October 2009

[Ally]

B.C. and Alberta in a Natural Gas Poker Game

CALGARY -- British Columbia fired the latest round Thursday in the North American battle to woo natural gas producers, unveiling miniscule royalty rates and millions of dollars in fresh infrastructure incentives in a move that may force neighbouring Alberta to respond to in kind.

In an effort to prod natural gas production in its Montney and Horn River shale plays, B.C. reduced the royalty rate on wells drilled between September and June 2010 to 2% for one year. Producers now pay an average royalty rate of about 20%.

"The oil and gas industry`s capital is mobile -- it can be invested anywhere in the world, so if you want to be a part of that, you want to ensure you have a competitive jurisdiction," Blair Lekstrom, B.C.`s minister of energy, mines and petroleum resources, said in an interview. "We want to secure the future of the oil and gas industry in British Columbia."

Alberta and B.C., Canada`s top natural-gas producers, have traded royalty announcements this year. In March, B.C. rolled out royalty breaks, extending a program it launched in 2004. Alberta unveiled its own incentives a day later, reducing royalties on some new conventional oil and gas wells to 5% or less for at least a year. It later extended that program in June.

While the two provinces are in fierce competition with each other, the royalty rate war extends beyond Canada`s borders. Prolific natural gas basins such as the Barnett shale in Texas and the Marcellus in Pennsylvania are sponging up billions of dollars worth of investments.

Read the full article here.

 

[Ally]

Natural Gas finding favour in Markets

One month ago, natural gas prices were at a cyclical low, trading at 40% of the equivalent value of crude oil. Since then, gas prices have risen 60%, though still 30% below its crude-equivalent.

Natural gas is coming back! On Sept. 4, the NYMEX October futures contract for natural gas closed at US$2.73, a 25-to-one ratio to the price of oil, compared to its heating value ratio of 6-to-one. Alberta spot gas, AECO-C closed at $1.96, a new low in 2009, the lowest since July 2002, and a 37-to-one ratio to the Canadian posted price of light crude oil. Talk about a natural gas bear market.

One month later, NYMEX November futures are near US$5.00 and AECO-C is $3.12. During the past month, several factors have emerged to spur the enthusiasm in the futures market, though spot gas continues to suffer in price.

Generally, economic forecasts have been upgraded for 2010. That helps the outlook for industrial production and thus, for oil and natural gas.

More specific to energy, drilling activity is required to replace depletion from existing wells, and though rig activity has bounced off the lows, the decline was huge.

Read the full article here.

 

[Ally]

Suncor may revive stalled Projects

CALGARY - Suncor Energy could be ready to start bringing delayed oilsands developments off its list of shelved projects, company CEO Rick George said in Toronto on Wednesday.

Speaking to the Economic Club of Canada, George said the company`s merger with Petro-Canada resulted in bigger than expected cost savings that could accelerate the pace of developing new oilsands projects that include the $20-billion Fort Hills mine as well as the multibillion-dollar Voyageur expansion.

"Perhaps the biggest opportunity we see with this merger is an improved ability to invest --and overwhelmingly, right here in Canada," George said in his speech. "That means many of the growth projects Suncor and Petro-Canada put on hold last year could again be in play much sooner than if the merger had not gone ahead."

When it was announced in March, the merger of Petro-Canada and Suncor created Canada`s largest integrated energy company with assets spanning Canada and the globe, including a dominant position in Alberta`s oilsands, the East Coast offshore and smaller operations in the North Sea, Libya and Syria.

Speculation has been building that Suncor will jettison most of the international assets to focus on a long queue of oilsands projects at home, which analysts said will put a distinctly Canadian stamp on the planet`s newest oil supermajor.

Read the full article here.

 

[Ally]

Proposal to have Bitumen upgraded in Alberta Delayed: Knight

CALGARY - A proposal by the Alberta government to have bitumen upgraded in the province has run into technical difficulties that will delay the bidding process to a yet-to-be-determined date, Energy Minister Mel Knight said Wednesday.

He told reporters after giving a speech in Calgary there`s no chance bids from refiners to buy bitumen paid as royalties to the province by oilsands players will be in hand by early December as expected, nor does he have an alternative deadline date.

