October 2010 Alberta Fundamentals

[Ally]

Quebec shale gas project grinds to a halt

Quebec`s much-touted "shale gale" has been put on hold after the leading developers postponed a planned drilling program, citing high costs and public criticism of shale gas development.

Questerre Energy Corp. (QEC-T1.710.042.40%) and its partner Talisman Energy Inc. (TLM-T18.100.110.61%) had planned to complete two new test wells this year to further assess commercial development of the shale gas resource on the south shore of the St. Lawrence River. But they have pushed back that schedule by at least six months.

Read the full article here.

 

[Ally]

Alberta auto sales soar

CALGARY - New motor vehicle sales in Alberta ballooned in August as the province led the country in the pace of growth both on an annual and on a monthly basis.

Statistics Canada reported Friday that Alberta had 17,859 sales for the month, up 13.5 per cent from August 2009 and up 2.4 per cent from July.

It was the fourth consecutive month of increased sales in Alberta.

The consumer mood for spending is improving in Alberta, said Todd Hirsch, senior economist with ATB Financial in Calgary.

"While still slower than the fever-pitch pace seen in 2007 and early 2008, new motor vehicle sales in the province are clearly on an upward trend," he said. "Unit sales have risen in seven of the past 10 months. It`s also the highest level in nearly two years."

Nationally, the number of new motor vehicles sold in August declined 4.8 per cent from the previous month to 128,764 units. However, that was a year-over-year increase of 1.3 per cent.

Read the full article here.

 

[Ally]

Red Deer building permit tally sinks

The value of construction work approved by the City of Red Deer last month sunk to less than half the tally for the same period in 2009.

The city`s Inspections and Licensing Department reported on Friday that it issued $6.1 million worth of building permits in September, with residential projects accounting for $4.5 million of this total. Commercial work added $1.1 million, public projects $419,000 and industrial construction $123,000.

In September 2009, the combined value of permits issued by the city was $12.2 million. This included $9.7 million in the residential category, $1.4 million for public work, $657,000 for industrial projects and $472,000 worth of commercial approvals.

Among the bigger projects authorized last month was $449,000 worth of renovations to TD Canada Trust`s branch at 6320 50th Ave. and $423,000 in work at the Canadian Blood Services premises at No. 5, 5020 68th St. G&G Plumbing and Heating Ltd. also received approval for an eight-plex at 3502 49th Ave, with this valued at $1.3 million.

Read the full article here.

 

[Ally]

Farmland values make slow gains

The value of farmland in Alberta increased by an average of 2.9 per cent during the first six months of 2010, according to a national appraisal conducted by Farm Credit Canada.

The Crown corporation, which specializes in agricultural lending, said the value of agricultural land in the province increased by an average of 0.4 per cent a month from Jan. 1 to June 30 — about the same pace as during 2009.

Last year, farmland values in Alberta increased by one per cent from January to June, but jumped 3.8 per cent between July and December.

During the past several years, the increases have ranged from one per cent to 10.3 per cent, with the latter figure recorded at the end of 2007.

A news release issued by Farm Credit Canada attributed the slower rise of farmland values in the first half of 2010, as compared with the last six months of 2009, to reduced urban sprawl and fewer speculative purchases.

Read the full article here.

 

[Ally]

Red Deer housing starts falling of `09 pace

After a brisk start to 2010, residential construction activity in Red Deer has lagged behind last year`s pace for the past four months.

Statistics released by Canada Mortgage and Housing Corp. on Friday showed that there were 34 housing starts in the city during September: 26 single-detached and eight in the multi-family category. The combined figure is less than half the tally for September 2009, when there were 37 single-detached and 42 multi-family starts for a total of 79.

Red Deer`s 57 per cent drop in building from September 2009 to September 2010 was the greatest among Alberta`s seven largest urban centres. Grande Prairie and Lethbridge were down 55 and 35 per cent respectively, while Calgary, Edmonton, Medicine Hat and the Regional Municipality of Wood Buffalo all recorded more starts this September than in the same month a year ago.

Despite its second-half slowdown, residential construction in Red Deer was still up 36 per cent for the first nine months of 2010 — from 345 starts to 469.

Read the full article here.

 

[Ally]

Oilpatch rebounds to record

The word "record" hasn`t been used in connection with Alberta`s oilpatch for some time. But the provincial government was able to dust off the word and insert it into a recent news release reporting on the status of this year`s oil and gas land sales.

As of last Wednesday, it had collected $1.86 billion in revenues from lease and licence sales — surpassing the previous high of $1.83 billion earned in 2005. And with five more sales scheduled before year end, the tally will grow.

