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Calgary & Alberta Economy

darwink

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- new LNG plants will not be operational. There is some sentiment that by the time they are up & running, it may be too late to capture a decent share of global exports. Meanwhile the U.S is light years ahead of Canada in this initiative
I'd appreciate your thoughts on this - what makes LNG better for us than say a fleet of power plans drawing the same amount of gas out of a pipeline in the midwest? And besides being closer, what makes BC LNG better for Alberta than Texas? Do we expect a pop in AECO - I was under the impression that it will be as near to 100% incremental and additional supply BC gas.

Or is it entirely a back office play for us now.
 

UrbanWarrior

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Considering that Alberta contributes nearly double what the Atlantic provinces contribute to economic output and over 60% more than what Quebec contributes (both per capita of course), all of your concerns are valid, Canuck. The rest of the country doesn't seem to comprehend how disproportionately important the Alberta economy is to the country. A lot of people on SSP Canada are literally joking/laughing about the situation here, and deride anyone who suggests the unequivocal fact that the Alberta is disproportionately important.
 

JonnyCanuck

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I'd appreciate your thoughts on this - what makes LNG better for us than say a fleet of power plans drawing the same amount of gas out of a pipeline in the midwest? And besides being closer, what makes BC LNG better for Alberta than Texas?
Given the state of Alberta gas companies (some just hanging on for dear life) and our abundance of supply, we need as many users & demand for natural gas as we can find. Whether that be gas exported through LNG plants in B.C to Asia and beyond; our own hydro plants powered by natural gas or any other customers in the mix.
Increased demand = reduced supply = higher prices, eventually.
 

JonnyCanuck

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A lot of people on SSP Canada are literally joking/laughing about the situation here, and deride anyone who suggests the unequivocal fact that the Alberta is disproportionately important.
I do occasionally visit the Canada thread and I agree with you. There are far too many people that take great joy with the sad state of our energy industry, and the suffering that Alberta, in particular, is going through. They clearly don't understand economics and I would suggest are not thinking like a Canadian. If those bloggers represent a cross section of Canadians then it is appalling.
If we are ever going to make a successful transition from fossil fuels to renewable energy, then we need the revenue generated by a strong fossil fuel industry to fund that transition. That is where a vision and leadership is lacking in this country.
 

Social Justice

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Considering that Alberta contributes nearly double what the Atlantic provinces contribute to economic output and over 60% more than what Quebec contributes (both per capita of course), all of your concerns are valid, Canuck. The rest of the country doesn't seem to comprehend how disproportionately important the Alberta economy is to the country. A lot of people on SSP Canada are literally joking/laughing about the situation here, and deride anyone who suggests the unequivocal fact that the Alberta is disproportionately important.
Good post. In three sentences you summed up the source of our alienation.

I was born and raised in Calgary so maybe I'm a bit biased on this subject, but I always got the impression that Ottawa and eastern Canada treated Alberta more like a colony than a fellow member in confederation. We've disproportionately contributed to the development of this country. Yet, when I travel to other parts of the country, I get the impression that people despise us. They seem to look down on us.

I'll share a short antidote since I'm kind of busy at work. I was once doing a bike tour in Haida Gwaii, and I stopped at a roadside convenience store. The woman working at the counter asked me where I was from, I naturally said "Calgary". She looked at me expressionlessly and said "Oh, the enemy". I was taken aback. I replied "The enemy?". Then said said something about the tarsands this, and the tarsands that. I can't remember exactly what it was, but the experience left a bad taste in my mouth.

Keep in mind that Haida Gwaii generates all it's electricity from diesel powered generators(They might have a small hydro plant). Most of it's food is imported via ferry from the main land and most of the loggers on the island like to drive jacked up trucks.


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Silence&Motion

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As an former non-Albertan, here's my perception of the rest of Canada's attitude toward Alberta. Mostly, Canadians do not think much about Alberta at all. They have their own problems to deal with. Lots of industries are going through problems. People in Vancouver can't afford homes. People in Windsor have seen the auto sector collapse. etc. etc. The O&G sector employs a minuscule portion of Canada's labour force. So, when unemployment goes up in the O&G sector, it's not that big a deal to the vast majority of Canadians - many of whom are in sectors with higher unemployment rates.

When Canadians do think of Alberta, they think of a province that still has the highest GDP per capita and enjoys the lowest taxation in Canada, but still complains that it's being taken advantage of by far poorer provinces. They also see a province that was happy to put all of its economic eggs in one basket when times were good, but is unwilling to live with the consequences or change tactics when that strategy stops working. They see a province that still gets 90% of its electricity from fossil fuels, while the vast majority of provinces and territories have virtually eliminated GHG-based electricity.