"We thought we`d be able to have an RFP (request for proposals) on the street at the end of September, some opportunity for a response to the RFP by the first of December," he said.

"What`s happening of course is that there are a number of these projects that are working and looking at engineering and sometimes to get the economics straight. In today`s economic situation . . . the ground is kinda moving a bit so they want to be darned sure they have things right so there`s a little bit of extra time that has to take place."

In July, the Alberta government announced it would seek bidders for up to 75,000 barrels per day of bitumen at market value for upgrading starting in 2012.

Read the full article here.

 

[Ally]

Suncor CEO says Merger Savings to exceed Target

TORONTO-- Suncor Energy Inc. chief executive Rick George said on Wednesday that annual savings from Suncor`s $22.7-billion acquisition of Petro-Canada will exceed the company`s target.

The merger, which created Canada`s largest energy company and a dominant player in the country`s oil sands, was expected to yield $1-billion in lower capital spending annually and $300- million in operating savings. However, Mr. George said in a speech in Toronto that the Suncor (SU/TSX) expects to exceed that target.

"We`re safely beyond that range," he said.

Mr. George also said the merger may help the company restart projects deferred last year, when oil prices plunged, at a quicker pace than would otherwise be possible.

He also said that Suncor would concentrate its investment capital on its Canadian assets.

Read the full article here.

 

[Ally]

Widening Edmonton`s River Valley Vistas gains Support

EDMONTON — A dozen speakers expressed general support Wednesday for a plan to change where development is allowed along the top of Edmonton`s ravines and North Saskatchewan River valley.

The existing policy approved in 1970 was intended to follow the long-established practice of building roads on these "top of bank" areas, creating majestic Ada Boulevard and Saskatchewan Drive, according to a city report.

However, this hasn`t happened in most subdivisions approved since 1985 because walkways have been allowed as replacements for a road, often behind private homes that limited public access and blocked the view.

Planners concerned about this interpretation have won support from 29 groups for a revised policy intended to preserve valley parks, prevent development encroachment, ensure people can reach the bank and protect buildings from collapsing slopes.

In 1999, a luxury home on Whitemud Road slid down the valley wall and two adjacent houses had to be dismantled after their backyard was eaten away by groundwater flowing toward the river.

Read the full article here.

 

[Ally]

`Relative` Prosperity makes Alberta No. 1 for Population growth

Despite mounting unemployment, a shaky economy and the ballooning provincial deficit, the grass still looks green enough in Alberta to lure thousands of newcomers who have an impact on everything from the jobless rate to the price of a home.

Alberta outpaced every other province in population growth in the second quarter, from April to June, at 0.59 per cent, according to the latest Statistics Canada figures.

"The main contributors to the province`s growth were immigration and natural increase," said the federal agency.

There were 3,687,662 Albertans as of July 1, including 21,466 residents new to the province in the three previous months.

Of those, 4,737 people moved from other provinces--the largest interprovincial migration in Canada.

Read the full article here.

 

[Ally]

Alberta faces long Road ahead to clear $7B Deficit

Alberta will still be struggling to get rid of its $7-billion deficit in 2015 as oil prices rise only slowly and the province faces competition from non-conventional natural gas, TD Bank chief economist Don Drummond said on Thursday.

Weak world demand for oil, especially in developing countries, will keep it below$80 over the next two years, Drummond told the Edmonton Chamber of Commerce.

Resource revenues are a third of what they were, and you can`t recoup that kind of deficit in a couple of years, he said.

"In 2015, Alberta and Ontario will still be struggling to get rid of deficits."

Low natural gas prices have brought exploration to a halt, and while prices are likely to rise in the long term, U.S. dependency on our resource may dwindle as more shale gas becomes available in northeast B.C. and other provinces, he said.

Read the full article here.

 

[Ally]

Housing Sector picks up Steam

Edmonton-area builders started work on 699 new homes in September, the third month in a row that construction posted year-over-year gains, the Canada Mortgage and Housing Corp. reported Thursday.

