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Alberta Oilsands Companies: Imperial Oil to invest $8 Billion

2009-05-28T15:19:00.000-06:00

Imperial Oil to invest $8 billion in Kearl Project

An amazing story for Alberta Oilsands companies just released. Imperial Oil, owned by US Parent Exxon Mobil and known for it’s retail chains Esso has announced that they will invest $8 billion in the first phase of the Kearl Project. The Kearl Project by Imperial Oil is located north of Fort McMurray and part of the Athabasca Region known for its vast reserves of oilsands. This is an amazing piece of news for the Alberta Oilsands industry as they have come to a standstill in the last 6 months when US per barrel of oil plummeted to $30. With the current price of US per barrel of oil at $60 and the availability of cheaper supply costs, it was an ideal time for Imperial Oil to continue with their project. The Kearl Project is expected to produce 110,000 barrels of oil per day starting in 2012 and this is just the first phase of this project. The entire project will last for over 50 years and is considered one of the best undeveloped Alberta oilsands resources available in the Athabasca region. The cost estimate of $8 billion is inline with Imperial Oil’s previous estimate 5 years ago and it was a matter of waiting for the right timing to announce and begin this project. With the availability of labour now that so many other Alberta Oilsands projects have halted production, Imperial Oil was able to secure more reasonable labour and supply costs for their Kearl Project. All in all this was a win win for the company and for the Alberta Oilsands industry.

$60 US per barrel of Oil is profitable for Alberta Oilsands

Now that $60 US per barrel of Oil is a reality in May 2009 where do we go from here. The Alberta Oilsands has been dependant on US per barrel of oil reaching at least the $60 price and stabilizing at this level. The recent announcement by Imperial Oil with a $8 billion investment in their Kearl Project north of Fort McMurray really tells the world that oilsands is here to stay. Not only will $60 US per barrel of oil stabilize but industry analysts all believe that the price will rise from this level and probably be more at the $80 price per barrel. Of course it is anyone’s guess on what will happen but the big companies in the Alberta Oilsands are starting to make their large investments now the $60 US per barrel of oil is here. Who will be the next major Alberta Oilsands company to make an announcement that they will continue with their project? Will it be Shell or Husky Energy or even Suncor. The availability of cheaper labour and supply costs will definitely make these large projects more viable even if oil falls back to $40 US per barrel. A more planned Alberta oilsands investment environment will benefit labour and companies as stability is a key to success.

US price per barrel of Oil is continuing to rise

Alberta Oilsands will definitely benefit from a rising US price per barrel over $60. Perhaps a stable $80 US per barrel of oil for the next five years will see a good steady growth of projects in the Alberta Oilsands areas of Fort McMurray and Edmonton or Calgary. The availability of financing will also play a key role in the further development of the Alberta Oilsands and this will determine the pace of new projects. With a higher US per barrel of Oil at $60 or more the current players in the market are more able to finance their larger projects with the improved cashflow projections. World demand for oil from Asia and the US will continue to make US price per barrel of oil swell and especially in the summer months when demand for oil is high. Though with the recent rise in oil to $140 and the double whammy of the financial crisis, consumers around the world will be more cautious about their oil consumption habits. This is actually a good thing as it will stabilize demand and keep US per barrel of oil at a more moderate level. Hopefully the availability of other viable alternatives to US Oil will make the price per barrel also more stable.

Dirty oil to Cleaner Energy, What is Next?

2009-04-04T02:40:00.000-06:00

What is Dirty Oil in Alberta oilsands

Dirty oil or tarsands in the Alberta oilsands industry is what environmentalist are all worried about. Dirty oil refers to the remains after the removal of the oil from the oilsands. Alberta oilsands accounts for the only commercially mined oilsands in the world. Though there are other oilsands reserves, in the United States and Venezuela, Canada has the only commercially viable development. Located in Northern Alberta in the Athabasca region, Alberta oilsands companies such as Suncor, Petro Canada, and Husky Energy have been extracting the dirty oil for over 30 years. With the improvement in technology and the rising US dollar per barrel cost of oil, Alberta oilsands represents the worlds largest growing oil reserves. Dirty oil is what the environmentalist focus on, however, when they discuss this potential. The Alberta government and the Alberta oilsands companies disagree with the environmentalist and cite reasons such as the improvement in extraction technology and the already present dirty oil in the region. The fact is dirty oil exists in Northern Alberta’s Athabasca region and the oilsands companies are not making the situation any worse. However, in the eyes of the environmentalist they measure the green house gases created by dirty oil production and the environmental impact on wildlife such as ducks who are dying as a direct result of exposure.

What types of Clean energy alternatives are there?

But if dirty oil is not the solution for the worlds energy consumption then what other clean energy alternatives are there? We have solar energy which harnesses the power of direct sunlight to convert the heat to usable power. Solar energy is clean and renewable. The harnessing of solar energy does not create greenhouse gases and solar energy is a renewable resource. While solar energy technology has been available for more than two decades, the production of solar energy has not been cost effective or commercially viable up to the present time. We see limited uses of solar energy as a clean energy alternatives by homeowners who place solar panels on their roofs to supplement their home’s power consumption needs. Some firms have been selling solar energy packs which can be used to recharge batteries on cars or boats and even provide hot water for a shower in the wilderness. Another clean energy alternative is wind power. The clean energy alternative created by wind is through the use of wind farms that harness the power of wind to turn turbines and create energy that can be stored or transmitted for direct use. Wind energy is a growing clean energy alternative but currently still plays a small role in clean energy consumption in the world. One of the requirements of using wind energy is the availability of lots of land in a fairly windy environment. Afterall we need wind to turn the turbines to create the energy. The cost of wind turbines and the need for constant replacement is also one of the reasons why we don’t see a large development of wind turbines in every city.

Dirty oil or clean energy alternatives, who will win the Energy wars?

Dirty oil or clean energy alternatives, who will win? The answer is not as simple as stating that one energy is better than the other and we should stop using one for the other. The world is a bit more complex than this and dirty oil makes money for many investors as well as provides a reliable, fairly inexpensive source of energy. Dirty oil has a limited supply but this supply will stay last for more than a few hundred years given current technology. With the improvement in technology we may see dirty oil last even longer and burn cleaner than it is currently doing. Clean energy alternatives such as solar energy and wind energy will depend greatly on the improvement in technology in helping lower their production cost and raise their output. The ability to provide a commercially viable source of clean alternative energy is the big hindrance in the rapid development and acceptance of this apparent valuable resource. It is interesting to note that even Alberta Oilsands company Suncor produces clean energy using biofuel and is wind power. Suncor is an integrated energy company and uses oilsands, biofuel, and wind power as the tools to provide energy to the world.

Alberta oilsands companies: Suncor buys Petro Canada

2009-04-04T02:07:00.000-06:00

Why has Suncor bought Petro Canada?

Suncor has proposed to buy rival Petro Canada to form Alberta Oilsands largest oil company. The $15 billion US ($18 billion Canadian) stock purchase by Suncor of Petro Canada would be the second biggest purchase of an Alberta oilsands in the history of oilsands mergers and acquisitions in Alberta Canada. The purchase is said to help Suncor energy slash costs by reducing redundancy and become a more focused Alberta oilsands company. This is crucial in a period where we see oil prices at lows of $30 to $40 US per barrel and without any idea of how long US oil prices will remain at this level. Survival in the long term is what Suncor has been really good at and that is why they are Canada’s largest integrated Alberta oilsands company. This is an all-share deal and rates as the biggest Alberta oilsands takeover in history. The deal will help Suncor save over 1 billion in annual savings, a significant amount considering the limited access to financial resources in the current economic environment.

Is the Alberta Oil sands cheap?

The purchase of Petro Canada by Suncor begs the question of whether it is a good time to buy other Alberta oil sands companies. Are the Alberta oil sands cheap at this moment in time. Like Alberta real estate in Edmonton and Calgary which has seen a fall of over 30 percent in the last year, oil sands companies have likewise seen significant declines. The stock market, Toronto Stock exchange, Dow Jones, and S&P 500 are all significantly down over the last year and every stock that trades on the exchange has been brought down. It is more a lack of confidence in the financial markets as a result of the global financial crisis that is creating this current buying opportunity. But if Alberta oil sands is cheap right now, who can financially afford to buy it right now. There are very few big players in the Alberta oil sands industry who have also not been significantly hurt by the global financial crisis. Surviving the short term is a key priority for all Alberta oil sands companies despite any cheap buys. We may see other global companies from the Middle East or Asia (China in particular) make a serious offer for cheap Alberta oil sands companies. The Suncor offer for Petro Canada does seem to indicate that it is indeed a time for cheap Alberta oil sands purchases. Suncor, however, will also see significant savings in the purchase due to cost reductions which is an additional incentive for the current purchase.

Are there other Alberta oilsands companies going to be purchased soon?

What other Alberta oilsands companies are going to be snapped up in the next 12 months. It is only a matter of time before the buying spree continues. With the firming of US oil prices at $50 US per barrel, there seems to be more confidence in the medium term for Alberta oilsands companies. The stock market has recovered significantly in the beginning of April 2009 and this points to a growing consumer confidence. Alberta oilsands companies that may be bought first will be the bargain shoppers who are looking for companies with great pieces of land in the Athabasca region but short on financial capital. Companies such as BA Energy will be one of the targets of these Alberta oilsands investors who are eyeing the potential of owning prime Alberta oilsands real estate. The long term trends of the oil industry are still rosy as the demand for oil will continue to be much higher than the annual supply. This and the inability to find alternative cheap sources of energy is the reason that conventional oil will continue to rule the world.