"That`s a great sign," said Brad Rowbotham, general manager of Red Deer`s Roll`n Oilfield Industries Ltd.

"It gives all of us reason to have some optimism that a lot of people could be going back to work."

Don Herring, president of the Canadian Association of Oilwell Drilling Contractors, said his organization noted improved land sales early this year but hadn`t anticipated that they would be this high after just nine months.

"I think it took us by surprise that they were as good as they are."

Read the full article here.

 

[Ally]

Caglary MLS sales lowest in decade

CALGARY - Calgary MLS sales in the single-family market are the lowest they have been in a decade.

However, the average sale price has risen by $270,000 from 2000, according to data obtained by the Herald from the Calgary Real Estate Board.

CREB`s year-to-date numbers, up to September, show there have only been 9,608 sales so far this year for an average sale price of $464,664. In the year 2000, there were 10,351 sales for an average price of $194,681.

Sales and average price in the single-family market peaked in 2007 with year-to-date transactions at 15,422 for an average of $475,961.

Read the full article here.

 

[Ally]

West is where the money is

It is not easy starting a business at the best of times, but Benjamin Dalziel and Joseph Facciola picked just about the worst time possible when they left Ontario to open a food-and-wine tour business in the upscale resort town of Whistler, B.C., in September 2008.

The concept, a guided three-hour walking tour that includes a four-course dinner spread across four restaurants, seems like a good one, but a risky tourism venture from two guys with little business experience at the apex of global economic armageddon? Seriously?

"Well, I was looking for work in Toronto right as the economy was starting to crumble, and nobody was hiring," Mr. Dalziel said. "Definitely, we were worried [about things like financing and people not vacationing] but we figured if we couldn`t pull it off when we`re young and motivated, we wouldn`t be able to do it later in life."

The enthusiasm and optimism of Mr. Dalziel and other independent business owners for their prospects moving is a major reason why cities and regions in Western Canada continue to hold most of the top spots of the third annual FP/CFIB ranking of Canada`s top 100 entrepreneurial cities.

"Optimism levels are considerably higher now than in the past year," Ted Mallett, chief economist with the Canadian Federation of Independent Business, said in an interview. "Alberta, for instance, had a bigger bounceback than most other provinces as it had a bigger drop in optimism [the previous year]."

Read the full article here.

 

[Ally]

Cashing in on recovery

From his shop in Grande Prairie, a small city in northwestern Alberta near the B.C. border, Jay Morris has easy access to a steady supply of trade workers, materials and low tax rates to help fuel the growth of his company, Wildhorse Oilfield Services Ltd.

"It`s cheaper to do business in Alberta," Mr. Morris says. Although he operates in British Columbia, locating his head office in Grande Prairie made sense because it`s a hub of activity serving northern and central Alberta, as well as British Columbia.

"That`s why we`re set up the way we are, so we can do a lot of the [prefabrication] work here and realize savings on this end and still do work out there. It`s a competitive edge," he says.

It`s an ideal situation in many ways. Low taxes and a business-friendly environment have helped fuel the growth of Wildhorse, even during the recession. The company is set to double its revenue year over year. "We`re very optimistic," Mr. Morris says.

Grande Prairie topped the annual FP/ Canadian Federation of Independent Business (CFIB) ranking for business-friendly cities, marking a shift away from Quebec, where many cities in the Top 10 last year were found.

Read the full article here.

 

[Ally]

Calgary business park breaks ground

Shovels have hit the ground for a commercial development near the airport that`s worth at least $500 million.

Toronto-based Oxford Properties Group said servicing work has begun on an industrial business park just north of the airport that`ll be built over the next six to eight years.

"We`re big believers in Calgary," said Oxford Properties executive Kevan Gorrie.

"Calgary`s emergence as a distribution hub is intriguing. The market fundamentals in Calgary are improving rapidly."

The development is worth upwards of $500 million.

When Oxford Properties bought the land two years ago, Canada, including Alberta, was on the brink of the worst recession in recent memory.

Despite lingering uncertainty about how stable the recovery is, the economic outlook has improved considerably this year, and Oxford Properties is now ready to move ahead with the four-million sq. ft. development.

"We believe that the timing is right," Gorrie said.

After suffering one of the sharpest economic contractions last year, Calgary is poised to lead Canada`s major cities in GDP growth over the next four years, the Conference Board of Canada had said last month.

Read the full article here.

 

[Ally]

Oxford launches huge airport-area project

A more than $500-mill ion commercial development is planned by Oxford Properties on 104 hectares of land near the airport, the Herald has learned.

The Oxford Airport Business Park -- a master planned area to include industrial, office, hotel and retail development -- has begun construction and will consist of nearly four million square feet of space in 15 to 20 buildings with two or three hotels.

