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It Gets Even Uglier In Canada
It Gets Even Uglier In Canada
The Province of Alberta, the epicenter of the Canadian oil bust, may be sliding into something much worse than a plain-vanilla recession. And it’s not exactly perking up the rest of Canada.
Layoffs are already cascading through the oil patch, as companies are retrenching and adjusting to the new reality. New vehicle sales are plummeting. And home sales are taking a broadside.
In August so far, total home sales in Calgary plunged 28% from a year ago, on flat prices. Condo sales collapsed 39%, with the median price down 8%, according to theCalgary Real Estate Board. Year-to-date, total home sales in Calgary are down 25%; condo sales 30%. And those condos that did sell spent 30% longer on the market than condos did a year ago, as sellers hang on by their fingernails to the illusion of wealth, and sales are stalling.
And the Business Barometer Index for all of Canada, which measures the optimism among small businesses, dropped again in August for the third month in a row. An index level between 65 and 70 indicates that the economy is growing at its potential. But now it hit 56.7, the lowest level since April 2009.
The Canadian Federation of Independent Business, which produces the index, blamed the commodity bust but added additional sectors, particularly those that are considered absolutely crucial for the hopefully coming economic recovery in the second half: construction, transportation, and retail.
The index dropped in 7 of 10 provinces, even in British Columbia, which was weighed down by “domestic conditions, coupled with weakening economic prospects in Asia.”
And that feverishly expected rebound of GDP in the second half from recessionary levels in the first half? Small business owners don’t see it. What they see is a continued downturn.
But it’s in Alberta where small business optimism has totally crashed. The Index dropped 3.5 points in August to 40.4, the worst level since March 2009, and just one such step above the historic low of 37, of February 2009, the very bottom of the Financial Crisis.
…click on the above link to read the rest of the article…
Explosion At Syncrude’s Mildred Lake Site, All Workers Are Safe
Explosion At Syncrude’s Mildred Lake Site, All Workers Are Safe
FORT MCMURRAY, Alta. — An explosion at a Syncrude oilsands processing site near Fort McMurray has interrupted operations at the facility.
Ryan Bartlett with the Alberta Energy Regulator says the blast happened early Saturday morning at Syncrude’s Mildred Lake site.
Bartlett says in an email that the company reports that all workers are safe, no product has been released and no offsite odours have been detected.
Syncrude spokesman Will Gibson says a fire broke out at the Mildred Lake Base Plant’s upgrading complex and was extinguished by Syncrude firefighters.
Gibson says there’s no word on what caused the incident, nor is there an estimate on how much damage has been done.
He says only Syncrude employees are being allowed onto the base plant site on Saturday, and the company is asking its contractors to be patient while it responds to the incident.
“Part of that response will be a thorough investigation and we will release further information when it’s available. The safety of the people at our site is our top priority,” Gibson said.
Bartlett said in his email that there have been no impacts to wildlife or water bodies.
Gibson said air quality at the site is monitored carefully and that there haven’t been any concerns.
He said production has been affected but that it’s too soon to say how seriously. Such information, he said would come from Syncrude’s owners.
“It’s too soon to tell how this is going to impact our production,” Gibson said. “Other parts of our operation are continuing. It’s a very big site up here.”
Big Oil in Retreat
Big Oil in Retreat
On July 14, 2011, at TomDispatch, Bill McKibben wrote that he and a few other “veteran environmentalists” had issued a call for activists to descend on the White House and “risk arrest to demand something simple and concrete from President Obama: that he refuse to grant a license for Keystone XL, a new pipeline from Alberta to the Gulf of Mexico that would vastly increase the flow of tar sands oil through the U.S., ensuring that the exploitation of Alberta’s tar sands will only increase.” It must have seemed like a long shot at the time, but McKibben urged the prospective demonstrators on, pointing out that “Alberta’s tar sands are the continent’s biggest carbon bomb,” especially “dirty” to produce and burn in terms of the release of carbon dioxide and so the heating of the planet.
