goldwyn, a senior State Department adviser for international energy issues, told a summit on North American energy security.

"It is a consideration, I think, in terms of the environmental aspects of pipeline oil versus deep water" drilling, he said.

Goldwyn made the comments while sharing a stage Thursday at the Canadian Embassy with Alberta Premier Ed Stelmach, who is in the U.S. capital seeking to quell concerns about the environmental impact of oilsands production.

With international attention now focused on the calamity unfolding in the Gulf — where oil giant BP is scrambling to shut down a ruptured offshore well — the `safety factor` of shipping crude overland is figuring more prominently in arguments made to U.S. policy-makers by promoters of Alberta oilsands development.

Read the full article here.

 

[Ally]

Calgary CMA lost 4,500 jobs in April while Alberta, Canada make gains

CALGARY - The Calgary census metropolitan went against the provincial and national trend in April when it came to the job market.

While the number of jobs created in Alberta and Canada grew on a monthly basis and the unemployment rate fell, the Calgary area experienced the opposite direction on both fronts.

Statistics Canada reported today that the number of jobs in the city`s region fell by 4,500 in April and the unemployment rate rose to 7.6 per cent from 7.2 per cent.

The federal agency reported that the unemployment rate in the province dropped to 7.4 per cent in April from 7.5 per cent in March.

Read the full article here.

 

[Ally]

Jobless rate blamed on migrants

EDMONTON — Alberta gained 10,000 jobs in April, but the province`s unemployment rate edged down only 0.1 percentage point in April to 7.4 per cent, Statistics Canada reported Friday.

That`s because the labour force, or the number of people working or available for work, also increased by 9,300 people over the previous month.

"We`re starting to plateau," said Alberta Employment and Immigration Minister Thomas Lukaszuk.

He said migration to Alberta continues to inflate the provincial unemployment rate.

"We have more people actually looking for work, but when you look at the numbers you realize that many of these people are new people to Alberta. That means we still continue to attract unemployed Canadians."

Read the full article here.

 

[Ally]

Tar sand mining gaining force

And, one or rather both the pictures are about to disappear: it`s not rocket science to discern that tar sands could be extracted only after mining the forest. For what? Well, tar sands are the source of liquid fuels- the dirtiest source of fuel on the planet, at present. Naturally, it comes at quite the cost to the environment, spoiling-you name it- the land, water and air. Up until recently, extracting oil from tar sands was very expensive, technologically difficult and complex. But advancement in technology and high price of oil-above $80 a barrel- has made it possible to extract oil with profit.

Needless to state, now we have companies flocking to get a piece of the cake, or should we say tar sand. And for good reasons, too: In 2008, production from Alberta tar sands was at 1.31 million barrels per day and Oil sands are the largest source of crude outside the Middle East. Further, Canada is politically stable and has an investment friendly government.

So, in one of China`s largest investment in North America, the state owned Sinopec Oil Company is all set to buy a 9% stake in Syncrude project for Canada`s oil sand. The oil company paid the US based ConocoPhillips $4.65bn for the stakes. Syncrude, is the largest project in Canada for tar sands, operating since the seventies, pumping around 350,000 barrels a day and accounts for more than 13 percent of Canada`s oil output. The deal is yet to be approved by the respective governments in China and Canada. Analysts were expecting Canadian Oil Sands Trust, the largest owner of the Syncrude project, to buy the stakes of ConocoPhillips. But Sinopec clinched the deal, and by more than $2bn the expected cost, at that. Other companies associated with the Syncrude project are Suncor Energy Inc, Imperial Oil Ltd, Nexen Inc, Nippon Oil Corp and Murphy Oil Corp.

This is the latest in a series of investments, to the tune of billions of dollars, done in the energy sector by China. Demand for energy is growing in China with a booming economy-the demand fast-tracked by 28% in January this year compared to the same month last year- and the country is leaving no stone unturned in its quest for oil. In fact, last year, Sinopec bought a ten percent stake in the Northern Lights project and spent around $7.2bn for Addax Petroleum, a company with stakes in oil fields in West Africa and Kurdistan. In 2009, Athabasca Oil Sands Corp. (AOSC) divested 60 percent of its stake in Alberta oil sands project to PetroChina International for $1.9 billion. But the latest acquisition is, so far, the largest from China in oil sands.

Read the full article here.

 

[Ally]

OPEC wary of action to stop drop in oil prices

DOHA - Global oil markets are oversupplied but OPEC thinks it is too early for the group to take action to halt a recent decline in prices as fallout from the eurozone debt crisis sets in.

OPEC Secretary General Abdullah al-Badri said yesterday global oil markets were oversupplied, urging greater compliance among members of the group.