Eligible Expenditures and Reno Expenses Under the 2009 HRTC Canada Home Renovation Tax Credit PLUS EcoENERGY Retrofit Canada Home Grants & Reno Canada

2009-03-27T09:36:00.004-06:00

Eligible Expenditures Under the HRTC – Canada Home Renovation Tax Credit Includes The Following Home Reno Projects

The Canada HRTC or Home Renovation Tax Credit for 2009 and 2010 can be claimed for renovations and alterations to a dwelling (home, condo, townhome, suite) or its land. For example, homeowners in Canada can claim expenditures and expenses for major renovation projects such as finishing a basement, renovating a kitchen or building an addition for an income generating suite. Costs associated with such major renovation projects on your Canadian homes are also eligible for the Home Renovation Tax Credit in Canada HRTC program, including permits, professional services, equipment rentals and incidental expenses. Routine repairs and maintenance normally carried out on an annual basis or more frequently such as cleaning, lawn fertilization and snow clearing do not qualify for the Canada Home Renovation Tax Credit or HRTC of Canada. The cost of furniture, appliances, audio visual electronics and construction equipment are also not eligible for the Canada HRTC tax credit for home renovations. Individuals must keep their home reno receipts for expenditures and expenses and can claim the HRTC Home Renovation Tax Credit when filing their personal income tax returns for 2009. Examples of the Home Renovation Tax Credit or Canada HRTC program expenditures and expenses that include eligible write-offs include: renovating a kitchen, bathroom or basement, new carpet or hardwood floors, building an addition, deck, fence or retaining wall, a new furnace or water heater, painting the exterior or interior of a house, resurfacing a driveway or laying new sod. The following expenditures or expenses, however, are not included in the Canada Home Renovation Tax Credit or HRTC: purchase of furniture or appliances (like kitchen appliances, washer/dryer), purchase of tools, carpet cleaning and maintenance contracts (furnace cleaning, snow removal, lawn care and pool cleaning.)

Renovation Budget Boosts and the 2009 HRTC Canada Program

The latest federal budget offers 2009 Canada home renovation incentives for homeowners, but only if the property is considered to be your principal or primary residence. So for those of you who rent out suites that share a common area, this may be a boost for your reno buck. The incentive is in the form of a 15% Home Renovation Tax Credit (HRTC) of up to $1,350 on eligible home renovation expenses in Canada real estate market undertaken after January 27, 2009 and before February 1, 2010. However, the Home Renovation Tax Credit HRTC is not available in respect of expenditures and expenses for work carried out or goods acquired in that period if the expenditure is made pursuant to an agreement entered into before January 28, 2009. Individuals may claim this HRTC Canada home renovation credit (including expenses made in January 2010) in their 2009 income tax returns. Individuals who earn business or rental income from part of their principal residence are allowed to claim the credit for the full amount of expenses made in respect of the personal use areas of the residence. For expenditures made to common areas or which benefit the housing unit as a whole (such as reshingling a roof), the administrative practices ordinarily followed by the Canada Revenue Agency (CRA) to determine how business or rental income and expenditures are allocated between personal use and income earning use will apply in establishing the amount qualifying for the credit. In other words, if you take a percentage of your home as a rental unit, the same percentage should be applied to the Canada Home Renovation Tax Credit or HRTC (not more and not less). Expenditures and Canada home renovation expenses will quality for the HRTC if they’re incurred in relation to a home renovation or alteration of an eligible dwelling (including land that forms part of the eligible dwelling) provided that the house renovation in Canada or alteration is of an enduring nature and is integral to the eligible dwelling. Such home renovation expenditures would include the cost of labour and professional services, building materials, fixtures, equipment rentals and permits as well. Expenditures on home renovations aren’t eligible if the related goods and services are proceed by a person not dealing at arm’s length with the individual, unless the person is registered for Goods and Services Tax/Harmonized Sales Tax purposes under the Excise Tax Act. Any eligible expenditure for Canada home renovation tax credit or HRTC claimed for the program must be supported with original receipts if possible.

EcoENERGY Retrofit Canada Home Grants

The federal budget in 2009 also proposes an expanded EcoENERGY Retrofit Canada Homes Program and Natural Resources Canada is currently working to finalize the details. Under the current program EcoENERGY Retrofit Homes Grant provides home and property owners with grants of up to $5,000 to offset the cost of making energy efficient improvements. EcoENERGY Retrofit Canada Homes grant apply to a host of measures that reduce energy consumption and provide for a cleaner environment, from increasing insulation to upgrading a furnace. Only Canadian homes that have undergone a residential energy efficiency assessment by an energy advisor certified by Natural Resources Canada will be eligible for EcoENERGY Retrofit Grants. Detached homes, row housing, duplexes, triplexes and mobile homes on permanent foundations and some small apartment buildings of three storeys or less may quality for the Canada EcoENERGY Retrofit Home Grants. The EcoENERGY Retrofit Canada Grant is based on the type and number of energy improvements that have been made and how much the efficiency of the home has been improved. The EcoENERGY Retrofit Grant of Canada is based on how effective that upgrade is in saving energy – not on the cost of the upgrade. The maximum Canada EcoENERGY Retrofit Home Grant one can receive per home or multi-unit residential building is $5,000, whereas the total grant amount available to one individual or entity/company for eligible properties over the life of the EcoENERGY Retrofit Program of Canada is $500,000. The average grant is expected to be more than $1,000 and yield an average 25% reduction in energy use and cost. Contact the government to learn more about the new Canada EcoENERGY Retrofit Home Grants and the changes being applied in 2009.

Home Renovations In Canada – What Should You Reno?

According to Scott of HGTV, here are the top renovations performed in terms of return on investment for your home in Canada: Income generating suite – 200%, Painting – 100%, Kitchen and Bathroom upgrades – 87.5%, Flooring – 80% and Light Fixtures – 67.5%. According to Re/Max Canada home renovations that provide the best return on investment includes: kitchen cabinets, hardwood floors, new windows, removing walls to open up space, finishing the basement, kitchen appliances, new shingles, new bathroom taps and plumbing and new bathroom tiles.

Reno Canada Home Makeovers – Basement Conversions – Made Easy

Step 1: Select your square footage. Step 2: Select your finishing package. Step 3: Select your turnaround time. Starting from $19,999, Reno Canada can completely transform your basement into a liveable entertainment or office space or whatever you would like. Reno Canada takes home renovation to a whole new level with their seamless blend of in house design services, on site project management and only the finest specialized products, personalized service and decorating detail. With Reno Canada renovations, all workmanship is thoroughly inspected to ensure only the best quality craftsmanship. Now’s the time to see how truly easy basement conversion can be through Reno Canada renovations. Ask Reno Canada Renovations today about their exclusive turn key, self contained, upscale efficiency suites. Whether it’s a teenage dorm, an in law suite, or simply additional square footage, now’s the perfect time to maximize your home’s investment through the installation of a quality basement conversion through Reno Canada Renovations. Ask them about the 0% interest free financing on selected bathroom packages through Reno Canada today. These projects quality for the 15% government HRTC credit. Visit www.renocanada.com for more information about Reno Canada renovations. Includes quality workmanship throughout, all necessary building materials and related supplies. Based on minimum 500 square foot space. May not meet all necessary building codes to quality as ‘retrofit’ status compliant through Reno Canada renovations. 15% government credit applies as per guidelines set out by the Canada HRTC program. Tax(s) extra, cannot be combind with any other offers or promotional incentives from Reno Canada renovations.

Why Alberta oilsands productions have halted in 2009

2009-03-27T00:42:00.001-06:00

Alberta oilsands projects have halted in 2009

The global financial crisis and the drop in oil prices to below $40 US per barrel has served a double whammy to the Alberta oil sands companies. Not only is the price of US $40 oil not as profitable for the Alberta oilsands companies but the global financial crisis is also reducing the available money for these companies to hire more labour and produce more oil. So falling commodity prices and weak credit markets make for a strong reason why Alberta oilsands projects have halted in 2009. The effects of the global financial crisis can also be seen in weaker demand for oil as more and more people are saving money in uncertain times. Less vacations means less Alberta oilsands development as well. The big Alberta oilsands companies such as Suncor, BA Energy and Husky energy will all see very weak 4th quarter 2008 earnings and this will dictate their strategy for 2009. We have already seen more than 10 billion of oilsands production halted and more announcements are expected to come.

Alberta oilsands companies cutting dividends

Alberta oilsands companies such as Suncor have cut their regular dividend payment to their shareholders. Suncor, one of the large Alberta oilsands companies, pays quarterly dividends to its shareholders. Investors have relied on the steady and safe return provided by companies such as Suncor who pay their dividends on a regular basis. This has been the main reason why people invest in oil sands trust which is mandated by their shareholder agreement to pay a specified amount of its income as dividends or automatic reinvestment shares. However as hard times have hit the global financial markets and the banks have stopped lending and cut credit, Alberta oilsands companies such as Suncor have had to take measures to conserve their cash. Conservative measures taken now rather than when the cash reserves run out is what Alberta oilsand companies are planning on as they try to survive the financial crisis. Will cutting dividends in the short term help these Alberta oilsands companies? Yes and No maybe the answer because if the financial crisis is short then we can expect the cash reserves to be improved soon. But if the financial crisis lasts for a few years then we can expect some bankruptcies to occur as cash strapped companies must close their doors.

Turn around time for Alberta oilsands projects

When will the turn around be for the Alberta oilsands projects. One year, two years or more is the question investors are demanding when they plan their investments in the Alberta oilsands. While the big Alberta oilsands projects have been postponed and not cancelled, the smaller Alberta oilsands projects have been cancelled. The big companies such as Suncor can wait out a slow period of growth by holding off for a year or more. In times of slow growth or negative growth we can expect some consolidation in the industry. The turn around time for the Alberta oilsands projects is expected to be 24 months. This coincides with the end of 2010 and when the global financial crisis is expected to improve and credit will once again be normal. We can expect Alberta oilsands projects to be announced again before the credit fully turns around. Maybe in early 2010 we will expect the activity in Alberta oilsands to be robust and more projects announced to be started.