Put simply, Canadians see Albertans as having a major entitlement problem. And all the talk about ending equalization or separating from Canada sounds a lot like rich people trying to hide their money overseas so that they're not "taken advantage of" by poor people who want free health care and public schools.
 

JonnyCanuck

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I was hoping to keep the discussion about the Alberta economy. However as happens often when the subject comes up, it can morph into Alberta vs. the rest of Canada.
I grew up in Ontario but I have spent a good part of my life in Alberta. I don't care about equalization; Wexit; whether we are being treated fairly or not; our entitlement vs any other province's. That in my mind is not the point. What I care about is that the energy industry in Canada is a significant contributor to the Canadian economy, to Canadian jobs and our overall prosperity. It so happens to be based in Alberta but the same would apply if it was based in Quebec, Unfortunately too many Canadians don't understand this or appreciate it.

The global demand for fossil fuels continues to grow, albeit slower, despite all of the best efforts to transition to renewable energy. Too many Canadians are prepared to let this resource stay in the ground with the expectation that a 'wind and solar only' solution to all of our needs is just around the corner. Canada is going to be the leader in this while all of the other countries in the world gobble up fossil fuels. That belief and expectation is wildly unrealistic. It is not going to happen for decades. Probably not in the lifetime of most young adults. And even when it does, this country will need fossil fuels as back up. Try heating your home in an extremely long cold winter where there is little wind or sun. Is everyone prepared to risk that in the present, with unproven technology on such a large scale.
Plain and simple. It does not make any sense for a country like Canada to stop exploring, promoting and selling our natural resources while the world continues to have demand for it. Are we supposed to let the U.S., Russia, Venezuela and Middle East countries have it all to themselves; just so we can say we are doing more than our part in eliminating GHG emissions ... we killed off one of our most important and vital industries and economic drivers. Name one other G20 country who is thinking and behaving like that? ?
 

darwink

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Try heating your home in an extremely long cold winter where there is little wind or sun. Is everyone prepared to risk that in the present, with unproven technology on such a large scale.
Friends built a new home in Saskatoon, uses a bit of power to run an air exchanger and that is it. No furnace. Gas is for a hot water heater only - Sask has higher power prices so it doesn't make sense to go electric, yet. It is possible to do - way easier than 20, 30, 40 years ago. It is a tired argument.

But yeah - the most effective green house gas mitigation ($ per unit reduced) in most of north america is installing wind plus natural gas. In Alberta you can reduce GHGs by 80% (compared to coal) at a 3rd the cost of nuclear.

We are clearly in the transition now - it is an odd one since the transition really kicked off simultaneously to the ability to flood the world with oil and gas. The question we should be asking ourselves as a province is: how do we maximize profits for the next 30 years, while trying to ensure that we strand as little production assets as possible (trying to make sure we don't build 50 year assets when they might only have 30 year profitable lives).
 
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Silence&Motion

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Try heating your home in an extremely long cold winter where there is little wind or sun. Is everyone prepared to risk that in the present, with unproven technology on such a large scale.
You realize that almost half of Canadian homes have electric heat, right? And most of that electricity comes from non-FF sources. The brave new world is already here (just not in Alberta).

Are we supposed to let the U.S., Russia, Venezuela and Middle East countries have it all to themselves
If they want to build their economies around a sector that expected to go into permanent decline in the next 20 years, that's their choice. I think most Canadians would be happy to trade less economic growth for a more stable economy.
 

Surrealplaces

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Lots of discussion about our oil industry and it's future for the next 30 or so years.

In the meantime, more news on TMX. I suspect if TMX does get built and we start selling oil on the world market a lot of this discussion will get forgotten for the next while.


Trans Mountain to start construction on pipeline expansion after years of delay
 

JesseLikesCities

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More good news. I know the company I work for is planning to apply for some of this capacity. I'm only a lowly control room operator but every quarter we get briefed on the financial status of the Canadian branch of the company and I always find it mind blowing the analytics and logistics that go into getting our oil to markets. A lot of companies are blending with gas condensate now to meet pipe line spec and then they recover the condy and sell it back on the market.
 
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Chowda7

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More good news. I know the company I work for is planning to apply for some of this capacity. I'm only a lowly control room operator but every quarter we get briefed on the financial status of the Canadian branch of the company and I always find it mind blowing the analytics and logistics that go into getting our oil to markets. A lot of companies are blending with gas condensate now to meet pipe line spec and then they recover the condy and sell it back on the market.
Agreed and the cost of diluent is not cheap. If you don't produce your own supply you get killed on the transportation costs
 

zagox

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Does anyone feel optimistic about the Alberta economy and Calgary specifically for 2020? I consider myself a realist rather than a pessimist however...

