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March 2010

Ally

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News articles for March 2010.
 

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India oil giant may look to Calgary after oversea deal hopes fade

LyondellBasell has rejected Reliance Industries` offer that values the bankrupt firm at $14.5 billion, Bloomberg reported, a decision that could push the Indian energy major to focus on other overseas targets.

Reliance, controlled by India`s richest man Mukesh Ambani, has said his company plans an aggressive exploration campaign, investments in petrochemicals and overseas acquisitions. Reliance has raised a war chest for potential deals by selling $2 billion in stock in recent months.

On Tuesday, Bloomberg reported petrochemicals maker Lyondell`s board rejected Reliance`s latest offer, citing unnamed sources.

Reliance declined comment and Lyondell could not be reached.

A creditor group led by U.S. private equity firm Apollo Management, which is controlling Lyondell`s bankruptcy process in the United States, was expected to file a reorganisation plan on Monday. That plan is set to lead Lyondell out of bankruptcy.

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Suncor project near finish line

Suncor Energy`s largest construction effort is set to hit its peak this May, as up to 3,500 workers complete the restarted $4.3-billion Firebag 3 in situ oilsands project north of Fort McMurray.

And by the end of the summer it will be complete, with commissioning of the complex set for the fall, first steam injected before the end of 2010 and first bitumen produced by mid-2011, Firebag`s central facilities project director told the Resource Industry Suppliers Association on Thursday.

"This year we`ll spend 3.7 million man-hours, and while there will be 2,500 to 2,700 people full-time, up to 3,500 will be hired to cover all the shifts during this period," said Jay Froc.

With the smaller Firebag 1 and 2 projects already producing more than 60,000 barrels per day, Suncor was counting Firebag 3 and the following three stages to push bitumen production up sharply -- until the oil-price crash of 2008 led the firm to freeze all construction.

Firebag 3, which was half complete at the time, was restarted this fall, with an allotment of $900 million in 2010.

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Stronger Loonie blamed for bigger tab on oilsands project

EDMONTON — The cost of Shell`s Athabasca oilsands expansion project has climbed by $600 million this year to $14.3 billion, but much of the increase in being blamed on a higher Canadian dollar.

Chevron Corp., one of the partners in the project, revealed the increase in a filing in a regulatory filing in the U.S.

Royal Dutch Shell (RDS) does not disclose specific costs associated with the mine and upgrader operations, said Shell Canada spokesman Phil Vircoe said Friday.

"Chevron`s ($600 million) figure is the right range, and it`s not a new figure for Shell. Shell`s estimates are fully reflected in the RDS`s capex projection to market in the Q4 announcement," he said in an e-mail.

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Albertans most optimistic financially, survey finds

Albertans are the most optimistic in the country about their personal finances, according to RBC`s latest Canadian Consumer Outlook Index.

Sixty per cent of Albertans believe their situations will improve over the next year, a significant increase from 47 per cent last month, and 45 per cent nationally.

The optimism also carries through to their short-term outlook, as 43 per cent expect their outlook to improve over the next three months, compared with 36 per cent in January, and the national average of 30 per cent.

While there was a slight drop in job anxiety, 29 per cent still say they or someone in their household is worried about job loss. That was second only to Ontario where job anxiety is at 30 per cent; the national average was 25 per cent.

"Some Albertans are optimistic about their personal finances and both the national and local economies, but many still feel the pinch of job anxiety," said Bruce MacKenzie, RBC`s regional president for Alberta and the Territories. "This could explain why in March one in four Albertans say they are planning to vacation in Alberta.

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Home sales, and prices, rise in Calgary

CALGARY - The local housing market showed signs of balance, not a bubble, in February, according to the Calgary Real Estate Board.

In releasing its official MLS numbers for the month, the board said sales and average prices increased in both the single-family home and condominium markets compared with year-ago levels.

"We`re just pretty steady and we`re getting some momentum, but that`s fairly typical in a normal year and I don`t even compare it to last year because last year wasn`t a normal year," said board president Diane Scott.