The business park is being built east of Deerfoot Trail between Airport Trail and Country Hills Boulevard next to the airport.

"We see improving market fundamentals in Calgary and combined with a pretty favourable cost environment as now being the time to go," said Kevan Gorrie, director of global asset management for Oxford.

"More long-term, we see the emergence of Calgary as a distribution hub."

When fully developed, it will have over 3.8 million square feet of industrial, office, hotel and retail space -- 3.3 million square feet will be warehouse space.

The majority of the buildings will be made up of large-bay industrial space.

Read the full article here.

 

[Ally]

Calgary-based drillers expect busier winter

Calgary-based drilling and well services companies can look forward to a more active winter than last year although it won`t match the frenzied pace of 2005 and 2006, observers say.

The traditionally busiest season for Canadian energy exploration will feature more oil drilling, more horizontal, multi-fractured wells and a lot fewer natural gas wells, say analysts, as oil prices continue to outshine gas.

"Our expectation is that the winter will be a little bit stronger . . . but fairly similar to last year," said analyst Jeff Fetterly of CIBC.

"The well profile is more oil than gas this year, more horizontals than vertical wells than there were last year."

He said 60 to 65 per cent of active rigs now are targeting oil, not gas, a complete flip from 18 months ago.

Read the full article here.

 

[Ally]

Glimmer of hope seen in Calgary home sales

Year-over-year MLS sales in Calgary`s residential market fell by the third highest rate in the country in September, according to the Canadian Real Estate Association.

But the Calgary Real Estate Board said there was a glimmer of hope in September followed by October that sales here are starting to rebound.

The national realtors` group said Friday there were 1,606 transactions in Calgary in September, representing a 28.8 per cent decline from September 2009.

The biggest yearly declines were in Victoria at 47.9 per cent and Greater Vancouver at 37.9 per cent.

However, Diane Scott, CREB`s president, said September sales were up from the previous month and so far October sales are looking good.

"It`s seasonal but it`s an indication there are people out there and that the market is more active than where it`s been," she said. "I think we`re on a little bit of an upswing."

Read the full article here.

 

[Ally]

Alberta leads national auto sales recovery

New motor vehicle sales in Alberta ballooned in August as the province led the country in the pace of growth both on an annual and a monthly basis.

Statistics Canada reported Friday that Alberta had 17,859 sales for the month, up 13.5 per cent from August 2009 and up 2.4 per cent from July.

It was the fourth consecutive month of increased sales.

The consumer mood for spending is improving in Alberta, said Todd Hirsch, senior economist with ATB Financial in Calgary.

"While still slower than the fever-pitch pace seen in 2007 and early 2008, new motor vehicle sales in the province are clearly on an upward trend," he said. "Unit sales have risen in seven of the past 10 months. It`s also the highest level in nearly two years."

Nationally, sales in August declined 4.8 per cent from the previous month to 128,764 units. However, that was a year-over-year increase of 1.3 per cent.

Read the full article here.

 

[Ally]

Imperial`s oilsands modules traverse circuitous route

With Imperial`s $8-billion Kearl oilsands project now about 25 per cent complete, the first two South Koreanmade modules have arrived by barge in Lewiston, Idaho, after a 500-kilometre trip from the U.S. West Coast.

A shipload of modules arrived on Oct. 3 at the Port of Vancouver, Wash., across from Portland on the Columbia River. The units were loaded onto barges and towed up the Columbia and Snake rivers to Lewiston.

The first two units of an eventual 207 -- which will be assembled into a bitumen separation facility at Kearl, 70 kilometres north of Fort Mc-Murray -- were off-loaded late this week and will be stored at the site until the road transport issue is resolved.

"We are working through the process with the departments of transportation in Idaho and Montana," Imperial spokesman Pius Rolheiser said Friday.

The total trip to northern Alberta covers more than 2,100 kilometres by river and road.

Read the full article here.

 

[Ally]

TransCanada faces pipeline opposition

Pressure against Trans-Canada Corp.` s Keystone XL pipeline mounted this week in Nebraska with farmer advocates joining congressional representatives in opposition to the bitumen line.

Nebraska Senator Mike Johanns asked U.S. Secretary of State Hillary Clinton to reassess the routing of Keystone XL through his state, in a letter released late Thursday.

Johanns sought assurances the State Department examined alternative routes as current plans could increase risks of an oil leak polluting to the Ogallala Aquifer.

The $12-billion expansion is slated to run through the state after threading its way from Alberta, Saskatchewan and Montana on its way to Oklahoma and Texas.

