May 2010

[Ally]

China`s reach into Alberta oilsands signifies resource`s vital role

CALGARY - In the days following the initial public offering of Athabasca Oil Sands, the chatter at the many fundraising events around town centred on which company would be next to do a deal with a Chinese entity — whether an operating oil and gas concern or with a sovereign wealth fund. The consensus view was when, not if.

And now we know.

On Thursday, Penn West Energy Trust essentially took a page out of the Athabasca playbook in that it sold a 45 per cent interest in its Seal oilsands play in the Peace River region to China Investment Corp., in a deal that also includes the sovereign wealth fund taking a five per cent equity stake in Penn West for $435 million.

The $1.2-billion deal once again shows the slow and deliberate strategy being taken by China through its various entities aimed at shoring up access to natural resources.

What`s ironic, perhaps, is that the transaction was announced on the same day Stephen Roach, Morgan Stanley`s managing director for Asia, delivered a somewhat bearish perspective on the future of China`s demand for natural resources to a crowd of business leaders — many of them energy executives.

Read the full article here.

 

[Ally]

China bulks up in oil sands

CALGARY - China`s $300-billion investment fund made another move into Canada`s resource sector yesterday in a deal brokered by a little-known Canadian investment bank that shut out its larger domestic and international rivals.

China Investment Corp. (CIC) and Penn West Energy Trust have struck two deals -- an oil-sands partnership worth $817-million, and an equity investment worth $435-million.

Under the joint venture, Penn West will put up $1.8-billion worth of steam-assisted gravity drainage oil-sands assets in exchange for a 55% stake in the joint venture. CIC will then pay $817-million for a 45% slice. About $312-million of that goes to Penn West now, after which CIC will cover $505-million worth of Penn West`s future expenses.

Penn West`s oil-sands assets had been relegated to the bottom of its priority list as it chased its more lucrative conventional oil and natural-gas plays. The company has been spending about $50-million per year on its oil-sands operations, which produce about 2,700 barrels of oil per day. But now the partnership will be able to double or triple that amount, said William Andrew, Penn West`s chief executive.

Read the full article here.

 

[Ally]

Stop knocking oil sands, Quebec told

MONTREAL - The former head of Quebec`s largest employer group says the province has to bury its criticism of Alberta`s oil sands because much of it is based on myths and ignores the fact that the resource generates wealth for all of Canada.

Michel Kelly-Gagnon, previously the president of Quebec`s Conseil du patronat and now chief executive of the Montreal Economic Institute, said the province has to renew a positive dialogue with Alberta. Tensions between the two provinces have escalated over the past few months as some societal leaders in Quebec adopted a confrontational position toward Alberta`s resource.

"Instead of always bad-mouthing the oil sands, Quebec should look at them as a source of development," Mr. Kelly-Gagnon said in a speech yesterday to the Canadian Club of Montreal. "The oil sands promise not just a tremendous benefit for Alberta -- they will spread wealth across Canada."

Oil and gas activities in Alberta alone, not counting Saskatchewan, will add $2.85-trillion to Canada`s gross domestic product over 25 years, according to estimates. The positive impact to Quebec will be $23-billion over that time, said Mr. Kelly-Gagnon, citing figures from the Canadian Energy Research Institute.

Read the full article here.

 

[Ally]

With world swimming in oil, price has room to sink further

Oil prices slumped to a five-month low Monday, as bulging U.S. inventories, Europe`s debt crisis and a possible slowdown in China weighed heavily on markets.

After sagging to an intraday low of $69.27 US, oil rebounded slightly to close at $70.08 a barrel in New York, down $1.53 on the day. It marked the fifth straight decline.

Since May 3, when crude reached a year-to-date high of $87.15, it has plunged by more than $17 a barrel or 19.6 per cent.

The abrupt slide, which comes at the start of the peak summer driving season, is an unexpected gift to motorists, who should see lower pump prices ahead.

But it has also walloped investor portfolios at a time when fears of a possible double-dip recession are again on the rise.

Shares of bellwether energy stocks such as Suncor, Canadian Natural Resources, Nexen, Husky and Talisman have all taken a beating over the past two weeks.

Read the full article here.

 

[Ally]

BP chief speaks up for Alberta

Canada`s embattled oilsands have earned a high-profile vote of confidence from BP PLC chief executive Tony Hayward, who downplayed concerns about his company`s recent investments in the carbon-intensive fuel source and expressed doubt that proposed U.S. import restrictions will ever come to pass.

"The likelihood of the U.S. army not using a secure local supply of energy is quite low," the head of Britishbased petroleum giant told the Guardian newspaper. "Canadian heavy oil is going to be a very important part of America`s energy."