"We have a lot of crude oil on land and offshore," Mr. Badri told reporters on the sidelines of the Arab Energy conference in Doha.

"OPEC already took action in December 2008 to reduce 4.2 million barrels (a day)," he told reporters. "We just have to abide by that.... I am calling for more compliance."

U.S. crude-oil futures settled at US$75.11 a barrel on Friday, posting their largest weekly loss in almost a year and a half, as worries grew that the eurozone`s debt crisis might derail the global economic recovery.

Read the full article here.

 

[Ally]

Norway to allow Statoil`s oil sands plan to proceed

OSLO - Norway said yesterday it will reject a motion by environmentalists to force majority state-owned energy company Statoil to withdraw from its Canadian oil sands project.

"The state will vote against the motion at the Statoil general meeting," the Oil and Energy Ministry said in an email yesterday.

The announcement means the motion by Greenpeace and the World Wildlife Fund will be defeated at Statoil`s annual general meeting on May 19, because the Norwegian state owns 67%of Statoil`s shares.

It is the second year the environmental groups have registered a motion calling for Statoil to disinvest from oil sands production, which critics say emits more carbon dioxide than traditional oil production, uses more water and involves greater destruction of the landscape.

Environmental groups have put similar motions to votes at annual shareholders` meetings of BP and Royal Dutch Shell.

Read the full article here.

 

[Ally]

Canada`s tar sands: a dangerous solution to offshore oil

As the clean-up of the disastrous oil spill in the Gulf of Mexico continues, the US may finally begin to rethink its position on off-shoring drilling. As usual, change is frustratingly slow, and almost imperceptible: environmental groups like the Centre for Biological Diversity have criticised the Mineral Management Service, the US agency that oversees oil extraction, for its "business as usual" approach during the disaster, and expressed concerns that the Obama administration has waived environmental reviews of more than 20 new off-shore drilling projects even as the Deepwater Horizon spill continues.

Still, a glimmer of environmental hope has come from the unlikely source of Californian governor Arnold Schwarzenegger, who withdrew his support to expand off-shore exploration off California`s coast in the wake of the BP oil spill. It may be hard for climate-change activists to admit, but Schwarzenegger`s move seems impressive, particularly considering the pressure he faces to ditch environmental concerns to save California`s flailing economy. The governor`s turnaround on off-shore drilling comes as he faces increasing pressure to abandon California`s commitment to the 2006 Global Warming Solutions Act to reduce greenhouse gas emissions by 25% by 2020. Opponents have collected enough signatures to put an initiative on November`s ballot to delay the implementation of the act until unemployment falls below 5.5%.

In this political climate, Schwarzenegger`s change of heart on off-shore drilling could bolster environmental campaigning efforts to reduce offshore projects nationwide: if recession-suffering California can do it, so can the rest of the country.

The problem comes if California shifts its consumption of oil to a more carbon-intensive source. David Hughes of the Post Carbon Initiative has noted that, even if offshore drilling is banned in California, it will have little positive environmental impact if the state`s current demand for oil is just met from other sources. One likely source in particular will only worsen the situation: oil from the Canadian tar sands are already the biggest source of US oil imports, and Alberta`s recoverable reserves are now estimated to be the second-largest worldwide after Saudi Arabia. And unlike oil from Saudi Arabia, Albertan oil is literally in the sand itself, so refining it is up to five times as energy-intensive as refining crude oil.

Alberta premier Ed Stelmach wasted little time visiting Washington to promote Canadian oil sands as a "safer" option in the wake of the Gulf of Mexico disaster – referring to the oil sands as an "unconventional" source, as though one of the most destructive variants of fossil fuel extraction was merely a friendly alternative.

Read the full article here.

 

[Ally]

U.S. ponders Alberta oilsands as safe alternative

The safety benefits of importing Canadian oil by pipeline should be a consideration in formulating United States energy policy in the wake of the BP oil spill currently polluting the Gulf of Mexico, a senior State Department official said Thursday.

"It`s certainly true that oil that comes by pipeline has far less potential to cause economic damage of that scale because if the pipes are properly constructed, there is an ability to shut them off if there is an explosion or leakage," David Goldwyn, a senior State Department adviser for international energy issues, told a summit on North American energy security.

"It is a consideration, I think, in terms of the environmental aspects of pipeline oil versus deepwater (drilling)," he said.

Goldwyn made the comments while sharing a stage Thursday at the Canadian Embassy with Alberta Premier Ed Stelmach, who is in the U.S. capital seeking to quell concerns about the environmental impact of oilsands production.

