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“It’s A Bloodbath” – Here Is The Biggest Casualty Of Canada’s Recession
“It’s A Bloodbath” – Here Is The Biggest Casualty Of Canada’s Recession
In the past year, we have extensively profiled the collapse of ground zero of Canada’s oil industry, Calgary, as a result of the plunge in the price of oil, in posts such as the following:
- “Canada Crude Contagion: Calgary Home Prices Drop Most In 2 Years”
- “Canada’s Biggest Oil Casualty To Date: Calgary’s Nexen Shutters Oil Trading Desk”
- “The Canadian Housing Bubble Has Begun To Burst”
- “Canada’s Oil Patch Confidence Crashes”
- “Canada Mauled by Oil Bust, Job Losses Pile Up – Housing Bubble, Banks at Risk”
- “The Stage Is Set For A Massive Housing Market Correction in Canada’s Oilpatch”
Since then it has only gotten worse for Canada, and as of two it culminated with the first official recession in 7 years.
Additionally, in September we profiled the expected collapse of the Calgary commercial real estate market when we reported that in Alberta Canada now has 1.7 million square feet of empty office space, the most in North America, with another 5.2 million under construction! After years of booming construction, the natural resource rich country is starting to feel the pinch.
Overnight Bloomberg followed up on this stunning deterioration when it, too, reported that “office-tower owners in Canada’s energy hub are about to feel the full force of the oil-price crash.”
Using data from real estate brokers including Jones Lang LaSalle Inc. and Avison Young, Bloomberg calculates that vacancy is already at a five-year high in Calgary and rents are the lowest since 2006 after thousands of office jobs were cut. Energy company tenants have now begun to ask for rental relief and are offering subleases for as little as half the going rate.
The backlog is even worse: five new office towers with about 3.8 million square feet (353,031 square meters) of space hits the market in the next three years.
…click on the above link to read the rest of the article…
Keystone XL may be dead. The oilsands probably aren’t
Low petroleum prices mean new projects are on pause, but existing production won’t disappear
The oilsands are producing more than two million barrels per day from long-term projects that are very difficult to shut in. The transport network is like a game of whack-a-mole: One access point is knocked down, others pop up. (Jeff McIntosh/Canadian Press)
There is some soul searching going on in the oilpatch this week in the aftermath of the U.S. rejection of Keystone XL. Would a carbon tax have changed things? A gentler hand with the politics? How much of the U.S. decision was connected to increases in their own domestic production?
What they aren’t asking is how to get oilsands product to market. Because it’s getting there, in ways both obvious and unexpected. The oilsands have lots of problems, like low prices and high costs. But right now, market access is pretty far down the list.
Oil is even being floated on barges down the Mississippi, though this barge was hit by a tow boat in September. (The Associated Press)
A slow boat down the Mississippi
“There is sufficient capacity to move all our production,” said Greg Stringham, vice-president of oilsands and markets with Canadian Association of Petroleum Producers (CAPP). “There hasn’t been any production that has been shut in because of pipeline capacity.”
In the years since Keystone XL was first proposed in 2008, Canadian oil exports to the U.S. have increased by more than a million barrels a day. Rail has picked up some of that slack, maxing out at 165,000 barrels a day in 2014. It was around half that in the most recent quarter.
…click on the above link to read the rest of the article…
Transcanada Just Killed The Keystone XL Pipeline
Transcanada Just Killed The Keystone XL Pipeline
In an ironic twist, just hours after we discussed the record capital outflow from Canada, resulting from the plunge in oil prices and the mothballing of Canada’s energy industry, Obama’s long-desired goal of killing the Keystone XL pipeline has finally come true.
Moments ago, the WSJ reported that Alberta-based Transcanada asked to suspend its U.S. permit application, “throwing the politically fraught project into an indefinite state of limbo, beyond the 2016 U.S. elections.”
Calgary, Alberta-based TransCanada Corp. sent a letter to the State Department, which reviews cross-border pipelines, to suspend its application while the company goes through a state review process in Nebraska it had previously resisted.
“In order to allow time for certainty regarding the Nebraska route, TransCanada requests that the State Department pause in its review of the Presidential Permit application for Keystone XL,” the company said in the suspension request reviewed by The Wall Street Journal. “This will allow a decision on the Permit to be made later based on certainty with respect to the route of the pipeline.”
