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July 2010 Alberta Economic Fundamentals

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End of recession brings drop in Alberta bankruptcies

Fewer personal and business bankruptcies in Alberta


EDMONTON — Fewer Albertans are filing for bankruptcy as they emerge from dark economic times, a new report suggests.

The number of personal bankruptcies fell to 744 in April from 776 in March and 838 in April 2009, the federal bankruptcy agency says.

The number of proposals -- offers to creditors to settle debts under conditions other than the existing terms -- fell by 10 per cent for consumers, who were hit hardest by the recession as companies slashed jobs and cut production.

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Encana raises 2010 production forecast, reports quarterly loss

TORONTO - EnCana Corp., Canada`s biggest natural gas producer, raised its 2010 production forecast and reported a stronger-than-expected quarterly cash flow on Wednesday as output and pricing exceeded forecasts.

But shares of Encana, which spun off its oil sands operations into Cenovus Energy Inc CVE.TO, dropped more than 2 percent as it posted operating income that came in well short of expectations.

On a net basis Encana reported a loss of $505 million, or 68 cents a share for the quarter, on hedging losses and foreign exchange fluctuations. That compared with a year-ago profit of $239 million, or 32 cents a share.

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Recession silver lining for oilpatch: report

Down year made industry more efficient


Last year was a washout for the oilpatch, but one that led to reduced costs, a better royalty regime and the proving up of drilling technology that sets the stage for future growth, PricewaterhouseCoopers said in a report Tuesday.

Recession-bound 2009 slashed revenues for Canada`s top 100 oil and gas companies by 32 per cent to $132.9 billion, while profits plunged 76 per cent to $8.5 billion from $36 billion the year before, according to PwC`s Canadian annual energy survey.

Last year produced the sector`s weakest performance since 2002.

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Surge in well licence applications suggests busy times ahead for drillers

Industry Set For Strong Second Half


In another sign of a recovering oilpatch, a surge in the number of applications to drill for oil and gas bodes well for the second half of the year, analysts and industry associations said Monday.

A pair of reports by Raymond James and UBS Securities in Calgary suggest that the number of well licence applications to western Canadian regulatory agencies, such as Alberta`s Energy Resources Conservation Board, are double what they were at this time last year. Alberta accounts for more than 80 per cent of the wells drilled in Canada.

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Building permits foreshadow dip in Calgary construction

Values drop by nearly 40% in city


Construction activity in Calgary and Alberta is expected to slip in the coming months, judging by the building permit values in May.

The Calgary region and Alberta posted among the largest year-over-year declines in the value of building permits in May, according to data released Tuesday by Statistics Canada.

The federal agency said the Calgary census metropolitan area issued permits worth $200.4 million during the month, down 68.2 per cent from May 2009 and 39.8 per cent from the previous month.

In Alberta, overall building permit value of $820.5 million was off by 31.1 per cent from last year and down 28.6 per cent from last month.

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Rocky View forms regional task force to study growth

A task force to listen to disgruntled residents and manage contentious urban growth was announced Tuesday by Rocky View County, just months ahead of the municipal elections.

A newly formed 16-person panel said it would hold three town hall meetings to collect public insight into the region`s planning and growth. The results of the study will be released in five months, several weeks after elections are slated to be held.

"The whole mandate of this task force is to engage all county stakeholders and discuss critical issues surrounding our inevitable growth and diversification as a metro-rural community," said the county`s reeve, Lois Habberfield.

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Alberta boosts appeal for oilpatch investment, survey finds

Calgary — Alberta is doing better as a preferred destination for energy investment in 2010, but the heart of Canada`s oilpatch still trails Manitoba, Saskatchewan and British Columbia as an attractive place for oil and gas companies to spend money, a Fraser Institute survey released Thursday shows.

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Calgary headed to 2.5M people

The face of Alberta will change dramatically over the next few decades, with a new provincial study projecting a greying, more multicultural population that flocks to the Calgary-Edmonton corridor.

Calgary and area will continue to be a magnet in the coming decades as the province`s population grows to more than six million by 2050, according to provincial projections, with future growth driven by international migration.

The Alberta Population Projections report released by the provincial government, which forecasts trends over the next four decades, predicts the Calgary, Red Deer and Edmonton regions will be home to about 77 per cent of Wild Rose Country`s population in 2050.

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Homebuyers face $10K hit

Ten thousand dollars.

That`s a ballpark figure of how much could be added on next year to the price of a new home in a neighbourhood going to be built in the far-flung suburbs.

The choices don`t look pretty.

The municipal deep thinkers point out the city`s water and sewer utility is leaking red ink.

Actually it isn`t leaking red ink, it`s gushing red ink.

The city`s water and sewer system is approaching $1.5 billion in the hole and will add another billion to the debt in eight years if nothing is done.


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Tame inflation seen as boon for consumers

Bank of Canada expected to pursue rate hike


A s the national inflation rate eased, the overall cost of living in Calgary and in Alberta was kept in check in May from a year ago.

Tuesday`s tame inflation report will not deter the Bank of Canada from raising its key lending rate for the second time in two months in July, analysts agree.

"Inflation remains mild because of the economic slack that resulted from the recent recession," said CIBC economist Krishen Rangasamy, "but that negative output gap has narrowed thanks to the improving economy, warranting some withdrawal of monetary stimulus.

"We therefore expect the BoC to continue raising rates by 25 basis points over the next three meetings."

