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May 2010

Ally

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Alberta offers new incentives to energy industry

The Alberta government has unveiled new incentives for the energy sector, including a 36-month royalty holiday for companies that drill unconventional oil-andgas wells into shale formations.

"This initiative to unlock Alberta`s unconventional resources offers the potential for decades of employment and community benefits," Alberta Energy Minister Ron Liepert said on Thursday.

"The final adjustments to royalty formulas will help industry make important investment decisions for the fall and winter drilling season and maintain Alberta as a competitive jurisdiction for investment."

The unconventional drilling incentives are designed to help Alberta compete with unconventional drilling hot spots in the United States, British Columbia and Saskatchewan.

Tapping oil and gas from shale involves high-cost horizontal drilling with multistage fracture stimulation.

The government has been trying to correct a relationship with the oil-andgas industry that went sour after royalties were increased two years ago.

Read the full article here.
 

Ally

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Enbridge moves ahead with $5.5-billion pipeline

Enbridge filed its environmental application for the Northern Gateway oil pipeline Thursday and immediately ran afoul of opponents of the proposed $5.5-billion project.

Enbridge envisions a 1,172-kilometre twin pipeline system running between Edmonton and the British Columbia coastal town of Kitimat, as well as a tank terminal and marine shipping terminal in support of crude oil shipments from the Alberta oilsands.

The company issued a news release to announce it has filed with the National Energy Board an eight-volume application that provides "a comprehensive overview of the proposed project and its benefits."

"We take pride in our long-standing reputation as a safe pipeline operator and socially responsible company," Enbridge president Patrick Daniel said in the release, adding that the project "will be a model of world-class safety and environmental standards."

The company estimates economic benefits to include 62,700 person-years of construction employment, 1,150 long-term jobs and $2.6 billion in tax revenue.

Read the full article here.
 

Ally

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Hearing kick-starts delayed upgrader

EDMONTON - Three years after proposing a bitumen upgrader for the Fort Saskatchewan area, French oil giant Total`s Canadian arm will seek a green light on Tuesday from the Energy Resources Conservation Board.

The Total public hearing, the first in three years for an upgrader in a region that once hoped to have a half-dozen projects underway by now, is expected to attract a range of opponents.

The promised construction boom was shelved after oil prices plunged along with the global economy, and only the Shell upgrader expansion at Scotford -- now almost complete -- was built.

But that could soon change. Total`s 150,000-barrel-per-day upgrader would closely resemble one it constructed in Venezuela several years ago. But construction likely won`t begin for a couple of years.

By that time, North West Upgrading`s $5-billion project near Redwater is likely to be well underway. NWU is in negotiations with the province to handle its bitumen collected under the Bitumen Royalty In Kind program

Read the full article here.
 

Ally

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Analysts applaud Alberta`s new royalty holidays for oilpatch

CALGARY - The benefits from Alberta`s new royalty incentives will be "material" and "significant," according to research reports that emerged overnight following the announcement on Thursday.

Provincial Energy Minister Ron Liepert went much further than most anticipated in announcing a series of royalty holidays for specific types of oil and gas activity, as well as confirming details or "curves" associated with lowered maximum royalty rates announced in March.

"All in all, the economic picture for many companies in our coverage universe is better coming off of this announcement," said a report from investment bank FirstEnergy Capital.

Chimed in Calgary rival Peters & Co.: "(The) modifications are a substantial improvement from the announcement in March, when there was minimal benefit for any play unless commodity prices increased significantly."

"We believe the new Alberta royalty framework ... is directionally positive for producers in Alberta and hopefully provides a new stable and clear regime for producers to carry out their oil or gas development," said Macquarie Securities.

Analyst Robert Fitzmartyn of FirstEnergy said Alberta companies will have to crunch the numbers over the next few weeks to decide whether to adjust their capital budgets but the changes make it likely that activity will increase.

Read the full article here.
 

Ally

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Oil above US $74 on dollar, but down 14% in May

LONDON -- Oil rose above US$74 on Monday in line with a timid recovery across financial markets, but was set for its biggest monthly loss in 18 months after European economic crisis raised the prospect of reduced fuel demand.

Although still under pressure following Fitch`s downgrade of Spain`s credit rating on Friday, the euro rose modestly against the dollar on Monday and Asian and European markets edged higher.

Trade volumes were limited as the U.S. and UK financial markets are closed on Monday for public holidays.

U.S. crude for July delivery rose 53 cents to US$74.50 a barrel by 1018 GMT, after settling down 58 cents on Friday.

London Brent crude rose 62 cents to US$74.64 a barrel.

Front-month U.S. crude, which hit a 19-month intraday high of US$87.15 at the start of May, has so far fallen by 14 percent this month in the steepest monthly drop since late 2008 when the market was crashing from a record of $147.27 in July that year.

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Ally

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Crude price, new royalties restore hope in oilfields

EDMONTON - Alberta`s drillers and oilfield services firms know all about roller-coasters.

When prices for crude oil and natural gas soar -- as they did in mid-2008, when oil touched $147 US a barrel and gas topped $13 per MMBtu (million British thermal units) -- oilfield services firms run flat out, scrambling to find enough workers and equipment to meet demand.

And when energy prices crater -- as they did in early 2009 -- activity levels crash, equipment is liquidated and thousands of workers are laid off. In a province where boom-and-bust cycles are the norm, no industry feels the swings more acutely than the services sector.

So now that energy prices are (touch wood) slowly on the mend, and Alberta land sales -- a key indicator of future drilling plans -- are rebounding, what`s the outlook for this volatile sector?

In a nutshell, it`s far better than it was a year ago. But no one expects the boom times to return any time soon.

Read the full article here.
 
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