Just over four years later, the president, whose administration recently green-lighted Shell to do test-drilling in the dangerous waters of the American Arctic, opened the South Atlantic to new energy exploration and drilling earlier this year, and oversaw the expansion of the fracking fields of the American West, has yet to make, or at least announce, a final decision on that pipeline. Can anyone doubt that, if there had been no demonstrations against it, if it hadn’t become a major issue for his “environmental base,” the Keystone XL would have been approved without a second thought years ago? Now, it may be too late for a variety of reasons.
The company that plans to build the pipeline, TransCanada Corporation, already fears the worst — a presidential rejection that indeed may soon be in the cards. After all, we’ve finally hit the “legacy” part of the Obama era. In the case of war, the president oversaw the escalation of the conflict in Afghanistan soon after taking office, sent in the bombers and drones, and a year ago plunged the country back into its third war in Iraq and first in Syria.
…click on the above link to read the rest of the article…
Alberta climate-change panel to consult before taking action
Environment Minister Shannon Phillips takes step toward ‘made in Alberta’ plan
Alberta’s NDP government took a first step toward a new climate change strategy Friday, but made it clear that new emissions targets and the policies to implement them will have to wait until the end of a consultation process.
Environment Minister Shannon Phillips has appointed a five-member panel that will spend the next few weeks gathering information and seeking public input as the province moves toward a “made in Alberta” climate change plan.
“It is my goal to have a new proposal prepared in advance of the United Nations Conference of the Parties in Paris this December,” Phillips said. “To get this right, we need to hear from Albertans.”
Phillips said previous Alberta governments have set greenhouse gas targets but pursued virtually no new policies to help meet them. Asked repeatedly when her government will set its own targets, Phillips said hard numbers will have to wait until the panel delivers its report, expected by the end of October or in early November.
“I expect that the panel will have a tremendous amount to say on the topic of targets, and they will be offering us their best advice and options on how to move forward on that,” she said.
Public consultation
Over the next several weeks, Albertans will be invited to go online or attend public sessions to share their ideas to address climate change.
The panel, chaired by Andrew Leach, academic director of energy programs at the University of Alberta school of business, will hold one-day public sessions in Edmonton and Calgary this September.
The report compiled by the panel will try to answer four key questions, Phillips said.
- How to put a price on carbon.
- How to transition to more a sustainable electricity system.
- How to grow the renewable energy sector.
- How to increase energy efficiency across the province.
…click on the above link to read the rest of the article…
Oilsands companies feel the pain as Canadian oil price falls
Alberta companies at break-even point or losing money as heavy crude sinks below $24 US a barrel
A drop in Canadian oil prices this week means companies in Alberta’s oilsands are breaking even or losing money on their operations.
Currently, oilsands companies are receiving about half as much money for oil compared to elsewhere in North America. That’s making it difficult for companies to cover their production and transportation expenses.
The value of oil from Alberta has dropped by 50 per cent since June.
“At today’s prices, the typical producer is just able to cover those variable costs; many producers are above the typical level and they would be losing money for each barrel that they produce, if they are selling at the spot price today,” said Jackie Forrest, a vice-president with ARC Financial, who monitors trends in the Canadian oil and gas industry.
Companies still have other costs to cover such as royalties and debt payments.
A double whammy has driven down Canadian prices since the beginning of July: North American prices have dropped and heavy oil from Canada has fallen further because of increased supply and the closure of refineries and pipelines.
This week, BP shut down one of its refineries for heavy crude. The facility in Whiting, Ind., may need one month to repair. Meanwhile, Enbridge shut down both its Line 55 Spearhead pipeline and nearby Line 59 Flanagan South pipeline, following a crude oil leak in Missouri on Tuesday.
“You have a bunch of demand for Canadian heavy crude that is gone, but it will resolve itself,” said Martin Pelletier with TriVest Wealth, which operates a Canadian energy investment fund.
Pelletier said the markets have been in flux with “selling across the board and panic and fear.”
