June 2010

[Ally]

Edmonton industrial real estate `healthy`

EDMONTON — A slight rise in Edmonton`s industrial real estate market`s vacancy rate hasn`t dented the overriding optimism for the rest of the year, a new report says.

The 0.2-per-cent first-quarter rise to 4.4 per cent came as companies started to find their balance after a tough 2009, says Avison Young`s spring report.

A stronger economy, boosted by recovering energy prices, has helped stabilize the marketplace as businesses adjust to the new economic realities of a recovering Alberta, Avison Young principal Rob Iwaschuk said.

"Our research indicates that despite the small increase in the overall vacancy rate, there is still a healthy demand for top-tier industrial space in the city.

"Rental rates have stabilized, and companies that may have been sitting on the sidelines in 2009 are re-entering the marketplace prepared to make real estate decisions with growth in mind."

Read the full article here.

 

[Ally]

Total urges big oil action

MONTREAL -- The oil and gas industry had better brace for unprecedented government and citizen scrutiny in the aftermath of BP PLC`s spill in the Gulf of Mexico, warns the chief executive of French energy giant Total SA.

Instead of waiting for legislators to table their dose of disaster-fighting medicine, Christophe de Margerie said his peers need to defend their records and get more engaged in the policymaking process. Whether that will work in stopping regulatory overkill is uncertain, if U.S. President Barack Obama`s threat yesterday to find out whose "ass to kick" for the BP spill is any indication.

"I strongly think we have to take an active part in the debate on what needs to be changed," Mr. de Margerie said in an interview with the Financial Post while here for the International Economic Forum of the Americas.

"This concern about environment and environmental protection, it won`t be just applied on deep offshore -- but on onshore, on shale gas, on the oil sands, on everything. We have to get ready for this, to answer and promote what we are doing in advance before being told [by policymakers] that it is not acceptable."

If oil executives are going to act, they had better do so quickly, as the Obama administration signalled yesterday it plans to introduce tougher oversight rules for the energy sector. New regulations governing drilling in shallow waters are forthcoming, Reuters reported, while a six-month ban on drilling in deeper areas will remain in place.

Read the full article here.

 

[Ally]

Alberta`s economy to bounce back this year: RBC Economics

CALGARY - Alberta`s economy is expected to rebound this year and next, with growth projected at 3.1 per cent and 4.2 per cent, according to the latest forecast report by RBC Economics.

"The recession was particularly tough for Alberta`s economy, which contracted for the first time since 1986," said Craig Wright, senior vice-president and chief economist for RBC. "However, the recovery now looks to be taking shape, with a sharp rise in home building activity and renewed interest in the oil and gas sector combining to fuel growth in the province."

Nationally, RBC is forecasting economic growth of 3.6 per cent this year and 3.5 per cent in 2011.

In the first quarter of this year, the Canadian economy witnessed 6.1 per cent growth, which was the fastest pace in over a decade, said RBC.

The drop in residential construction, oil and gas services, machinery manufacturing and retail trade had particularly damaging effects during the recession, causing Alberta`s economic performance to lag behind most other provinces last year, said the report.

Read the full article here.

 

[Ally]

Calgary misses out on Alberta job gains

It`s been more than a year since 41-year-old Rick has been able to find steady work after being laid off from his oil rig job.

"It`s been up and down since then. I`ve been putting my name out, but I haven`t been getting the calls back from the oil rigs. I need to get back there but it`s been tough with this recession," Rick said Friday afternoon as he stood on the downtown street popularly known as Cash Corner, where the unemployed seek jobs in the trades on a daily basis.

"I`ve been coming out here since January. It`s been pretty much steady with the people out here. I was laid off about a year and a half ago and it`s been a tough time to get back into the system."

Earlier Friday, Statistics Canada released the latest employment figures for May that saw the Calgary census metropolitan area lose 1,000 jobs from April as its unemployment rate rose to 7.7 per cent from 7.6 per cent the previous month.

In contrast, 14,700 new jobs were created in Alberta and the province`s unemployment rate fell to 6.6 per cent from 7.4 per cent.

Read the full article here.

 

[Ally]

Calgary housing starts leap 80% in May compared to year ago

CALGARY - Housing starts in May ballooned in the Calgary census metropolitan area compared with year-ago levels.