"Right now, where we sit in February, it`s pretty stable. It`s a comfortable market and we`re almost close to equal buyers and sellers."

Single-family home sales for February were 1,035 units, up 25.5 per cent from February 2009`s 825 units. The average sale price hit $458,254, an increase of 10.3 per cent from last year`s $415,568.

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Calgary Housing market shows `momentum` in February

The local housing market showed signs of balance, not a bubble, in February, according to the Calgary Real Estate Board.

In releasing its official MLS numbers for the month, the board said sales and average prices increased in both the single-family home and condominium markets compared with year-ago levels.

"We`re just pretty steady and we`re getting some momentum, but that`s fairly typical in a normal year and I don`t even compare it to last year because last year wasn`t a normal year," said board president Diane Scott.

"Right now, where we sit in February, it`s pretty stable. It`s a comfortable market and we`re almost close to equal buyers and sellers."

Single-family home sales for February were 1,035 units, up 25.5 per cent from February 2009`s 825 units. The average sale price hit $458,254, an increase of 10.3 per cent from last year`s $415,568.

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Edmonton Home sales surge 33%, prices lag

EDMONTON — Home sales spiked in February, but price growth in the Edmonton area lagged behind, according to MLS figures released Tuesday.

The average single-family house price was $369,573 for February, up 1.4 per cent from January, or 5.6 per cent from a year ago.

The median selling price for a single-family dwelling was $355,000 -- meaning half the homes sold for more and half sold for less. That`s up nearly six per cent from the median price of February 2009.

Condominium prices actually dropped 3.8 per cent from January to an average of $231,530 in February. Compared with a year ago, they edged up 0.8 per cent.

Duplex and row-house prices fared better, rising 3.3 per cent to $315,390 in February from January.

Sales figures for February showed more dramatic monthly and yearly increases.

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Climate `misinformation` troubles builder

Alberta`s construction industry isn`t doing enough to counter misinformation about the oilsands and climate change spread by Al Gore and other environmentalists, the Cold Climate Construction Conference heard Tuesday.

Resource projects drive Alberta`s economy, and misinformation from "Al Gore and his cronies" doesn`t help, Clark Construction CEO Andy Clark said.

"As an industry we haven`t done a good enough job of standing up to this misinformation."

The construction industry is closely tied to major resource projects and "it`s something we all need to pay attention to," he said.

Clark noted that overzealous climatologists, using incorrect dates, concluded last fall was one of the warmest on record, when in fact it was one of the coldest in history.

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It`s all about the unconventional

Forget plastics as the future - it`s all about the unconventional - specifically, shale gas and oil sands. At least, that is the conclusion one should draw from all the activity happening in that space.

Earlier this week the Korean Gas Group announced a farm-in with EnCana involving the latter`s properties in the Horn River and Montney plays of northeast British Columbia. Last month saw Anadarko inking a deal with Mitsui & Co. to develop shale gas prospects in the Marcellus shale in northeast Pennsylvania.

On Tuesday morning there was word that BP is about to announce another joint venture involving shale gas in the U.S., this one with Lewis Energy. The company already has similar agreements involving similar assets with Chesapeake Energy - an energy player that has teamed up with a number of companies to develop its shale plays. BP is also exploring shale gas opportunities with Sinopec in China while Royal Dutch Shell has already signed a joint venture agreement with PetroChina to develop shale gas plays in southwest China.

On the oil sands side, the announcement by Athabasca Oil Sands Corp. that it is going ahead with a $750 million initial public offering - the size of which hasn`t been seen in the oil patch since the 1990s - is yet one more sign that the oil sands are going to play in important role in meeting the world`s energy needs; one need look no further than the fact that China now imports more oil from Saudi Arabia than the U.S. to understand how the sands are shifting.

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Stelmach`s Tories face gooey problem as more bitumen upgrading leaves Alberta

The amount of oilsands bitumen being upgraded in Alberta continues to sink -- leaving the government well short of its target -- with Syncrude the latest in a growing number of companies to cancel upgrader projects and send the lucrative product stateside.

