August 2009

[Ally]

Calgary`s Housing Starts fall on Multi-Family Projects

CALGARY - Calgary`s housing starts dropped in July as builders remained cool to multiple family construction, Canada Mortgage and Housing Corp. said Tuesday.

There were 755 starts in July, down from 877 a year earlier.

Year-to-date, construction activity is less than one-third of 2008 levels.

Most of the decline came in multi-family starts, which include semi-detached units, rows and apartments. there were 254 units constructed in July, down 43 per cent from the same month a year ago.

The number of single-detached homes under construction rose in July, with builders starting 501 units, up 16 per cent from a year ago.

Read the full article here.

 

[Ally]

Building Permit Applications Drop 40%

The value of planned construction projects dropped in July, with fewer non-residential projects on the books, the City of Calgary said Friday.

Building permit applications totalled $214 million last month, down 40 per cent from a year ago.

Permits for residential building permits were up nearly 60 per cent to $130 million in July.

However, non-residential projects were down 70 per cent to $84 million.

Year-to-date, total permit values are down 29 per cent to $1.9 billion.

Read the full article here.

 

[Ally]

Pine Beetle Biting into Property Values

Mountain pine beetles are doing more than ravaging Alberta forests: The invading pest is also likely to take a bite out of real estate values in some communities over the next decade, says a report released Monday by the Real Estate Investment Network.

"These tough economic times coupled with pine beetle aggression have led to the closure, both permanent and indefinite, of over 13 mills across Alberta," said Don Campbell, president of REIN and author of two bestselling books on real estate. REIN is a group that offers education to members on buying real estate.

Campbell said significant change to an industry is one of the most dramatic catalysts for real estate values. "The real estate market will suffer if there is no future job sustainability in an area."

REIN`s report says forestry is the primary or only industry in over 50 Alberta communities.

From a real estate investment perspective, the report divides forest-industry communities into how much hardship they are likely to face.

Read the full article here.

 

[Ally]

Oilsands Camps still Busy

The number of employees in Fort McMurray work camps and lodges has remained high despite the cutbacks of major projects last fall, according to a new census released by the Oil Sands Developers Group.

The June survey showed 22,728 workers at 78 camps, lodges and motels largely north of the city. Last year`s survey tallied 27,757 staff, but the difference was largely accounted for by construction at the Canadian Natural Resources Horizon mine and upgrader project north of Fort McKay, which is now complete.

The 8,259 workers on-site there last year is now down to 960, but other camps have expanded.

"I think it is a misconception that growth of the oilsands has stopped. This year between $7 billion and $8 billion will be spent on several large and small projects, and environmental projects. Plus Imperial`s Kearl Lake project is coming on," said OSDG president Don Thompson.

"Shell Albian is working on Jackpine, there are several in situ projects and Syncrude is in

the middle of their $1.6 billion emission control program, so there is a lot going on in the region."

Read the full article here.

 

[Ally]

Pine Beetles likely to dent Alberta`s Real Estate Prices

CALGARY - The mountain pine beetle infestation is likely to affect real estate values in Alberta over the next decade, says a report released today by the Real Estate Investment Network.

"These tough economic times coupled with pine beetle aggression have lead to the closure, both permanent and indefinite, of over 13 mills across Alberta," said Don Campbell, president of REIN and author of two bestselling books on real estate.

"And over the past 17 years, our research has revealed that real estate values are driven both up and down by eight economic fundamentals, of which industry change (job growth and job loss) is one of the most dramatic catalysts. The real estate market will suffer if there is no future job sustainability in an area."

Read the full article here.

 

[Ally]

Commerical Real Estate Activity remains down: CBRE

CALGARY - Despite the Bank of Canada`s most recent economic forecast that the current recession is over, diminished transaction volume in the country`s commercial real estate sector remains a key indicator that Canada is not yet on the road to recovery.

According to a Mid-Year National Investment Report released today by CB Richard Ellis Limited, Canadian commercial real estate transaction volumes from January through June shrunk by 51 per cent, year-over-year, from $10 billion halfway through 2008 to $4.9 billion halfway into 2009. Mid-year through 2009, the number of commercial transactions was 1,569, down from 2,542 transactions completed half way through 2008.