…click on the above link to read the rest of the article…
Syncrude bird deaths, Nexen pipeline spill show oilsands’ degradation of ecosystem: First Nation
‘Something is seriously wrong,’ says Athabasca Chipewyan First Nation
The recent bird deaths at a Syncrude oilsands facility in northern Alberta along with last month’s Nexen Energy pipeline spill — one of the biggest in the province’s history — show the need for better oversight, a local First Nation says.
“In less than one month, we have seen two major events that clearly demonstrate that something is seriously wrong,” said Allan Adam, chief of the Athabasca Chipewyan First Nation (ACFN), in a news release. “These incidents, and the countless more seen in recent past, are contributing to the degradation of the local ecosystems and the treaty and aboriginal rights of nations in the region.”
Alberta’s energy regulator said 30 blue herons died earlier this week at the Mildred Lake Facility north of Fort McMurray, Alta. An investigation into what caused the birds to die is still underway.
Bob Curran, a spokesman for the agency, says a Syncrude worker found one of the heron Wednesday. The animal was alive but had to be euthanized. After the company searched the area, they found the rest of the birds dead in a run-off pond.
“We have seen irreparable damages to the environment and now death of a species that is listed with special concern,” said Adam.
Adam is correct that the fannini subspecies of the great blue heron is listed as a species of “special concern” under Canada’s Species at Risk Act, but they mostly reside on the B.C. coast. According to the Canadian Wildlife Federation’s Hinterland Who’s Who website, the overall great blue heron population is healthy, and scientists estimate there are tens of thousands of the bird in Canada.
…click on the above link to read the rest of the article…
‘Perfect Storm’ Engulfing Canada’s Economy Perfectly Predictable
‘Perfect Storm’ Engulfing Canada’s Economy Perfectly Predictable
Years ago Andrew Nikiforuk, citing experts, warned where Stephen Harper’s priorities would lead us.
Economists, an irrational tribe of short-sighted mathematicians, are now calling Canada’s declining economic fortunes “a perfect storm.”
It seems to be the only weather that complex market economies generate these days, or maybe such things are just another face of globalization.
In any case, economists now lament that low oil prices have upended the nation’s trade balance: “Canada has posted trade deficits every month this year, and the cumulative 2015 total of $13.6 billion is a record, exceeding the next highest, in 2009, of $2.95 billion.”
But this unique perfect storm gets darker. China, which Harperites eagerly embraced as the globe’s autocratic growthlocomotive, has run out of steam.
As the country’s notorious industrial revolution unwinds, China’s stock market has imploded. Communist party cadres are now moving their money to foreign housing markets in places like Vancouver.
Throughout the world, analysts no longer refer to bitumen as Canada’s destiny, but as a stranded asset. They view it as a poster child for over-spending, a symbol of climate chaos, a signature of peak oil and a textbook case of miserable energy returns. Nearly $60-billion worth of projects representing 1.6 million barrels of production were mothballed over the last year.
A new analysis by oil consultancy Wood Mackenzie reveals that capital flows into the oilsands could drop by two-thirds in the next few years.
The Bank of Canada doesn’t describe the downturn led by oil’s collapse as a recession because the “R word” smacks of negative thinking or just plain reality.
Surely lower interest rates will magically soften the consequences of a decade of bad resource policy decisions, Ottawa’s elites now reason.
Meanwhile the loonie, another volatile petro-currency, has predictably dropped to its lowest value in six years along with the price of oil.
…click on the above link to read the rest of the article…
Recession Risk Mounting For Canada
Recession Risk Mounting For Canada
The latest economic data from Canada shows that it is inching towards recession, after its economy posted its fifth straight month of contraction.
Statistics Canada revealed on July 31 that the Canadian economy shrank by 0.2 percent on an annualized basis in May, perhaps pushing the country over the edge into recessionary territory for the first half of 2015. “There is no sugar-coating this one,” Douglas Porter, BMO chief economist, wrote in a client note. “It’s a sour result.”
The poor showing surprised economists, who predicted GDP to remain flat, but it the result followed a contraction in the first quarter at an annual rate of 0.6 percent. Canada’s economy may or may not have technically dipped into recession this year – defined as two consecutive quarters of negative GDP growth – but it is surely facing some serious headwinds.