The WSJ correctly notes that “the move comes in the face of an expected rejection by the Obama administration and low oil prices that are sapping business interests in Canada’s oil reserves.” Clearly the former was never an issue before, however the collapse in oil prices and the resultant plunge in CapEx spending means that the pipeline no longer made much economic sense.
Canadian Election: A Study in Values
Canadian Election: A Study in Values
Those who work on climate change were both chuffed and chagrined by its role in Canada’s federal election campaign, which peaked last week with the victory of Liberal leader Justin Trudeau and defeat of Conservative incumbent Stephen Harper.
“The environment” – a catch-all concept that often encompasses concern about climate change – consistently ranked close to economy and healthcare on voters’ list of top priorities. Oilsands and climate change issues took up nearly a quarter of the first leaders debate, commanding more than twice the airtime they did in 2011. Several media outlets ran editorials calling on all parties to take a strong stance on reducing GHG emissions or put a price on carbon. To quote professor and commentator George Hoberg, “energy and environmental issues have become central to Canadian electoral politics.”
Despite all of this, climate change didn’t have a significant impact on the election’s outcome. Fundamentally this was a campaign about values where action on global warming was bundled into a broader set of aspirations and ideas that Canadians said yes to last Monday.
The election of Canada’s new prime minister is an important case study in the powerful potential of values-based messaging. Where the Conservative campaign sought to preserve the status quo and motivate voters with threats of an unstable or unsafe future, the Liberal campaign (and to a different extent, the New Democrats) mobilized Canadians with a vision of change centred on honesty, inclusion and fairness.
Of course, the timing couldn’t have been better. Much has been said about why Canadians’ were ready to bid farewell to one of their longer-standing leaders – corruption, fiscal mismanagement, deepening degrees of intolerance and an overt contempt for basic democratic principles being among them.
…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.”
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…
Spin Cycle: Will all of the oilsands be developed?
Toronto Centre NDP candidate not the only one to suggest some oilsands ‘may have to be left in the ground’
“A lot of the oilsands oil may have to stay in the ground.”
— NDP candidate Linda McQuaig on CBC News Network’s Power & Politics
Alberta’s oilsands seem to always be a contentious issue both nationally and internationally. It was likely only a matter of time before it became a hot topic on the federal campaign trail. Comments by an NDP candidate for the riding of Toronto Centre are causing a stir and putting the spotlight on Alberta’s bitumen.
Linda McQuaig, a well-known author and journalist, told a panel discussion on CBC News Network’s Power & Politics Friday that for Canada to meet its climate change targets much of the oilsands may have to be left in the ground.
The Spin
McQuaig didn’t mention any specific climate change targets that Canada has pledged to achieve, but instead spoke about reaching Canada’s future environmental goals.
“We’ll know that better once we properly put in place a climate change accountability system of some kind,” she told host Rosemary Barton. “And… once we have a proper review process for our environmental projects like pipelines.”
McQuaig later tweeted that “NDP policy is sustainable development, overseen by strong (environmental) review process,” a policy NDP Leader Tom Mulcair expanded upon in response to questions Monday.
The counter-spin
The Conservatives wasted no time in jumping on the NDP and claiming the party wants to shut down the oil industry and introduce new taxes. Conservative Leader Stephen Harper accused the NDP of having a “not-so hidden agenda,” saying it “is consistently against the development of our resources and our economy.”
McQuaig’s comments spurred Michelle Rempel, Conservative candidate for Calgary Nose Hill, to accuse the NDP of proposing a moratorium on the oilsands, which would kill jobs at a time of instability in the oil sector.
Stranded assets?
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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…
Stop oilsands expansion, Canadian and U.S. researchers say
Group cites concerns about carbon pollution, environmental contamination, aboriginal rights
More than 100 Canadian and U.S. researchers are calling on Canada to end expansion of its oilsands, for 10 reasons that they describe as “grounded in science.”
“Based on evidence raised across our many disciplines, we offer a unified voice calling for a moratorium on new oilsands projects,” said a statement issued Wednesday by the group, led by academics at the University of Waterloo, Simon Fraser University and the University of Arizona.
The statement, signed by a range of researchers including biologists, political scientists, physicists, economists and geographers, including a Nobel Prize winner and several Order of Canada recipients, is being sent to Prime Minister Stephen Harper, MPs and the Canadian media.