Hayward did take a shot at some of the more environmentally damaging means of extracting usable fuel from the oilsands, highlighting what he characterized as BP`s cleaner strategy for tapping the controversial Canadian energy source.

"BP has never been in the strip-mining of the tarsands and never will be," he said in the interview.

"We are focused on so-called steam-assisted gravity drainage, which is much more akin to conventional reservoir engineering . . . therefore the environmental footprint on the ground is no more or worse than normal oil or gas operation."

Read the full article here.

 

[Ally]

Alberta oilsands become largest U.S supplier of crude in 2010: Report

If the oilsands were a country, they would be the largest source of crude oil to the United States, according to a new report by a leading American energy think-tank.

Canada has long been a top oil supplier to its southern neighbour, but 2010 will mark the first time oilsands production will account for the lion`s share of U.S. imports of petroleum and refined products, according to the report prepared by Massachusettsbased Cambridge Energy Research Associates. Oilsands could eventually account for 20 to 36 per cent of U.S. supply by 2030, the report notes.

"The fact that oilsands by themselves -- were they a country -- are set to become the largest single source of U.S. crude oil imports this year, emphasizes the importance they have attained as a supply source for the United States," Daniel Yergin, IHS CERA chairman and Pulitzer Prize-winning author of The Prize, said in a news release. "It also shows how integrated Canada and the United States are in terms of energy, as in their overall economies."

The study is the first in a four-part series that will look at the oilsands and factors such as econ omic and environmental policies that could influence development of the world`s second-largest oil reserves.

Read the full article here.

 

[Ally]

Oil and gas drive Alberta exports

EDMONTON — Oil and gas will be the main drivers as Alberta exports jump 16 per cent this year and a further seven per cent in 2011 despite crude prices flattening at around $70, Export Development Canada chief economist Peter Hall said Tuesday.

"Albertans don`t like me talking about this, but oil prices are right where we forecast," Hall said during his national exports forecast tour.

"Oil inventories are swollen just now, and they are not conditions to sustain $85 oil. Prices are now much more realistic."

Hall said some oil-exporting countries are storing oil in supertankers, and that`s not likely to change in the near future.

The province`s agri-food industry also has a bright, long-term future as the global economy grows, and the machinery and equipment sector will continue to thrive despite the strong loonie, Hall said.

Read the full article here.

 

[Ally]

St. Albert LRT route unveiled

In a plan to be revealed today, the transportation department is recommending that Edmonton`s future LRT line to St. Albert travel north from the City Centre Airport land along 113A Street.

The proposed route, which would see tracks go west on 153rd Avenue to a new park-and-ride lot beside Anthony Henday Drive, beats out two other suggested corridors along 127th Street and St. Albert Trail.

Transportation officials are scheduled to unveil their recommendation at a news conference this morning, but Coun. Kim Krushell said she isn`t surprised to hear 113A Street is the preferred option.

"This is the route that always seemed to make the most sense to me, although I am concerned about the property acquisition," said Krushell, whose Ward 2 includes northwest Edmonton. "It opens up an area that has a lot of transit riders. It still meets the goal of serving St. Albert citizens in a timely manner."

The main advantage of using 113A Street is it`s projected to have the highest ridership, serving Griesbach and other growing neighbourhoods, Krushell said.

Read the full article here.

 

[Ally]

Alberta oil sands upgrader argument doesn`t make sense

There`s a surprise. Not. The provincial government announced Tuesday it had picked North West Upgrading Inc. as the winning candidate to build an upgrader in Alberta.

Talk about a badly kept secret. Ever since Canadian Natural Resources Ltd. announced it had bought a 50 per cent interest in the orphaned project back in January, the guesswork as to which company would get the go-ahead to build an upgrader in the province disappeared. It was just a question of when the official announcement would take place. Interesting, too, that it came in conjunction with CNRL`s annual investor day, which also took place Tuesday.

Still, making the argument that the province needs another upgrader is a tough one. It simply doesn`t make sense from an economic standpoint -- even with the jobs created during the construction of the facility.

Where to begin?

Let`s start with the fact that merchant upgraders -- those that are not tied to an existing oilsands operation -- don`t make economic sense.

Read the full article here.

 

[Ally]

Retail growth in Alberta to lead Canadian provinces in 2011

CALGARY - Retail sales in Alberta are expected to lead the country next year in rate of growth as consumers will spend to the tune of nearly $62 billion for the year.

The Conference Board of Canada is forecasting an annual growth rate of 5.5 per cent for the province next year which would tie it with Ontario for the highest growth across the country. Nationally, sales are expected to rise by 4.9 per cent in 2011 to $458.1 billion.

