March 2011 Alberta Economic Fundamentals

[Ally]

Alberta hopes higher oil prices will help offset costly hiccups





EDMONTON ` While surging oil prices will deliver a financial windfall to the petroleum-powered provincial treasury, a series of major production hiccups over the fiscal year is expected to cost the Alberta government at least $340 million.




An Enbridge pipeline rupture in Michigan last year caused a bitumen bottleneck that squeezed production volumes flowing out of Alberta to the U.S., the province`s top energy customer.




The Alberta government now estimates the Enbridge supply disruption will cost it a minimum of $300 million in lost royalties for the budget year ending in March, but the toll could be `significantly higher` by the time the 2010-11 numbers are finalized.




Read the full article here.

 

[Ally]

Analyts predict further drop in natural gas prices, exports





CALGARY - Natural gas prices could plunge to $2 per gigajoule by the fall as volumes get backed up into Alberta on rising U.S. production and stable demand, say analysts.




The sombre expectation would lead to companies shutting in volumes rather than producing at a loss as incremental supply from the United States pushes Canadian volumes back into Alberta.




"The million dollar question is what is the ultimate productivity of emerging and key resource and shale gas plays in North America," said Jeff Fetterly with CIBC World Markets. "And from a productivity standpoint, at what point do we reach the threshold where the decline in dry gas activity more than offsets the increase we're seeing in well productivity in North America."




Read the full article here.

 

[Ally]

Drilling activity hits five-year high in Western Canada





CALGARY - Oil and gas drilling activity in Western Canada rose to five-year highs in February as producers took advantage of frozen ground and hot prices to make up for a slow 2010.




The number of active rigs in Western Canada jumped to 74 per cent of an available fleet of 787 rigs last month, rising from 66 per cent in January, according to the Canadian Association of Oilwell Drilling Contractors Monday.




"We're running nice, strong numbers," said Nancy Malone, manager of economic analysis. "They were stronger than we had anticipated."




The association had predicted a 60 per cent rig utilization rate for the first three months of the year, typically the busiest season from oil and natural gas drilling.




Read the full article here.

 

[Ally]

Calgary council stopping short of major secondary suite changes





CALGARY - Secondary suites will remain outlawed in most Calgary residential districts until at least 2012, as a city council that has long wrestled with the issue debated some cautious steps towards legalizing the affordable-housing units throughout the city instead of embracing the change.




Mayor Naheed Nenshi had become the most ardent advocate for a quick and sweeping reform to encourage legal and safe suites Calgary-wide, but he lacked votes from aldermen, who`ve been long hit with warnings from suburban community associations that condoning suites would worsen neighbourhood life.




So he and council asked city officials to study the idea further until December, and are trying to eke out some minor progress on the file.




Read the full article here.

 

[Ally]

Calgary major secondary suites reform nixed




City council decided late Monday not to make any major changes to the way secondary suites are regulated in Calgary.




Aldermen rejected several proposals that would have loosened the rules across the city, including one that would have allowed suites to be built in areas close to LRT stations and post-secondary schools.




Instead council passed a motion making it easier for homeowners to add basement suites in parts of the city that are already zoned for it.




"I deliberately said, as did some of my colleagues, 'let's go for the touchdown.' Our council today decided they'd rather go for the first down," said Mayor Naheed Nenshi, who campaigned on the issue of legalizing the affordable-housing units and was pushing his colleagues to support sweeping changes to the current rules.





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[Ally]

A whole lot of gas




Energy market analytics firm Bentek Energy is calling for the possibility of NYMEX gas prices falling below $3.00/mcf by September. It presented its outlook at the Canadian Energy Research Institute`s 2011 natural gas conference in Calgary this past week.




According to their estimates, U.S. dry gas production has recently reached an all-time high of 60.2 bcf/d, which is 3.8 bcf/d over March 2010 levels. As reported in the Wall Street Journal citing EIA data, domestic production in 2010 posted its fifth consecutive increase and has reached its highest level since 1973.




In its more recent outlook the EIA is forecasting yet another increase, by 0.8% in 2011. Therefore in our view the nearer-term fundamentals for the commodity are not painting a very pretty picture.







That said, we`ve been hearing rumblings of some funds that have recently taken a contrarian view via increasing their natural gas exposure with some even going short/reducing their crude oil exposure. Perhaps they are buying into the `apparent` large gap in valuations between natural gas and oil-focused companies?





Read the full article here.