According to preliminary figures released today by Canada Mortgage and Housing Corp., total housing starts in the reached 862 units, up 79.6 per cent from 480 units in the previous year.

To the end of May, total housing starts have increased from 1,547 units in 2009 to 3,932 units in 2010.

In May, there were 634 single-detached units that broke ground, representing an increase of 66 per cent from the 382 units started in the previous year. To the end of May, new construction of single-detached units has improved from 1,175 units in 2009 to 2,804 in 2010, an increase of 139 per cent.

"Although the gain after five months has been impressive, the rate of increase is expected to moderate over the balance of the year due to higher mortgage rates, rising inventory levels, and comparatively stronger activity in the latter half of 2009," said Richard Cho, CMHC`s senior market analyst for Calgary.

Read the full article here.

 

[Ally]

The new oil risk: Peak regulation

The regulatory system totally failed. Let`s try more regulation. We`ve seen this pattern before, and we`re about to see it all again in the oil industry. In the wake of the Gulf of Mexico disaster, governments all over the world, led by U.S. President Barack Obama, are now gearing up thousand-page rule books and new bureaucracies to oversee the global oil industry. Canada and Norway have already imposed curbs on deep water and Arctic exploration.

The result is certain to be declining reserves of oil around the world, reduced supply and messed-up markets. Much as many people would like to believe that fossil fuels are a filthy nuisance that can be replaced by wind, sun and other forms of green energy, the fact is that the world`s people are increasingly dependent on oil and will continue to be for decades to come.

The latest BP statistical review, released yesterday, put world oil reserves at 1.3 trillion barrels, with consumption currently equal to about 45% of reserves. New reserves must constantly be found to maintain consumption. Peak oil theorists believe the world is approaching a point where consumption is exceeding the world supply of oil, a theory that has many holes but which could become a reality if governments begin to impose regimes that prevent the finding of new reserves. As Christophe de Margerie, CEO of the French energy giant Total SA, told the Financial Post`s Paul Vieira: "We are not going offshore for pleasure. That`s where the oil is."

The activists behind the peak oil idea see an opportunity. Jeremy Leggett, a true believer, in a Financial Times column yesterday, played the Gulf oil crisis as a peak oil benefit. "The disaster in the Gulf of Mexico casts doubt on the viability of the deepwater production on which the industry forecasts depend," said Mr. Leggett, rubbing his hands in delight that the idea that deepwater risks are now so great that that offshore oil can no longer be counted as useful now or at any time in the future.

Read the full article here.

 

[Ally]

Oil sands expected to yield up to 3.5 million barrels a day by 2025, CAPP says

Canada will produce more than twice the amount of crude derived from oil sands by 2025 compared with what experts predict the bitumen-rich zones will churn out in 2010. The Canadian Association of Petroleum Producers expects the oil sands to produce 1.5 million barrels of oil a day this year, and 3.5 million barrels a day by 2025. Its estimate considers current and planned projects, based on a survey of oil sands operators. Further, by 2016, in-situ bitumen extraction methods--in which the oil is recovered using drilling techniques-- will exceed strip-mining operations, CAPP said in its annual crude, markets and pipelines forecast. Oil sands production growth is expected to be the main driver behind Canada`s rising crude production.

Read the full article here.

 

[Ally]

Oil rises above US$47 as China exports surge

LONDON -- Oil climbed above $74 per barrel on Thursday after Chinese data showed a surge in exports in May and as the IEA revised up its estimate of global oil demand growth for this year.

China`s exports rose 48.5 percent in May from a year earlier, beating forecasts of a 32 percent gain and confirming a Reuters report on Wednesday, which helped send oil up more than 3 percent.

U.S. crude for July rose 47 cents to $74.85 a barrel by 1213 GMT. ICE Brent gained 22 cents to $74.49.

Asian and European stock markets rose and the dollar fell after the strong Chinese data, which eased some worries over a slowdown in Europe.

"Risk appetite is creeping back into the markets," said Carsten Fritsch, analyst at Commerzbank in Frankfurt.

Support for oil prices came from the International Energy Agency (IEA), which on Thursday revised up its estimate of global oil demand growth this year due to increased fuel use in the United States and on robust Chinese oil consumption.