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Oil Sands Opponents Will Lose, Economist Suggests

Attempts by some American policymakers to limit fuel from Alberta`s high-carbon oil sands will ultimately fail, a leading Canadian economist predicted. And two pro-oil lobby groups fighting U.S. climate legislation appear to agree.

"Being able to receive crucial oil to fuel your economy from a stable, friendly country like Canada has an awful lot of merit to it," BMO senior economist Earl Sweet told The Tyee. "I suspect that will overcome," he claims, "current environmental misconceptions that are being propagated in some quarters of the United States."

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U.S. urged to cancel plans for Alberta pipeline over climate fears

The U.S. Environmental Protection Agency is urging the Obama administration to put the brakes on a proposed pipeline linking Alberta`s oilsands industry with American refineries because of its potential impact on global warming.

In a newly released letter to the U.S. State Department, EPA officials suggested that, if approved, the $12-billion Keystone XL project, proposed by TransCanada, would bring oil into the country with a much higher environmental footprint than the average crude oil now being refined.

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Retail sales dip across Canada but hold steady in Alberta

Retail sales across the country dipped slightly in May, while in Alberta spending went virtually unchanged, according to Statistics Canada.

The unexpected drop of 0.2 per cent resulted from slower sales in building and gardening materials and at gas stations, according to details released Thursday.

However, there were gains at clothing stores, in sales of food and beverages and purchases at home furnishing outlets.

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Calgary`s industrial market on road to recovery

The industrial real estate market is showing signs of recovery as the vacancy rate continues to drop and developers are expected to start on new projects as early as the end of this year.

Vacancies decreased for a second consecutive quarter in Calgary`s industrial market as more properties were occupied and the slow pace of new construction continued.

A report by Colliers International in Calgary said the vacancy rate dropped to 5.36 per cent from 5.89 per cent in the second quarter of this year.

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Calgary new home prices rose 3.1% in May: StatsCan

CALGARY - New house prices in the Calgary region rose by a higher rate in May than the national average on a year-over-year basis.

The New Housing Price Index released today by Statistics Canada reported a 3.1 per cent increase from May 2009 to May 2010 and a monthly increase of 0.3 per cent from April.

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Calgary building permits in June off last year`s pace

CALGARY - The value of building permits in June in the city fell from what it was a year ago and is down compared with the five-year average.

However, the City of Calgary said Monday it is up from the 10-year average.

The estimated construction value of building permit applications for the month was $346 million. The city said that is off by 12 per cent from June 2009`s $395 million and off by 17 per cent from the five-year average of $419 million.

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"Bumpy" Quarter Expected for Drillers

Second-quarter results from land drillers — which start Thursday with Calgary-based Precision Drilling — will be "bumpy," according to Canaccord Genuity analyst John Tasdemir.

In an earnings preview that came out Monday, the analyst now based in Houston points out that the Canadian market had the highest year-over-year growth rate, up 84 per cent compared to 2009`s brutal second quarter, while the United States market grew 12 per cent from the first to the second quarter.

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The oil sands: A vital part of Canada`s future

The Gulf of Mexico oil spill has understandably led to more attention on the oil and gas industry. In Canada, the discussion gravitates to the oil sands , with our 178 billion barrels of reserves – the second-largest source of oil after Saudi Arabia.

Some supporters believe this method of oil recovery is inherently safer and more stable than deepwater drilling, attracting more interest and investment. Detractors see it as another example of why we need to end our dependence on oil more quickly.


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Inflation `going nowhere fast`

EDMONTON - Inflation is a non-issue for most Albertans as prices for consumer goods were up just 0.6 per cent in June from a year earlier, Statistics Canada said Friday.

That rate was matched by one province and bettered by four others as inflation fell nationally to a seven-month low in June, but that won`t stop the Bank of Canada from raising interest rates in the months ahead, analysts said Friday.

"Consumers in Alberta are probably not noticing much change in prices these days," said ATB Financial senior economist Todd Hirsch.

Keeping inflation modest in Alberta were lower prices for fresh fruit and vegetables, due to a stronger dollar, and less expensive gasoline, Hirsch said. Albertans did see higher prices for health care, electricity, education and reading materials, however.

"Alberta`s modest pace of inflation does suggest that the provincial economy has softened a bit in mid-2010. It is also consistent with the pause seen in retail sales and housing starts," Hirsch said.

Nationally, consumer prices rose only one per cent in June, year-over-year, down from an annualized 1.4-per-cent pace the month before, Statistics Canada reported.

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Upgrader plan in final stages

EDMONTON — The Alberta government gave the green light Tuesday for detailed talks to proceed with North West Upgrading to handle provincial royalty bitumen, and likely allow the firm and partner CNRL to build a $5-billion facility near Redwater.

Energy Minister Ron Liepert said a contract could be signed by early fall. If that happens, construction will start next spring, with about 8,000 workers needed -- including work at the site in related manufacturing.

The Tory caucus agreed Tuesday with a cabinet decision the day before to accept an agreement in principle with the firm.

"We have agreed on a term sheet, and it has been approved, so now we will proceed with negotiations. This bodes well for the future of the project," Liepert said in an interview.

"This is all part of the negotiations. You had to agree within this scope of how we are going to get to an agreement, because without agreeing on these general principles there wouldn`t be a deal."

The province selected North West Upgrading`s project in May. The first phase of the three-phase project will see the upgrader handle 50,000 barrels of bitumen a day.

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