But housing starts this year are still down one-third for the first nine months compared with 2008, the federal agency said.

Housing starts for September 2008 totalled 428, and amounted to 5,400 for the first nine months of the year. So far this year, the Edmonton metro area has recorded 3,620 starts.

"Following a weak first quarter, activity has gradually improved throughout 2009 and CMHC expects this trend to continue in the months ahead," said Richard Goatcher, CMHC`s senior market analyst in Edmonton.

Basements were poured for 481 single detached homes in September --twice the total for September 2008 --and the best month since October 2007. This year`s total is 2,246, beating 2008 by 14 per cent.

Read the full article here.

 

[Ally]

Shell Project captures $865M

EDMONTON - Alberta and the federal government laid down their first big bet in the fight to limit carbon dioxide industrial emissions Thursday, promising Shell Canada Energy $865 million in financial support for its Quest project near Fort Saskatchewan.

Alberta`s ante is$745 million from its $2-billion carbon capture and storage program, while Ottawa is chipping in $120 million from a fund that supports large-scale CO2 projects across Canada.

The money will be paid out over 15 years. For Shell, the long-term commitment will allow it to plow ahead with two more years of engineering work at its Scotford bitumen upgrader and do further research on the local geology, plus undertake the extensive consultations required by regulators.

Only then will the project, estimated to be worth $1.3 billion, be formally approved by Shell and construction allowed to begin.

Shell Quest will not inject any CO2 until 2015. But it aims to eventually inject up to 1.2 million tonnes each year of CO2 produced by the Scotford bitumen upgrader and its expansion, which is now under construction.

Read the full article here.

 

[Ally]

Calgary`s Housing Starts jump 42%: CMHC

CALGARY - September proved to be a fairly strong month for local homebuilders.

According to data released today by Canada Mortgage and Housing Corp., total housing starts in the Calgary census metropolitan area jumped to 813 units last month, compared with 573 units in September 2008 - a 41.9 per cent hike.

The strength of the new home market was particularly felt in single-detached homes as builders poured foundations for 616 homes in September, twich the number of homes (308) started in the same month last year.

But the multi-family market continues to remain weak as only 197 units were started last month, down 25.7 per cent from last year`s 265 units.

For the first nine months of this year, total starts are down 58.5 per cent from year-ago levels, particularly because the multi-family market is off by 84.7 per cent and single-detached homes are down by 8.6 per cent.

Read the full article here.

 

[Ally]

Global Blushing

It`s hard to be green when you`re red-faced all the time. It`s easy to be red-faced when your cause is global warming doomsterism.

This week, the doomsters were embarrassed to learn, once again, that the planet was not in grave peril. Antarctica, their greatest candidate for catastrophe, was not melting at an ever-faster rate, according to a report in Geophysical Research Letters, but at the slowest rate in 30 years. To add to their frustration, they couldn`t even lash out at the lead author, Marco Tedesco of the Earth and Atmospheric Sciences Department of City College of New York -- the doomsters had praised his previous reports showing high rates of Antarctic melt.

The latest news from the Arctic -- delivered daily via satellite -- is no better. Two years ago with the Arctic ice in rapid retreat, the doomsters, convinced of the coming of an ice-free Arctic, could scarcely contain themselves. Now, with the Arctic ice in rapid return, their anticipation of disaster seems more a cruel hoax of Nature. The doomsters now dread to track the satellite data beamed down to us courtesy of the International Arctic Research Center and the Japan Aerospace Exploration Agency -- you can see why they cringe each day by going to the satellite website and following the red line: http://www.ijis.iarc.uaf.edu/en/home/seaice_extent.htm.The red faces aren`t all caused by Nature`s refusal to cooperate in Earth`s demise. The clean carbon folks have recently discovered that they`ve been in bed with organized crime. Scotland Yard and Europol, among numerous other law enforcement agencies across Europe, are hot on the trail of scam artists believed to have made off with £1-billion by illicitly trading carbon credits. In Australia, authorities are investigating claims that a supplier to Carbon Planet, a carbon trading business, has been using fake carbon trading certificates to persuade forest dwellers in Papua New Guinea to sign over the rights to their forests under a UN scheme called REDD, for "Reduced Emissions from Deforestation and Degradation.`` Australia`s REDDfaced Climate Change Minister Penny Wong may now be unable to tout Carbon Planet -- about to list on the Australian stock exchange on the promise of A$100-million in REDD assets -- at the upcoming climate change meetings in Copenhagen. Other dodgy carbon dealings led to the suspension of the UK branch of SGS, one of the world`s largest clean energy auditors, and of the Norwegian certification company DNV.