In Calgary, investment dropped to $471 million for the first six months of this year compared with $2.2 billion for the same period a year ago. The number of deals in Calgary fell from 281 in 2008 to 149 this year.

"The global recessionary impact on the commercial real estate market has yet to run its course," said John O`Bryan, vice-chairman of CBRE. "The size and number of investment transactions across most Canadian markets have declined since last year, dragging Canada`s overall transaction volume down so far in 2009."

Read the full article here.

 

[Ally]

Energy Contracts sold in Alberta a `Ripoff`

Energy contracts shopped door-to-door in Alberta are a "ripoff" because consumers are being charged too much for electricity and natural gas, and have to spend hundreds of dollars to get out of them, a former official with the Utilities Consumer Advocate says.

David Gray, who last month stepped down from his post as the agency`s executive director, said Monday only 30 per cent of the province`s one million retail electricity consumers have switched to contracts.

"The biggest number of complaints we had at the Utilities Consumer Advocate were from people pressured into a contract at their door ... and realizing after they got their bill what happened to them. Instead of saving money, their bills went up considerably, and if they wanted to cancel their contracts, they faced enormous penalties."

Current contracts range in price from eight to 12 cents per kilowatt hour, compared to the regulated rate which is currently 8.3 cents.

Read the full article here.

 

[Ally]

Alberta Rental Subsidy Fund Broke

Edmonton renters looking for help to cover housing costs will have to join 4,000 others on a waiting list because the provincially funded rent-supplement program has dried up.

The program has provided subsidies to more than 2,000 people in the Edmonton area, but stopped accepting new applicants about two months ago after the money ran out.

"The program is fully subscribed at this time," said Kent Fletcher, acting executive director of the Capital Region Housing Corporation, which administers the program.

Successful applicants are eligible for funding of up to$550 per month for one year to help cover their housing bills. If anyone drops out of the program, their funding may be given to someone on the waiting list.

"But there are very few people leaving the program at this time," Fletcher said. "All that we can do is take their application and assess their need. And those in the greatest need we offer whatever we have available."

Read the full article here.

 

[Ally]

Imperial takes fresh look at $1B Oilsands Plan

CALGARY - Imperial Oil Ltd. has dusted off a $1-billion, 30,000-barrel-per-day oilsands project approved by the province five years ago and is looking at resubmitting a heavily amended application.

The new Nabiye project northeast of Imperial`s Cold Lake operations in northeastern Alberta will now include a 170-megawatt cogeneration plant, sulphur recovery facilities and a drilling plan that reduces the number of well pads.

A report from Peters & Co. investment bank this week pegs the cost of the revised project at about $1.3 billion, or about $40,000 per barrel of oil equivalent per day. The report suggests the project will be economic at prices above $30 US per barrel and with a light-heavy price differential of 25 per cent or less.

Imperial will apply for approval as early as next month, it notes, from the Energy Resources Conservation Board, Alberta Environment and the Alberta Utilities Commission. It would be considered for funding in late 2010.

Read the full article here.

 

[Ally]

Natural Gas Glut hits Industry

With vast underground natural gas storage cells almost full across North America months earlier than normal, producers are hoping for an early and cold winter to eat up some of the surplus.

And perhaps even a hurricane or two to hit the Gulf of Mexico and take some gas production off-line.

"It`s a heck of a way to run a business, hoping for storms and cold weather," said Gary Leach, executive director of the Small Explorers and Producers of Canada.

Sagging consumption because of the recession combined with less air-conditioner use during a cool summer in the U. S. has killed demand. But until recently, the supply has been strong from existing gas fields and the new shale gas plays.

American producers are pumping more than 66 billion cubic feet(BCF) of natural gas each week into storage reservoirs--largely depleted oil and gas deposits--which now hold more than three trillion cubic feet (TCF)of gas. The total U. S. capacity is estimated at about four TCF.

Read the full article here.

 

[Ally]

Calgary Home sold for a Record $10.3M

CALGARY - An Elbow Park home, which was owned by former Calgary Flames goaltender Mike Vernon, has sold for $10.3 million --setting the benchmark for the highest MLS residential sale price in Calgary.