Alberta Oil is cheap supply for US Obama

2009-03-27T00:27:00.000-06:00

Ed Stelmach says US will need Alberta Oil

Alberta oilsands produces a reliable and secure oil source for the US. Ed Stelmach sent a clear message to the Obama administration when he said US will need Alberta oil in the future. It is important for the US to recognize that Canada’s Alberta rich oil sands is a secure and cheap source of oil for the growing US Demand. Fossil fuels including the oilsands will provide more than 80% of the supply needed to satisfy world demand for oil. It is in the best interest for the US to work closely with Canada in implementing a viable solution to develop the oilsands responsibly. Expel the myths and produce the facts of Alberta oil and let the world know what the Alberta oilsands companies can do to protect the environment. In 2008, the Alberta Government created a $2 billion dollar fund to promote solutions to solving the dirty oil problem. This and other solutions from the oilsands’ companies themselves will serve to promote this abundant resource for the growing demand for oil consumption.

Obama concerned about Alberta Dirty Oil

Obama has an aggressive plan to combat climate change. He says that we can not punish the future by exploiting the present and we will not tolerate the increase in green house gas emissions while he is President. This is a direct blow to Alberta oilsands companies and the growing environmental concern about ‘dirty oil’. Alberta’s dirty oil image is a picture of an environmental disaster waiting to happen. We are shown images of Northern Alberta’s oilsands production in Fort McMurray, the Athabasca region, and how the destruction and carnage of the environment is occurring without concern. Environmentalist are adamant that dirty oil in Alberta cannot continue and they will work harder in showing the world the truth that is happening to this ecosystem. Obama further stated that his presidency will reduce the US’s dependence on ‘dirty oil’ for good. Ed Stelmach of the Alberta government on the other hand has been working vigorously in fighting the environmentalist by dispelling the myths behind their stories.

Dirty Alberta Oil: Myths and Facts

Myths about Alberta oilsands are abundant. But what are the true facts of what the Alberta oilsands is doing to the environment. With a $2 billion dollar investment by the Alberta Government in researching solutions to develop the oilsands more cautiously, we are sure to hear a lot of buzz about the oilsands in the near future. One of the myths about the oilsands is the amount of impact that oilsands has on the environment. A study was done comparing the emissions that currently are produced by coal production, a large polluter in the US and China, versus the oilsands. When compared with this polluter, the oilsands represents less than 1 percent of the emissions being emitted by coal production. Another myth follows about the oilsands environmental impact due to tarsands pools created from extracting the oil and leaving the toxic remains behind. Of course the toxic remains have always existed in the area even without removing the oil. The environmentalist are concerned that the process of extracting the oilsands will create a bigger impact than if no production was done. While this may be true of only some rare situations, the truth is that the tarsands production is very careful in leaving behind tarsands pools in a way that will not be worse than the original case. Of course the results are hard to prove by both sides given the short amount of time that has passed since the production of the oilsands.

Living in Summerside Edmonton

2009-03-19T02:51:00.001-06:00

Ellerslie Road and Summerside

Ellerslie Road is the south border of the city and what divides Summerside from the rest of Edmonton. The development of Summerside is really a story of the development of farm land on either side of Ellerslie Rd. Many people still can remember the not so distant past when they played hockey on the rink in the farm by Ellerslie Road. This was not known as Summerside back then and will be a distant memory for most people in another 10 years as development in Edmonton real estate continues to push on. Why is Summerside such an important part of the Edmonton real estate story? Well, you can see the rapid growth in the area with the South Common drawing crowds from as far away as Red Deer. The South Common is a shopping mega complex with box stores such as IKEA, Home Depot, Golftown, and Best Buy to name a few. There is also a large multi-cinema theatre and all your favourite restaurants. There has been significant commercial and residential growth since the development of the Anthony Henday South ringroad in 2008. This connects to Ellerslie rd. in so many points that Ellerslie Rd. is synonymous with the Ringroad in Edmonton South. Summerside will benefit from the better access that Ellerslie now receives as this new community is just south of it.

Summerside Lake and Community

At the heart of Summerside is the Lake. More properly known as Lake Summerside, this rapidly growing community is starting to take shape as more and more people relocate to the area. With a resident community fee for all people who live in the area, Lake Summerside is developing the resources to provide a valuable resource to everyone who lives in the vicinity. A gated community Lake that is the biggest in Edmonton and has a clubhouse, tennis courts, basketball courts, and real sand beaches. The experience of this community is one of pride and exclusiveness. All members of this Lake Summerside community are required to pay an annual fee and receive a membership card that allows access to the Lake and all it has to offer. With a stocked pond full of trout, residents at Lake Summerside can enjoy a famous Alberta pastime of fishing. The clubhouse also provides kayaks, canoes, and other water activities that can be enjoyed by the whole family on any of the beautiful sunny days that Edmonton always has. In the winter you can enjoy ice skating on the lake once it has been tested to be safe. There are ice skating lessons that are organized by the staff at the Lake Summerside clubhouse that are ready to show you how to skate. Other people make participate in a friendly game of ice hockey or even ice fishing!

Summerside home real estate developments

In Summerside you will find a variety of Edmonton home developments. From the typical single detached homes to the multifamily townhouses, apartments, and coach homes, Summerside has it all. The difference is that Summerside is a master planned community and that means when you come to Summerside you will notice that everything is very well organized and looks like it belongs. Homes in the area conform to a community landscaping plan and all new homes have this development requirement. The result is that the area is a great place to walk around in as you enjoy the beauty of all the new Edmonton homes and their unique architectures and styles. You feel like you are in a resort lake community and not really in Edmonton at all. Of course the people are all friendly and family oriented so you will enjoy getting to know your Summerside neighbours perhaps at one of the many Lake Summerside community events.

Alberta royalty cuts: will it help the oil companies?

2009-03-19T02:30:00.001-06:00

Why is Alberta cutting it’s royalties?

The Alberta Government just announced their policy change in March 2009 for the Alberta Oil sands royalty revenues. The Alberta government has decided to give Alberta oil sands companies a break in 2009 due to the financial crisis and drop their oilsands royalties significantly for any new activity that will be done in 2009. What this means is that any Alberta oilsands companies willing to invest in their existing oilsands projects and thus create new jobs in Alberta will be able to benefit from paying less royalty to the Alberta government for the oil that they produce. There is of course a cap on the amount of the cut and it only applies to a certain amount of oil produced as well as the time period. Time is of the essence in the Alberta royalties cuts and Oilsands companies need to move fast in order to benefit from this revenue boosting cut. The main reasons for the royalty reduction in Alberta is the lower revenue that is expected due to the postponement of many major oilsands projects and due to the climbing unemployment rate in the province. The Alberta government is losing revenue anyways and the reduction in royalty split may actually increase its share in a shrinking royalty pie in 2009 and 2010. The other reason is that oil prices that have hit historic highs of $140 US per barrel have fallen to barely profitable levels of $35 US per barrel. At these low US dollar per barrel oil prices the Alberta oilsands companies have postponed any further production to protect their future revenues.

Who will benefit from the Alberta royalties cuts?

So who will really benefit from the Alberta royalties cuts anyways? The Alberta oilsands companies consists of a few major players and lots of smaller companies. The fragmented nature of the oilsands companies is the reason why it is so hard to control the revenue that the Alberta government hopes to achieve. The global financial crisis has caused a reduction in the available capital to all Alberta oilsands companies both big and small. This is the real reason behind the many postponements of major oilsands projects and why we may continue to see very little oilsands activities despite the Alberta royalties cut. The stimulus for the cuts is giving the Alberta oilsands companies more future revenue but as you can see this misses the point of why they have reduced their development in the first place. This is especially true of the smaller oilsands companies in Alberta as they do not have the financial reserves that the bigger players such as Suncor has. In the current global financial crisis we can expect the big players such as Suncor, Husky Energy, or BA Energy benefit from the Royalties cuts the most. The smaller players will have to sit on the sidelines waiting for the banks to start lending again before taking part in any revenue gains as a result of Alberta royalties cuts.

Alberta oil company activity in 2009 and beyond

What will happen in 2009 for Alberta oilsands companies and the industry? This is a question mark for everyone including this writer of course but we can definitely put out our opinions. One of the main factors for any growth in the Alberta oilsands development in 2009 is the ability of the global financial crisis to stabilize. This is by far the most important factor in determining whether we will see an increase in Alberta oilsands companies investments. With an increase in lending activity we should start to see the large Alberta oilsands companies start to perhaps consolidate by buying smaller oilsands firms. This consolidation will happen at good prices not seen for some time as the smaller oilsands companies values have decreased dramatically with the fall in US oil prices to $35 per barrel. The second important factor is the US price per barrel of oil and what price this will stabilize at. It is important for US oil prices to maintain a level of $50 or more. This level of US price of $50 will allow for the profitable development of new projects without over production causing abnormally high costs. The US price per barrel of oil should not be more than $100 or else this will have an adverse affect on the industry.

Edmonton Real Estate: Buy or Wait?

2009-03-19T01:49:00.001-06:00

Buy or Wait for Edmonton Real Estate

With the gloom and doom headlines of late it is not hard to see why the prices of real estate in Edmonton and Calgary are falling fast. How fast you may ask? Based on recent data by Statistics Canada, Edmonton real estate prices dropped 2.8 percent and Calgary real estate prices dropped by 2.1 percent in January 2009. This is a drop in a month’s time which is significant when you look at the average home increase in the last 50 years is only 3 percent per year. The current drop in Alberta real estate prices is definitely a result of the global financial crisis caused by the subprime lending in the US. Buy or wait is the question, however, that many investors are now asking about Edmonton real estate. With prices dropping back to levels not seen for 2 years and rents more than double what they were back then is this a good time to buy? As with all buy or wait decisions, what investors should always pay attention to is their cashflow. Cashflow is king in any buy or wait decision. Can you afford to buy Edmonton real estate and have the rental income support all the cash flows that real estate investing has? Perhaps the answer is yes and maybe even better the answer is that buying Edmonton real estate right now will give you positive cash flow. Waiting on the other hand has it’s pluses and minuses as well. If you are waiting for a better deal on Edmonton real estate this just may never happen. The fact is real estate is always a cyclical market and with the current large fluctuations it is most certainly a fast moving one for good property. Waiting to buy good property may end up costing you.