The Paris-based agency raised its global oil demand growth forecast for 2010 by 70,000 barrels per day to 1.68 million bpd, saying oil demand this year would hit 86.44 million barrels per day (bpd), up from 84.76 million bpd in 2009.

Read the full article here.

 

[Ally]

Canada`s oilsands are a blessing

BP`s tragic Deepwater Horizon oil well rupture in the Gulf of Mexico points out a cruel irony -- that Canada`s so-called "dirty oil" from the Athabasca Sands is now looking pretty good compared to oil from offshore drilling.

For the past 10 years, green-leaning politicians and policy gurus have talked about the "ecological carnage of the tar sands" and targeted them as the "worst project in the world." Al Gore likened the sands to the last vein the junkie finds in his big toe. Waterloo academic Thomas Homer-Dixon recently bemoaned that "The rapacious exploitation of Canada`s tar sands has distorted our economy, corrupted our politics, ruined our environment, and turned us, collectively, into a rogue nation of carbon polluters." Even Toronto peak oil pop star Jeff Rubin has sneered, "You know you are at the bottom of the ninth when you have to schlep a tonne of sand to get a barrel of oil."

Anybody who didn`t believe their tar-sands-are-evil-and-stupid mantra was clearly guilty of thought crime.

All this criticism is becoming increasingly moot now the oilsands and heavy oil of Alberta and Saskatchewan are proving themselves to be one of the world`s most stable and productive petroleum sources. It`s a resource that has turned Canada overnight into the world`s major new petro power.

For most people, the Athabasca Sands conjure up the image of a large industrial site with monster trucks delivering oil sand to giant washing machines that belch steam and CO2 into the atmosphere and spew hot waste water into greasy tailing ponds that snare unwary ducks. But that picture is starting to change, since almost 90 per cent of the bitumen is underground and we can`t get the energy out by surface mining.

Read the full article here.

 

[Ally]

India competes with China for stake in oilsands

CALGARY - India`s oil minister said Wednesday his country is still looking to secure a toehold in the oilsands, even as rivals such as China move to increase their stake in the world`s second-largest petroleum reserves.

Speaking at the International Energy Ministers Forum in Calgary, Shri Jitin Prasada, India`s minister of state for petroleum and natural gas, told reporters his country is still keen to invest in the oilsands even after more than five years of pronouncements that a deal was imminent.

"These decisions do happen and do take time. As I said, we are very much interested in having some kind of stake in oilsands and we are continuing with our quest to finalize something soon," he said.

India first expressed public interest to acquire a position in the oilsands as far back as 2005, but failed to make a deal. In the meantime, rivals such as China have stepped up, most recently by taking a $1.25-billion stake in PennWest to accelerate development of its Peace River oilsands assets. In April, refining giant Sinopec paid $4.65 billion for ConocoPhillips` nine per cent interest in Syncrude.

Last fall Petro China invested $1.9 billion in a pair of in-situ thermal projects operated by Athabasca Oil Sands Corp., which went public in one of the largest initial public offerings in Canadian history.

In March, Bloomberg reported that Oil and Natural Gas Corp. (ONGC), India`s largest oil producer, was close to buying oilsands assets currently producing 10,000 barrels per day for $1 billion.

Prasada declined to confirm if India had been in the running for the Athabasca stake. However, he acknowledged the tight competition for oilsands assets among international players.

Read the full article here.

 

[Ally]

Calgary housing starts leap 80% in May compared to year ago

CALGARY - Housing starts in May ballooned in the Calgary census metropolitan area compared with year-ago levels.

According to preliminary figures released today by Canada Mortgage and Housing Corp., total housing starts in the reached 862 units, up 79.6 per cent from 480 units in the previous year.

To the end of May, total housing starts have increased from 1,547 units in 2009 to 3,932 units in 2010.

In May, there were 634 single-detached units that broke ground, representing an increase of 66 per cent from the 382 units started in the previous year. To the end of May, new construction of single-detached units has improved from 1,175 units in 2009 to 2,804 in 2010, an increase of 139 per cent.

"Although the gain after five months has been impressive, the rate of increase is expected to moderate over the balance of the year due to higher mortgage rates, rising inventory levels, and comparatively stronger activity in the latter half of 2009," said Richard Cho, CMHC`s senior market analyst for Calgary.

Read the full article here.

