November 2010 Alberta Economic Fundamentals

[Ally]

Energy sector bolsters `solid` Alberta GDP forecast

OTTAWA - A rebounding energy sector will deliver solid — but slower — economic growth in Alberta next year, the Conference Board of Canada said Tuesday.

The provincial real GDP is forecast to expand by a "solid" 2.8 per cent, down modestly from the rate of growth in 2010.

"Bolstered by a swift rebound in oil drilling and a turnaround in the domestic economy, Alberta`s real GDP is expected to grow by 3.6 per cent in 2010," the board said.

Next year, "the energy industry will keep the goods-producing sector growing at a quick enough pace to offset another year of modest performance among services industries."

Nationally, ebbing strength in Canada`s domestic economy will curb growth in all but Saskatchewan and Manitoba in 2011, the board warned.

Read the full article here.

 

[Ally]

Alberta`s royalty cuts cost billions: Report

CALGARY - The oil and gas industry in Alberta is paying even less in royalties now than it did during the decade ending in 2008 -- and it underpaid by $121 billion in that period, charges the Parkland Institute in a new report.

But Alberta`s energy minister and a spokesman for the Canadian Association of Petroleum Producers both said rig utilization rates and drilling rights sales show the province did the right thing when it trimmed royalties over the past 18 months to maintain industry health.

"Albertans have seen a stream of royalty cuts that range into the many billions of dollars," said study author Regan Boychuk, who became the Calgary research manager for the University of Albertabased think-tank in June, at a news conference in Calgary on Thursday. "There`s good reason to believe that those cuts have brought us back below the level we were before the last royalty review."

Rates were raised in January 2009, but following howls of protest from industry, a series of incentives was introduced.

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[Ally]

Calgary house prices decline, according to report

CALGARY - Calgary house prices fell for a second consecutive month in September in a survey of properties that have sold more than once.

The Teranet-National Bank House Price Index, which is estimated by tracking observed or registered home prices over time using data collected from public land registries, said today that Calgary prices declined by 2.2 per cent on a monthly basis. All dwellings sold at least twice are tracked in the index.

Canadian home prices in September were down 1.1 per cent from the previous month. The national monthly decline ended a string of 16 consecutive increases in the composite index since the last monthly deflation in April 2009.

For the first time since February 2009, prices fell in all six of the metropolitan markets surveyed. The declines were 2.4 per cent in Halifax, 2.2 per cent in Calgary, 1.6 per cent in Toronto, 0.5 per cent in Ottawa and 0.3 per cent in Montreal and Vancouver.

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[Ally]

Improving economy boosts office leasing activity in Calgary

CALGARY - Absorption in the Calgary office market was positive for the third consecutive quarter, according to a report by Barclay Street Real Estate Ltd.

And over the past seven to eight years, a healthy city commercial real estate leasing market has been able to keep up with the millions of square feet in inventory added during the latest construction boom cycle.

The commercial real estate firm said the change in occupied space reached 654,100 square feet in the third quarter of this year and overall citywide annual absorption was a positive 1.72 million square feet.

In 2009, year-to-date absorption for the same period was negative 2.6 million square feet.

"The absorption is a result of three different factors: favourable lease costs which are significantly lower than the peak of 2008 are enticing tenants to expand; higher oil prices and favourable drilling incentives from the Alberta government are stimulating the economy as a whole; and many tenants are adding employees that were let go in 2009 as a reaction to the world economic recession," said Dan Harmsen, vice-president and associate broker for Barclay Street Real Estate.

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[Ally]

Calgary resale housing market expecting price growth

CALGARY - The Conference Board of Canada says Calgary`s resale housing market can expect short-term year-over-year price growth at between five and seven per cent.

The board, in releasing its monthly Metro Resale Index today, said Calgary is in a balanced housing market.

The average MLS sale price in the city in October, combining all residential properties, was $392,733.

That was down from $399,101 in September and from $399,550 in October 2009.

Robin Wiebe, senior economist with the conference board, said sales to new listings ratio is down in Calgary which is affecting prices.

Read the full article here.

 

[Ally]

Gas gaining on oil, summit told

He isn`t predicting the end of oil, but ARC Financial Corp.`s chief energy economist says things are likely to change dramatically within five years as natural gas becomes a global commodity.

In Peter Tertzakian`s view of the big picture, oil prices will rise -- perhaps to $100 a barrel for a short period -- but that level won`t be sustainable as nations turn from oil to natural gas and embrace new efficient technologies on a massive scale.

"We have to begin to think about how we are going to manage the ups and downs and the switch from oil to gas," Tertzakian told the Energy Services Summit on Thursday.

Today the industry is focused on the price of oil, but soon the more important question will be the cost of production, and Alberta is not an inexpensive producer, he said.

Oil demand in Europe and the U.S. has fallen in the past few years, while the market is being pushed up by rising demand from emerging nations -- with 40 per cent of that coming from China.

Read the full article here.

