26th February 2015

On Keystone, the Conservatives made one fatal blunder – by Tasha Kheiriddin (National Post – February 26, 2015)

The National Post is Canada’s second largest national paper.

Between price drops and presidential vetoes, Canada’s oil-fuelled future is looking more and more like a mirage. The latest blow came on Wednesday, when U.S. President Barack Obama vetoed Congress’ endorsement of the Keystone XL Pipeline. Obama’s letter to the Senate was both fulsome and blunt: “Because this act of Congress conflicts with established executive branch procedures and cuts short thorough consideration of issues that could bear on our national interest — including our security, safety, and environment — it has earned my veto.”

The move was not unexpected. For years, the White House had repeatedly delayed its decision on the project. In an interview given to The New York Times in July 2013, Obama pooh-poohed Keystone’s job-creation potential, and warned that he would insist that environmental standards be the ones that prevailed. And now, with crude prices hitting rock-bottom, oil sands projects shutting down, and U.S. petroleum inventories growing, it’s hard to argue the pressing need to pipe in more oil from Canada.

Why did this happen? It’s not like Canada didn’t try: The federal government threw everything at the Keystone file. Yet despite heavy lobbying by Ottawa and Alberta, despite the fact that Canada produces “ethical” oil untainted by gross human rights violations, despite our nation’s military engagement in Afghanistan and now Iraq, despite paying for the U.S. customs plaza at the new Windsor-Detroit bridge, in short, despite being a damn good neighbour, friend and ally, all Canada got is a sharp stick in the eye.

Through all this, however, the Conservative government made one fatal blunder: It underestimated the importance of the environment to the Obama presidency. Read the rest of this entry »

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25th February 2015

Obama’s veto of Keystone XL bill is a slap in Canada’s face – by Claudia Cattaneo (National Post -February 25, 2015)

The National Post is Canada’s second largest national paper.

U.S. President Barack Obama made good Tuesday on his threat to veto a bill to approve the Keystone XL pipeline, maintaining under his full control the final decision on the Canadian project’s future.

His office downplayed the gesture, only the third veto of his presidency. There was to be no “drama or fanfare around it,” said White House press secretary Josh Earnest.

It’s “certainly possible” that Obama will approve the pipeline once a State Department review of the project is completed, he added, though he gave no deadline for a decision.

Yet the move is another slap in the face to Canada, which has championed the pipeline for years and did everything by the book to get it approved, only to be led down the garden path, through a maze of roadblocks and traps, by its supposed best friend and ally.

“I think you should take this personally,” said Matt Koch, vice-president at the U.S. Chamber of Commerce’s Institute for 21st Century Energy. Read the rest of this entry »

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24th February 2015

Commodity crash reflects global economic slump – by Brent Jang (Globe and Mail – February 24, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER — Global commodity prices have tumbled to levels below the depths of the Great Recession, underscoring the widespread difficulties facing the global economy.

While crude oil’s price collapse has been in the spotlight, a wide range of other commodities are suffering as well, including natural gas, coal, iron ore, copper, grain and pulp and paper.

The commodity crash is the result of too little demand for raw goods now in plentiful supply after producers ramped up capacity in recent years in anticipation of steady global growth.

But trouble spots are everywhere. Commodity markets have declined during worldwide turbulence as the pace of growth in China continues to slow, Russia grapples with an imploding economy and ruble and Greece struggles through an economic crisis that Europe must solve. Oil’s big drop has hurt many energy-producing countries, including Canada, where low prices are hammering Alberta and reducing growth for Canada as a whole. Read the rest of this entry »

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12th February 2015

Eagle Spirit pipeline plan obtains ‘licence’ as B.C. First Nations chiefs sign on to project – by Claudia Cattaneo (National Post – February 12, 2015)

The National Post is Canada’s second largest national paper.

Just as proposed bitumen pipelines through British Columbia seemed hopeless because of widespread opposition, backers of the aboriginal-led Eagle Spirit pipeline plan announced a major breakthrough Wednesday. The group has solid support from the province’s First Nations for its $14-billion-to-$16-billion project linking Alberta’s oil sands to the West Coast and an invitation to the oil community and the Alberta government to get on board.

What made the difference? The one million barrel-a-day pipeline plan, plus a possible refinery that would cost extra, started with getting First Nations involved, offering them a large equity stake, and obtaining their ‘social licence.’ There were also growing concerns about transportation of oil by rail, which aboriginals see as inevitable if oil pipelines aren’t built. And there was encouragement from Alberta First Nations familiar with resource development and benefiting from the oil sands business.