While those provinces and states have oil and gas histories, Nebraska does not and is skeptical about Trans Canada`s proposal, noted analyst Steven Paget of FirstEnergy Capital Corp.

Read the full article here.

 

[Ally]

Buyers go back to the `burbs

The real estate mantra that it`s all about location is only part of the equation of why people love the condo lifestyle in the suburbs, says one of Canada`s real estate investment leaders.

"It`s about the lifestyle it provides," says Don Campbell, author and president of REIN (Real Estate Investment Network).

"It`s a little bit outside the hustle and bustle of the downtown and people have a bit of a yard -- and with a townhouse, there`s a secure feeling about it. It`s almost impossible not to know your neighbours, so you feel safer and it`s easier to lock it and go."

But ultimately, condos in the suburbs are all about price, he says.

"It`s mostly about affordability."

That resonates with a 33-year-old nurse who recently purchased a townhome in Hawthorne Homes` Mosaic development in Auburn Bay.

"Cost is a factor," says Tina McLean, who currently owns a house in the same neighbourhood.

"Reducing debt was important to me. I love my house but couldn`t afford to build a garage and now, I have almost the same size of home, I still have a yard and the overall cost is less."

Read the full article here.

 

[Ally]

OPEC leaves output targets unchanged, says prices are `comfortable`

VIENNA - OPEC oil ministers on Thursday left production targets unchanged despite what they say is oversupply, signalling both satisfaction with crude prices in the $80s and determination to send a message of stability to energy-dependent nations just starting to emerge from recession.

The decision by the organization`s 12 oil ministers was expected, with oil powerhouse Saudi Arabia suggesting the group would stay with the status quo shortly before the start of their closed meeting. The ministers, said Saudi oil minister Ali Naimi, are "are happy with the market the way it is."

Thursday`s agreement extended the overall output target of the 11 OPEC countries under quotas of just under 25 million barrels of crude a day — a figure set in December 2008.

Back then, OPEC announced the last of a series of cuts aimed at bringing its output down by 4.2 million barrels per day — a move that helped engineer a rebound in crude prices, which had collapsed to the low $30s from a mid-2008 high of almost $150 per barrel.

But OPEC nations overproduce, meaning that those 11 nations actually put out about 27 million barrels a day — about 2 million over the target they agreed to maintain Thursday. And with the inclusion of Iraq, which is not bound by quotas as it rebuilds, total daily output is around 29 million barrels.

Read the full article here.

 

[Ally]

Cashing in on Recovery

From his shop in Grande Prairie, a small city in northwestern Alberta near the B.C. border, Jay Morris has easy access to a steady supply of trade workers, materials and low tax rates to help fuel the growth of his company, Wildhorse Oilfield Services Ltd.

"It`s cheaper to do business in Alberta," Mr. Morris says. Although he operates in British Columbia, locating his head office in Grande Prairie made sense because it`s a hub of activity serving northern and central Alberta, as well as British Columbia.

"That`s why we`re set up the way we are, so we can do a lot of the [prefabrication] work here and realize savings on this end and still do work out there. It`s a competitive edge," he says.

It`s an ideal situation in many ways. Low taxes and a business-friendly environment have helped fuel the growth of Wildhorse, even during the recession. The company is set to double its revenue year over year. "We`re very optimistic," Mr. Morris says.

Grande Prairie topped the annual FP/ Canadian Federation of Independent Business (CFIB) ranking for business-friendly cities, marking a shift away from Quebec, where many cities in the Top 10 last year were found.

Read the full article here.

 

[Ally]

Oil prices to support rise in Canadian drilling in 2011

CALGARY - Strong crude prices will drive an increase in drilling across Canada next year, with oil wells outpacing natural gas for a second year running, according to industry observers.

Oil well licences outstripped gas this year for the first time since 1997 as sinking natural gas prices discouraged drilling, analysts noted Monday.

In 2010 crude wells are expected to represent 66 per cent of the licences issued in Canada, a jump from 50 per cent seen last year, UBS analyst Chad Friess said. "Though we remain cautious that natural gas fundamentals will act as a headwind, we see no shortage of oil-focused opportunities in Canada where producers can direct capital," he stated in a morning research note. "In short, we believe oil drilling will more than pick up the slack from any weakness in gas drilling as overall producer budgets should be flat year-over -year."

The investment brokerage forecast 13,000 oil and gas wells will be drilled in Canada in 2011, up from an estimated 11,600 predicted for this year.

Such forecasts are reasonable given the sustained prices seen for crude oil and forecasts of modest increases in demand from Asia and India, said Roger Soucy, outgoing head of the Petroleum Services Association of Canada.

Read the full article here.