Related: This Week In Energy: Low Oil Prices Inflict Serious Pain This Earnings Season
Canada’s central bank slashed interest rates in July to 0.50 percent, the second cut this year, but that may not be enough to goose the economy. With rates already so low, there comes a point when interest rate cuts have diminishing returns. Consumer confidence in Canada is at a two-year low.
There are other fault lines in the Canadian economy. Fears over a housing bubble in key metro areas such as Toronto and Vancouver are rising. “In light of its hotter price performance over the past three to five years and greater supply risk, this vulnerability appears to be comparatively high in the Toronto market,” the deputy chief economist of TD Bank wrote in a new report. A run up in housing prices, along with overbuilding units that haven’t been sold, and a high home price-to-income ratio has TD Bank predicting a “medium-to-moderate” chance of a “painful price adjustment.” In other words, the bubble could deflate.
…click on the above link to read the rest of the article…
TransUnion expects spike in debt delinquencies in Alberta, Saskatchewan
TransUnion expects spike in debt delinquencies in Alberta, Saskatchewan
Alberta and Saskatchewan will soon see a ‘sharp’ increase in the number of people falling behind on their debts for the rest of this year, credit agency TransUnion says.
The debt monitor said in a study released Wednesday that it is expecting the number of consumer credit delinquencies to increase by double-digits in Saskatchewan, and as much as 60 per cent in parts of Alberta.
Oil’s impact
The two provinces are disproportionately dependent on oil prices to drive their economy. In Alberta’s case, more than a quarter of the province’s GDP is tied to oil revenues, which have halved in the past year. In Saskatchewan’s case, the ratio is still high at more than one sixth of GDP tied to oil.
Cheap oil has hit those economies in many ways. “First, oil price drops cause lower oil sector investment,” TransUnion says. That leads to higher unemployment, which leads to less disposable income to spend in all other aspects of the economy.
“Consumers then have lower ability to service debt, finally resulting in higher delinquency rates,” TransUnion says.
The number of people who pay off only twice their minimum credit card payment has increased by 10 per cent in Fort McMurray since last summer, TransUnion says. (Ryan Remiorz/The Canadian Press)
“Based on an historical analysis of the last oil crash and recent payment behaviour trends, we expect materially higher delinquency rates in Alberta and Saskatchewan in the second half of 2015,” the company’s research director Jason Wang said.
“If lenders do not take proactive measures to address the impact of the decline in oil prices, we could potentially see double-digit delinquency rate increases in Saskatchewan, and as much as a 60 per cent rise in areas of Alberta.”
…click on the above link to read the rest of the article…
Beef prices could rise further with cruel Alberta drought
Herd size expected to shrink as ranchers sell off cattle
The price of steaks, roasts and other cuts of beef are expected to increase further because of drought conditions in Alberta, although it may take about a year before consumers feel the full bite on store shelves.
Retail beef prices hit record highs early this year and have continued to climb since then as the number of cattle in the Canada continues to dwindle. Now, drought in Alberta and Saskatchewan means ranchers struggling to feed their animals are choosing to sell some of their cattle at the auction market.
- Global demand for beef sends steak and hamburger prices sizzling
- Drought forces some Alberta cattle farmers to sell stock
At least nine different counties throughout Alberta have declared states of agricultural disaster due to harsh drought conditions. Many areas received less than 100 mm of rain between the start of April and early July, which is less than 50 per cent of normal rainfall levels. The hardest-hit areas received less than 50 millimetres of precipitation, according to Alberta Agriculture.
If you thought buying beef this summer was already expensive, prices could rise further with dry conditions in Alberta and Saskatchewan. (Dale Molnar/CBC)
Not only are pastures and hay crops in poor condition, but little feed is available for purchase.
In the short term, for consumers, the price of beef may actually fall slightly as ranchers reduce their herd size, but retail prices may jump further next year as the number of cattle in Canada will be even smaller.