“We are very cognizant of how important this is to Canada, and Alberta in particular, and we have a solution,” Calvin Helin, chairman and president of Vancouver-based Eagle Spirit Energy Holdings Ltd., and a member of the Tsimshian First Nation in northwestern B.C., said Wednesday at a news conference in Calgary. “The chiefs came out today to say they are prepared to be partners.” Read the rest of this entry »

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5th February 2015

TransCanada CEO says Canada needs to resolve conflicts over pipelines – by Jeff Lewis (Globe and Mail – February 5, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

CALGARY — Canada’s push to become a global resource powerhouse is at risk of failing unless government leaders take action to resolve the many conflicts holding up key projects, the head of the company behind the Keystone pipeline says.

TransCanada Corp. chief executive officer Russ Girling said Wednesday that Canada faces fundamental choices about the future of the country’s economy, including questions around aboriginal relations, resource extraction and pipeline development.

Those issues have pitted industry against opponents, transforming once-staid pipeline hearings into a forum for oil sands critics. Meanwhile, infrastructure projects are shouldering long-standing aboriginal grievances with the federal government, Mr. Girling said in a meeting with The Globe and Mail’s editorial board.

“We’ve got to quit the little bickering that goes on between us and get to the bigger picture and let the institutions that we charge with managing the public good get on with doing their job,” he said.

His comments point to the growing frustration in the energy sector as Alberta’s oil patch braces for an extended slump due to the dramatic plunge in crude prices. Read the rest of this entry »

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28th January 2015

Provinces making bad bets with resource-based budgets – by Brian Lee Crowley (Globe and Mail – January 9, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

You can’t say you weren’t warned. That’s a message that should be posted on billboards opposite the premier’s office in Edmonton, St. John’s and various other provincial capitals where falling energy prices have devastated government budgets.

Those of us who care about such things have been repeating for years the wisdom best summed up by former Alberta treasurer Jim Dinning: “Non-renewable natural resource revenues are non-reliable revenues.”

When your provincial budget is the attic in a house of cards, the first breath of contrary wind brings the whole structure tumbling down. I remember when a 10-cent difference in the price of natural gas meant a swing of $142-million in Alberta’s revenues. The price of that commodity has of course gyrated all over the place in the past 20 years, but mostly in a direction that has caused apoplexy at budget time.

The volatility of natural resource revenues is far less interesting than what might be done about them. On the other hand, if you can’t get policy makers to grasp the fragility of their budgets, you will never get them to take the hard decisions necessary to put things on a sounder footing. Read the rest of this entry »

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27th January 2015

The petro plunge will be painful, but we will adapt – by Stephen Gordon (National Post – January 27, 2015)

The National Post is Canada’s second largest national paper.

Oil prices have fallen, and our economy will have to adjust. This prospect may alarm many, but Canada has had to adjust to similar shocks throughout its history. The Canadian economy altered its structure in order to take advantage of higher resource prices, and part of that shift will now have to be undone.

There’s no point in pretending that this is anything but a negative shock, but it is possible to overstate the bad news. Firstly, the change in the Canadian economy over the past decade has often been overstated, and sometimes wildly exaggerated. Secondly, the ability of the Canadian economy to adjust is not well-enough appreciated.

No one will be surprised to learn that higher oil prices spurred more oil production, but the increase was surprisingly modest: The average growth rate of after the 2002 was 3.6%, compared to 2.6% during the preceding 12 years. But since other sectors have been growing even faster, the oil and gas sector’s share of GDP declined from 6.4% in 2002 to 6% in 2014.

Its share of employment has increased, but is still only 1.7% of the total. Claims to the effect that Canada has become a “petro state” or that its economy is largely dependent on oil simply do not mesh with the facts. As far as output and employment are concerned, the Canadian economy of 2015 is surprisingly similar to what it looked like in 2002. Read the rest of this entry »

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27th January 2015

Pacific Future Energy Corp eyes ‘money left on the table’ for $11-billion refinery project in B.C. – by Yadullah Hussain (National Post – January 27, 2015)

The National Post is Canada’s second largest national paper.

TORONTO – The company proposing a $11-billion heavy oil refinery in British Columbia is pushing ahead with the project despite market volatility and is seeking $25-million in financing, according to its chairman, Samer Salameh.

“We are raising $25 million and that would take us to the permitting process, which would take two to three years,” Mr. Salameh, chairman of Pacific Future Energy Corp., said in an interview Monday on the sidelines of a speech to a business audience in Toronto. “We are down to finalizing two sites on the B.C. Coast, and we will be filing for an environmental assessment by the end of this year.”