Alberta Mortgage rates and Edmonton homes

Mortgages in Canada and especially in Alberta have given most investors a chance to afford the new home purchase. Even if prices were at the high of 2007 we can still see the average investor being able to afford the average Edmonton home. For example with current prime rate at 2.5 percent and most banks willing to lend to their best clients at Prime + 1%, the mortgage rate that investors will get right now are close to 4%. This low mortgage rate will make your Edmonton home more affordable by $300 or more depending on the size of your house. Most homeowners in Edmonton have been able to go to their banks and talk to them about their Alberta mortgage and have their amortizations extended and thus lowering their monthly payments. In a global financial crisis such as the one we are experiencing, the ability to keep more cash in your account is the key to surviving. Most Alberta mortgage rates that are on variable rate have benefited greatly from the drop in the Canadian Prime rate to 2.5%. With mortgage rates expected to be stable for the next 12 months most Edmonton homes will continue to be very affordable.

Summerside, Northeast, and other buying opportunities in Edmonton

Now the real question real estate investors in Edmonton have is where to buy their home? There are so many areas in Edmonton to choose from with some of the more popular areas being: Summerside and the Northeast. When deciding on buying your Edmonton home you need to know what the purpose of buying is. Are you an investor or are you going to buy the Summerside or Northeast home to live in? For a lot of people in Edmonton they are actually homeowners. There is still a lot of in-migration from the other provinces to Alberta. Edmonton is one of the most popular choices for people to locate as the jobs in Edmonton are still abundant as compared to other areas in Canada. Summerside is located in South Edmonton near the South Common Shopping Centre and minutes away from the new Anthony Henday ringroad. For people who work in the South or need to be near the Edmonton International Airport, Summerside is the ideal location. The completion of the Anthony Henday ringroad in the south has opened up the transportation routes and enabled the efficient flow of traffic to the area. Summerside is experiencing an explosion in commercial activity including Edmonton real estate development. The Northeast Edmonton area on the other hand is perfect for people who work in the army or North of the Fort Saskatchewan River. It is an area that will be going through an expansion in the next few years as the Anthony Henday ringroad is complete in 2011. The northeast is already slowly experiencing commercial and residential growth and has seen one of the best real estate returns in Canada over the last five years. So buying in Summerside or Northeast Edmonton will really depend on where you work and what you plan to do with your new Edmonton home.

Subprime lending in Alberta: Truths and Myths

2009-03-19T01:43:00.000-06:00

What is the Subprime Market in Alberta

The Subprime Market made the national news in the US and has continued to be a weekly headline. A subprime market is one in where high lending rates are offered to borrowers with lower credit quality. These lenders borrow from the subprime markets because the main banking institutions will generally not lend to these types of investors. The Alberta Subprime Market does exist but not in the same scope as we have seen in the US. The hot Alberta real estate market, especially in areas such as Edmonton, Calgary, Fort McMurray, and Grand Prairie have led investors to borrow like there is no tomorrow. Everyone just wants to be in the real estate market of Alberta and the prices seem to keep climbing. With the price of oil rising to meteoric heights, the subprime market was also lending at meteoric rates with investors leading the way in borrowing from these non-traditional lenders. While the interest rates given by the main banks such as Royal Bank, CIBC, and TD Canada Trust remains at historic lows of 5% on a 5 year fixed rate mortgage, some subprime lenders were writing new mortgages that ranged from 7% to 20%. There have even been cases where investors who needed bridge financing to close on a deal would borrow from these second tier lenders at rates above 30%.

Foreclosures in Alberta as a result of Subprime Lending

Foreclosures in Alberta have seen a dramatic rise in the last 12 months. The year of 2008 has seen the foreclosure rate jump more than 50% with the lawyers working overtime to handle the workload of Foreclosures in Alberta. How can the rate jump so high? It is a direct result of subprime lending in Alberta and specifically in real estate heated markets such as Edmonton and Calgary. The subprime lending has allowed investors to over leverage their financial position and put themselves in an impossible position to maintain their properties. Once the ability to pay the mortgage is not met, these investors desperately try to liquidate their properties in a falling Edmonton and Calgary real estate market. The result is that many homes do not get sold, mortgages do not get paid and the foreclosures start increasing in the double digits. However, put into perspective, the foreclosure rate in Alberta, especially Edmonton and Calgary have been very low. Even with a tripling of the foreclosures in Alberta due to sub prime lending, the actual amount of Edmonton foreclosures is still small. We do not see a subprime crisis the equivalent of the US in Alberta or Canada. Even our subprime lenders are more careful than their US counterpart in giving out their hard earned cash. However we should expect to see foreclosures in Alberta to remain at historic highs for at least another two years while overly optimistic investors untie themselves from the poor investment decisions they have made.

Predictions for Subprime lending in Alberta

We predict that the subprime lending in Alberta will be reduced to normal levels for 2009 and 2010. Lenders such as HomeTrust, Resmor, and some private money lenders are just going to be careful by reducing their risk in a declining Alberta real estate market. Faced with falling real estate prices, the subprime lending activity in Alberta will become even below average over the next 12 months. You also got to know that the subprime lenders themselves are suddenly short of capital and must be conservative in their own portfolios or else face similar fates as the clients whom they lend to. When the economy is not doing well and jobs are not abundant the ability for investors to pay their mortgages will also decline. In a falling economic climate, sub prime lending is going to be placed at a low priority and it will be back to the basics of borrow what you can afford.

Alberta slashes Alberta Oil Sands Royalty

2009-03-06T17:02:00.001-07:00

Alberta Government reveals Royalty Slashing

The worsening financial crisis has hurt many industries including the Alberta Oil Sands and their related companies. The recent postponing of many of the billion dollar projects by companies including Suncor, Husky Energy, BA Energy, and Petro Canada to name a few are forcing Alberta politicians to review their Royalty policy. A recent shift in their Alberta Oil Sands Royalty from 15% - 20% down to 5% shows how much the Alberta Government is willing to give in order to save jobs in Alberta. Read more about this online at Financial Post http://www.financialpost.com/story.html?id=1349060. The Alberta Government is facing a dire deficit of more than 1 billion dollars, its first deficit for more than 10 years. Despite the recent increase in the percentage of Royalty payments in 2008 when oil price per barrel was well over $100, the Alberta Government is in a worst position if no new jobs are created. With fewer oil wells as a result of a postponement in projects, royalty slashing is the only alternative in creating the right environment for Alberta Oilsands companies to continue to invest in Alberta rather than in other areas. The new royalty slashing plan in Alberta applies to 5% of the first 500,000 barrels of oil in the next year or 500 million cubic feet of natural gas.

Alberta Oilsands Royalty rates and the Alberta Oilsands Companies

The royalty rates charged by the Alberta Government allow it to share in the profits of Alberta oil sands companies. When the economy is doing well, Alberta oil sands companies will continue to invest despite a high royalty payment to the Alberta Government. As long as profits remain high, and they were at record levels of a few billion dollars per quarter, everyone will remain in business. However, the global financial crisis has created a bad environment for the Alberta oil sands companies. In a global financial crisis, it is impossible to borrow money from any bank. The major banks around the world provide the credit facilities required to fund Alberta oil sands companies operations and lines of credit facilities to operate efficiently. Without the support of the global financial system, the Alberta Oilsands companies run a high risk of running out of needed capital and going bankrupt from a lack of financial resources. While the big companies such as Suncor have large financial reserves, it is still unlikely to invest in times that are this uncertain. The royalty rates are a financial incentive to provide Alberta Oil Sands companies to continue to take risk despite the possibility of lower financial support.

Will the Royalty reduction work?

The beginning of 2009 has already seen a decrease of 27% in drilling activity from the major Alberta oil sands companies. This drastic reduction in activity means a drastic reduction in employment and an increase in unemployment for the province of Alberta. A royalty reduction will provide the financial incentive for Alberta oil sands companies to take the risk now to invest rather than wait a year and have to pay a larger percentage of their profits to Alberta oilsands royalty payments. But arguments of whether this will work include the financial stability of the Alberta oil sands companies have not improved. Without providing the financial stability taken away as a result of a weakening in the global major banks, the small Alberta oil and gas companies are still not able to make any new investments despite having a lower royalty. The main benefits of this royalty reduction would actually to go larger producers who have the financial reserves to produce even more and will be able to take advantage of a saving in royalty payments.

Alberta Oil Sands Companies: Suncor Energy

2009-03-06T16:36:00.000-07:00

Suncor develops Alberta Oilsands in the Athabasca Region

Suncor Energy Inc. is an integrated energy company with large holdings in the Alberta Athabasca region. The company was founded in 1967 and currently employs more than 6,500 employees. Being an integrated energy company, Suncor has large holdings in the Alberta Oilsands Athabasca region, explores, produces and develops natural gas, has downstream operations in Ontario and Colorado that market the company’s refined products. In addition to it’s oil and natural gas, Suncor also has investments in renewable energy including wind power farms and Suncor’s ethanol facility, a known biofuel, in Ontario. Though its main focus is on the development of the Alberta Oilsands and is one of the first Alberta Oilsands companies to locate in the Athabasca region.

Suncor and Alberta Oilsands production

Suncor Energy Inc. main focus is Alberta Oilsands production. The Alberta Oilsands is an oil rich area that has more commercially viable oil than anywhere in the world and the reserves are only getting larger with improvements in technology. Suncor has been developing its Alberta Oilsands since 1967 and continues to be one of the biggest Alberta Oil sands companies in the area. By recovering oil, known as bitumen, from the oil sands and refining it to produce products that include feedstock and diesel fuel, Suncor provides an economically viable product that is in high demand around the world. The two methods that Suncor uses to recover oil from the Alberta oil sands is surface mining and in-situ (similar to conventional oilwell production). Through advances in Alberta oilsands technology and computers and engineering techniques, the current proven reserves in Canada’s Alberta Athabasca region is only second to Saudi Arabia. However, our potential reserves given an improvement in the technology in the future are far in excess of anywhere else in the world.