The forecast for this year in Alberta is for 5.0 per cent growth to almost $58.7 billion, which is below Canada`s increase of 5.7 per cent to $436.9 billion.

The Alberta retail landscape for this year and next is no surprise to the CrossIron Mills development in Balzac, just north of Calgary`s city limits.

"Coach opening (April 10) was fabulous. It was beyond expectations. They really exceeded the targets," said Kelly Steward of the CrossIron Mills complex which includes the over one-million-square-foot shopping centre and the CrossIron Common big-box format beside the mall.

"We have Brooks Brothers opening this summer. The entertainment SilverCity and Xscape area is on target for the end of June. That is 45,000 square feet. There`s a huge area with virtual bowling, arcade games, licensed lounge component and seven theatres with about 1,300 seats."

Read the full article here.

 

[Ally]

Resale housing markets in Calgary, Alberta lag in April

CALGARY - Residential MLS sales and price growth in Calgary and in Alberta lagged behind the national averages in April as the housing market showed initial signs of cooling, according to a report released today by the Canadian Real Estate Assocation.

CREA said there were 2,382 MLS sales in Calgary last month which was up 7.4 per cent from a year ago. The average sale price was $395,847 for a 6.4 per cent hike from April 2009.

In Alberta, CREA said sales increased by 5.9 per cent to 5,544 units for an average sale price of $355,102, up by 7.7 per cent from a year ago.

Nationally, there were 52,042 MLS transactions in April which was 20.3 per cent higher than April 2009 and the average sale price hit $344,968, a year-over-year increase of 12.2 per cent.

Sales activity across the country came up just short of the record for the month of April which was set in 2007. CREA said seasonally-adjusted national home sales activity slipped 2.6 per cent from the previous month and now stands 6.8 per cent below the peak reached in December 2009.

Read the full article here.

 

[Ally]

Boardwalk moving away from rental incentives

CALGARY - With occupancy rates increasing, Boardwalk Real Estate Investment Trust is moving away from rental incentives, particularly in Alberta, the REIT reported in a conference call Tuesday for its first-quarter financial results.

Sam Kolias, CEO of Calgary-based Boardwalk, Canada`s largest owner/operator of multi-family rental communities, called the first quarter a "successful" one with supply and demand in balance at 97 per cent occupancy.

He said higher occupancy and improved economic conditions will help stabilize rental revenue.

"When the rental market firms up, we will focus on reducing incentives further to maximize our rental revenue going forward and selectively increase market rents," said Kolias.

He said "increasing interest rates and home prices may make renting an attractive option for potential homebuyers."

In the first quarter of this year, Boardwalk reported

Read the full article here.

 

[Ally]

Calgary Economic Development sees financial sector city`s next step to global status

CALGARY - The oil and gas industry will always be Calgary`s bread and butter, but future economic development also lies in other areas such as the financial services sector.

"Calgary is well-known for its role in the energy sector as it should be, but it should be better recognized as an important global financial centre," said Bruce Graham, president and CEO of Calgary Economic Development during the organization`s 2010 Report to the Community on Tuesday.

CED established the Financial Sector Advisory Committee last year, which consists of 21 high-level executives leading Calgary`s financial services industry. The objective is to increase the growth and capability of the financial services industry as a means to diversify the economy and to increase assets under management by Calgary-based institutions.

"It`s a lofty goal, but again it recognizes that if we work together, we`re going to get things done," said Graham.

Read the full article here.

 

[Ally]

Stelmach Tories bet on long-term with North West upgrader announcement

The Stelmach government is forging ahead with an upgrader partnership designed to process more oilsands in Alberta at a time when market forces are working against their goal and the premier actively promotes sending the product to Asia.

Alberta Energy announced Tuesday it has launched negotiations with North West Upgrading that would see the company build a new bitumen processing facility northeast of Edmonton, in an effort to keep more value-added jobs and investment in the province.

The 150,000 barrels-per-day upgrader proposed by North West would be built in three stages and see the provincial government collect its royalty share of oilsands production in-kind, as it currently does for conventional crude. Up to 75,000 barrels per day would be processed on behalf of the province.

The government believes collecting the bitumen royalties in place of cash will spur more upgrading, refining and petrochemical development in Alberta.

However, the province recognizes current market conditions -- including a small price spread between bitumen and synthetic crude -- are leading to more product than it would like being shipped to the U.S. for processing.

Read the full article here.

 

[Ally]

Province picks bitumen refinery partner

The Alberta government has chosen Calgarybased North West Upgrading Inc. to refine the heavy, sticky oilsands product it will receive in place of cash through its bitumen-royalty-in-kind initiative.