Mr. Salameh previously managed the U.S. business interests of Mexico’s Carlos Slim, the second-wealthiest investor in the world, according to Forbes magazine. The management team includes Stockwell Day, a former federal minister for the Asia-Pacific Gateway, and Shawn A-in-chut Atleo, a former national chief of the Assembly of First Nations. Mark Marissen, a political strategist and former-husband of B.C. Premier Christy Clark, is also part of the team.

The company has ambitious plans to build the world’s “near net-zero carbon emission facility and the cleanest refinery in the world,” powering it with natural gas and renewable to reduce emissions by 40%. Carbon-capture technology will further reduce emissions by 52%, the company claims. Mr. Salameh said the technology is “proven,” but admits that it will be the first greenfield refinery of its kind in the world. Read the rest of this entry »

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23rd January 2015

Harper says there’s more to the Canadian economy than oil – by Bill Curry (Globe and Mail – January 23, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Ottawa — Stephen Harper is playing down the impact of energy on the overall Canadian economy, noting that other sectors will help keep growth strong during hard times for the oil patch.

The Prime Minister, who has previously promoted Canada abroad as an emerging energy superpower, stressed the importance of small business, manufacturing and innovation during an event in St. Catharines, one of many Southwestern Ontario communities that have lost manufacturing jobs in recent years.

“It’s obviously significant for the Canadian economy, particularly certain sectors and regions, but the oil industry isn’t remotely the entire Canadian economy,” said Mr. Harper. “There are many benefits to other parts of the economy because of these developments and although the oil industry in those regions are going to face some pretty significant adjustments, the fact of the matter is that this is a resilient industry that knows that prices go up and down.”

The Prime Minister’s comments, which followed an announcement to expand a program for small-business loans, marked his first public response since Bank of Canada Governor Stephen Poloz shocked markets Wednesday by cutting interest rates in response to lower-than-expected growth and inflation. Read the rest of this entry »

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23rd January 2015

Saudi Arabia’s King Abdullah, the careful reformer, dies at 90 – by Mark MacKinnon (Globe and Mail – January 23, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LONDON — King Abdullah, the monarch who led Saudi Arabia through a period of wrenching change in the Middle East – keeping the oil-rich country stable as the region convulsed around it and critics demanded urgent reform – died late Thursday, a statement from the royal palace in Riyadh said.

The death, while immediately mourned in the Arab world, was hardly unexpected. The 90-year-old Abdullah had been seriously ill for several weeks, suffering from pneumonia and breathing only with the help of a tube.

Abdullah became king after the 2006 death of his half-brother, Fahd, but with Fahd in ill health, he had been de facto regent for a decade before that. He led the country through the worst years of the Iraq war, kept the kingdom intact through the upheaval of the Arab Spring, and in recent years built an informal Sunni Arab coalition that confronted what he saw as Iran’s rising influence across the region, particularly in Syria.

Saudi Arabia’s role in Syria will remain a controversial part of Abdullah’s legacy. Saudi Arabia gave money and weapons to jihadi groups opposed to Syrian President Bashar al-Assad, helping give birth to the force now known as Islamic State. Read the rest of this entry »

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22nd January 2015

Can Harper’s Canada defy oil dependence’s ugly history? – by Brian Milner (Globe and Mail – January 22, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

History shows that political leaders who rely heavily on oil earnings to paper over economic cracks, balance budgets and spread largesse among the voting public can end up paying a heavy price for putting too many eggs in the energy basket.

We are about to find out if that holds true in Canada, where the Bank of Canada responded to the steep drop in oil prices with a surprise rate cut Wednesday.

Every major oil exporter is scrambling to deal with sudden economic reversals, tax shortfalls and greater demands on the public purse as capital investment is slashed, massive projects are shelved and layoffs mount in the wake of plunging oil prices.

It was a Saudi-orchestrated price collapse in 1986 – when oil bottomed at $10 (U.S.) a barrel after dropping by two-thirds in just four months – that set the stage for a stunning falloff in Russian production in the late 1980s and the breakup of the Soviet empire.

Another price crash in 1998 played a key part in the collapse of the ruble and a humiliating bond default that cleared the way for Vladimir Putin’s swift rise to the top of the Russian heap. Read the rest of this entry »

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22nd January 2015

Billions in oilpatch investment up in smoke as crude plunge reverberates across Canada – by Claudia Cattaneo (National Post – January 22, 2015)

The National Post is Canada’s second largest national paper.

There’s nothing like losing something to understand the value of what you had. With billions in investment going up in smoke, the Bank of Canada cutting its key interest rate and growth forecast, governments struggling with big budget gaps, the oil price collapse is highlighting the big shoes filled by the oil and gas sector in Canada’s economy.