Suncor Energy Inc.on the NYSE and TSX: SU

Trading on the Toronto Stock Exchange, TSX, and the New York Stock Exchange, NYSE, under the symbol SU, Suncor is a global energy company with access to private capital. Suncor has a dividend reinvestment option that allows current shareholders to easily and cost effectively reinvest their regular quarterly dividends into more shares of Suncor. The stock price of Suncor hit an all time high in 2008 of $73. With the current fall in oil prices, Suncor has fallen back to its 2004 and 2005 price range of $20 to $30 per share. The value of Suncor is highly dependent on the price of oil and the world demand for oil products. While the oil prices remain in the range of $30 - $40, the price of Suncor and other Alberta oil sands companies including BA Energy, Husky Energy, and Petro Canada will all be affected by the weakness in the commodity price. When the price of oil peaked at $140 per barrel we saw the high reach $73 per share so there is a large range of share prices in the current market. With global demand expected to continue to be robust and after the financial crisis is passed, we expect to see another jump in the price per barrel of oil. While alternative energy such as windpower, biofuel, and solar panel are still in its infancy, we can also continue to expect the reliable consumption of oil to continue.

Alberta Cities Come in 1st and 2nd for Best Places to Invest in Canadian Real Estate PLUS Edmonton Real Estate Forecast 2009 and 2010 Outlook

2009-02-26T17:05:00.006-07:00

According to an article in the Canadian Real Estate Magazine, Edmonton takes first place in the best areas to invest in real estate in Canada. Whether oil is $50 or $100, Edmonton’s underlying economy is poised to be a national leader over the next decade. Calgary followed closely behind. Second in corporate head office locations in the country, lowest in unemployment and highest in average income, Calgary will challenge Edmonton as leader of Canada’s economy. Five Year Cycle: In Canadian real estate investing, you’ve got to be able to hold onto a property. It’s not like buying a stock that you sell a few days later because it went up a few dollars. I use a five year cycle, because that seems to be the time frame when you can trade up or move on. According to the Canadian Real Estate Magazine, the outlook for Alberta real estate is promising: The economy will grow by just 1.2% in 2008, as output has declined in goods-producing industries such as manufacturing, construction and mineral fuels. With these industries expected to rebound, Alberta is forecast to generate real GDP growth of 2.6% in 2009.

Edmonton Real Estate Forecast 2009

According to the Canadian Real Estate Magazine, Edmonton Real Estate forecasts for 2009 are very promising. A growth rate of 4%, according to the Conference Board of Canada, in part due to oilsands development in the northeast parts of Edmonton, construction and infrastructure activity, is making forecasts for Edmonton real estate 2009 a key player for property rental returns. According to Don R. Campbell, president of REIN, Calgary, “With over $200 billion of investment pouring into Northern Alberta in the next vie years we will witness a dramatic growth in jobs, which will attract people from across the country and around the world, each and every one of them requiring housing either rental or purchase in Edmonton real estate 2009.” In addition, the completion of the LRT route from Health Sciences Station to Century Park central Edmonton real estate at the end of 2009 is expected to bump up the 2009 forecasts for Edmonton real estate values by ten to even twenty per cent says REIN. In 2008, the average price of an Edmonton condo was $228,750 according to Royal LePage, which is one the most affordable and undervalued real estate markets in all of Canada. CMHC figures show the average monthly rental income for a two bedroom Edmonton property was sitting at about $1,000 per month. 2009 Edmonton real estate investors forecast such as Bill Briggs, a local realtor for Re/Max Real Estate Central Branch says that property investors in Edmonton tend to purchase mid to lower priced single family homes as well as apartments and condos to achieve good cashflow. The forecast for 2009 in Edmonton real estate values is that cashflow will continue to be a great positive for the markets while property values should stabilize by mid year. “Proximity to the University of Alberta, the Northern Alberta Institute of Technology and Grant MacEwan College provide a huge number of prospective home renters,” he says. Edmonton condo forecast for 2009 might be the best opportunity for cash flow because these units tend to rent faster and are expected to see a 12.2% increase in rent by the end of 2009, according to CMHC.

The 2010 Outlook for Edmonton Real Estate

According to many experts, now is a great time to purchase Edmonton property. There are several factors that result in this conclusion. Firstly, mortgage rates and lending are at all time lows in the history of this country. With BoC lending rate at 1% as of February 2009 and an expected drop by 0.25% to 0.5% in the upcoming Bank of Canada announcements, the variable rate mortgages that are tied to the BoC lending rate to some point, will possibly hit the lowest point ever in the coming month. The 2010 outlook for Edmonton real estate is that the rebound in commodity prices such as oil and gas will have a very positive effect on the Alberta economy in general, with Edmonton property prices in 2010 outlook and forecasting expecting a high single digit gain through the year. Variable rate mortgages are very low right now, and waiting even 6 months may mean a difference in one or two per cent over a course of a five year term. Any drop in Edmonton real estate prices in 2009 or 2010 will be offset by the increase in mortgage interest rates, so there would be no real advantage to wait if you, as a homebuyer, are ready to make a new Edmonton home purchase. Secondly, the Edmonton real estate outlook 2010 and beyond is that with many home buyers waiting it out to see where the market goes this year, and with forecasts for 2009 and 2010 in Edmonton real estate calling for a big dip in sales volume and a small decrease in sales price, there will be many more people looking to buy a home in Edmonton property market in 2010. with an increase in homebuyers, comes competition again, meaning that the new Edmonton home of your dreams may have multiple offers and possibly bidding wars for lower priced houses and condos. Why go through the tense wait of bidding wars when you can submit a single offer in 2009 Edmonton real estate outlook and forecast and end up with a great home that you love. Thirdly, oil and gas make up a big part of the Edmonton economy and is a driving force for the province of Alberta in terms of revenue, infrastructure, business and population growth. As commodity prices are at their all-time lows in the past 20 years and with the rise and growth of both China and India coupled with the insecurity of other gas and oil producing nations, Edmonton real estate forecast for 2010 and 2009 is much better than what most headline news portrays. With a growing demand in these developing nations, it is important for Edmonton to make sure that it gains the respectable relationships with these nations and to promote other clean energy sources for the future of Alberta. With a rebound of oil and gas prices expected in late 2009 and through 2010, the Edmonton real estate outlook and forecast is very good as property prices here have always had a direct relationship to commodities. With more people moving into the Edmonton area in 2010 and with an increase in the number of jobs coupled with a stagnant home building industry for the last two years, there will be a shortage of rental and owner occupied housing in Edmonton real estate in 2010 again. For all of these reasons, Edmonton real estate outlook 2010 and beyond is for a strong and stable market for both buyers and sellers.

Alberta Oilsands Companies Feature: Husky Energy

2009-02-24T13:43:00.001-07:00

Husky Energy and the Alberta Oilsands

Husky Energy is an integrated energy and energy related company. Incorporated in Calgary, Alberta, Husky Energy has operations all across Canada. Vertically integrated oil company with a listing on the TSX: HSE, Husky Energy is a developer, an integrator, and a retail seller of oil. Husky Energy is a large player in the Alberta Oilsands in Northern Alberta. Husky energy has a 100 percent interest in oil sands leases east of Kearl Lake, about 60 kilometers northeast of Ft. McMurray. The company’s website is www.huskyenergy.com.

BP Energy and Husky Energy

In December 2007, BP Energy acquired half share in Sunrise field in Northern Alberta, operated by Husky Energy. The deal will have Husky acquire a half share of BP’s Toledo oil refinery in Ohio US. This joint venture will form an integrated North American oil sands business. A 50/50 joint venture will be independently operated and developed. BP’s purchase of Husky’s Sunrise project gives BP a bigger stake in the Alberta oil sands market. The Sunrise oil sands field is expected to have its first production of bitumen in 2010 with up to 200,000 barrels of oil per day (bpd) within 10 years. The total production cycles is expected to last 40 years. Husky’s Sunrise projects is located in the Athabasca oil sands region in the north-eastern part of Alberta. The joint venture gives Husky an integrated oil sands venture with upstream and downstream businesses. BP is one of the world’s largest oil and gas companies with operations in 100 countries over six continents.

Husky Energy and Husky Market and Mohawk Gas

Husky Energy operates retail gas stations and a retail restaurant. Its own brand of gas stations, Husky Gas has been around for more than a decade in the Canadian market. Husky Energy has teamed up with CAA, the Canadian Automobile Association, to collect CAA points on every fill up of gas. The other retail outlets at certain Husky gas stations include the convenience store Husky Market and the restaurant Husky House. Very well known in the Western Canadian Provinces, the Husky Energy brand is becoming a bigger player in the retail space. Husky Energy has also recently purchased Mohawk Gas and added their brand to its own. Consumers who visit a Mohawk Gas are now filling up their cars with a Husky Energy product and can collect CAA points along with their purchases. Currently Husky has more than 500 retail locations which make it the third largest retail oil and gas company in Canada.

Recent News with Husky Energy

Husky Energy follows other Alberta Oilsands companies in slowing its production in the Alberta oilsands for 2009. Husky Energy has decreased its investment from $300 million in 2008 to $65 million for 2009. While this is a strategic move in the current low US oil price environment, Husky Energy has not commented on whether it is pulling out of the Alberta oilsands market. Husky did say they are continuing with the Sunrise oil sands project, located about 60 kms northeast of Ft. McMurray, Alberta. BP and Husky expect costs to continue come down in the Alberta Oilsands. The Sunrise project is at the pre-engineering stage where its optimal design is being assessed. Other companies that have announced slowdowns in 2009 include Royal Dutch Shell PLC, Statoil ASA, ConocoPhillips, Petro-Canada and Suncor Energy Inc.

US $40 Oil per barrel and the Alberta Oilsands

2009-02-24T13:40:00.001-07:00

US $40 Oil price per barrel – what does this mean for Alberta Oilsands

When US $40 oil price per barrel hits the world economy it means that there are more uncertain times to come for the Alberta Oilsands. A gauge for the strength of the US economy, the $40 per barrel price of oil in the US is signalling to the world that we are still in the midst of uncertainty. The January price per barrel of oil was in the mid $30 US and our current level is only slightly better. To the Alberta Oilsands that is still not a strong enough signal for players to make bold investments in new projects. I think what the big players are looking for is a stable US oil price at $50 per barrel or perhaps $60 per barrel. Not $40 per barrel of oil because at this price all projects related to the Alberta Oilsands is just marginally profitable. With an overhanging financial crisis, marginal projects are better put off than to be started. The direction of the market will tell Alberta Oilsands companies what they should do.