It eclipsed the previous record sale in June 2008 of a six-bedroom Crescent Heights home which sold for $7.5 million.

"We`re finding the real estate market to be quite strong right now," said Donna Rooney, one of the realtors who listed Vernon`s property along the Elbow River. "This was not our one and only offer. We sold the property in a period of six weeks, which is consistent with what`s going on in real estate.

"This is a real statement that things are pretty good in this city still. There is a lot of confidence in real estate."

The house was listed in early May at $10.5 million by Calgary realtors Rooney Cronin +Valentine.

Read the full article here.

 

[Ally]

Imperial warms to Cold Lake Plan

Imperial Oil Ltd. may dust off long-held plans for a $1-billion expansion of its massive Cold Lake oil sands project in northern Alberta that would increase output by 30,000 barrels per day, a company spokesman said yesterday.

Imperial, Canada`s No. 2 integrated oil company, is revising the design of the expansion project, called Nabiye, potentially adding equipment to remove sulphur and an electricity-cogeneration plant that would produce steam for the thermal oil sands project.

"We`re doing planning and design work right now," said Gordon Wong, a spokesman for the company, 69.6% owned by Exxon Mobil Corp. "We`re looking at moving it along but no final decisions have been made on whether to proceed with the expansion or not."

The project was submitted to regulators in 2002 but the revisions mean the company would need to seek new clearances from Alberta`s Energy Resources Conservation Board.

The company does not yet know when it will submit its revised plan.

Read the full article here.

 

[Ally]

Gas Producers Pray for Cold

With vast underground natural gas storage cells nearly full across North America months earlier than normal, producers are hoping for an early and cold winter to eat up some of the surplus.

And perhaps even a hurricane or two to hit the Gulf of Mexico and take some gas production off-line.

"It`s a heck of a way to run a business, hoping for storms and cold weather," said Gary Leach, executive director of the Small Explorers and Producers Association of Canada.

Sagging consumption because of the recession combined with less air conditioner use during a cool summer in the United States has killed demand. But until recently, the supply has been strong from existing gas fields and the new shale gas plays.

American producers are pumping more than 66 billion cubic feet (bcf) of natural gas each week into storage reservoirs--largely depleted oil and gas deposits--which now hold more than three trillion cubic feet (tcf) of gas. The total U. S. capacity is estimated at about four trillion cubic feet.

Read the full article here.

 

[Ally]

Enbridge gets U.S. Approval for Pipeline to Midwest

CALGARY - Enbridge Inc. has received U.S. approvals for its Alberta Clipper pipeline, which will carry oilsands crude to the U.S. midwest.

The U.S. State Department said Wednesday it has granted a permit to the Calgary-based pipeline company to build the U.S. portion of the line, allowing construction to begin.

When the $3.7-billion pipeline is completed in about a year, it will ship 450,000 barrels of bitumen a day to Superior, Wis., with the potential to reach 800,000 barrels a day.

The product will then be rerouted from Wisconsin to refineries in Illinois and on to the main storage hub in Cushing, Okla.

The line has created controversy on both sides of the border, as Alberta critics have complained the line will potentially drain investment and upgrading jobs to the U.S., while American environmental groups argue the pipeline will bring greenhouse-gas intensive oilsands crude from Canada.

Read the full article here.

 

[Ally]

Natural Gas Prices Falls Below $3 U.S.

CALGARY - Hard-hit Calgary natural gas producers are increasingly opting to leave the heating fuel in the ground rather than try to sell it into a spot market that plunged to new seven-year lows on Thursday.

The near-month spot price for natural gas in New York fell below $3 US per million British thermal units and kept going Thursday, winding up at $2.94.

It was the first time it closed below $3 since Aug. 14, 2002, and it followed news from the United States Energy Information Administration showing that gas in storage in the U.S. had grown by 52 billion cubic feet to 3.2 trillion cubic feet as of last Friday.

That`s 562 bcf higher than last year at this time and 513 bcf above the five-year average of 2.69 tcf.

Analysts attribute the North American oversupply to unexpectedly robust production from U.S. shale gas plays — although the halving of U.S. drilling activity due to low prices is expected to reduce growth.

Read the full article here.