As Tim McMillan, the president and CEO of the Canadian Association of Petroleum Producers, put it Wednesday: The industry has been growing so much, is active in so many parts of the country, works with so many suppliers, low oil prices “are having more of a national effect now than at any time in its history.”

In an interim report on investment plans, CAPP provided a glimpse Wednesday of how much the sector — the country’s biggest spender — plans to tighten its belt this year to cope with a 50% decline in oil prices since June, the result of excess world supplies and OPEC’s refusal to cut its own: Capital investment in Western Canada, including the oil sands, will decline 33%, to $46 billion, from $69 billion in 2014.

In the Alberta-based oil sands alone, capital investment will shrink to $25 billion, from $33 billion in 2014. Capital spending in the conventional oil and gas portion of the Western Canada Sedimentary Basin — which straddles Saskatchewan, Alberta and British Columbia — will decrease to $21 billion, from $36 billion in 2014. Drilling is expected to decline by 30%, to 7,350 wells.

Read the rest of this entry »

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21st January 2015

Resource takeovers no cause for national angst – by Howard Green (Globe and Mail – January 21, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

What a difference a few years makes. Recall the bygone days when there was a fuss about foreigners wanting to buy our miners and oil companies. Sure, Spain’s Repsol played vulture when it scooped up Talisman last month, but it was welcomed rather than turned into a federal case.

The national harrumphing that went on back in 2006 and 2007 when Inco, Falconbridge and Alcan were sold to outsiders is amazing in retrospect. But who would want to be stuck with a fistful of those shares in their portfolios right now, given where commodities are?

Back then, not only commentators, but also Bay Streeters and big shot executives were critical of the CEOs of those companies, railing about how they were selling out Canada’s birthright to rapacious buyers from abroad. Or worse, that they were not willing to step up and pay up to be acquirers rather than sellers.

If only the country had such problems today. The truth is, Inco’s CEO at the time, Scott Hand, and Dick Evans, the CEO of Alcan, got absolutely brilliant prices for their shareholders when they sold their respective companies. Wouldn’t it be something to hear complaints today about selling resource companies at the top of the market? Read the rest of this entry »

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21st January 2015

Oil slide to shave billions off federal and provincial government revenue – by Bill Curry and Shawn McCarthy (Globe and Mail – January 21, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Ottawa and the provinces will lose a combined $14-billion in government revenue this year as a result of falling oil prices, according to new analysis that comes as the federal Conservatives shift their economic message ahead of Parliament’s return next week.

The federal government alone is set to lose $4.3-billion this year, the Conference Board of Canada said in a report Tuesday. The board is among the organizations that provide forecasts to the finance department and its findings add to the growing private sector opinion that Ottawa’s return to budget surplus is in jeopardy.

The International Monetary Fund lowered its forecast for global economic growth, helping trigger a 4.7 per cent drop Tuesday in the price of North American crude, which closed at $46.49 (U.S.) a barrel Tuesday. The IMF also cut its forecast for Canada. The Bank of Canada is expected to comment in detail Wednesday on the impact of low oil prices in its quarterly Monetary Policy Report. Analysts suggest the Canadian dollar could sink below 82 cents U.S. depending on what the bank has to say.

The rapidly changing economic picture is also leading to some mixed messages from the Conservative government. Read the rest of this entry »

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16th January 2015

No help from Ottawa as Alberta’s economy devastated by oil collapse – by Claudia Cattaneo (National Post – January 16, 2015)

The National Post is Canada’s second largest national paper.

The oil-price crash that is causing a major pullback in energy investment is also stirring plenty of worry in oil-revenue dependent Canadian governments. But while top oil-producing provinces such as Alberta are in full damage-control mode, the federal government is taking the oil shock in stride.

In a speech in Calgary Thursday, federal finance minister Joe Oliver was sympathetic to Alberta’s predicament, noting the price crash is the third-largest in four decades. As for the impact on Canada, he said Ottawa remains on track to balance its budget after years of deficit spending triggered by the global recession. He said there are no plans to increase taxes.

“Lower oil prices will adversely impact our federal government’s fiscal situation, but the decline in oil prices will not prevent our government from achieving the budgetary balance in 2015/16,” Mr. Oliver said in a speech to the Calgary Chamber of Commerce, after conducting consultations on the upcoming federal budget.

Because of the high level of instability in the economy, though, he said the budget would not be tabled at least until April.

Tough times in the energy sector are balanced by benefits for consumers at the gasoline pumps, as well as lower energy costs for manufacturers and transport companies that are also getting a boost from a decline in the value of the Canadian dollar, making them more competitive, he said. Read the rest of this entry »

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