The group says it has requested meetings with federal politicians to discuss the science behind their reasons in favour of the moratorium. Those include concerns about carbon emissions making climate change worse, hampering the shift to clean energy, environmental contamination, aboriginal rights, and potential effects on international policy. The researchers also cited evidence that stopping oilsands expansion won’t hurt the economy.
Marc Jaccard, a professor in the School of Resource and Environmental Management at Simon Fraser University who co-authored the statement, said the group is targeting the oilsands primarily because most of them are Canadian.
“So of course you try to clean up your own backyard before you start pointing your finger at others,” Jaccard said.
Carbon deal signed
He added that the scientists are not calling for existing oilsands projects to shut down — they just don’t want new ones to start up.
…click on the above link to read the rest of the article…
OPEC is frying bigger fish than just Canada’s oilsands
OPEC keeping the taps wide open, letting Saudi Arabia pick off many birds with one stone
OPEC’s masterminding of the world oil market is leaving Canada to wonder where exactly our reeling energy industry fits within the scheme of the cartel’s strategic thinking.
By leaving its production targets unchanged at its semi-annual meeting in Vienna this week, the Organization of the Petroleum Exporting Countries is sticking with a measure that will continue to bleed competitors around the world.
In Canada, the fallout of the oil shock is already something of a national preoccupation. The idea, then, that our oil industry, at least in the mind of OPEC kingpin Saudi Arabia, is just some happy collateral damage likely won’t do much for any lingering traces of our bygone global inferiority complex.
‘Here is a situation in which the Saudis, with one single chess move, are able to achieve multiple objectives’— OPEC watcher Atif Kubursi
“Obviously, we weren’t the main target, but anything that slows overall growth of non-OPEC production is good in the eyes of the Saudis,” said Vincent Lauerman, the director of energy and the environment at the Conference Board of Canada. “Taking us down a couple notches certainly supports their end goal.”
The rationale that OPEC’s move away from production quotas last November, which cratered global oil prices, was a cannon shot in the battle for market share is certainly valid.
Many birds with one stone
That said, squeezing the competition by keeping the oil market oversupplied is only one of the kingdom’s many objectives. For the Saudis — whose wants can be taken as synonymous with those of OPEC despite the fractious nature of its various factions — the real elegance of this latest oil price war is how it serves so many of its purposes with a single stroke.
…click on the above link to read the rest of the article…
Canada needs to confront its oilsands ‘challenge,’ German ambassador says
Observers say Canada and Japan are attempting to block ‘decarbonization’ pledge from G7 declaration
Germany’s ambassador to Canada says Ottawa’s new targets to cut carbon pollution mean it will have to tackle the problem of the oilsands.
In an interview with CBC News, Ambassador Werner Wnendt said he recognizes the oilsands are an asset for Canada.
- Analysis: How can Canada cut emissions 30% by 2030?
- Oilsands emissions will rise faster than ability to curb them, cabinet told
- Canada sets carbon emissions reduction target of 30% by 2030
“On the other side, this is a challenge. Of course we know that the oilsands and the production of oil in the oilsands does produce a lot of carbon and Canada needs to deal with it,” he said.
Germany is putting a top priority on climate change as it prepares to host the two-day G7 gathering in the Bavarian town of Schloss Elmau in June. Germany wants the world’s richest industrialized countries to send a clear message they’re not going shirk their responsibilities in tackling rising global carbon pollution.
By the mid-term of the century we should come to a point where economic growth can work without the emission of carbon– Werner Wnendt, Germany’s ambassador to Canada
“The signal is that the leading countries in the G7 group do take this very seriously, that they are ambitious in their own targets and they are ready also to support countries that need to be supported financially.” Wnendt said.
The leaders of the seven industrialized countries are being told to be prepared to discuss their new national carbon-cutting goals in preparation for the crucial UN climate conference in Paris at the end of the year.
Canada announced its target for greenhouse gas emissions earlier this month, setting a goal of a 30 per cent reduction below 2005 levels by 2030.
…click on the above link to read the rest of the article…
Rising carbon emissions from oilsands a ‘unique’ challenge, federal cabinet told
Canada may need international emissions credits to offset increasing emissions from oilsands
Greenhouse gas emissions from increasing oilsands production will rise faster than Canada’s ability to curb them, the federal government was warned before new emissions reduction targets were announced last week.
Cabinet documents obtained by CBC News reveal the thinking behind the scenes as the cabinet members mulled over various proposals for Canada’s target to cut its greenhouse emissions by 2030.