 

[Ally]

Companies flee high Alberta Power Bills

Two companies that recently shut down their energy-intensive manufacturing operations in Alberta say they cut their electricity costs in half by moving to other provinces.

Both Erco and Canexus, which operated sodium chlorate plants near Bruderheim, north of Edmonton, cited high electricity costs as a major factor in their decisions to relocate their operations.

Gary Kubera, president of Canexus, said electricity prices in Alberta are high and unpredictable, and that makes the production of sodium chlorate -- used to bleach pulp and treat water--an expensive proposition in this province.

He said electricity costs are responsible for 80 per cent of the cost of producing sodium chlorate.

"Our main facility now for that product is in Brandon, Man., and the electricity rates in Manitoba are less than half of what they were even under normal circumstances in Alberta," he said.

Read the full article here.

 

[Ally]

The Big Drill

What energy crisis? Despite what you may be hearing about a global peak in oil production, waning reserves, and $100-plus oil prices, North America is suddenly awash in fossil fuel.

Sophisticated new drilling methods and a shared epiphany among exploration companies about the vast potential for new natural gas production from deep underground shale deposits have overturned decades of gloom about waning gas supplies.

"Natural gas will displace coal. It will displace oil," said Mike Graham, Canadian foothills division president for Calgary-based gas giant EnCana. "There is no reason North America shouldn`t be energy self-sufficient if we can displace a lot of the oil with natural gas."

British Columbia is emerging as a major player in this new enterprise.

Gas exploration and development companies, all the way from obscure juniors to global giants like ExxonMobil, have scrambled into northeast B.C. in the past three years, desperate to reserve a piece of the Horn River and Montney shale plays (or underground geologic formations) that are perceived as two of the most lucrative on the continent.

Read the full article here.

 

[Ally]

Construction Costs in Calgary Falling: ATB Economist

CALGARY - It is now cheaper to build major construction projects in Calgary than it was a year ago.

During the boom years, huge projects in the province had a difficult time finishing within budget because of escalating construction costs on a monthly basis.

But economist Dan Sumner, with ATB Financial in Calgary, said that trend has reversed when you look at recent Statistics Canada data.

"With the recession-associated reduction in demand, the cost of building an office tower, factory, or hospital in Alberta is now more reasonable," said Sumner.

Non-residential construction prices were 13.5 per cent lower year-over-year in Edmonton as of the second quarter of this year and nine per cent lower in Calgary.

Read the full article here.

 

[Ally]

Fixed Fees Biggest Slice of Utility Bills

It`s not surprising Albertans are frustrated and confused over their electricity and natural gas bills when most of the costs are not directly related to the amount of energy they use, says a former top official with the Utilities Consumer Advocate.

David Gray, who resigned his post as Utilities Consumer Advocate executive director July 24, says 50 per cent or more of utility bills are regulated fees, including costs related to the distribution and transmission of electricity and natural gas.

"It makes it a bit of a challenge if you want to save money on your power bill," he said. "A lot of it is fixed amounts you pay every month."

Despite the fact that the cost of electricity and natural gas have been deregulated, Alberta utilities still make a lot of their money in regulatory hearings, he said.

"I have to say the single largest cost driver has just been the level of inflation costs companies include in their applications. Utilities want to make money and they make money in the hearing rooms. "

Read the full article here.

 

[Ally]

Weak Natural Gas Prices Push Alberta`s Deficit to a Record $7 Billion

EDMONTON - Alberta`s energy boom gone bust has left the province with projections of a record $7-billion deficit and if natural gas prices continue to fall, there could be even more red ink by the end of the fiscal year.

Finance Minister Iris Evans has ordered provincial bureaucrats to find $430 million in program savings, but deeper cuts are coming as the government scrambles to trim $2 billion from the budget by next year.

"Quite frankly, our earnings took a real kick in the head," Evans told a news conference Wednesday. "We are heavily dependent on our oil and gas revenues."

"Global economic turmoil is deeper and more sustained and natural gas prices are lower than originally forecast and the result is a higher deficit than we predicted."

The new deficit number included in Alberta`s first-quarter update is $2 billion more than the original budget forecast. But the latest forecast is based on a prediction that natural gas prices will nearly double to $4 per gigajoule for the remainder of the fiscal year.

Read the full article here.