November 2009

[Ally]

Calgary`s Building Permits hit $532M in October; Double `08 Levels

CALGARY - The estimated construction value of building permit applications for October hit $532 million, according to the City of Calgary.

In data released today, the city said this is more than double compared with October 2008 ($248 million), up 19 per cent compared to the five-year average (October 2005-2009; $449 million) and up 64 per cent compared to the 10-year average (October 2000 to 2009; $325 million).

Residential values rose by 123 per cent to $164 million, led by $131 million in new single-family construction, representing 525 new residential dwelling units.

Non-residential values for the month were also up by 111 per cent to $367 million, led by $283 million in new institutional spending including the new $117.6 million Bow Valley College South Campus, the new $104.7 million SAIT Trades & Technology complex (Centre Wing) and the new $61.1 million SAIT Trades & Technology complex (West Wing).

Year-to-date, total permit values are still down 14 per cent to $2.9 billion compared with $3.4 billion in 2008.

Read the full article here.

 

[Ally]

Oilsands revival in the Cards

CALGARY - Canada`s once booming oilsands industry has been hit hard by the global financial crisis, but could yet stage a comeback, if it can overcome key economic and environmental challenges, according to a new report by the International Energy Agency.

The Paris-based energy think-tank on Tuesday released its 2009 World Energy Outlook, which identifies Canada as "one of the few growth areas" among non-OPEC countries.

"Providing that current challenges can be overcome, Canadian oilsands have the potential to make a significantly greater contribution to global energy security for decades ahead by increasing the diversity of supply," the report said.

"However, as an industry whose profitability currently relies on oil prices of $75 to $80 US per barrel, the outlook for oilsands in the medium term is less certain."

Canada`s oilsands warrant a full page in the 698-page tome, illustrating the potential contribution to global oil supplies. But the exhaustive report also notes the oilsands sector faces enormous technical, economic and environmental hurdles in the wake of the global financial crisis and attempts to limit greenhouse gas emissions.

Read the full article here.

 

[Ally]

Edmonton Building a Recovery

EDMONTON — October housing starts in the Edmonton region were up nearly 55 per cent over the same time last year, according to figures released Monday by Canada Mortgage and Housing Corp.

It`s the fourth consecutive month that total housing starts have surpassed year-earlier levels.

Housing starts in the Edmonton census metropolitan area totalled 947 homes, up from 612 in October 2008.

Despite the recent turnaround in Edmonton-area new housing activity, the 4,567 starts to date this year still trail construction reported in the first 10 months of 2008 by 24 per cent.

For single-detached homes, it was the best October performance since 2006. Builders poured foundations for 598 homes in October--up 168 per cent from a year earlier.

Read the full article here.

 

[Ally]

EnCana earmarks $2.3B for Oilsands

Canada`s newest energy companies plan to spend about $6 billion next year after EnCana Corp. splits into two pure-play oil and natural gas companies later this month.

Cenovus Energy will spend up to $2.3 billion to increase oilsands production and build refining capacity, while the "new" EnCana will shell out $3.9 billion to boost natural gas output.

Cenovus will focus on heavy oil assets at Foster Creek and Christina Lake in Alberta, while EnCana will move ahead with shale gas at Horn River in B.C. and Haynesville in the U.S. Deep South, and developing a "small entry position" in the Marcellus shale area of Pennsylvania.

The combined spending of the two companies is on par with the $5.8 billion EnCana expects to spend as a stand-alone unit in 2009. EnCana shareholders will vote to consider the split at a special meeting on Nov. 25 and the deal is expected to close Nov. 30, pending all required approvals.

"Both companies will continue to demonstrate what we believe to be industry-leading performance in the development of unconventional natural gas and enhanced oil resource plays," EnCana CEO Randy Eresman told a conference call to discuss the combined company`s lower financial results.

Read the full article here.

 

[Ally]

EnCana plans $6B Spree

CALGARY - Canada`s newest energy companies plan to spend a combined $6 billion next year, after EnCana Corp. splits into two pure play oil and natural gas companies later this month, the heads of each respective firm said Thursday.

Cenovus Energy will spend up to $2.3 billion to increase oilsands production and build refining capacity, while the "new" EnCana will shell out $3.9 billion to rebuild its natural gas output to 3.3 billion cubic feet per day from a pre-split high of about 3.7 billion cubic feet per day.

