December 2011 Alberta Economic Fundamentals

[Ally]

Saudi output points to healthier oil demand




Saudi Arabia is by far the world`s largest oil exporter. Thus, when it raises its production, oil prices usually fall. Yet, when Ali Naimi, Saudi oil minister, said last week Riyadh was pumping more than 10 million barrels a day, prices barely moved a few cents.





Oil traders were in disbelief. The International Energy Agency estimated that in October the kingdom pumped 9.45 million barrels a day and OPEC itself put Saudi production at 9.47 million b/d in the same month. The level of production that Mr. Naimi stated suggested a huge increase, in only a few weeks. Moreover, the 10 million b/d is a psychological barrier -- a level the kingdom has not reached since the aftermath of the second oil crisis in 1979.





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[Ally]

Running hard on the natural gas treadmill




New Year`s resolutions are just around the corner. No doubt, many will vow to jump on treadmills to try and get into shape. Meanwhile, the North American natural gas industry continues on its own treadmill, cranking up the dial to an untenable belt speed. Rather than get on the treadmill in 2012, the gas industry just may fall off.




Back in 2001, the overall natural gas decline rate was a steady 23%. That meant if all drilling for natural gas had suddenly stopped, US output would have dropped from 54 Bcf/d to 46 Bcf/d within one year, a 12 Bcf/d cut to pipeline deliveries. Put another way, ten years ago the industry was on a constant annual `treadmill` to find and replenish 12 Bcf/d of natural gas production. Rising prices and increasing drilling activity ensured that natural gas producers were able to keep up the pace, even with now-antiquated drilling technologies.





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[Ally]

Alberta's economy like a Chevy V8, according to RBC




Alberta's oil-fueled economy is firing on all cylinders heading into 2012, and the recession is disappearing in the rear view mirror.




Craig Wright, the chief economist for the Royal Bank of Canada (RBC), says Alberta's growth will be the envy of people in almost every other province. Wright says we'll see 4% growth when this year goes into the book and the expectation is for 3.9% growth next year. Only Saskatchewan will do better.





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[Ally]

Local housing values to regain 2007 levels




Despite economic uncertainly around the globe, Calgary-area housing values are poised to reach new highs next year, according to a new report from RE/MAX, released Dec. 6.




The RE/MAX Housing Market Outlook 2012 examined trends and developments in 26 major markets across Canada. Eighty-eight per cent (23 of 26) anticipated average price increases by year-end 2011 ` with percentage hikes ranging from one to 16 per cent.




Locally, average housing values are expected to reach $417,000, a level not seen since 2007, when prices reach an all-time high of $416,399.





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[Ally]

Oil and Eurozone problems merge





There were two sides to the commodity price rout on Wednesday. One had to do with the continued uncertainty in the eurozone, which sent the euro south, took gold with it and boosted the U.S. dollar. The other aspect related to the outcome of the meeting held by the Organization of Petroleum Exporting Countries that resulted in production levels being "boosted" to 30 million barrels a day. That move sent oil prices down - with West Texas Intermediate briefly sinking to its lowest level since the beginning of November, touching $94.41 US per barrel in midday trading.




When the dust settled, WTI ended the day down $5.19 to $94.95/bbl while Brent lost $4.48 to close at $105.02/bbl. The downdraft, which saw gold fall 5 per cent, sent the resourceweighted S&P/TSX down 216.89 points on the day.






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[Ally]

U.S. Senate approves pipeline, tax deal



WASHINGTON ` The U.S. Senate passed a $1-trillion spending bill and a two-month payroll tax cut holiday extension Saturday, setting up fresh congressional gridlock for the 2012 election year.





The compromise tax measure further dented President Barack Obama`s authority by forcing him to revisit the contentious $7-billion Keystone XL pipeline plan to ship Canadian oilsands crude to the U.S. Gulf Coast.





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[Ally]

TransCanada boosts Keystone XL plans






TransCanada Corp. (TRP-T43.890.451.04%) is raising the amount of crude it plans to pump through its Keystone XL pipeline, after receiving a boost in support from companies who hope to ship oil on the controversial project.




TransCanada itself had raised doubt about whether its shippers might stick around when the U.S. State Department last month delayed its decision on approving Keystone XL, asking for a change in route around the environmentally sensitive Sand Hills in Nebraska.





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[Ally]

For Calgary, business park paves over Cowtown image




Five years ago, when you landed at Calgary`s airport, you`d hop in a cab and turn onto the province`s busiest highway. Out one window, you`d note another skyscraper going up on the multi-billion dollar skyline; out the other, you`d see tractors and a decaying barn. You were in Cowtown ` a nickname that was something of a stigma for this city. Indeed, it felt the need to add the words `Heart of the New West` to its welcome signs.





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[Ally]

Blocking pipelines to B.C. would entail loss of billions: Study




Canada will forgo billions of dollars in gross domestic product and government revenue if oil companies are unable to access markets off the Pacific coast, according to a new study.




Moving Canadian heavy oil to the West Coast, where it can be shipped to markets in California and Asia, could add up to $131-billion (U.S) to Canada`s GDP between 2016 and 2030, according to a new study prepared by researchers at the School of Public Policy at the University of Calgary. This translates to $27-billion in federal, provincial and municipal tax receipts, the academics calculated.





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[Ally]

Canada is 'very serious' about selling oil to Asia: Harper




Canadian Prime Minister Stephen Harper said he is `very serious` about the idea of selling the country`s oil to markets in Asia, and that Canada no longer wants to export its energy only to the United States.




