November 2010 Alberta Economic Fundamentals

[Ally]

OPEC boosts 2011 growth forecast

World demand for OPEC’s oil will be higher than expected next year as economic growth accelerates, the producer group said on Thursday.

The Organization of the Petroleum Exporting Countries raised its estimate of global oil demand growth for 2011 by 120,000 barrels per day (bpd) and now expected an increase of 1.17 million bpd in global consumption in 2011 over 2010.

It raised its forecast of world oil demand next year by about 310,000 bpd to 86.95 million bpd, and raised its estimate of consumption this year by around 190,000 bpd to 85.78 million bpd.

“Consumption in the OECD has outpaced expectations as a result of the stronger-than-expected economic activities, supported by various stimulus plans,” OPEC said in its Monthly Oil Market Report, which is written by economists at the group’s Vienna headquarters.

Read the full article here.

 

[Ally]

Gaining Ground in the Sands 2011

Read Deloitte`s latest report on the top 10 issues facing the oil sands sector.

Read the full report here.

 

[Ally]

Edmonton: 104th Ave. takes the high road

EDMONTON - Stewart Gillespie knew he didn`t want to see another big-box strip mall on 104th Avenue when he took over the former Crosstown Motors car lot.

But it took a few years to figure out a "one-of-a-kind" design that would work on the 6.5-acre site at 104th Avenue and 120th Street.

Next door, to the east, sits Oliver Square, where massive parking lots stretch right out to the avenue and big box stores with oversized signs announce suburban, car-friendly shopping.

Gillespie went in the opposite direction on his site -- store fronts right out to the avenue, sidewalks inside the site, and trees and benches around a collection of half a dozen separate buildings. Cars are mostly banished to the back of the site. The office and retail space, in an intriguing classical style, is designed for upscale, unique retail.

Read the full article here.

 

[Ally]

Calgary multi-family starts soar

CALGARY - Multi-family starts in the Calgary census metropolitan area soared in October to a level more than 90 per cent higher than a year ago.

According to data released today by Canada Mortgage and Housing Corp., there were 438 multi-family units that began construction last month, up from 230 units in October 2009.

However, the CMHC also said single-detached units dropped by 31.1 per cent in the month to 346 starts compared with 502 a year ago.

Total starts were up 7.1 per cent in the region to 784 units.

"Single-detached construction continued to moderate as a result of heightened competition from the resale market and slowing sales," said Richard Cho, senior market analyst in Calgary for the CMHC. "This represents the third consecutive month where starts have declined on a year-over-year basis."

He said new home construction in the single-detached sector will remain modest for the rest of the year and into the early part of next year until active listings in the resale market diminish.

Read the full article here.

 

[Ally]

Alberta house prices, sales to drop next year

CALGARY - The Canadian Real Estate Association is forecasting house prices and sales will fall next year in Alberta.

In a revised forecast released today, the national association of realtors, predicted total sales in the province will decline by 5.6 per cent in 2011 to 46,550 transactions. This comes after a 14.3 per cent decline in sales predicted for this year.

CREA also projects the average MLS sale price in 2011 to fall by 0.3 per cent in Alberta to $349,100 following a 2.6 per cent hike for this year.

Weaker than expected third quarter activity has reduced CREA`s annual forecast at the national level as well.

National sales activity is now expected to reach 442,200 units in 2010, representing an annual decline of 4.9 per cent. In 2011, the association is forecasting another nine per cent decline to 402,500.

"Lacklustre economic and job growth, muted consumer confidence, and the resumption of interest rate increases are expected in 2011," said the association.

Read the full article here.

 

[Ally]

Juniors adjusting to new natural gas realities

CALGARY - Gas weighted juniors say they are finally finding ways to survive and even prosper in the midst of what could be a permanent drop in natural gas prices.

ProsPex Resources reported lower third quarter losses as it adjusts its business model to account for new market realities.

"Producers need to be finding ways to be profitable at these low (gas) prices," Pros-Pex CEO John Rossall said. "It`s not enough to hunker down in the bunker ... people need to be building new business models."

Rather than chase expensive unconventional resource plays like the Horn River shale or Bakken oil, Rossall said ProsPex is looking to create a spot for itself by applying new drilling technology to what were considered conventional reservoirs.