Cenovus will focus on heavy oil assets at Foster Creek and Christina Lake, while EnCana will move ahead with shale gas at Horn River, Haynesville and developing a "small entry position" in the Marcellus shale area of Pennsylvania.

The combined spending of the two companies is on par with the $5.8 billion EnCana expects to spend as a standalone unit in 2009. EnCana shareholders will vote to consider the split at a special meeting on Nov. 25 and the deal is expected to close Nov. 30, pending all required approvals.

"Both companies will continue to demonstrate what we believe to be industry leading performance in the development of unconventional natural gas and enhanced oil resource plays," EnCana CEO Randy Eresman told a conference call to discuss the combined company`s lower financial results. "Each company will build its future on very strong foundations."

Read the full article here.

 

[Ally]

Alberta in luck as losers prosper in `10: Report

Canadian provinces suffering the most from the recession will see the best economic growth next year, says a report released Thursday.

The Conference Board of Canada said provinces such as Alberta, British Columbia, Saskatchewan and Ontario, which suffered among the biggest contractions this year, will post the largest gains in 2010.

Alberta, which is expected to see its economy decline 2.6 per cent this year, should grow three per cent in 2010, thanks largely to higher oil prices encouraging more development in the oilsands.

Quebec--where a relatively modest economic decline is expected this year--along with Manitoba, New Brunswick, Nova Scotia and Prince Edward Island -- all expected to exit 2009 with no net loss in gross domestic product--will grow more modestly than other provinces next year, though they will perform better than this year.

Newfoundland and Labrador is in a category of its own. It`s expected to post the biggest GDP decline this year, at 3.6 per cent, and is the only provincial economy forecast by the Conference Board to contract in 2010--by 0.5 per cent. The board said the province was hurt by declines in forestry, mining and manufacturing this year, and offshore oil drilling is expected to remain depressed.

Read the full article here.

 

[Ally]

Total Upgrader hearing gives hope to `Heartland`

With most bitumen upgrader projects on the shelf -- or in one case bankrupt--the notice of public hearings for French oil giant Total`s project near Fort Saskatchewan is being called "a sliver of hope" for Alberta`s so-called "industrial heartland."

The Energy Resources Conservation Board has set Feb. 24 for the start of hearings on the 150,000-barrel-per-day facility, which would double in a second phase.

An ERCB decision could take several months, but a final green light from Total won`t come until after the 200,000 bpd Joslyn mine project also wins corporate approval, possibly in late 2011. The mine and upgrader are an integrated project.

"Our bet is on the long-term. This upgrader will be operating for 30 or 40 years," said Jean-Michel Gires, president of Total E&P Canada.

"We have a commitment to the oilsands, and our one refinery in Texas is not being targeted as an outlet for our Canadian bitumen," he said.

Read the full article here.

 

[Ally]

Edmonton leads Country in House Price drop

CALGARY - Calgary experienced the third highest year-over-year decline in new house prices in September, according to Statistics Canada.

The federal agency reported today that Edmonton led all major Canadian cities with an 11.4 per cent decrease from September 2008 to September 2009, followed by Victoria at 10.4 per cent and Calgary and Vancouver at 6.4 per cent drops.

Statistics Canada`s New Housing Price Index said prices fell by 2.7 per cent on a national level.

However, contractors` selling prices rose 0.5 per cent across Canada in September from the previous month - the largest month-over-month increase since January 2008 at 0.6 per cent.

Between August and September, prices increased the most in Vancouver at 1.4 per cent, followed by Ottawa–Gatineau (1.0 per cent), Calgary (0.6 per cent), Toronto and Oshawa (0.5 per cent) as well as Saskatoon (0.5 per cent).

Read the full article here.

 

[Ally]

Slower growth, higher taxes: Meet the `new normal`

A number of reports are providing a mosaic of what our lifestyle and investment landscape will be like during the next 10 years. After decades of partying, we`re in for a sombre period of reduced expectations.

In the year 2020, we will have a single securities regulator in Canada, with a less-centralized population that will often work past age 65. In the decade in between, we will face increased taxation plus growing costs of education, health care and public services, combined with minimal salary increases, the need to adapt to new jobs in new locations, and a reduction in social benefits.

In recent months there has been growing mention of a "new normal," namely reduced economic growth in North America and many other parts of the world.

Back in October, Peter Buchanan of CIBC World Markets said that nominal gross domestic product growth of seven per cent annually in the United States during the past 50 years will shrink to four or five per cent. More recently, TD Bank predicted what has been called "the lost decade," with GDP growth in Canada averaging two per cent annually the next 10 years, as government stimulus expires, the population ages and productivity dwindles.