 

[Ally]

Calgary city council hints bills will rise less than 5.5%

Calgarians should brace for a 2011 city property-tax hike of about five or 5.5 per cent, along with an intense council debate about snow removal, transit and other services to allow for that smaller-than-proposed increase.

Most aldermen are comfortably predicting next week`s budget debate will help deliver a hike below the 6.7 per cent mark (or $79 on the average homeowner`s annual bill) approved under former mayor Dave Bronconnier.

But how much lower?

"It depends on where you think `much` is," said Ald. Gael MacLeod.

Many of her colleagues had mused earlier about a tax hike at or below the civic inflation rate of four per cent.

Read the full article here.

 

[Ally]

The world`s most ethical oil

Last week, I had the opportunity to visit Fort McMurray`s oilsands with my Wildrose Caucus colleagues. It was truly an amazing site to behold. Not only are these multi-billion dollar projects impressive in their size and scope, just as amazing if not more so, are the lengths to which our industry is going to restore the land to its original use after mining operations are complete.

I saw dozens of wood buffalo stampeding across miles of restored grasslands that were once massive craters hundreds of feet deep only a few years earlier. I learned about the billions in investments being made in environmental research and technology, and the incredible advances that are underway to reduce water usage, tailings ponds and emissions.

To see this kind of world class development in Alberta being conducted by Albertans and Canadians left me feeling incredibly proud and hopeful for our children`s future. I don`t think Canadians, and even Albertans, realize the incredible amount of good that will flow from the riches of our northern oilsands. Think of the billions of dollars in royalties that will be used to build our health and education systems; the hundreds of new environmental and industrial technologies that will be used to reduce pollution and environmental impacts around the world; and the trillions of dollars of earnings to be enjoyed by hundreds of thousands of Canadians and their families.

There are, of course, many detractors. Most of whom are generally ignorant of the facts, or worse, knowingly ignore the facts in pursuit of an extremist ideological agenda intent on shutting down the oilsands entirely regardless of the economic devastation it would cause our province and country.

Read the full article here.

 

[Ally]

China`s billions ready to pour into oilpatch, energy forum told

LAKE LOUISE — Billions of dollars of Chinese investment are poised to be invested in the Canadian energy sector as it plays catch-up with the rest of the world, a business forum heard Friday.

"Chinese companies are coming out and they are looking for investment overseas," said Jiang Shan, minister counsellor of commercial affairs for the Chinese Embassy, speaking at the Bennett Jones Lake Louise World Cup Business Forum.

"I think sound and stable political relations will facilitate China`s investment in Canada. I`m very glad to see we are maintaining very good momentum of political relations. This is important."

Wenran Jiang, a researcher with the China Institute at the University of Alberta, said Canada has had some large Chinese investments recently but nothing like the billions that have flowed into countries such as Russia, Australia and Brazil.

"The momentum is picking up," he said, noting recent investments in Syncrude Canada and Penn West Energy Trust as examples.

Read the full article here.

 

[Ally]

Upgrader OK likely in `weeks`

EDMONTON - Approval of the first phase of North West Upgrading`s project near Fort Saskatchewan is just weeks away with the firm "shovel ready" to begin work almost immediately, the project director told the Energy Services Summit on Friday.

"We`re looking to start work in the new year on this full-conversion refinery complex," Guy St. Pierre said. "The site is ready and we have all our approvals, so we could start work tomorrow."

North West, a private startup firm run by a group of oilpatch veterans, has already purchased its equipment, including six heavy-walled reactors now sitting in Duluth, Minn.

The project was halted when oil prices collapsed in 2008. Each phase of the planned three-phase project is estimated to cost about $5 billion and create up to 8,000 jobs in construction, equipment supply and manufacturing.

"The first six months of 2011 will be extremely busy. We need to finalize our supplier agreements and award all of our contracts," St. Pierre said.

Read the full article here.

 

[Ally]

Doubts cast on feasibility of West Coast pipelines

Some of Canada`s top oil-industry players are casting doubt on the possibility that substantial volumes of Alberta crude will one day flow to the Canadian West Coast for delivery to Asian markets.

Opposition from First Nations groups – as well as regulatory issues that are increasingly hurting Canadian industrial projects – have already dealt a near-fatal blow to the Mackenzie Valley gas project, and may block development of a Pacific export market for some time, former TransCanada Corp. (TRP-T36.35-0.04-0.11%) chief executive officer Hal Kvisle said Friday.

Both Enbridge (ENB-T56.65-0.25-0.44%) with its $5.5-billion Northern Gateway project, and Kinder Morgan (KMP-N69.78-0.26-0.36%) with plans to expand an existing West Coast pipeline called Trans Mountain, are working to give oil sands companies access to refineries in China and Asia. Enbridge has calculated that Asian exports could be more profitable than exports to the U.S., and has spent $250-million, including $100-million sourced in part from Asian refineries, to develop a project it says can be built safely and with substantial local benefits.

Read the full article here.