“Over the long run, if the drought causes the cow herd to shrink even further, then the supply, of course, gets tighter,” said Greg Bowie, chair of the Alberta Beef Producers. “It is going to drive the price to a different level again.”
…click on the above link to read the rest of the article…
Will ‘Corner Office Syndrome’ Be The Downfall Of Canada’s Oilfield Services?
Will ‘Corner Office Syndrome’ Be The Downfall Of Canada’s Oilfield Services?
No sector of the economy should be considering the urge to merge more than Canada’s beleaguered oilfield services (OFS) business. The signals are powerful: overcapacity in virtually every product and service line; prices down to slimmest of margins; bankers are unhappy and getting twitchy; shareholders are morose and OFS operators have to do something because doing nothing is no longer an option.
The short- and medium-term outlook is not promising. Oil prices are going down, not up. The recent nuclear deal with Iran will continue to overhang well-supplied world crude markets into next year. Even if oil rose sharply tomorrow, Alberta would still suffer from heightened uncertainty until the royalty issue is clarified.
New oil sands projects are dead. LNG is paralyzed by price, cost and global market turmoil. E&P companies looking to drill are demanding the lowest prices possible. Bankers who have been patient for months cannot kick the forbearance letter can down the road forever.
Because of a collapse in business, along with oil prices, oilfield service managers have been cutting costs since late last year. Workers have been laid off by thetens of thousands. Capital spending and maintenance programs have been slashed or postponed. Discretionary expenditures like travel and entertainment have been cancelled. Pay cuts have been instituted. Dividends reduced or eliminated. Principal payments postponed where possible.
Related: Toxic Waste Sullies Solar’s Squeaky Clean Image
The last major expense not yet addressed in any meaningful way is a measurable reduction in administrative (non-revenue generating) costs per dollar of revenue. This is the CEO, COO, CFO, VP marketing, HR manager, safety officer and corporate head office. Reduced expenses for field service locations and product and service delivery. Increased purchasing power in other words.
…click on the above link to read the rest of the article…
Nexen’s Brand New, Double-Layered Pipeline Just Ruptured, Causing One of the Biggest Oil Spills Ever in Alberta
A pipeline at Nexen Energy’s Long Lake oilsands facility southeast of Fort McMurray, Alberta, spilled about five million liters (32,000 barrels or some 1.32 million gallons) of emulsion, a mixture of bitumen, sand and water, Wednesday afternoon — marking one of the largest spills in Alberta history.
According to reports, the spill covered as much as 16,000 square meters (almost 4 acres). The emulsion leaked from a “feeder” pipe that connects a wellhead to a processing plant.
At a press conference Thursday, Ron Bailey, Nexen vice president of Canadian operations, said the company “sincerely apologize[d] for the impact this has caused.” He confirmed the double-layered pipeline is a part of Nexen’s new system and that the line’s emergency detection system failed to alert officials to the breach, which was discovered during a visual inspection.
At this time, the company claims to have the leak under control, according to CBC News.
The spill comes at a particularly bad time for Canada’s premiers, who are poised to sign an agreement three years in the making to fast-track the approval process for new oil sands pipelines while weakening commitments to fight climate change, according to Mike Hudema, a climate and energy campaigner for Greenpeace.
“As provincial premiers talk about ways to streamline the approval process for new tar sands pipelines, we have a stark reminder of how dangerous they can be,” Hudema said in a statement. “This leak is also a good reminder that Alberta has a long way to go to address its pipeline problems and that communities have good reasons to fear having more built.”
…click on the above link to read the rest of the article…
Calgary thunderstorm causes power outages, flooding in Chestermere
Lightning advisory that grounded all flights at Calgary airport now lifted
People in Calgary woke up with a bang early Sunday morning as a line of thunderstorms hovered over the city, bringing lightning, power outages and overland flooding in communities to the east.
As the storms moved eastward, severe thunderstorm warnings issued by Environment Canada remained in effect for Red Deer, Ponoka, Innisfail and Stettler by 3 p.m. MT. An earlier storm warning for Calgary was cancelled at 9:40 a.m. MT.