`I am very serious about selling our oil off this continent, selling our energy products off to Asia,` Harper said in an interview with CTV National News broadcast Monday night. He said that when `senior Americans` told him U.S. lawmakers would approve TransCanada Corp.`s Keystone XL pipeline, allowing Canada to sell all its oil to the U.S., he replied, `We`d love to, but I think the problem is now that we`re on a different track.`







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[Ally]

Calgary inflation on pace with Canadian average





CALGARY ` Consumer prices in the Calgary region rose at the same pace as the national average in the past 12 months, according to Statistics Canada.




The federal agency reported Tuesday that prices in the Calgary census metropolitan area, as well as for all of Canada, increased by 2.9 per cent in November compared with a year ago.




On a monthly basis, prices in Calgary declined by 0.5 per cent from October while they rose by 0.1 per cent for Canada.






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[Ally]

New rules for residential growth in Calgary





Decisions over where future condominiums will rise and which fields will be turned into suburban homes is soon to be subject to a new set of criteria the city hopes will help it assess where and when different parts of Calgary should grow.




City officials will be piecing together a system to weigh nine growth criteria, which council can use as a guide when it makes land planning decisions.




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[Ally]

Stephen Harper has doubts on Keystone pipeline approval, sees markets in Asia


Canada could sell its oil to China and other overseas markets with or without approval of the Keystone XL oil pipeline in the United States, says Prime Minister Stephen Harper.





In a year-end television interview, Harper indicated he had doubts the $7-billion pipeline would receive political approval from U.S. President Barack Obama, and that Canada should be looking outside the United States for markets.





"I am very serious about selling our oil off this continent, selling our energy products off to Asia. I think we have to do that," Harper said in the Monday interview with CTV National Newshttp://http://watch.ctv.ca/news/latest/one-on-one/#clip588632 with Lisa LaFlamme.



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[Ally]

Athabasca Oil Sands to spend 46% more in 2012




Athabasca Oil Sands set its 2012 capital budget 46% higher at $1.02-billion, as the bitumen producer inches towards regulatory approval for some of its projects which it plans to soon bring to production.




Calgary, Alberta-based Athabasca, whose stock started trading on the Toronto Stock Exchange in April last year, plans to spend $403-million on its oil sands division.






The company, which said in November it would spend $700-million this year, expects to get regulatory approval for its 12,000 barrels per day steam-assisted gravity drainage (SAGD) project, and will likely start producing in 2014.





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[Ally]

Vacancy rates drop in Grande Prairie




It's getting hard to find an apartment in Grande Prairie.




According to data released b Canada Mortgage and Housing Corporation (CMHC), the vacancy rate in the city was 3.9% in October ` a significant drop from 10.5% in the same month last year.




The average rent in October was $845 per month, up from $798 in October 2010.





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[Ally]

Elbow Park mansion sets top price for Calgary home sales in 2011: $5 million





CALGARY ` The highest priced MLS sale in Calgary this year of over $5 million took place recently for a property in the Elbow Park/Glencoe neighbourhood and was the fifth highest sale ever in the city.




John Hripko, realtor for Royal LePage Foothills who listed the property, said he defines the `luxury` market as homes priced over $3 million and `it`s extremely active so far as for the number of inquiries, showings and interest in the product.`




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[Ally]

Keystone project has Montana approval, governor says




Montana has given final approval to the controversial Canada-to-Texas Keystone XL oil pipeline, even though the project still faces obstacles with the federal government and Nebraska, the governor said on Thursday.




Governor Brian Schweitzer told Reuters that an important component of the project for Montana is an `on-ramp` to feed oil from his state into the proposed pipeline.




`This country needs conflict-free oil,` he said in a phone interview. `Montana`s National Guard is in Afghanistan and they`ve been in Iraq, and I promise you that we`ll never send the National Guard to protect the pipeline in Alberta.`




The proposed Keystone XL pipeline would stretch from the Canadian border through Montana, South Dakota, Nebraska and link up with an existing pipeline in Kansas.





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[Ally]

U.S. Congress hands energy industry historic victory




In a crushing demonstration of the growing power of domestic energy producers, and waning influence of environmental groups, Congress is poised to enact legislation fast-tracking approval for the controversial Keystone XL pipeline.




It is a stinging defeat for environment groups that have lobbied fiercely against the Keystone extension, and comes little more than a month after the president had sought to take the heat out of the issue by postponing approval beyond the next election pending a review of alternative routes through Nebraska.





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[Ally]

Oil patch pushes for immigration change




Canada`s energy industry is pushing the federal government to reform the country`s immigration policy as the oil patch grapples with the looming threat of a severe labour shortage.




Alberta is facing a shortage of 77,000 workers within the next 10 years, according to a recent report from Ernst & Young, which cited the provincial government. The oil sands` projected growth is a key force behind the deficit, with bitumen production expected to double by 2020 as companies pour billions of dollars into their projects. While labourers enjoy higher wages as the employee pool dries up, rising salaries eat into corporate profits and put projects at risk of delay.





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[Ally]

Imperial Oil approves major new expansion of oil sands project




Imperial Oil Limited says its board of directors has approved the expansion phase of the Kearl Oil Sands Project, a surface mining operation under construction northeast of Fort McMurray, Alberta. Imperial Oil`s share of the Kearl Oil Sands asset is 71%.




The Kearl initial development, sanctioned in 2009, was reconfigured in mid-2011 with a capital appropriation of $10.9 billion. Imperial Oil says the initial development is currently 80 per cent complete and progressing on the planned timeline towards an expected start-up in late 2012.




Initial production is targeted at 110,000 barrels per day, with a subsequent increase in mining output to reach plant capacity of about 145,000 barrels per day.





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