- the price of oil & gas continues to languish and none of the forecasts I have seen indicate that either will recover appreciably next year
- there will be little progress on TMX, meaning it is still 2-3 years away from being fully operational, and that is if construction goes full bore next year
- Keystone XL continues to drag on in the U.S. The addition of Line 3 will help a little but there are too many Alberta oil companies that need more pipeline capacity. It just is not enough
- new LNG plants will not be operational. There is some sentiment that by the time they are up & running, it may be too late to capture a decent share of global exports. Meanwhile the U.S is light years ahead of Canada in this initiative
- foreign investment in oil & gas infrastructure has disappeared. Alberta based companies have reduced their capital spending in the province.
- the U.S is not nearly dependent on Canada for oil & gas as it once was. Other than heavy oil which they don't produce, they are merely supplementing other forms of energy with Canadian imports. On a 'whim' from Trump & crew, these could be sourced from anywhere other than Canada.
- the agriculture industry has been 'wacked' by China trade interruptions, and weather related set backs
- the unemployment rate in Calgary, particularly in good paying job sectors, is still very high. That means still fewer people will be migrating to Calgary. Hence, new home construction is not expected to increase next year

What scares me most is the apathy that seems to be pervasive in the rest of Canada, outside of Alberta & Saskatchewan. Many Canadians, at large, seem to be shrugging their shoulders. They seem to think that we don't need an energy industry in Canada. This is all part of the plan to eliminate fossil fuels. This sentiment is not helped by the lack of vision and leadership at the federal level when it comes to energy policy. Where do Albertans look for confidence??
I am a modest optimist about 2020 and extremely optimistic about 2030 in this city. My arguments:

1) Life is good here. We continue to enjoy an extremely high quality of life for an extremely low cost relative to other places to live. I more or less agree with the Economist's global livability rankings, that consistently calculate that Calgary is one of the top 10 cities in the world in terms of stability, healthcare, culture and environment, education and infrastructure. I've visited 9 of the 10 and while you can quibble about the order the general thrust lines up with my experiences.
2) Life is cheap here. When you look at the other cities on that list, the average cost of housing is 2x Calgary, and the average cost per square foot is 3x Calgary.
3) Despite all the challenges, the economy is pretty good. With all the bad signs (lower oil prices, rock bottom gas prices, no progress on pipelines, LNG still a ways off), Calgary unemployment is only about 1% higher than the Canadian average, and way below most European cities. Salaries are more than 20% higher than the Canadian average.
4) We attract smart people. Even in a relative economic trough, we have 10,000 people per year voting with their feet and moving here. Both our international and our internal migrants are more highly educated and employed at higher rates than immigrants to similar European and American cities.

Given all these positives, I predict that while oil and gas will continue to drift sideways, the balance of the economy will perform well and we will see modest improvements in the unemployment rate, downtown vacancies, and housing prices.
 

JonnyCanuck

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Great. Let's
You realize that almost half of Canadian homes have electric heat, right? And most of that electricity comes from non-FF sources. The brave new world is already here (just not in Alberta).

Yes... hydro electric or nuclear generated power is non fossil fuel and is the primary source in Quebec in Ontario, and it is in abundance. Why? ... because of their proximity to large bodies of water (also required for nuclear generation). Alberta & Sask do not have that advantage so the transition options are fewer. Could Alberta have transitioned to natural gas powered plants sooner? Yes ... although nat gas is clean burning, it is still a fossil fuel and does not satisfy the environmentalists.

If they want to build their economies around a sector that expected to go into permanent decline in the next 20 years, that's their choice. I think most Canadians would be happy to trade less economic growth for a more stable economy.
There is no certainty when that decline will start to happen. Even when it does, demand will not drop off a cliff. It will be gradual. There will be continued demand for fossil fuels in my lifetime and yours. It would be silly for Canada not to participate in that industry all the way to the end. No one is saying we must make Canada's economy dependent on fossil fuels. As it is today, energy should be inclusive in a diverse Canadian economy. Canada should be leaders in all types of energy as long as there is demand for all types of energy.
Notice my emphasis is on Canada, not Alberta. This is not about what one province within a country should be doing or shouldn't be doing. I don't hear that kind of discussion going on in the U.S about their fossil fuel producing states like Texas or South Dakota. Why is this glare going on in Canada?
 

JonnyCanuck

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Despite all of the negativity surrounding O&G, there is hope ...medium-to-long term but .... all of these things have to fall into place. Geesh! ?
 

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