"The shale gas plays in our opinion are too large of a risk for small juniors," he said. "We`re not turning water into wine. We`re applying new technology in old reservoirs that have been around for decades, we think that`s the logical niche for smaller companies."

Read the full article here.

 

[Ally]

Oilsands "dialogue" tour heads to U.S.

CALGARY - A series of meetings to discuss Alberta oilsands crosses the border into the United States this week, with Canadian Association of Petroleum Producers executives meeting with local people in Washington, New York and Chicago.

"This is mid-process, we`re right in the middle here," said CAPP spokesman Travis Davies, who said the first "dialogue" was in Vancouver in September, followed by stops in Edmonton, Ottawa and Toronto.

Following a final meeting in Montreal, the findings are to be used to publish a report in partnership with the University of Calgary`s Canada School of Energy and Environment by year-end.

"We have a dialogue back and forth, a broad diversity of opinions are expressed," he said. "We listen, we talk about what we`re doing, we try to understand where other people are at, what their concerns are."

CAPP president Dave Collyer will represent the organization at the meetings.

Read the full article here.

 

[Ally]

Alberta pulp mill gets $37.8M for green improvements

EDMONTON — TThe federal government said Friday it is pumping $37.8 million into the Hinton pulp mill to improve its environmental performance and reduce its operating costs.

The mill, owned by B.C.-based West Fraser Mills Ltd., will get the money from the $1-billion Pulp and Paper Green Transformation Program (PPGTP) for two projects that will improve energy efficiency and redirect more steam toward the production of renewable energy -- creating enough electricity to meet the power needs of about 900 homes.

"Action like today`s announcement is helping to improve the environmental performance of Canada`s forest sector and sustain the jobs and livelihood of forest sector workers for years to come," said Christian Paradis, minister of natural resources, who added the program has made "great strides in helping industry position itself for future opportunities through innovation and environmental performance."

At the Hinton plant, the grant will be used to install new components and upgrade a boiler and a pulp machine to increase efficiency and increase renewable electricity generation. The changes will allow the mill to reduce its natural gas consumption by more than 112,000 gigajoules per year and cut greenhouse gas emissions by more than 5,600 tonnes annually.

Read the full article here.

 

[Ally]

Ten lessons to learn from the great recession

EDMONTON - So what did the world learn from the devastating financial crisis of 2008, and the Great Recession that followed?

The Conference Board of Canada`s forecasting and analysis team does its best to answer that question in a new study out Tuesday.

Crisis and Intervention: Lessons From the Financial Meltdown and Recession, isn`t exactly bedside reading material.

The 135-page book is the kind of ponderous read that only policy wonks, bean counters -- and yes, biz columnists -- are likely to plow through. But give chief economist Glen Hodgson and his colleagues credit. Although the book isn`t likely to get a plug from Oprah, at least it`s well organized.

It follows the same, easy-to-digest Top Ten format as one of talk-show host David Letterman`s monologues on the Late Show.

In brief, here are the 10 key lessons the Conference Board`s authors derived from the economic turmoil of the past two years:

Read the full article here.

 

[Ally]

Innovative biodiesel plant set for northern Alberta

EDMONTON — Northern Alberta is likely to be the site of an innovative plant which will turn non-food-grade canola, and an easy to grow plant called pennycress, into high quality biodiesel.

Alberta`s new green fuel standards call for all diesel sold in the province to contain two per cent biodiesel by next year. But Alberta, which doesn`t produce any that is suitable for cold weather, will have to import the product.

And across the country, only 10 per cent of the demand will be filled by current Canadian plants.

The modular biodiesel plant destined for Alberta is currently sitting in Michigan, designed by TPA, a firm headed by the former chief executive of the Ford Motor Co., James Padilla.

The plant, which can be moved in a matter of months, has converted a wide variety of materials, from animal fats to soybean, corn and canola, into bio-diesel.

But with commodity prices soaring, what it lacks is an inexpensive feedstock — something High Prairie farmer Stan Peacock has offered through his firm All Peace Industries.

Read the full article here.