US Recession and Alberta Oilsands

The price of $40 US oil per barrel has been watched closely along with the US stock markets. The ups and downs of the Dow Jones Industrial Average has been a common pastime with viewers around the world. Especially with the slide of the DJIA mirroring the slide in the $40 US oil price per barrel and the fortunes of the Alberta oilsands. What is happening in the US with the continuous layoffs in the thousands from company’s such as Lowe’s, Home Depot, Walmart, and J.C. Penney just to name a few of the bell weather companies. The price of oil in the US has fallen to record lows and the price of the stock market is also at record lows. Is there a link between the price of oil and the US stock market? Will the US Recession lead to a slowdown in the production in the Alberta Oilsands as well. While the questions remain unanswered, the big players are on a wait-and-see approach to investing in the Alberta Oilsands. We will wait and see what happens before we take a bigger position in our Alberta Oilsands investments.

OPEC supply and Alberta Oilsands

OPEC or the consortium of Middle Eastern oil companies which stands for Oil and Petroleum Exporting Countries has long been the major player in deciding oil prices. A signal from OPEC regarding their supply usually signals to the world the direction of what oil prices should go. However recently OPEC has cut supply signalling the oil price per barrel to rise but the price has not done so. This cut is confirmed by the Energy Information Agency which reported a drop in inventories of US Crude. What can Alberta Oilsands companies do when even OPEC has no power to control the price of oil. Alberta Oilsands is the second largest supply of oil after Saudi Arabia, a member of OPEC, and has the worlds largest proven reserves even greater than the middle east. However Alberta Oilsands reserves are only proven if the price of oil remains above US $40 per barrel as this is the lower limit of the cost it would require to convert the oilsands to viable oil production. OPEC’s cut in supply should affect world oil prices in a more direct manner but in today’s uncertain economic environment, consumer confidence is a bigger key in unravelling the price of oil.

Alberta oil sands project cancellations

2009-02-21T02:04:00.000-07:00

Over 200 billion to be lost in Alberta oil sands investment

As more and more projects are halted on a daily basis in the Alberta oil sands, estimates of $97 to $241 billion will be loss in investment. (read article: http://www.financialpost.com/story.html?id=1258599) A loss of this magnitude will affect the investment environment in Alberta and the Canadian economy. With a big loss will also come a reduction in the amount of labour employed by the Alberta oil sands companies and loss revenue to the province of Alberta. The figure of 200 billion may seem arbitrary but this would represent 1/3 of the proposed investments in the Alberta Oil sands over the next decade. Imagine the loss in revenue to the Alberta and Canadian government and all the well paid Alberta oil sands jobs that will never be started. Alberta oil sands investments may seem to be risky in light of this figure and the potential of even bigger numbers to come. Depending on the severity of the global financial crisis and the ability of Alberta oil sands companies to survive the Alberta recession, we may see Alberta oil sands investments become the jewel once again in Canada.

Alberta oil sands project cancellations

BA Energy became the first Alberta oil sands company to file for bankruptcy in 2009. Imperial Oil and Exxon and Husky Oil are all slowing down existing projects or have project cancellations and postponements. If a project cancellation occurs there is an indeterminate amount of time before it may be started. The effect on labour is huge as many existing workers are laid off and no new labour is required or forecast. This will inevitably lead to an Alberta Recession as the Alberta oil sands projects account for a significant share of the labour demand. Alberta oil sands project cancellations are not a bad thing on the other hand. If you think about it, the Alberta oil sands have been running at near full capacity for the last five years. The impact can be felt by the labour force through increased injuries and WCB claims and increased job dissatisfaction as a result of over work and too much stress. The other big impact is the environment and Alberta oil sands negative image as dirty oil or tainted oil. With a slow down in production the Alberta oil sands companies including the Alberta government now have the resources to invest in improving the processes that are used in developing the tarsands. Perhaps we will not hear the word dirty oil or tainted oil in the following decade.

US Oil Prices and Alberta oil sands

US oil prices have a big impact on the Alberta oil sands. It seems that no matter how high the price of US oil we all need to drive. When the price of US oil reached $4 a gallon there was a revolt in many parts of the World including the US. But people still drove their SUVs and trucks still delivered their goods. The oil companies made record quarterly profits silently in the background of all the outrage. With low US oil prices we see a shift in production of the Alberta oil sands and a reduction in production and new projects. The Alberta oil sands companies must make a profit as like any other business and when the profits are low or negative then it becomes survival mode. The large Alberta oil sands companies have been around for up and down markets and realize that the prices will fluctuate 2 to 3 times during the expected life of their projects. These Alberta oil sands companies keep large cash reserves and tightly guard this as their strategic weapon in times such as these. It is sometimes a blessing for them to be in a global financial crisis as they get to pick up distressed junior oil and gas companies without the financial resources at bargain prices.

Alberta Oil Sands Bust – Is the end really over?

2009-02-21T01:34:00.000-07:00

Alberta recession and the Alberta Oil Sands

What is happening in Alberta these days? With so much happening with the world including the global financial crisis, global credit crunch, and US $33 a barrel oil, it’s no doubt that Alberta would suffer along with the rest of the world. The Alberta Oil Sands was the best thing to happen to Canada in the last ten years. It gave Canada a national treasure that was poised to bring it to the forefront of being a global energy leader. With the high US oil prices at even $50 US a barrel, the Alberta Oil Sands could not have been a safer investment. The Alberta oilsands had many players and investors over the last decade. As with many of the Canadian Industries, Alberta oil and gas industry is also filled with a majority of junior oil and gas companies. The Alberta recession, or what may be just a few negative quarters of growth, may bring a halt to the boom of the last decade. Could we see an Alberta Oil Sands Bust in the near future??? With a global recession, anything is possible and speculation is everywhere. Many of the large Alberta Oilsands companies are finding this an ideal time to go bargain hunting and picking the jewels to add to their portfolio of Alberta oil sands companies and assets.

Global Credit Crunch and Junior Alberta Oil and Gas companies

A global credit crunch means that major financial institutions will not be as willing or able to lend money to fund company projects. Whether the project is to start a new franchise or fund the daily operations of a Junior Alberta oil and gas company, the decisions that are being made these days are quite dire. No major or minor financial institution has been unharmed by the global credit crunch due to the interrelated nature of the business. Junior Alberta Oil and Gas companies are tied to the global credit crunch as their financing is tied to one of the major financial institutions. Another source of their usual financing, the equity markets or stock markets have also been unavailable during this time of global financial crisis. It is for such a reason that the major Alberta Oil sands companies are shopping for the bargains that are starting to pile up as one after another Junior company starts to feel the crunch. Instead of filing for bankruptcy, the next alternative is to sell at a loss and lose all your equity. While some of the Alberta Junior oil and gas companies may make it with some federal and provincial government funding from Canada, this will not help many of them soon enough.

US $33 a barrel Oil and Alberta Oil Sands

With US $33 a barrel oil prices we are seeing a halt in any new Alberta Oil Sands projects. Alberta oilsands projects that are just started or announced to be started are now currently on hold until further notice. Of course no one knows when oil will go up so the timeframe can stretch longer than anyone is comfortable with. Current US $33 a barrel oil seems like an enigma in todays society. With the bustling growth in population in India and China alone, the price of US $33 a barrel oil would seem silly as the current supply of oil is insufficient to meet global demand. The current $33 US a barrel oil price is more of overreaction to the global financial crisis and once confidence builds up we should see a spike in oil prices again. With a spike in oil prices even to a stable $50 US a barrel oil we will see the commencement of a lot of projects overnight.

Low Risk RRSP Investments Offered by Banks in Edmonton, Alberta

2009-02-15T10:33:00.003-07:00

In this articles I’ll look at some of the safer and conversative alternatives currently offered for R.R.S.P. investments that can be found in edmonton’s region. In future articles I’ll review mutual funds, stocks and my all time favourite using RSP to invest in Edmonton real estate.

What is a low risk RSP?

A low risk RRSP is bacially a RSP that will guarantee your investments regardless of whatever happens in the Edmonton market. They are usually guarantee by the bank of canada security act. These types of investments are usually for people that have no tolerance for risk and wishes to sleep better at night. I called these types of investments low risk because the money deposited into these accounts are guarantee by the governement of Canada.

Which banks guarantee your principal investments in Edmonton for RRSPs?

The five largest banks in Edmonton are relatively safe. These banks are: the Royal Bank of Canada, the Toronto Dominion Bank, the Bank of Montreal, the Bank of Nova Scotia and the Canadian Imperial Bank of Commerce. These banks are fully guaranteed by the Government of Canada and is protected under the Canadian Deposit Insurance Corporation (CDIC). Money deposited in these accounts are protected up to $100,000 per depositor per bank. The deposits must also be made in Canadian currency, payable in Canada and must be repayable no later than five years from the date of deposits.

In addition some of the second tiers banks such as the National Bank of Canada, the Mouvement Desjardins (credit unions), HSBC Bank Canada and ING Bank of Canada also have the similar protections given to the top five largest banks in Edmonton.

Current RSPs rates offered by the five largest banks in Edmonton

All top 5 banks in Edmonton offered pretty much the similar rates for GIC (guarantee investment certificate) with a minimum $500 deposits and three years terms. The only exception is RBC. They’re offering 0.85% for the first year, 2.25% for the second year and 1.9% for the third year. The other 4 banks, TD Canada Trust, BNS, BMO, & CIBC are offering 1.0% for the first year, 1.6% for the second year and 1.9% for the third year. You can start investing and contributing into your 2008 or 2009 R.S.P. account for as low as $500. just visit any of your local Edmonton top 5 banks and start savings for your retirement.