It warns that growth could fall even more if governments adopt climate control changes.

Read the full article here.

 

[Ally]

Suncor reignites Firebag 3

EDMONTON — With its decision Friday to unfreeze one of its half-built projects, Suncor Energy said it has "officially restarted growth in the oilsands."

The firm will take its Firebag 3 in situ expansion off the shelf, spending $900 million this year and creating up to 3,000 construction jobs, with many likely filled by workers at Shell`s Muskeg River expansion, which is nearing completion.

That`s a far cry from 2008, when Suncor expected to spend between $6 billion and$10 billion on growth plans that included in situ projects, an upgrader and a new mine--part of its $20.6-billion Voyageur expansion project.

"In this next round of projects, we want to avoid creating a firestorm of inflation. I expect the industry to be more mature," Suncor CEO Rick George said in a webcast to investment analysts.

Of Suncor`s $5.5-billion capital budget for 2010, $4 billion was allotted to non-growth areas like maintenance and tailings reduction operations.

Rea the full article here.

 

[Ally]

Keyera lands deal to supply Kearl

EDMONTON - Imperial Oil`s $8-billion Kearl oilsands project has generated a long-term deal for Keyera Facilities Income Fund to provide diluent transportation, storage and loading services in the Edmonton area.

Keyera will transport diluent, a light hydrocarbon that is mixed with thick bitumen so it can be shipped by pipeline to upgraders, from supply sources in the Edmonton area to a delivery pipeline north of Fort Saskatchewan for pumping to the Fort McMurray-area oilsands project, Keyera said in a news release.

Read the full article here.

 

[Ally]

Worst seems over for Oilsands

Between the capital markets being wide open, deals being done and more than $11 billion in capital expenditures announced for the oilpatch in the last couple of days, it`s starting to look like the worst of the downturn is over.

Some months back, former vice-chairman of Peters & Co., Wilf Gobert said that the fact Suncor had decided to put its Firebag project on hold was effectively the canary in the coal mine for the oilsands business. If Suncor couldn`t make the numbers work, said Gobert at breakfast hosted by Calgary Economic Development, no one could.

Today, with Suncor announcing it is re-starting activity on projects that were shelved suggests the oilsands world is at an inflection point in the cycle, and poised for an uptick.

That`s not say the coming year won`t have its challenges, especially given the natural gas glut, but the fact companies are raising money and not afraid to spend it, shows two important facts.

One, a measure of confidence is returning to the energy sector. Despite the still significant crude oil inventories, along with the fact that the Organization of Petroleum Exporting Countries has been gradually increasing its output, the futures curve for crude is still showing prices of $100 US per barrel a few years out.

Read the full article here.

 

[Ally]

Video: A few Minutes with T. Boone Pickens

Philanthropist and oilman T. Boone Pickens dropped by for a visit with the Herald editorial board this week and showed he`s the kind of friend Alberta`s oilsands needs in the U.S. Although a patriotic proponent of using U.S. domestic supplies, any increase in demand for natural gas would hugely benefit Alberta, especially if Pickens`prediction proves true that the commodity will rise to $6 US by next year. Here are a few of Pickens thoughts.

See the video here.

 

[Ally]

Calgary`s Suburban Office Space headed for a squeeze

Calgary`s suburban office market is providing a contrast to its downtown counterpart, which is seeing the vacancy rate continuing to rise and headed for the range of 20 per cent in the next couple of years.

But Chris Law, vice-president and partner with Colliers International in Calgary, said the overall suburban vacancy rate in the third quarter of this year "has essentially peaked."

A report by Colliers shows the vacancy rate in the suburban market, excluding the Beltline, was 11.54 per cent, with a total inventory of just over 17.2 million square feet as of Sept. 30. The vacancy rate increased from 11.0 per cent at the end of June.

"Nearly 4.5 million square feet of new buildings are now complete in the suburbs, with about 500,000 square feet left to complete," said Law.

"With little new development expected for the next few years and limited chance of any major downsizing in suburban tenancies going forward, available options for suburban tenants will diminish going forward."

Read the full article here.

 

[Ally]

TransCanada to hike Gas Pipeline tolls

TransCanada Corp. , the country`s largest pipeline company, said Tuesday it expects to increase tolls sharply next year on its main natural gas system from Western Canada. The company said it needs to boost the tolls paid by shippers on its mainline system to compensate for a shortfall in expected revenue in 2009 brought about by declining supplies and shipments from Western Canada`s gas fields.