“Meteorologists are tracking a dangerous thunderstorm capable of producing up to penny size hail and flooding rain,” the agency said on its website.
Thunderstrom watches — the agency’s less urgent category of alert — were still in effect for much of the southeastern part of the province by late afternoon.
- Have images of the storm? Send photos or video towebcalgary@cbc.ca
When the storm hit early Sunday morning it caused flash-flooding in parts of northeast Calgary as well as Langdon and Chestermere east of the city.
The Alberta emergency public alert system tweeted a warning about overland flooding in Chestermere.
“While short, this was an intensely severe storm that brought an amount of water that overwhelmed our systems” Steve Bagley, Chetermere’s director of emergency management. said in a release.
“We are working hard to assist residents and restore services as quickly as possible.”
Officials said power had been restored to most parts of the city by 1:30 p.m. MT and that Chestermere Lake water levels were under control.
Langdon resident Andrew Kucy said it didn’t take long for his basement to flood.
…click on the above link to read the rest of the article…
Supreme Court Rejects Argument to Dismiss Landmark Fracking Case
Supreme Court Rejects Argument to Dismiss Landmark Fracking Case
Jessica Ernst’s charter claim hearing slated for 2016.
The Supreme Court of Canada has rejected a motion by the country’s most powerful energy regulator that Jessica Ernst’s case involving fracking and groundwater contamination raises no significant constitutional claim and should be dismissed.
Chief Justice Beverley McLachlin ruled that the case raised a significant constitutional question on whether or not an “immunity clause” in the regulator’s legislation placed it above the Charter of Rights and Freedoms.
Is the regulator’s immunity clause, asked McLachlin in her June 25th ruling “constitutionally inapplicable or inoperable to the extent that it bars a claim against the regulator for a breach of” the Charter of Rights and Freedoms?
But Glenn Solomon, counsel for the Alberta Energy Regulator, argued in submissions to the court that “no constitutional question should be stated in the present matter.”
After the Supreme Court agreed to hear the charter case last April, it required lawyers representing Jessica Ernst to clearly state the question and Solomon to agree on the wording.
But Solomon told Ernst’s lawyers that “We will not be able to agree on a constitutional question.”
The Alberta Energy Regulator’s obstruction cost Ernst more time and money, but she is satisfied with McLachlin’s ruling and definition of the final constitutional question.
“If energy regulators can violate our charter rights, there will be no protection for citizens living in areas where industry is fracking for hydrocarbons,” Ernst told The Tyee.
Fracking damage alleged
Hydraulic fracturing, a technology described by industry as a combination of “brute force and ignorance,” injects highly pressurized fluids into shallow and deep formations with the goal of splitting open rock as dense as concrete to release small amounts of oil and gas over vast distances.
…click on the above link to read the rest of the article…
Chicken Little Meet the Friends of Science
Canada’s leading climate conspiracy theorists, the Friends of Science, are out this week with a critique on climate change that would make even Chicken Little blush.
In a press release issued Thursday, the Friends of Science state that if plans proceed to move our country away from carbon-intensive fuel sources like oil and coal, “Canada would have to be completely shut down in order to reach the emissions reduction targets, leaving millions of Canadians unemployed.”
The Friends of Science are no stranger to hyperbole, which is on full-display on the homepage of their website promoting all sorts of pseudo-scientific climate science conspiracy claims.
The FOS is also no stranger to controversy.
Many longtime DeSmog readers will know that a few years ago this group was outed in an investigative piece by the Globe and Mail for its ties to the Alberta oil patch and Conservative Prime Minister Stephen Harper.
I am reluctantt to address these latest Chicken Little claims by the Friends of Science, because arguing back at them is exactly what they want and could be mistaken for a sliver of a legitimate place in the debate about how to solve the issue of climate change and transition the world from polluting fossil fuels to clean energy.
And quite frankly, as I pointed out last week, a group like the FOS who still readily claim that climate change is “big green propaganda” and nothing to be concerned about, has no place in a debate about how to deal with a problem they don’t .