Current R.R.S.P. rates offered by 2nd tiers banks in Edmonton

The second tires banks or trust companies generally are viewed as a little bit more risks and that’s why you’ll often see a bit of higher returns compare to the top 5 banks in Edmonton which are protected under the CDIC by the Government of Canada. The best rates that I found for the 2008/2009 RSP seasons are:

1. Equitable Life, 2.0% for the first year, 3.25% for the second year, 3.5% for the third year;
2. Canadian Western Bank, 2.25% for the first year, 3.05% for the second year, 3.35% for the third year;
3. ING Direct, 2.0% for the first year, 3.0% for the second year, 3.25% for the third year;
4. B2B Trust, 2.0% for the first year, 3.0% for the second year, 3.3% for the third year;
5. Desjardins Fin. Security, 1.85% for the first year, 2.0% for the second year, 2.95% for the third year;
6. Citizens Bank of Canada, 2.0% for the first year, second & third year;
7. HSBC Bank Canada, 1.2% for the first year, 1.6% for the second year, 1.9% for the third year.
You can also start investing into any of these second tiers bank with as low as $500 and you can easily find them around Edmonton as well.

Many of the top 5 banks and 2nd tiers banks also offered shorter 1 year term. Just visit any of your local Edmonton branch to ask for more details.

Low $30 Oil and the effects on the Alberta Oilsands

2009-02-15T01:22:00.002-07:00

Why is oil at US $30 and what effects will it have on Alberta Oilsands

It is Feb. 12 and US oil prices have settled at US $33.98 a barrel. What has happened to the price of oil and can Alberta oilsands companies still remain profitable at this level? The price of oil fell 5.5% to settle at its lowest point in recent memory. We seen the US price of oil fall from $140 US a barrel in less than 6 months to $33 US a barrel. Can the Alberta oilsands companies survive this level of low oil prices? It has been the uncertainty of the future price of oil that concerns Alberta oilsands companies and not the current price levels we see in the market. It is in this unstable financial market that we the halt of further development of any new Alberta oil sands companies’ projects and a stand still in development. While many companies including large oilsands companies Syncrude Oil continue to be optimistic of the future, many smaller oilsands companies have had to file bankruptcy. What is a sustainable level of US oil prices a barrel and will there be a mass file for bankruptcy soon for this industry?

Large inventory of Oil means continued low US oil price per barrel

It is a straight supply and demand equation for why oil prices are low right now. The financial crisis can be blamed for this but so can the rapid rise in US Oil prices per barrel and the frenzied speculation we have seen for investing in anything related to the Alberta oil sands. Currently we have a glut in demand leading to a stockpiling and buildup of inventory in the US and the world. We frankly have record levels of inventory of oil meaning that the US oil price per barrel remains low. Until this glut is consumed and demand for oil resumes, we will continue to experience record low levels for US oil prices. It is hard to imagine a situation like this since we have been so accustomed to the opposite. The demand for oil has been so robust leading to the quick and rapid development of the Alberta Oilsands. The Alberta oil sands represents a significant source of Oil and is only second to Saudi Arabia. However, with the current glut and oversupply we are seeing the slowdown of massive proportions. In the US we expect to continue to see a glut in demand as unemployment data continues to be negative and the forecast the same for the next few months. More and more people will choose to conserve and thus the US oil price per barrel will be at $30 or even lower to come.

Can global demand for oil shrink in 2009

Aside from the question of a glut of demand for oil in the US is the bigger question of the world demand. What is going to be the demand for Oil from the world in 2009 and 2010? There are many reports from well known International Agencies reporting that the demand for oil in the world will shrink to levels in the early 80’s. This means that we may see a low US oil price per barrel for some time to come. What will the global demand for oil mean to Alberta oilsands developments? It is a hold and see approach for 2009 and possibly the first quarter of 2010 as major Alberta oilsands players are reacting to the numbers of global demand. If the demand for oil continues to shrink in 2009 then we will see a low level of economic development in Northern Alberta, Athabasca regions where development has been brisk for the last 5 years. While no one can see the future, it is the job of companies such as Shell, Syncrude, and Imperial Oil to forecast the demand and thus the development schedule of oilsands development. It is these large Alberta oilsands companies that can change their production and development schedule to closely match global demand.

Slower pace of development good for Alberta Oilsands

2009-02-15T00:59:00.000-07:00

Alberta Oilsands will benefit from the slower pace

The slow down of the development in the Alberta Oilsands and Northern Alberta region will actually have a positive long term affect on the environment. The past few years have been a frenetic pace for Alberta oil sands companies and oilsands developers to quickly develop and buy up more land in Northern Alberta. The higher price of oil caused a euphoria in investment capital being poured into Alberta oilsands companies without any consequence to the environmental impact. The recent slowdown in development will actually benefit Fort McMurray and the Athabasca Region as the region gets some time and breathing room. Some much needed time to take a look at what can be done to develop the valuable resources that the Alberta oilsands offers and to positively impact the communities that they operate in. Yes, the slower pace of development is actually a blessing in disguise and will give Alberta Oilsands companies time to develop a long term strategic plan that will take into account the communities and the environment in relation to the profit potential.

Developing an Environmental plan for the Alberta Oilsands

Many environmentalists and governmental agencies have criticized the Alberta Oilsands companies in their lack of a solid plan for the development of the Alberta oil sands region. This lack of a plan will not only have long term negative consequences to the environment but also affect all the surrounding people living in the communities of Northern Alberta and the Athabasca region and Fort McMurray. A lack of a solid plan is a direct correlation to a lack of responsibility and accountability for the environment that these Alberta Oilsands companies have. It is unacceptable to not have a viable environmental plan for the Alberta Oilsands and many environmentalists around the world are lobbying their governments to take actions to prevent any further damage to the Northern Alberta and Athabasca regions. It is important to immediately address the long term consequences of developing the Alberta tarsands and making sure that the environmental impact is minimized. Having a solid environmental plan for the Alberta oil sands will be a first step in reaching this shared goal and the Alberta Government is also in agreement with this position.

Alberta Oilsands and the Aboriginal Communities

Many Aboriginal Communities, including the Metis Settlement, are affected by the development activities of the Alberta Oilsands. The concerns for health and the destruction of their lands is a primary objective that the Aboriginal communities including Chief Allan Adam of the Athabasca Chipewyan First Nation is striving so hard to achieve. As so many Aboriginal Communities will be affected by the Alberta oil sands companies, it is vital that the rights and concerns of these people be dealt with immediately. We cannot build first and make a plan later for the environmental impact. This is not acceptable and will be a major obstacle for the further rapid development of many Alberta oilsands projects. On the other hand, there has been some good news regarding the environmental plan for the Alberta oilsands and the Aboriginal Communities. There has been a lot of positive development towards drafting of solid plans to protect the environment from the rapid development happening in the Athabasca region. However, as with most talk, people want to see action and it is this action that will help the Aboriginal Communities.

Alberta Oilsands and the Cap-and-Trade System

2009-02-06T18:22:00.000-07:00

What is Cap –and-Trade System and its impact on the Alberta Oilsands Companies

Cap-and-Trade system is a name given to an environmental initiative to reduce greenhouse gases. Essentially, all industries would be given limits on the amount of greenhouse gases that it could release. The Alberta Oilsands companies in particular would be monitored closely under the Cap-and-Trade system. It is well known, at least publicly believed, that the Alberta Oil Sands companies are big emitters of greenhouse gases. Al gore has shown in his video that greenhouse gases pose a significant threat to the planet and unless we are aggressive in reducing our levels we will continue to face harsher environmental impacts. The Cap-and-trade system would fine Alberta Oilsands companies who exceed the caps placed on them by imposing heavy fines. These fees would actually go from the Alberta Oilsands companies who exceeded their limits to those under the limits. In effect this would benefit the companies who are good to the environment and reward them for reducing greenhouse gases.

US Barack Obama and the Cap-and-Trade System

In the US, President Barrack Obama has set environmental goals to lower greenhouse gases to 1990 levels by 2020. The Cap-and-Trade system will be a tool used to achieve this goal. In Canada, Prime Minister Harper has set a similar goal of 3 percent less than 1990 levels by 2020. The Conservative Government and the Obama administration has set very similar goals in using the Cap-and-Trade system to and other tools to aggressively reduce the impact from green house gases. The Conservative Government commented on the timing of Canada in implementing this strategy now that the Bush administration is gone and US Barack Obama is now the President. It would have been wrong timing to have released Canada’s plans if the US was also not in favour of the Cap-and-Trade system or at least supporting our mutual goals of reducing greenhouse gas emissions.

Kyoto Accord is now the Cap-and-Trade System

The Kyoto Accord, an International Treaty to reduce greenhouse gases, was previously agreed upon by the Liberal Government. The Kyoto Accord differs from the Cap-and-Trade system and was eliminated under the Harper government. Though many countries still adopt the Kyoto Accord as their goal to reduce greenhouse gases, both the US and Canada have went their own ways and are currently looking at the Cap-and-Trade system to achieve the similar goal. Under the Kyoto Accord, each country would reduce greenhouse gases and their neighbours would be expected to do a similar reduction. By reducing greenhouse gases, a country would earn pollution credits. It is possible for the neighbouring country to buy pollution credits from their neighbours who are doing more to reduce greenhouse gases. In the end, the country that is emitting less greenhouse gases will be rewarded and the world will benefit from reduced emissions under the Kyoto Accord. However, as you can predict, all neighbouring countries need to buy into the system for it to work effectively. The Cap-and-Trade system will also have a similar trading mechanism but it is expected that both the US and Canada to play by the rules and reduce greenhouse gases.

Edmonton Century Park Master Planned Condominium Community - Construction Update on Century Park Condo High-Rises & LRT Expansion

2009-02-05T10:45:00.001-07:00

Century Park Club & Residences Newsletter Update

Beautiful condos – Community living – Modern luxury – Location and style – Access, access, access, Close to University, Club Century Park – Convenience – Exciting Community – Excellent Location – Close to LRT – Great Quality. This is Edmonton Century Park Club and Residences, a master planned community marketed by Rennie. Club Century Park: At Century Park Club & Residences Edmonton pre-construction condos, ownership has its privileges. While membership at most private clubs costs a fortune, at Century Park it’s a lifestyle benefit. Club Century Park Edmonton offers an amazing array of activities and amenities to all owners/residents at this wonderful community. Some of the great amenities at the Club Century Park Edmonton property includes a modern reception and lobby, food and juice bar with lounge, multimedia theatre, bar and grill, games room, gymnasium: play basketball, badminton and volleyball, racquetball courts, swimming pool and whirlpool, sauna and steam rooms, change rooms, locker rooms and showers, fitness and weight room, aerobics and yoga studio.