If universities could blush, Stanford would be setting the skies ablaze with its latest embarrassment, an attempt to censor a global warming documentary about to be released that had filmed one of its professors, global warming catastrophist Stephen Schneider. "You are prohibited from using any of the Stanford footage you shot, including your interview of Professor Stephen Schneider," Stanford demanded in a letter. "Professor Schneider likewise has requested that I inform you that he has withdrawn any permission for you to use his name, likeness or interview in connection with any film project you may undertake."

Read the full article here.

 

[Ally]

House Construction rises in Edmonton

Construction of single-detached housing in the Edmonton area more than doubled in August compared to the same month last year, says a federal housing agency.

Work started on 376 homes, up from 184 in 2008, says Canada Mortgage and Housing Corp.

Meanwhile, activity for the first eight months of this year was narrowly ahead of 2008. Construction started on 1,766 homes, up two per cent.

"Year to date, single-detached starts have surpassed last year`s level for the first time," says Fang Qin, market analyst for CMHC in Edmonton. "Market conditions have improved in recent months following a very weak first quarter as builders` unsold inventories have moved downward."

But multi-family housing was still experiencing decreases in activity.

Work started in August on 184 units, a decrease of 24 per cent from 241 units a year ago.

Read the full article here.

 

[Ally]

BOC Chief in a Quandry over Interest Rates

OTTAWA -- Cutting interest rates in the midst of a financial meltdown may seem like a jog in the park for Mark Carney, the governor of the Bank of Canada, compared to the quandary he now faces.

Signs of a recovery abound, most notably demonstrated by an "awe-inspiring" rebound in real estate. But the strengthening Canadian dollar has whacked the country`s trade sector, which accounts for more than a third of economic output.

Bond-market traders anticipate signals from the central bank in its interest-rate statement on Tuesday that rates are headed upward soon, with yields on two-year bonds climbing nearly 50 basis points over the past two weeks.

Analysts are of the opinion, however, that Mr. Carney will do his best next week to indicate he`s in no mood to pull the trigger on rate hikes because this economic recovery, regardless of how good some of the data look, has a soft underbelly.

Read the full article here.

 

[Ally]

Natural Gas fails to pull its weight

Rising natural-gas prices may bring some relief to Canada`s dismal export picture but the fossil fuel`s economic contribution may be muted by the strong Canadian dollar and declining output, the result of energy companies pulling back production plans during the past two years.

Natural gas settled at US$5.16 per million British thermal units on the New York Mercantile Exchange yesterday, up nearly 7% on the day. The spot price for natural gas dipped below US$3 in August, a seven-year low.

"It could end up being net neutral," said Peter Tertzakian, chief energy economist at Calgary`s ARC Financial Corp. "The good news is price is going up; the bad news is volume is going down."

Energy`s contribution to the Canadian economy has traditionally been split 50/50 between oil and gas, Mr. Tertzakian said.

That divide, however, has been shifting in oil`s favour as bitumen production and demand are climbing and natural-gas efforts have slowed.

Read the full article here.

 

[Ally]

Natural Gas `Could End up being Net Neutral`

CALGARY -- Rising natural-gas prices may bring some relief to Canada`s dismal export picture but the fossil fuel`s economic contribution is likely to be muted by the strong Canadian dollar and declining output, the result of energy companies pulling back production plans during the past two years.

Natural gas settled at US$5.16 per million British thermal units on the New York Mercantile Exchange on Tuesday, up nearly 7% on the day. The spot price for natural gas dipped below US$3 in August, a seven-year low.