With international attention now focused on the calamity unfolding in the Gulf -- where oil giant BP is scrambling to shut down a ruptured offshore well -- the safety factor of shipping crude overland is figuring more prominently in arguments made to U.S. policy-makers by promoters of Alberta oilsands development.

Read the full article here.

 

[Ally]

T. Boone Pickens` Oil Price Predictions for 2010-2011

Click here to watch.

 

[Ally]

Oil prices to stay low through 2011: CBC report

OTTAWA - Several key forces are holding oil prices around US$80 a barrel, and not even the oil leak in the Gulf of Mexico and positive news on Europe`s debt crisis are enough to lift prices in the near term, says a CIBC report released yesterday.

Unlike the spike in prices seen in 2004 when Hurricane Katrina affected production in the Gulf and the peak above $145 US a barrel in July 2008 --mainly due to speculation-- "several countering forces are at play in the oil market that should see prices stay below triple-digit territory over the next 18 months, averaging $80 US a barrel this year and $85 US in 2011," says the report by CIBC senior economist Peter Buchanan.

Many countries, including the world`s top oil consumer, the United States, "will have to cut bloated deficits, and the drag from those efforts will keep the global recovery`s pace from matching past ones, restraining oil demand," the report says.

In booming China, oil demand is likely temporary, the result of "increased consumption by the power sector to offset reduced hydroelectric production resulting from the worst drought to hit the country in a century," it says.

Read the full article here.

 

[Ally]

Canada`s natural gas resource jumps dramatically in estimates

CALGARY -- Canada is sitting on nearly 4,000 trillion cubic feet of natural gas, a dramatic jump from previous estimates thanks to the inclusion of unconventional natural gas estimates, according to a report released Wednesday that for first time measures shale gas and other plays that are difficult to access.

The amount of marketable gas - the chunk that can be recovered and sold to the market after impurities are stripped out - hovers between 700 TCF and 1,300 TCF, the Canadian Society for Unconventional Gas said.

Total marketable gas from conventional sources is estimated to be 357 TCF, the Calagry-based organization said. Canada`s previous gas estimates were based only on conventional plays without providing hard data on unconventional resources.

"Natural gas has been overlooked in energy policy, in part because nobody has really tried to make sense of how much is out there," Kevin Heffernan, one of the report`s authors, said in an interview. "We now have a comfort factor and confidence that we have lots of natural gas for many, many years to come, and we can build policies and foundations around that."

Read the full article here.

 

[Ally]

China to invest more than $1B in Penn West deal

Penn West Energy Trust has struck a joint venture with China`s sovereign wealth fund to develop the company`s oil sands assets in the Peace River area of Northern Alberta.

Under the terms of the agreement, Penn West will contribute $1.8-billion of assets to the joint venture, while China Investment Corp. (CIC) will invest $817-million to acquire a 45% stake in the partnership. CIC will also provide Penn West with $435-million in financing by buying about 23.5 million units of the income trust in a private placement.

In a statement, the two companies said they believe the oil assets represent a "world class resource" and that the potential production and reserves are "substantial." The assets include 237,000 net acres of oil sands leases, with current production of about 2,700 barrels of oil equivalent per day.

David Middleton, Penn West`s executive vice president of engineering and corporate development, will be responsible for directing the operation of the joint venture through a joint management committee. He is a key part of Penn West`s management team led by chief executive William Andrew.

CIC, China`s main sovereign wealth fund, has invested aggressively in resource assets around the world over the last year as China looks to convert some of its massive currency reserves into hard assets. While CIC is invested in many Canadian companies, its biggest position is a 17.5% stake in Teck Resources Ltd. that is worth more than $3.5-billion.

Read the full article here.

 

[Ally]

Calgary parking rates stubbornly high

CALGARY - Calgary`s downtown has experienced a sharp rise in its office vacancy rate and a subsequent sharp decline in rental rates in the past year or so.

But a new study, obtained by the Herald, by a commercial real estate firm says very little has changed in the parking rates as they remain among the highest in North America.

"Over the past two years, downtown office rents are off 50 per cent or greater, however parking rates have stubbornly remained near the most expensive in North America," said Mike Gigliuk, senior negotiator with CITI Commercial Real Estate Services Inc. "That condition is expected to change as the supply of parking stalls will soon increase within and in the vicinity of the downtown core."

Research by Gigliuk shows that the average monthly parking rate, for downtown stalls (underground and surface) operated by the private sector and associated with office buildings, remained unchanged in the first quarter of this year from a year ago at $465.15 for all classes. Those rates were $283.34 in 2003.