- Canada sets carbon emissions reduction target of 30% by 2030
- The House: Wynne calling for more than Ottawa’s ‘nebulous’ targets
- How Canada’s provinces are tackling greenhouse gas emissions
The documents marked “secret” also suggest Canada should try to negotiate new North American-wide rules to reduce oil and gas emissions in lockstep with the U.S. and Mexico.
And they advise cabinet to follow Alberta’s lead when it comes to adopting a national plan to cut emissions — though that advice came a week before the provincial NDP’s surprise victory in Alberta’s May 5 election.
‘Increasing [oilsands] production is expected to outpace improvements in emissions intensity.’— Document to federal cabinet
Last Friday, federal Environment Minister Leona Aglukkaq announced Canada would cut its emissions by 30 per cent below 2005 levels by 2030.
The target is Canada’s required contribution to a new global climate change agreement and has to be submitted to the G7 meeting in early June and filed with the United Nations Framework Convention on Climate Change.
Aglukkaq said Canada will meet its target by bringing in regulations to reduce methane that leaks from industrial processes and pipelines and by cutting emissions from the chemical and fertilizer industry and natural-gas fired electricity. All these align Canada with U.S. plans for the same sectors.
…click on the above link to read the rest of the article…
Premiers told to rethink pipelines as they meet on climate
Pembina Institute argues projects such as Energy East would boost oilsands production and carbon emissions
The Pembina Institute is warning premiers and territorial leaders they need to think about the effects of pipelines on Canada’s carbon emissions before they think about an energy strategy for the country.
A new report by the think-tank says building new oil pipelines, such as the Energy East project to bring western oil east, could produce more carbon pollution and wipe out a lot of the work the provinces have already done to reduce their greenhouse gas emissions.
- Ontario joins Quebec, Calif. in cap-and-trade system to cut emissions
- Ottawa says provinces won’t hit their greenhouse gas targets
The report was released Tuesday, as the premiers and territorial leaders meet to discuss climate change in Quebec City.
“The oilsands is Canada’s fastest-growing source of carbon emissions,” says the report. “That means infrastructure proposals such as the Energy East pipeline have significant impact on the federation’s ability to meet climate change objectives.”
The report, titled Crafting an Effective Canadian Energy Strategy, calls 2015 a year of reckoning.
By the fall, governments around the world must reveal their concrete plans to cut carbon emissions for the next decade at an international UN climate change conference in Paris. The initial deadline was March 31, which Canada missed.
National targets coming in June, Harper says
Prime Minister Stephen Harper has promised that Canada will release its targets for the next decade by June in advance of the meeting.
But the executive director of the Pembina Institute, Ed Whittingham, says Canada is lagging on its promise to cut greenhouse gas emissions to 17 per cent below 2005 levels by 2020.
“It’s nip and tuck as to whether Canada will come anywhere close to reaching its 2020 target,” Whittingham said in an interview with CBC News.
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Layoffs, Spending Cuts Permeate Alberta’s Oilpatch On Quarterly Results
Layoffs, Spending Cuts Permeate Alberta’s Oilpatch On Quarterly Results
CALGARY – There was a splattering of red ink in the oilpatch Thursday, as the steep drop in oil prices weighed on the bottom lines of some of the energy sector’s biggest names in the last three months of 2014.
Oilsands producer Cenovus Energy Inc. (TSX:CVE) said it’s cutting its headcount by 15 per cent, mostly contractors, amounting to 800 positions. Husky Energy Inc. (TSX:HSE) also said there’s been a “small” reduction in its workforce, but declined to get more specific. And Precision Drilling Corp. (TSX:PD) said there’s not enough work these days to keep its crews busy.
“I believe we are in for much greater volatility in oil prices for the foreseeable future and that’s why you’ve seen Cenovus preserve cash by moderating our growth and reducing our workforce,” Cenovus CEO Brian Ferguson said.
Crude prices have been at around the US$50 a barrel mark for much of this year so far, after having hit US$107 a barrel last summer. The drop intensified toward the end of 2014.
Cenovus posted a net loss of $472 million, widening from the previous year’s loss of $58 million.
The results for the quarter included a $497-million charge related to its Pelican Lake oil project in Alberta due to the drop in oil prices and a slowing of the development plan for the project.
Some expansion work at Cenovus’ flagship Foster Creek and Christina Lake oilsands projects is winding down, though phases that are further along in development are continuing as planned.
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