September 2010 Alberta Economic Fundamentals

[Ally]

High Prairie: The Road to Prosperity

EDMONTON - This is a story about a gravel road in the wilderness that now leads straight into the heart of Alberta`s newest oilsands area, the massive Seal Lake reserve north of town.

With $1.2 billion from China set to jump-start Penn West Energy`s existing project, the new Seal Lake Connector Road should get the credit for giving High Prairie the feel of a nascent Fort McMurray -- a small town sitting near a huge resource, High Prairie now calls itself the "gateway community" to the new oilsands and expects to double its population in the next few years.

With at least 136 billion barrels of heavy oil in place, the Peace River oilsands region -- about 400 kilometres northwest of Edmonton -- is Alberta`s third star, much less developed than the Cold Lake region and dwarfed by the Athabasca-Fort McMurray deposits.

The new section of all-weather road completed a circle route through Seal Lake, and was largely paid for by local residents who believed their area was in danger of being overlooked by the oil firms that had just one entry point from Peace River.

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[Ally]

High Prairie: Producers see rich potential in Seal Lake

Heavy oil production is set to jump in Alberta`s third oilsands area, but even the hundreds of new wells that may appear over the next few years will just scratch the surface of Seal Lake`s 136-billion-barrel deposit.

Stretching from north of High Prairie, the Peace River oilsands are less well-known than the similar-sized Cold Lake deposits and the mammoth Athabasca-Fort McMurray reserves, but promise to soon be a significant economic engine for both High Prairie and Peace River.

After a decade of slow but steady growth, Penn West Energy Trust provided a spark in June when it announced a $1.2-billion deal with China Investment Corp. that will see the firm triple its production by the end of next year, drilling 44 wells.

"On our own it would have taken considerably longer to assess the resource. Now, large-scale development here will be accelerated," Penn West spokesman Jason Fleury said.

Meanwhile, international giant Murphy Oil is continuing its drilling program, and Shell -- the region`s biggest player, with three bitumen-producing facilities -- is awaiting ERCB approval for its 80,000-barrel-per-day Carmon Creek thermal project.

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[Ally]

Alberta`s economy to lead Canada: TD economist

EDMONTON — Alberta will continue to outperform the rest of the country as oil prices remain stable and good balance sheets encourage businesses to invest in the future, TD chief economist Craig Alexander said Friday.

And a slight uptick in interest rates here while they remain lower in the U.S., and lower corporate taxes, should encourage foreign investment, Alexander told the chamber of commerce.

"Canadian companies are sitting on enormous amounts of cash, and that`s a huge catalyst for investment."

Western Canada will grow at 2.8 per cent next year, 0.8 per cent above the national average, and hit 3.5 per cent in 2012, he predicted.

He also said oil prices should stay at the industry supportive level of $75 to $85 through 2012.

"Canada`s going to get average economic growth and OK job creation. I would argue that this is positive, but some people will be disappointed."

And he cautioned that Canada will be affected to some degree by a U.S. economy that will take some time to get back to pre-recession buoyancy

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[Ally]

Edmonton`s Camgill Enterprises pleased with progress of Spruce Grove development

EDMONTON — Choosing Spruce Grove as the site for a $75 million multi-phase commercial development is paying off for Edmonton`s Camgill Enterprises.

Interest from retailers is so strong the company is more than two years ahead of schedule with Century Crossing, and expects to have the whole 40 acres built out by 2013, vice-president Ron Mosher says.

The initial $16 million development at the site at Highway 16A and Century Road, anchored by a Shopper`s Drug Mart, will be completed by next summer. It will also include a Starbucks, two financial institutions, a restaurant, medical space and mid box retailers Mosher can`t yet name.

A major food retailer, which Mosher again can`t yet identify, will follow in the fall, and a hotel, several box stores new to the community, more retail and office space, and a children`s park will be in place by the end of 2012.

"We are surprised at the amount of activity in Spruce Grove, but the market is perceived by the retail community as being under-retailed, and it`s a young family oriented community that retailers want to target," Mosher says.

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[Ally]

Calgary buyers `circle the wagons` as home resales fall: RBC

Home resales in Calgary fell significantly through the spring and summer, reaching levels only moderately higher than the lows seen at the end of 2008 - the worst period in the housing downturn, according to the latest housing report released today by RBC Economics Research.

Renewed weakness in demand exerted downward pressure on home prices which fell for most housing types in the second quarter, said RBC.

The RBC affordability measures for Calgary edged lower, down between 0.1 and 0.5 percentage points across most housing categories with the exception of a 0.9 percentage increase for bungalows.

The RBC Housing Affordability Measure, which has been compiled since 1985, determines the proportion of pre-tax household income needed to service the costs of owning a home. The higher the reading, the more costly it is to afford a home. For example, an affordability reading of 50 per cent means that home ownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household`s monthly pre-tax income.

"Buyers appear to be circling the wagons as favourable housing affordability has failed to spur sales following the fairly subdued rebound in activity which ran its course at the start of the year," said Robert Hogue, senior economist, with RBC. "However, it might just be a question of time before they spring into action. Sustained economic recovery will eventually dissipate any lingering doubts about the attractiveness of home ownership in the city."

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[Ally]

Average home in Calgary sells for $451,807 on MLS

CALGARY - The average MLS sale price for single-family homes in the city for the past 30 days is $451,807, according to the Calgary Real Estate Board.

The board says there have been 908 properties sold during that period with a median price of $395,000. As of today, there are 5,430 active listings and 71 new listings were added in the past 24 hours.

At the end of July, the average MLS sale price for a single-family home was $464,655 with the median price at $400,000. The month-end inventory of homes for sale was 5,525.

In the condominium market, CREB says there have been 366 sales in the past 30 days with an average price of $293,086 and a median price of $266,000. Active listings are 2,428 with 33 new ones in the past 24 hours.

Read the full article here.