 

[Ally]

Calgary region new home prices rise slightly in January



CALGARY - New home prices in the Calgary census metropolitan area rose slightly in January, according to Statistics Canada.





The federal agency reported Wednesday that prices were up 0.3 per cent from December and up by 0.8 per cent from January 2010.





David Hooge, president of the Canadian Home Builders' Association-Calgary Region, said new home prices have remained stable here.





"We certainly haven't decreased," said Hooge. "We're expecting there to be some minor increases of perhaps 2.5 to three per cent increase over the year. Nothing outrageous for sure. It all depends on what sort of absorption we see and what kind of traction we see going through the spring. But at this point that's kind of what we're banking on."





Read the full article here.

 

[Ally]

February housing starts down 24% in Edmonton




EDMONTON - Home construction in Edmonton slipped in February compared to year-earlier levels for the fifth consecutive month.




Canada Mortgage and Housing Corp. said Tuesday there were 489 housing starts for the Edmonton census metropolitan area last month. That`s nearly 24 per cent off the pace of 642 started in February 2010.




Total housing starts in Edmonton are also down for the year to date, with 852 compared to 1,219 in the first two months last year.




Builders started 360 single-detached homes ` down 26 per cent from a year earlier. Year-to-date, the drop is even higher: from 881 to 565.



Read the full article here.

 

[Ally]

More study needed on Quebec shale-gas drilling: Commission





MONTREAL ` The question of shale-gas drilling in Quebec needs to be further studied, says a committee that spent the past six months looking into the industry.




The committee says the government should do a strategic environmental evaluation of shale-gas drilling. That`s the kind of long-term study that was done on oil and gas drilling in the lower St. Lawrence River, which led to a ban on drilling last fall. That type of study, overseen by an expert committee, can take one to two years to complete.




No hydraulic fracturing ` where a mixture of water, sand and chemicals is injected into the ground at high pressure ` should be allowed while the study is being carried out, unless it is for research purposes, said the four commissioners who prepared the report for the Bureau d`audiences publique sur l`environnement.





Read the full article here.

 

[Ally]

Alberta racks up biggest land sale of year





CALGARY - Alberta racked up its biggest land sale of the year on Wednesday, taking in more than $175 million from the sale of oil and gas and oilsands rights in the province.




According to the Energy Department website, the sale of 227,771 hectares of conventional oil and gas parcels brought in $159.54 million at an average price of $700 a hectare, while a separate sale of oilsands leases tacked on another $15.8 million.




Cavalier Land Ltd. placed the top bid of $35.9 million or $10,000 a hectare for a 3,300-hectare drilling licence near Fox Creek, which is the most expensive piece of oil and gas real estate sold thus far in 2011.




Read the full article here.

 

[Ally]

Calgary building permits up 13% in February from a year ago



CALGARY - The estimated construction value of building permit applications in February rose in the City of Calgary.





The City said Wednesday that applications came in at $215 million, up 13 per cent from February 2010 when it was $191 million.





But the level is still down 14 per cent compared with the five-year average of $251 million and down two per cent compared with the 10-year average of $219 million.





"Building permits for the month of February were fairly typical," said David Watson, general manager of planning, development and assessment for the city, in a news release. "While there are signs of a number of new projects in discussions, they have not yet translated to building permits."





Read the full article here.

 

[Ally]

Governments say soaring loonie cancels royalty gains on high-price oil




Soaring global oil prices are boosting government revenues beyond expectations in both Saskatchewan and Alberta but residents will see only a small benefit, highlighting once again the negative economic impact of a strong Canadian dollar.




Quarterly updates show both provinces are reaping windfalls as oil hovers above $100 per barrel, but the surpluses are being chewed up by the similarly high Canadian dollar. The dollar tends to rise with oil, and its strength hurts both provinces` exports.



Read the full article here.

 

[Ally]

Woe betide world's oil users is Saudis aren't talking true



Libya really doesn`t matter in the oil markets. It`s all about Saudi Arabia and whether its touted ability to replace lost production is genuine or fake. If genuine, oil prices will stabilize, perhaps fall, in spite of the Libyan civil war and protests elsewhere in the Arab world; if fake, $200 (U.S.) a barrel oil or higher is a distinct possibility.





Libya is the world`s 13th-largest oil producer, making it a relative pipsqueak. It normally exports about 1.4 million barrels a day, accounting for 2 per cent of the market. Half to two-thirds of those exports vanished as Libyan rebels and forces loyal to Moammar Gadhafi battled for control of cities, ports and oil fields. Oil prices shot up. Brent (North Sea) crude reached $120 a barrel in late February, though the fear factor, not the lost production, was probably the real price driver. Note that the regime change in Egypt, a country that imports more oil than it produces, was enough to propel prices before the Libyan uprising took hold.