Natural market drivers and a glut of oilsands processing capacity in the U.S. mean Premier Ed Stelmach is finding it difficult to hold to his three-year-old promise to upgrade more bitumen in Alberta.

Indeed, the continued loss of billions of investment dollars and thousands of jobs to the U.S. is leaving his Tory government in a predicament as sticky as the gooey product, with energy economists expecting the situation will only worsen.

Stelmach pledged during the Tory leadership race in fall 2006 to stem the oilsands giveaway to the U.S., making it a key plank in his platform and comparing it to "scraping off the topsoil" from prime farmland.

But the amount of the resource being upgraded in Alberta has steadily decreased over the past three years.

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CMHC forecasting boost to new, resale housing markets in Calgary

Canada Mortgage and Housing Corp. is forecasting increases in both the new home and resale housing markets this year and next year in Calgary and in Alberta.

In releasings its updated market forecast today, CMHC said the Calgary census metropolitan area will see total housing starts rise by 20.3 per cent this year to 7,600 units followed by a 21.1 per cent hike in 2011 to 9,200 units.

MLS sales in the Calgary area are expected to climb by 10.9 per cent to 27,400 this yearand another 3.3 per cent in 2011 to 28,500.

Average MLS sale price in the Calgary region is forecast to jump by 5.5 per cent this year to $407,000 and another 3.9 per cent next year to $423,000.

In the province, housing starts are forecast to increase by 20.7 per cent this year to 24,500 units and by 22 per cent in 2011 to 29,900.

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Wave of optimism sweeps the province

There is a growing sense of optimism in Alberta that last year`s recession is behind us.

And people in this province appear to be the most optimistic in the country when it comes to their personal financial situation.

The February RBC Canadian consumer outlook report released Monday said six in 10 Albertans believe their situation will improve over the next year, a significant increase from 47 per cent last month and compared with 45 per cent nationally.

The optimism is also evident in their short-term outlook, as 43 per cent expect their personal financial situation to improve over the next three months, up significantly from January`s 36 per cent, and compared with the national average of 30 per cent.

In Alberta, "we`re seeing stronger than expected capital spending that is allowing people to have more confidence," said Tasha Giroux, regional vice-president for Calgary east for the Royal Bank of Canada.

"I also think it`s fuelled by the fact that we`re seeing employment numbers

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Alberta braces for next labour squeeze

Evan Brewer could soon be the Alberta economy`s salvation – and its worst nightmare.

Near the end of the energy boom, the 24-year-old New Brunswicker worked as a journeyman welder in the oil sands , making close to $5,000 in a good week in Fort McMurray.

Then the bottom fell out of the market and he is back in Fredericton, picking up occasional work that pays $800 a week at best, and waiting for the next bonanza.

"The difference is unreal," says Mr. Brewer, who is taking courses to add pipefitting to his welding credentials. "There was good money in Alberta – and I`d go back."

He may get his chance.

The energy industry, particularly on the oil side, is rebounding, and there are concerns that, once again, there will be a burst of new projects and a shortage of tradespeople in the West. That could set off a labour bubble similar to the frenzied 2004-08 period, leading to sky-high wage costs and the mass importing of workers from outside Western Canada.

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Owners with children can defer property taxes

As announced in the throne speech last month, homeowners with children under 18 will be allowed to defer their property taxes, an option that people over 55 or in financial hardship already have.

Under the program, a homeowner can postpone paying property tax if he or she financially supports at least one child under the age of 18 and there is at least 15 per cent equity in the home. The owner must have lived in the province for at least a year before applying and must have fire insurance on the home

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Rig activity on the mend in Western Canada

CALGARY - Dire predictions of low drilling activity in Western Canada to start the year have faded, with rig utilization averaging a strong 60 per cent for January and February, according to an industry association.

Last fall, the Canadian Association of Oilwell Drilling Contractors had forecast a rather bleak 40 per cent utilization rate for the first quarter, traditionally the busiest time of the year for drilling.

But a surge in crude prices last year pushed up activity in the oilpatch and spilled into 2010. The number of active rigs peaked at the beginning of February at 520 out of 802 rigs, or 64.5 per cent, compared with a year prior, when rates were around 47 per cent.