In an announcement Tuesday, Alberta Energy Minister Ron Liepert said negotiations will begin exclusively with the privately held company to eventually take up to 75,000 barrels per day into its refinery.

Insiders who asked not to be identified have said the three phases of the project could cost as much as $18 billion, at $5 billion to $6 billion per 50,000-bpd phase.

Calgary`s Canadian Natural Resources Ltd., which completed its 110,000-bpd Horizon oilsands project last year, bought a 50 per cent share in North West earlier this year.

"This is great news," said North West chairman Ian MacGregor. "We`ve been through a long tendering process now and the next thing is to work on the details."

MacGregor said the negotiations will not include government subsidies, loans or equity in the project.

"It`s really a commercial deal where we`re converting their raw bitumen into diesel fuel," he said.

Read the full article here.

 

[Ally]

Oilsands could supply one-third of U.S. oil within 20 years: Report

CALGARY — Despite environmental and economic challenges, Canada`s oilsands could account for more than one-third of U.S. oil supply within two decades, says a new report from U.S.-based Cambridge Energy Research Associates.

Depending on the rate of growth, oilsands crude could eventually supply 20 to 36 per cent to the world`s largest consumer by 2030, the report states.

"The fact that oilsands by themselves — were they a country — are set to become the largest single source of U.S. crude oil imports this year, emphasizes the importance they have attained as a supply source for the United States," Cambridge chairman Daniel Yergin said in a news release. "It also shows how integrated Canada and the United States are in terms of energy, as in their overall economies."

Although U.S. oil demand peaked in 2005, it will remain the world`s largest energy market over the next two decades, the report notes, allowing oilsands to assume a relatively larger portion of the country`s energy mix and offsetting reduced supplies from such traditional suppliers as Venezuela, Mexico and Saudi Arabia.

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.

Read the full article here.

 

[Ally]

Shell to stay in oil sands

THE HAGUE - Anglo-Dutch oil major Royal Dutch Shell PLC`s shareholders have rejected a resolution challenging the company`s multi-billion-dollar investments in Canadian oil sands projects.

A group of ethical investors, environmentalists and indigenous groups had urged Shell to reconsider its plans to squeeze crude from Alberta`s oil sands.

Oil-sands production produces more carbon dioxide than traditional oil production, uses more water and typically involves greater damage to the landscape. Charges for emitting carbon dioxide can also prove costly for projects.

But Shell, Europe`s largest oil company by market capitalization, had urged investors to vote against the resolution, saying it had already considered potential charges for carbon dioxide in its initial business plans.

At the company`s annual shareholders meeting, a provisional 94.26% of investors voted against the proposal, which had challenged Shell on the financial risks that oil-sands projects might pose.

Read the full article here.

 

[Ally]

CNQ cites big break cleaning tailings

CALGARY - Canadian Natural Resources Ltd. has made what it says are "promising" steps in solving some of the most challenging environmental problems associated with oil-sands tailings ponds.

The Calgary-based company said it is is using far less -- only 12% to 14% -- of the fresh water it expected to remove from the Athabasca River at its Horizon oil-sands mine near Fort McMurray.

Furthermore, Canadian Natural thinks it has sped up the time needed to clean up the toxic ponds, all while also sequestering carbon dioxide, key in reducing emissions.

"It looks like a very, very promising process," Steve Laut, the company`s president, told reporters yesterday.

The company said the process works by injecting carbon dioxide into the lines that transfer contaminated water out of its oil-sands mining facilities and into toxic-waste ponds. This technological twist forces clay and silt to settle at the bottom of the lakes faster than expected, leaving about 12 metres of clear water on top.

"If you can get [the clay and silt] to settle quicker, then you can reclaim the ponds quicker [and] the ponds get smaller," Mr. Laut said.

Read the full article here.

 

[Ally]

Creative problem solvers defy marketing conventions

Here`s a challenge for all the open-minded marketers out there: The next time you are tasked with marketing a product, service or idea, do not run toward traditional tactics such as advertising or sponsorships.

Pretend they don`t exist.

But if they don`t exist, how will you do your job?

Marketing should be fluid and have impact, but it becomes rigid when approached merely as a set of tactics. If you are forced to address your marketing needs without using these conventional tactics, you must engage in creative problem solving to create something unique and highly customized.

The conventional marketer versus the creative problem solver

It is important to realize that there is nothing wrong with traditional marketing tactics as long as they perform. If they produce great results and a good return on investment, by all means continue with them. For those who find they are not getting great results from their marketing, perhaps a new approach would be advantageous.

Below are two examples from the perspectives of the more common conventional marketer who relies on traditional tactics and a creative problem solver who relies on imagination. Look at how each marketer approaches a problem and the types of solutions they develop.

Read the full article here.