 

[Ally]

Calgarians are biggest renovation spenders

CALGARY - Households in Calgary are expected to spend more on renovations than anywhere else in the country this year.

The average expected cost of a renovation in Calgary is $13,256, $1,825 more than the national average, according to the Renovation and Home Purchase Survey released Wednesday by Canada Mortgage and Housing Corp.

"Incomes in Calgary are among the highest in the country. This may contribute to the average expected cost of renovations in Calgary being higher than other centres in Canada as households have more to spend," said Richard Cho, senior market analyst for Calgary for the CMHC.

The survey included: Calgary;

St. John`s, N.B.; Halifax; Quebec City; Montreal; Ottawa; Toronto; Winnipeg; Edmonton and Vancouver.

The report said the national average expected cost of renovation this year is $11,431. Vancouver was second to Calgary, at $12,750 with Toronto next at $11,881.

The survey said Calgary`s average cost of renovations dropped from $16,254 in 2008 to $13,087 last year.

Read the full article here.

 

[Ally]

Alberta`s coal bed methane estimates boosted by 90%

CALGARY - A new report credits regulatory changes for a 90 per cent increase in Alberta`s coal bed methane reserves, amid low interest in the abundant but poorly priced resource by producers.

Production of the unconventional resource rose six per cent last year, to 317 million cubic feet, according to the Energy Resources Conservation Board reserves report.

The increase came despite soft natural gas prices and a 7.5 per cent drop in conventional gas production in the province, because of a tweak to rules allowing companies to produce coal bed methane (CBM) from existing natural gas wells, said board spokesman Darin Barter Thursday.

"The co-mingling directive really has allowed CBM to become more economical, as well as reducing the environmental footprint of coal bed methane production," Barter said.

"It enables companies to utilize existing infrastructure and not have to pay for costly infrastructure such as compressor stations, pipelines and tie-ins."

Coal bed methane is found in coal seams that often coexist with natural gas formations. The energy regulator estimates Alberta`s coal reserves hold about 500 trillion cubic feet of coal bed methane.

Read the full article here.

 

[Ally]

Robotics touted as oilsands mine energy saver

There`s more imagination than people know about being employed in oilsands mining as an industry that has really only been commercially viable for a few dozen years continually refines and improves its processes.

At Alberta`s newest oilsands mine, Canadian Natural Resources` Horizon, opened just last year, the company uses the very latest bird deterrent system — including radar to detect the birds in flight, discouraging noises including distressed bird calls, predator sounds and gorilla grunts, and a laser light show at night — to discourage tailing pond landings and the dead duck trouble that Syncrude Canada got into a couple of years ago.

At a presentation to the Global Petroleum Conference in Calgary Thursday, vice-president of mining Phil Keele said the radar picked up 220,000 bird migrations over the tailings pond last year.

The imagination doesn`t stop there. Cost control and energy efficiency are the big drivers, along with environmental improvements.

"Technology is going to be the answer. I believe robotics will be deployed in the longer term," Keele said in response to a question.

Read the full article here.

 

[Ally]

Oilsands output to overwhelm upgrading capacity

CALGARY -- Gains in oil sands production is expected to outstrip increases in Alberta`s processing capacity over the next decade as oil companies go slow on building new facilities to protect profit margins and guard against the return of surging construction costs.

The province`s energy regulator said on Monday that this trend will prevail despite government efforts to foster construction of upgrading plants to bolster economic activity and job creation from the vast oil sands resources of northern Alberta, the largest crude source outside the Middle East.

In its annual report, the Energy Resources Conservation Board (ERCB) predicted production of raw bitumen from the oil sands would more than double to 3.2 million barrels a day by 2019 from 1.49 million in 2009.

The figure for last year was up 14% from 2008.

Output of upgraded synthetic oil, meanwhile, is expected to hit 1.3 million barrels a day, a 77% increase in 10 years, the ERCB said.

Read the full article here.

 

[Ally]

Tarsands` output set to double

Canada will produce more than twice the amount of crude derived from tarsands by 2025 compared with what experts predict the bitumen-rich zones will churn out in 2010.

The Canadian Association of Petroleum Producers expects the tarsands to produce 1.5 million barrels of oil per day this year, and 3.5 million barrels per day by 2025.