"It could end up being net neutral," said Peter Tertzakian, chief energy economist at Calgary`s ARC Financial Corp. "The good news is price is going up; the bad news is volume is going down."

Energy`s contribution to the Canadian economy has traditionally been split 50/50 between oil and gas, Mr. Tertzakian said.

That divide, however, has been shifting in oil`s favour as bitumen production and demand is climbing and natural gas efforts have slowed.

Read the full article here.

 

[Ally]

Developers put Brakes on Transit Advance-Pay plan

Edmonton developers on Tuesday spoke against a proposal to require them to pay for initial transit service in new neighbourhoods, saying homebuyers would be required to pay for service they may not receive for years.

"Depending on where you are, they could be paying up to $2,500 ...our concern is the residents will pay money right now without service," said Patrick Shaver, chairman of the Urban Development Institute in Edmonton.

"It could be up to five years before any service whatsoever. When we pay the other assessments -- the roads, water, sanitary, sewer -- there`s a direct benefit and direct usage to those residents immediately. With transit that is an indefinite time, we don`t know."

City administration proposed that developers be charged $1,000 per single family home to help offset the cost of buses and bus shelters to serve new neighbourhoods. But developers told the city`s transportation and public works committee the fee hasn`t been calculated properly.

"What we`re saying is that it`s more like $1,500 to $2,500, and that cost would be passed onto the home builder...$2,500 could be the breaking point between someone getting into a duplex or town home versus into that single-family home," Shaver said.

Read the full article here.

 

[Ally]

`The Pre-Eminate Hub`

HARDISTY — With the opening of Enbridge`s huge,$600-million contract terminal in Hardisty on Tuesday, the pipeline giant has embarked on a new way of doing business.

"We are helping the industry maximize the value of their crude oil," said Al Monaco, executive vicepresident for major projects.

"Having storage is critical; it offers flexibility for refinery operations, so they can have a continuous flow. So, for them, space has value, and that is what we are providing," he said.

Calgary-based Enbridge moves two-thirds of the oil in Canada, about two million barrels a day. And the Hardisty terminal, about 160 kilometres southeast of Edmonton, is second in size only to its operations in Cushing, Okla.

On Tuesday, Enbridge officially added 19 tanks to its existing 10-tank main-line operations. The new tanks, with a capacity of up to 530,000 barrels each, hold a total of 7.5 million barrels of oil--enough to fill 48,000 Olympic-sized swimming pools.

Read the full article here.

 

[Ally]

Coal-fired Plant secures $779 M for Carbon Capture

Wabamun — The Alberta and federal governments will pump $779 million into a carbon capture and storage facility west of the city, the second time in two weeks Ottawa and the province have committed to such a project.

The money will be used to help TransAlta retrofit its Keephills 3 coal-fired generation plant with technology it says will capture and bury up to one million tonnes of CO2 per year.

Prime Minister Stephen Harper, who was on hand for the announcement, said such projects "will define the future of this industry."

"Carbon capture and storage has the potential to help us balance our need for energy with our duty to protect the environment," Harper said Wednesday.

But despite fanfare from the prime minister, the premier and others, the project is still a long way from being built, and critics wonder if it`s too much money for technology that remains unproven at a large scale.

Read the full article here.

 

[Ally]

Second Study in Weeks says Alberta needs Sales Tax

Alberta`s lack of a provincial sales tax, along with other Canadian governments` decisions to reduce sales taxes such as the GST, are "good politics" and "poor tax policy" according to a new study.

A paper prepared by Casey Vander Ploeg, senior policy analyst with the Canada West Foundation, and released Tuesday is the second in a week to praise value-added sales taxes for their ability to improve corporate competitiveness with the rest of the world.

In an interview, Vander Ploeg said convincing Albertans that a sales tax would benefit them is tough but possible.

"The benefit for the average guy in the street is that, unlike an personal income tax, you can avoid paying a sales tax through your choices as a consumer," he said, giving the example of buying a used car instead of a new one.

But he said the bigger advantage is that shifting away from income taxes and taxes on capital boosts competitiveness and attracts more capital investment, creating jobs.

Read the full article here.