 

[Ally]

Watch EEDC`s Economic Outlook forum

Watch the archived video of the live-stream from the Edmonton Economic Development Corporation`s look at the city`s economic future, on Nov. 16 at the Shaw Conference Centre.

Watch the video here.

 

[Ally]

Weak Edmonton region construction market needs boost: PCL chief

EDMONTON — The capital region currently has one of the weakest construction markets in North America and needs provincial government funding to get cranes and backhoes active again, an Edmonton economic forum heard Tuesday.

Forum panellist Paul Douglas, chief executive of PCL Constructors Inc., said that while the region appears to be continuing its slow climb out of the economic doldrums, some sectors are not seeing the same progress.

Residential and commercial building has been particularly slow, he said, calling on the province to spark the construction industry by quickly pushing ahead major projects such as the northeast Anthony Henday Drive extension and new LRT lines.

"In our eyes, outside of the heavy industrial market, Edmonton has one of the softest markets in comparison to other major cities," he said, directing some of his comments at Finance and Enterprise Minister Ted Morton, another panellist at the forum. "We need some of that infrastructure money to be released."

Douglas said that in 2008, his company secured $800 million worth of new construction contracts in the Edmonton region. This year, that number dropped to $100 million.

Read the full article here.

 

[Ally]

Oil will run out 100 years before replacement found, U.S. study warns

The world will run out of oil around 100 years before replacement energy sources are available, if oil use and development of new fuels continue at the current pace, a U.S. study warns.

Researchers at the University of California, Davis (UC-Davis) used the current share prices of oil companies and alternative energy companies to predict when replacement fuels will be ready to fill the gap left when oil runs dry.

And the study`s findings weren`t very good for the oil-hungry world.

If the world`s oil reserves were the 1.332 trillion barrels estimated in 2008 and oil consumption stood at 85.22 million barrels a day and growing yearly at 1.3 per cent, oil would be depleted by 2041, says the study published online last week by Environmental Science and Technology.

But by plugging current stock market prices into a complex equation, UC-Davis engineering professor Debbie Niemeier and post-doctoral researcher Nataliya Malyshkina calculated that a viable alternative fuel to oil will not be available before the middle of next century.

Read the full article here.

 

[Ally]

Edmonton not a pretty picture

EDMONTON - There are a small number of crucial things that make people passionate about the city they live in. Edmonton is missing one of the keys elements for success: beauty.

The city, on the whole, is an eyesore. With few exceptions, its main roads are pimpled with dingy strip malls; boxy warehouse stores; cold towers; small, exposed sidewalks and massive parking lots.

Yes, the Edmonton region has a fine river valley and magnificent skies. It doesn`t lack for physical beauty. When it comes to the man-made component of this city, however, we`ve done poorly over the last 100-odd years. We`ve built just a handful of buildings and streetscapes that inspire anything but gloom.

This isn`t a trivial problem, either, it`s a signifi cant, pressing issue that should drive city council`s spending priorities as it examines this current budget.

A three-year study done by the Knight Foundation and the Gallup polling company has found that building an attractive city doesn`t just make people want to live and work there, it`s a driver of economic productivity. "What we found, and it was pretty astounding, is ... communities where people felt more attached, their economies did better," says Paula Ellis, vice-president of the Knight Foundation. "How residents feel about the place they live actually does matter. Attachment is a leading indicator of economic growth."

Read the full article here.

 

[Ally]

Economic sluggishness to affect Central Canada most: Forecast

OTTAWA — The country`s slowing economic growth will be most evident in Central Canada next year as opposed to areas in the West, East and North that are supported by resource industries, says a report released Wednesday.

The Scotiabank forecast said areas that have strong commodity-based economies will see relatively stronger growth, as compared to places largely dependent on manufacturing.

"Meanwhile, resource-related activity is ramping up alongside strong emerging-market demand for key industrial products, which along with a weaker U.S. dollar, is boosting commodity prices," said Scotia Economics economist Alex Koustas.

Rising prices for things such as oil and metals will play a role in bolstering certain parts of the country, the report said.

However, the low U.S. dollar, which creates a higher loonie, will also hurt export-oriented factories, which have been key to helping the economy grow in provinces like Ontario and Quebec over the last year, Scotiabank said.