Its estimate considers current and planned projects, based on a survey of tarsands operators.

Further, by 2016, in-situ bitumen extraction methods -- in which the oil is largely recovered using drilling techniques -- will exceed strip-mining operations, CAPP said in its annual crude, markets and pipelines forecast.

Tarsands production growth is expected to be the main driver behind Canada`s rising crude production.

In 2010, the country will churn out 2.8 million barrels of oil per day, with 1.5 million barrels per day coming from the tarsands, CAPP forecasts.

In 2015, total production is expected to climb to 3.3 million barrels per day, with the tarsands contributing 2.2 million barrels; while 2020 will bring 3.9 million barrels per day, with 2.9 million barrels coming from Northern Alberta.

Read the full article here.

 

[Ally]

Alberta`s Competitiveness - A Primer for Discussion

Download the PriceWaterhouseCoopers report below.

 

[Ally]

BP oil spill`s real impact on Canada`s energy sector

It`s impossible to talk about the energy business in Calgary these days without discussing the impact of BP`s rogue well in the Gulf of Mexico.

No one wants to convey an inappropriate sense of competitive Shadenfreude as the environmental disaster worsens, but there is quiet and guarded optimism among domestic stakeholders that the unintended consequences of the blowout will benefit the Canadian oil industry, especially the oil sands. But such optimism should remain very guarded, because the tragedy in the Gulf poses unintended and unwanted risks to Canada`s oil and gas industry too.

There are many consequences to consider, too many for one column, but let`s focus on what the blowout means to capital investment into oil exploration. Extra safety measures, higher insurance rates, more stringent regulation and drilling moratoria in the Gulf of Mexico will all translate into higher costs that lead to the diversion of exploration dollars to other free-market jurisdictions where there is oil to be found. It`s uncertain how much of the $US 15 billion that is spent annually in the offshore United States will migrate elsewhere, but those in the oil business know that options are highly constrained and Canada represents one of the few attractive choices for investment.

The world of oil reserves is divided into two; restricted barrels under the control of national oil companies (NOCs) are paired against barrels open to investment in a free market environment. This two-sided oil world is far from equal. Estimates vary, but a country-by-country scan combined with consensus opinion suggests that around 80% of the world`s oil reserves are under state control, which means that only 20% of the world`s oil is open to freely flowing competitive capital.

Read the full article here.

 

[Ally]

Energy park billed as world`s second biggest

EDMONTON - The first lots are already for sale at the city`s massive Horsehills Energy and Technology Park, which was approved by city council Wednesday.

The Yorkton Group has more than 163 hectares of the 4,857-hectare park at the junction of Manning Freeway and Highway 28A, which is second in size only to Jubail Industrial City in Saudi Arabia.

It will be close to Shell`s current Scotford bitumen upgrader and other projects planned for the Fort Saskatchewan and Strathcona County areas north of the city, Yorkton vice-president Reg Liyanage said Friday.

"From a developer`s standpoint, we believe this approval is very significant news for the City of Edmonton.

"Finally we have a world-class petro-industrial park within the city, and a greater variety of products are expected to be produced than in Jubail.

"Edmonton has in effect joined a very exclusive club, with global implications in the petrochemical industry."

Liyanage said the park has been modelled on the best in the world, including those in Dubai, Saudi Arabia, Antwerp, Germany, Singapore and Houston.

Read the full article here.

 

[Ally]

Alberta apartment vacancies up, rents down

EDMONTON — A weak jobs market and people moving out of province pushed Alberta`s apartment vacancy rates up and rents down in April, says a new report.

Vacancies increased across all five of the province`s largest "census agglomerations," according to Canada Mortgage and Housing Corp.`s Spring Rental Market Survey released Tuesday.

"Weaker labour market conditions across the province coupled with interprovincial migration losses have dampened the demand for rental units," said Lai Sing Louie, CMHC regional economist.

The Edmonton census metropolitan area saw vacancy rise to 5.2 per cent, from 4.7 per cent a year earlier. It`s the highest rate since 2007, when CMHC reintroduced its April rental market survey.

"Low mortgage rates, which have provided the incentive for some tenants to move into home ownership, have also contributed to the rise in vacancies," said Richard Goatcher, CMHC`s senior market analyst for Edmonton.

Read the full article here.