Read the full article here.

 

[Ally]

Opportunity emerges in Natural Gas

Another buying opportunity has emerged for natural gas investors as recent price weakness is inconsistent with much improved industry fundamentals. Following a strong rebound from their September lows, natural gas prices have given back a significant chunk of these gains recently.

While this retreat is legitimate, it represents a decoupling from fundamentals as U.S. natural gas demand is growing again and supply now contracting on a year-over-year basis, according to Dundee Securies portfolio strategist Martin Roberge.

"Historically, this dynamic has been optimal for natural gas price appreciation," he told clients. "Resilient gas-related equities corroborate our view that the current weakness in natgas pits may only be transitory and/or a seasonal issue."

Read the full article here.

 

[Ally]

Heating Bill break for Albertans

CALGARY - The province has ordered some landlords to stop charging renters separately for heat because the measuring technology they`re using hasn`t passed federal accuracy tests.

"Renters deserve to have the confidence to know that they are paying for the right amount of energy," Service Alberta Minister Heather Klimchuk said Wednesday as she introduced new rules banning uncertified heat sub-meters.

Since the technology appeared in Alberta about two years ago, about 3,000 heat sub-meters have been installed -- affecting nearly one per cent of the province`s 330,000 rental units.

The meters allow landlords to charge separately for heat, a cost previously included in a tenant`s monthly rental fee. But the new device sparked about 200 complaints to the province, many from renters contending their heating bills were excessively high.

A Service Alberta probe confirmed that none of the heat sub-meters used in Alberta has been certified by Measurement Canada, a federal agency responsible for ensuring the accuracy of marketplace counting tools.

Read the full article here.

 

[Ally]

Calgary`s Cost of Living starts inching back up

CALGARY - It comes as no surprise to Leonie Snell that the cost of living in Calgary has risen compared with what it was a year ago.

The massage therapist was reminded of that the other day when she went shopping.

"I couldn`t believe how much the prices went up," said Snell on Wednesday morning on her way to work in downtown Calgary. "Yeah, they`ve gone up a lot in groceries. Everything.

"Meat. Cheese. Bread."

Statistics Canada confirmed that reality on Wednesday when it reported that consumer prices in the city rose by 0.1 per cent last month on a year-over-year basis following a 1.2 per cent decline in September.

Read the full article here.

 

[Ally]

Albertans contribute more to RRSPs than other Canadians

CALGARY - Albertans are contributing more to their RRSP`s than the average Canadian.

According to Government of Canada statistics on tax filers, the median RRSP contribution by Albertans in 2008 was $3,210, a gain of $10 from 2007. By comparison, the median Canadian contribution in 2008 was $2,700, down $80 from the previous year.

Economist Dan Sumner, with ATB Financial in Calgary, said that since 2002 the median Albertan RRSP contribution has grown every year and as of 2008 was 18.9 per cent higher than in 2002. In Canada, the median contribution grew every year except in 2008 and grew by a slower eight per cent rate during that period.

Read the full article here.

 

[Ally]

Strong Numbers in Calgary boost Oct. MLS Sales to Record highs in Canada

CALGARY - MLS sales activity in October reached record levels in Canada for the month, buoyed by strong residential real estate markets in Western Canada, particularly Vancouver, Victoria and Calgary.

The numbers last month compared with a year ago are simply staggering. Greater Vancouver led the country with a whopping 170.8 per cent hike in MLS sales, followed by Victoria at 135 per cent, Toronto at 64.2 per cent and Calgary at 55.9 per cent.

"A dramatic rebound in sales activity compared to the recent low rate at the beginning of the year," said Gregory Klump, chief economist for the Canadian Real Estate Association, of the Calgary real estate market.

"Trendwise, we`re still continuing to see new listings down from their peak reached in early 2008. So the market`s tightened up considerably. In fact, using sales to new listings as a gauge for market balance, Calgary appears to be in a seller`s market territory."

In October, Calgary had 2,265 MLS sales for an average sale price of $399,679, which includes single-family homes and condos. The price is up 2.9 per cent from a year ago. Total dollar volume for transactions in the month was just under $905.3 million for a 60.3 per cent hike from a year ago. And new listings were down by 21.9 per cent to 3,343.

Read the full article here.