Read the full article here.

 

[Ally]

Alberta to post strongest provincial growth next year: Scotiabank

CALGARY - Alberta will lead the country in economic growth in 2011, building on a resource-led rebound this year, a new report suggests.

In its latest forecast released Wednesday, Scotiabank expects Alberta`s economy to expand 3.5 per cent, the most growth among the provinces. The province is expected to post three per cent growth this year.

"Resource-related activity is ramping up alongside strong emerging-market demand for key industrial products, which along with a weaker U.S. dollar, is boosting commodity prices," said Scotia Economics economist Alex Koustas in a release.

The report also noted that Alberta`s job market has been slow to catch up to national gains, but expects "substantial" improvements in 2011.

The housing market posted strong rebound in starts, with potential for steady gains as in-migration return to growth, it noted.

Read the full article here.

 

[Ally]

Calgary industrial land selling for more than $600,000 per acre

CALGARY - Buyers are still cautious for Calgary and area industrial land sales this year but interest is beginning to pick up.

So far this year, 53.4 hectares of industrial land has sold in the Calgary area for a total dollar volume of $70.8 million. Last year, virtually the same amount of hectares sold for $59.7 million.

"It`s still cautious I guess but there is activity. There`s people looking and there are deals happening," said Luke Stiles, partner and associate with Advent Commercial Real Estate Group in Calgary.

"It`s positive. People aren`t waiting anymore. They`re really looking at the numbers hard and they`re trying to get a good deal going and they want to proceed. And we`re hearing that."

A report by Advent said 31.2 hectares of fully-serviced industrial land has sold this year for $50.1 million or $605,864 per acre inside the city limits. In 2009, 10.5 hectares of fully-serviced industrial land inside the city limits sold for $21.3 million or $857,009 per acre.

The current vacancy rate in the industrial real estate market is 4.81 per cent in an inventory of close to 118.5 million square feet. In 2009, the vacancy rate was at 6.6 per cent.

Read the full article here.

 

[Ally]

Calgary multi-family starts soar

CALGARY - Multi-family starts in the Calgary census metropolitan area soared in October to a level more than 90 per cent higher than a year ago.

According to data released today by Canada Mortgage and Housing Corp., there were 438 multi-family units that began construction last month, up from 230 units in October 2009.

However, the CMHC also said single-detached units dropped by 31.1 per cent in the month to 346 starts compared with 502 a year ago.

Total starts were up 7.1 per cent in the region to 784 units.

"Single-detached construction continued to moderate as a result of heightened competition from the resale market and slowing sales," said Richard Cho, senior market analyst in Calgary for the CMHC. "This represents the third consecutive month where starts have declined on a year-over-year basis."

Read the full article here.

 

[Ally]

Peace Country to get direct flights to Calgary

EDMONTON — Peace Country municipalities are hailing new air service between Peace River and Calgary.

Beginning Nov. 29, Northern Air is introducing four direct flights a week between Peace River and Calgary.

The airline already operates four flights between Peace River and the Edmonton City Centre Airport.

"We recognize no community can expect to attract jobs and investments without air service to Edmonton and Calgary," said Rob King, president and CEO of Northern Air.

The Calgary service comes as the Peace River Regional Airport is expected to come under the management of a regional authority on Jan. 1.

Read the full article here.

 

[Ally]

Alberta will lead the way: Study

Alberta is expected to lead the country in economic growth in 2011, building on this year`s rebound in the resource industry, economists say.

Scotia Economics` provincial trends report, released Wednesday, puts Alberta and other western provinces at the forefront of Canada`s future growth as the economy continues to shift to resources from manufacturing.

"With Central Canada being much more tied to the U.S. economy, we see the western provinces outperforming mainly on the fact that the one thing that`s going to keep going in spite of decreased activity in the U.S. is our commodity exports," Scotia Economics` Alex Koustas said.

While Alberta`s job market hasn`t kept up with gains across the country, Koustas expects "substantial" improvements in 2011.

In September, more Albertans collected employment insurance than during the month before, jumping 4.7 per cent after having fallen over the previous 10 months, Statistics Canada said.

Read the full article here.