However, Gigliuk said the average office lease rate has declined by 45 per cent from $32.46 a year ago to today`s average of $17.75. The average downtown office rent in 2003 was $15.15.

Read the full article here.

 

[Ally]

Albertans` time in unemployment lines continues to grow

CALGARY - The average length of unemployment continues to increase in Alberta despite the economic recovery gaining traction in the province.

The average duration of unemployment in Alberta skyrocketed during the recession from a low of 6.6 weeks in November 2008 to 18 weeks in April, said Dan Sumner, economist with ATB Financial in Calgary.

From 2006 to the end of 2008, the average length of unemployment hovered around eight weeks, its lowest sustained level since the last oil boom in the late 1970s and early 1980s, he said.

"Although the duration of unemployment has seen a spectacular rise during the past 18 months, it is rising from an unsustainably low level which makes the increase look worse than it is," said Sumner. "Even after the large increase, the average length of unemployment in Alberta is below the Canadian average of 19.3 weeks."

He said the length of unemployment is a very important statistic in evaluating the health of the labour market.

Read the full article here.

 

[Ally]

Oil sands revenues shrink Alberta deficit by half: Stelmach

EDMONTON — The province has roughly halved its anticipated deficit, somewhere "south of $2 billion," Premier Ed Stelmach said Thursday night in a speech to party faithful.

Government officials said the reduction is a result of increased oilsands revenues, in part because of a boost in crude oil prices.

"I can confidently report to you tonight that the deficit that we projected a year ago at $4.7 billion ... has been reduced," Stelmach said during a Progressive Conservative fundraising dinner at Edmonton`s Shaw Conference Centre.

He called it "proof that a measured approach during difficult times does work."

Speaking to reporters ahead of the speech, Stelmach said the new figure "speaks to the volatility of (Alberta`s) revenue stream." He noted corporate and personal income taxes have bounced back as well.

Read the full article here.

 

[Ally]

Edmonton home building back to normal

EDMONTON — Lower inventory, stable demand and improving consumer confidence have boosted home building in the Edmonton region to "normalized" levels from the lows of last year.

Despite rising interest rates, housing starts in the Edmonton region in April nearly quadrupled from a year earlier, when homebuilders downed tools because of recession and oversupply of inventory.

"Basically, what happened is the market returned from last year," said Sandra Young, president of the Edmonton branch of the Canadian Homebuilders` Association of Canada.

"We, as builders, saw sales start returning last fall and they stayed strong throughout the winter months, and that turns into the starts that you see today."

Total home construction started in the region reached 1,407 in April, compared with 355 in April 2009, Canada Mortgage and Housing Corp. reported Monday.

Read the full article here.

 

[Ally]

Thousands of jobs set to end in Edmonton region

With work on two major industrial projects nearing completion and no new ones in sight, the Edmonton region`s workforce is about to be hit hard.

And perhaps the clearest indicator of what is coming can be seen at Diversified Transportation`s garage, where more than 100 buses that ferry about 5,500 workers to Shell`s Scotford upgrader expansion project will soon no longer be needed.

"We`ve been at peak since last fall, but Shell is winding down and we expect to be finished by August," said general manager Rick Colborne.

Today, there are about 6,000 construction workers on the Scotford site.

Shell`s new facility is scheduled to be commissioned later this year and start up in early 2011, adding 100,000 barrels per day to the current 155,000-bpd production of synthetic crude that is largely used by the adjacent Shell refinery.

"Without crying the blues, we`ll have 100-plus buses with drivers and support staff that have no other job to go to of that size."

Read the full article here.

 

[Ally]

China to invest $1.2 billion in Penn West and its oil sands venture

CALGARY - China on Thursday beefed up its Canadian oil sands portfolio with a $1.25-billion cash injection in Penn West Energy Trust.

The China Investment Corp., one of the world`s largest sovereign investment funds, agreed to pay $817 million for a 45 per cent interest in a joint venture to develop Penn West`s Peace River oil sands assets along with an additional $435 million to take a five per cent equity stake in the trust itself.

Under the joint venture agreement, which will be structured as a general partnership, Penn West will contribute thermal oilsands assets valued at $1.8 billion while CIC will make an initial lump sum payment of $312 million and fund $505 million of future operating expenses.

Penn West, which is currently producing about 2,700 barrels per day at Peace River, has approvals for a commercial pilot that will see output jump to 10,000 barrels per day by the end of 2012.

According to Penn West spokesman Jason Fleury, the deal accelerates the development of the Peace River assets, which would have otherwise laid dormant. "We`re very excited because it`s going to allow us to develop assets that we didn`t have the capital for," he said. "What this allows us to do is focus attention on our Cardium play."

Read the full article here.