Prices have since declined to about $114 a barrel because of assurances from the OPEC countries, led by Saudi Arabia, that they have ample wiggle room. While reports vary considerably, it is said the Saudis have about 3.5 million barrels a day of spare capacity ` more than enough to make up for any lost production in Libya and its North African neighbours. Saudi Arabia says the spare capacity figure is accurate and has promised to pump another 700,000 barrels a day.





Read the full article here.

 

[Ally]

13 Fascinating charts about oil





Can't get enough oil?



No worries. We've got you covered.




Austria's Erste Group has published a big "special report" on the oil industry, complete with some long-term charts about the state of the market.




Let's just jump right in.





Read the full article here.

 

[Ally]

Alberta economy set for solid growth in 2011: RBC report





CALGARY - Alberta's economy will grow by 4.3 per cent this year - the best since 2006 - elevating the province to a top-three status among provinces for real GDP growth, says a report by RBC Economics




This comes from after a 3.3 per cent economic gain in 2010 following a 4.5 per cent decline in 2009.




The latest Provincial Outlook report also forecast growth of 3.8 per cent for the province in 2012.




Read the full article here.

 

[Ally]

Alberta registers best employment gain in country





CALGARY - Alberta was the only province to register a notable employment gain in February, signalling it is back as a "job creating machine."




Statistics Canada reported Friday that 13,700 new jobs were created in Alberta in the month as the unemployment rate dropped to 5.7 per cent from 5.9 per cent in January - its lowest level since February 2009.




It was the second consecutive month that employment increased in Alberta. In January, 21,600 new jobs were created, the largest employment gain since 2006 in the province.




Read the full article here.

 

[Ally]

High oil prices today much different than 2008




With crude prices retreating slightly after hitting 29-month highs last week, volatility remains an ongoing story for oil. But looking at oil`s technicals suggests the recent price surge doesn`t really have legs .




Prices for WTI crude have recently settled to one-week lows of $102.73, after touching a high of $106 on the back of the conflict in Libya. But a report from National Bank Financial said oil`s technicals today present a much different picture than in 2008, when prices skyrocketed to $137 a barrel.




`Obviously, it is still above its current fundamental value,` said Yanick Desnoyers, assistant chief economist at National Bank Financial, in the report. `That said, history shows that pure risk premiums can reverse themselves quickly.`





Read the full article here.

 

[Ally]

Rosy year predicted for Alberta economy




EDMONTON - Jobs will return to Alberta in 2011, helping propel the provincial economy to among Canada`s top three, says a report released Friday by RBC Economics.




Alberta`s real GDP will grow by 4.3 per cent in 2011, compared to last year`s 3.3-per-cent growth and a 4.5-per-cent decline in 2009. It would be the fastest growth since 2006.




The report said Alberta`s job market will benefit from ramping up of capital investment in oilsands developments. This will be driven by higher global energy demand from China and other emerging economies and disruptions in crude oil supply in the Middle East.




`We expect employment creation to gain traction in Alberta and this will be an important piece of the provincial growth puzzle that was missing last year,` said Craig Wright, RBC senior vice-president and chief economist.



Read the full article here.

 

[Ally]

Alberta bests country's employment gains




EDMONTON - Alberta created 13,700 new jobs in February and was the only province to post a notable employment gain.




Statistics Canada said Friday Alberta`s unemployment rate dropped to 5.7 per cent from 5.9 per cent in January.




The job gains in February follow a January where 21,600 new jobs were created. That was the largest employment gain since 2006 in the province.




Compared to the same month last year, employment in Alberta is up by 68,300 jobs, or 3.4 per cent. Nationally, employment is up 1.9 per cent year-over-year.





Read the full article here.

 

[Ally]

Safe supply in a perilous oil world




It has taken war in the Middle East to turn the tide of negative public opinion on the oil sands. After four years of beatings from the environmental movement that severely damaged Canada's international reputation, the oil sands are re-emerging as a secure source of energy in a risky oil world.




New imagery helped a lot. The pileups of bodies in the evening news, victims of Middle East despots firing at their own people to protect their oil wealth, make the tar pits in northern Alberta look like responsible oil in comparison.




Signs that Joe Q. Public is good with the oil sands are emerging everywhere.





Read the full article here.