"This is starting to look a lot more like a typical year," said association president Don Herring. "We can expect to go into breakup any time now, but it won`t be a premature break up like last year that came solely as a result of financial issues."

Poor prices and soft demand due to the recession pulled down drilling to decade-low levels in 2009. In addition to the continental and global factors pressuring activity in Alberta, new royalty rates were instituted that hit producers in already hurting pockets.

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Alberta cuts oil and gas royalties

EDMONTON - The Alberta government cut royalty rates for conventional oil and gas Thursday, making permanent some previous incentive programs and unravelling many of the changes introduced with great fanfare in 2007.

The new rules will cost Albertans at least $828 million over the next three years, but the government expects to make back roughly half that amount in increased land sales and corporate taxes.

Premier Ed Stelmach called energy development a partnership between Albertans who own the resources and companies that develop them on their behalf.

"The changes we`re announcing today will make that partnership even stronger," Stelmach said in Calgary, where the announcement took place.

Incentive programs launched last year offered companies a five-percent royalty rate for new natural gas and conventional oil wells for the first year of production. That will now become permanent.

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BP takes stake in oil sands project

BP PLC, the British oil and gas company that has been slowly rebuilding its stake in the oil sands after deserting northern Alberta two decades ago, Monday bought a chunk of an oil-sands development belonging to once-financially distressed Value Creation Inc.

BP is now the majority partner and operator of Value Creation`s Terre de Grace oil-sands lease, a 185,000-acre zone that is expected to morph into a steam-assisted gravity drainage project, the Calgary-based company said.

Financial terms of the deal were not disclosed, but Columba Yeung, Value Creation`s chief executive, said it "should be in that range" between $1-billion and $5-billion.

"It is certainly bigger than $1-billion," he said.

"BP will make a significant capital contribution that … will bring us all the way to commercialization [on the Terre de Grace property] and perhaps beyond," he said.

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Global natural gas glut sends price reeling as B.C. set to expand production

All of a sudden, there is so much natural gas available in North America that the International Energy Agency is speculating about an "acute" world-changing glut.

Prices are crashing, markets are shifting, and governments such as British Columbia that rely on gas royalty revenue are scrambling to keep the money coming in.

It is a textbook case of supply and demand, driven by technological innovation, and is expected to persist long beyond any presumed recovery of the global economy.

Whereas North American gas explorers traditionally drilled a single, vertical well into each shallow, conventional deposit in sandstone or limestone, they now drill as many as 20 horizontal offshoots from a single vertical drill into unconventional gas deposits two kilometres underground.

That innovation has eliminated the greatest obstacle — cost — to development of unconventional reserves such as gas locked into deposits of shale.

Jurisdictions such as Quebec are confronting for the first time the possibility that they have accessible gas reserves.

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Oil rises after OPEC says deman rising, U.S. pledges low rates

Crude oil rose for a second day after OPEC officials said demand is growing and U.S. Federal Reserve authorities repeated their pledge to keep the main interest rate near zero.

"OPEC says demand is increasing; this is positive for oil," Roland Stenzel, a crude and carbon trader at E&T Energie Handelsgesellschaft mbH, said from Vienna. "Low interest rates will keep the economy on track."

Crude for April delivery gained 76 cents, or 0.9 percent, to US$82.46 a barrel in electronic trading on the New York Mercantile Exchange as of 11 a.m. London time. Yesterday, the contract rose 2.4%, the biggest one-day gain since Feb. 16. Brent crude for May added 89 cents to US$81.42 a barrel on the ICE Futures Europe exchange in London.

The Organization of Petroleum Exporting Countries, meeting in Vienna, agreed for a fifth time since late 2008 to keep its production limits unchanged, according to Shokri Ghanem, chairman of Libya`s National Oil Corp.

Prices are "beautiful" and there`s no reason to revisit the group`s output limits, Saudi Arabian Oil Minister Ali al-Naimi said today before the start of the meeting. OPEC "should keep things as they are," he said. Demand may grow by "around 1 million barrels" a day in the second half of the year, he said.

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