Central Living at Century Park Club & Residences

Edmonton’s most spectacular new pre-construction condo residential development, featuring wolrd-class architecture and interior design by internationally renowned James KM Cheng Architects. This beautifully appointed collection of resort style Edmonton condominiums is surrounded by 43 acres of tranquil gardens with a recreational lake, paths and park. Century Park Club & Residences is a fully integrated, sustainable community offering exquisite design and state of the art technology. Enjoy carefree living, convenient transportation and LRT, signature restaurants, shops and cafes – plus exclusive access to Club Century Park, your own private fitness centre and retreat! Central Condos at the Edmonton Club Century Park. Location, location location. Lcoated in southwest Edmonton, the pedestrian friendly Century Park Central condo pre-construction properties locale with onsite new LRT station and public transportation means you are just minutes away from everything, including South Edmonton Common, the largest retail in the city. Central Condos Edmonton is ideally situated adjacent to Club Century Park, overlooking the spectacular setting. Recreation at your door. The resort style atmosphere features convenient in house fitness facilities and exclusive access to your own private Club Century Park at the Edmonton Central condos with a spectacular swimming pool and collection of luxury amenities. Your pre-construction condo Edmonton home is a tranquil oasis, surrounded by jogging, cycling and walking trails intermingled with courtyard and public gardens, public art, recreational and green spaces, including a lake. Conveninece at the Central at Century Park Edmonton condos is a lifestyle. Live carefree. Book a session with your trainer at the Club Century Park or make a dinner reservation from the comfort of you home via a personal electronic concierge. There’s no maintenance to worry about, no lawn to cut. Everything is taken care of for you at the Central Condos at Century Park in the Edmonton real estate market.

Construction Update

At Century Park Edmonton Club & Residences, construction is proceeding rapidly and it’s an exciting time on site. The full community development real estate is phased over 10 years and we are currently working Phase 1 and Phase II. Century Park Phase One – South Building – completing roof, floor 4 installing steel studs and floor 2 installing mechanical and electrical while the North Building – floor 2 is completing concrete. Edmonton Century Park Regent Condos – South Building – parking level 1 – completing concrete and North Building at the same point. Century Park pre-construction condos availability includes: Regent pre-sales Edmonton Condos from Unit 603N at $407,000 facing E, 1 bed plus den and 775 sq ft with N views to Unit 402S at $557,000 facing NW with 1121 square feet, 2 bedroom Plan N. The Central Condos at Century Park Edmonton pre-sales includes units from PH4 at $1,595,000 with 2 bed plus den plus family room with 1978 square feet of living space and SW views to Unit 806 at $368,900 at 1 bedroom, 679 sq ft and S views. More information about availability and the various condo developments are located online at centurypark.ca or you can call 780.410.1738 or visit the Century Park Presentation Centre at 2395 111 St. SW, Edmonton which is open daily 12 pm to 6 pm and closed Fridays.

RRSP can be use as a tool to invest in Edmonton, Alberta real estate

2009-02-04T00:43:00.009-07:00

It’s true that you can also use RSP to as an investment tool to invest in Edmonton properties. I’ll look at the benefits of how to do this in a series of upcoming articles and the best ways to tap into this form of investing versus investing in the traditional stuff such as mutual funds, GIC, stocks, etc.

What is a RRSP?

Investing in Alberta real estate with RSP is easy once you understand the basic. Let first look at what is a RRSP. RRSP is Registered Retirement Savings Plan and is one of the few tax benefits that are still available to individual Canadian taxpayers. I called this a tax benefit because you invest in RRSP with before taxes dollars. This is done by using a special investment account that is registered with CRA (Canada Revenue Agency). The amount invested into RRSP is based on before taxes dollars and allows you at the same time to also reduce your taxes for that year based on the amount that you contributed. This amount is calculated by CRA and can be found in your last year taxes return. If you have not contributed before or have not contributed to your maximum you therefore, have an unused contribution room. In any given year you are entitle to contribute to the maximum that you can afford and reduces your taxes at the same time. You might also borrow money to invest in RSP as well up to your annual contribution limit.

Annual Contribution Limits for RRSPs for your 2008 Alberta’s taxes Return

The maximum one can contribute in a year is called the “RSP deduction limit.” It is also known as the “annual contribution room” or “deduction room.” Your RRSP deduction limit is found on your Notice of Assessment or Notice of Reassessment from CRA. For example your 2008 limit would be on your 2007 Notice of Assessment. The annual limits in a nutshell are as follows:

Annual Contribution Limits
Year RRSPs
2007 $19,000
2008 $20,000
2009 $21,000
2010 $22,000

The Canadian government allow us taxpayer to deduct for example, in this case in your 2008 return $20,000 from your “earned income”. If this number is higher in your 2007 Notice it just mean that you have not contributed to your maximum RSP deduction room from your other previous years and this extra cap room can be use in your 2008 to help you save some money when you do your filings for your Alberta’s tax return by the April 30th deadline.

Why is the Canadian government so generous?

You might asked why is our Canadian government being so generous and giving us a tax break if we invest with them by buying RRSP? This is because the government know that the more people put away the less they will have to pay us down the road when we retired. Also the government might not have enough funding to pay everyone if we all decided to calculate CPP or Canadian pension plan when we retired. Depending on when you retired this money might not be so available by the time you retired as it might be used up by others such as the baby boomers when they retire over the next 10 to 15 years. This is especially the case if you’re just currently entering the workforce. And this is more likely so as Edmontonians have such a young workforce! To give us more incentive the Canadians government have long came up with a plan to allow us to save taxes and at the same time save for our future. This to them is a win-win philosophy and that is why there is always such a big push to put money into RSP around the February 28th taxes deadline times.

An example of Tax Savings using RSPs

For most Canadians investing in RRSPs is an excellent ways to save money for their future rather they retired at age 65 or earlier. Lets use a simple example here of how substantial this taxes savings can be for you in your next 2008 Alberta tax returns. Suppose you are one of those hard working Albertans and make over $100,000 a year and decide to contribute $20,000 to your RSP this year.

Earned Income - $100,000
Less RSSP contribution - (20,000)
New Earned Income or Taxable Income - $80,000

Providing this is your only deduction for your 2008 Alberta’s filing this year, this can equate to a tax savings of $7,800 just base on your contributing your maximum RRSP for 2008. Here is a simple

Tainted Alberta Oilsands and Environmental impact

2009-02-03T16:31:00.003-07:00

The current Alberta Oilsands environmental problem

A recent study stated that Alberta Oilsands production is releasing four billion litres of tainted water into Alberta and surrounding regions including Saskatchewan, Northwest Territories, and the Athabasca River. This report states that it’s a matter of fact that the Alberta Oilsands poses a significant environtmental problem to the areas affected and to the global ecosystem. Alberta Oilsands or Tarsands produces leaks called tarsand tailings which are held in tarsand ponds. The environmental problem is that some scientists and environmentalist believe that there is no way to control the leakage and the negative effects of this Tarsand leakage will destroy the delicate ecosystem including fish, animal and plant life. The Alberta Oilsands poses an increasing environmental problem which will worsen by five fold over the next ten years as more projects are started. It is for this reason that the Alberta Government and Alberta Oilsands companies have invested heavily into studying the environmental impact of the oilsand and ensuring that the public is well educated on its findings. Part of the role of the Alberta Government and Alberta Oil sands companies is to dispel myths and lies about the environmental impact.

Tailing ponds and Alberta tarsands

A tailing pond is created as a result of how Alberta tarsands are produced. A process that uses hotwater to separate the Alberta oil from the sand leaves behind the tailing pond. The tailing pond holds contaminated material from the original product and can continue to be contaminated for decades to come. Alberta Tarsands tailings ponds have been continuously examined to assess its environmental impact on humans, wildlife, and vegetation. It is believed that Alberta tarsands tailing ponds poses significant threat to the surrounding area. Studies on birds have found increased mortality rates. Birds that live in the area or migratory birds that come to the area have been tested and negative effects have been noticed in their expected life. Another significant impact is to plant life and studies have been done on germination. These studies have found that lower seedling weights have been a result. While Alberta Oil Sands companies have been increasing their ability to control the leakage of tailing ponds through use of better technology, some scientists still believe that we are a long way away from having no environmental impact on the environment. It is impossible to stop tailing ponds as a result of the Alberta tarsands production to leak.

Differing view of environmental impact of Alberta Oilsands

Differing views of the environmental impact of the Alberta Oilsands is a matter of where you are standing and what effect you are testing for. A scientist for the Alberta’s Environmental Department said the reports are misleading on the tailing ponds. While tailing ponds do hold waste from Alberta Oilsands production, this waste is overstated and the environmental impact is not as significant. The tarsands waste is going into deep aquifiers that are already naturally contaminated by the geology of the Alberta Oilsands. Another false myth that these scientists are trying to dispel is that tarsands leakage is a big environmental problem. This is a myth and there has not been a serious run off of toxic tailing ponds into surrounding regions. The scientists are confident that they can prevent any serious contamination of groundwater and ecosystems. Of course problems will existing with tainted Alberta oilsands but with continuous research and action taken by the Alberta Government and Oil sands companies, any siginificant environmental impact should be avoided.

Alberta Oil Sands companies – BA Energy files for credit protection

2009-02-03T16:25:00.001-07:00

Alberta oil sands and BA Energy

A major player in the Alberta Oil Sands projects, BA Energy Inc., filed for credit protection in early 2009. BA Energy Inc. was developing a $4 Billion Dollars Alberta Oil Sands Upgrader project near Edmonton in what is known as the Heartland Upgrader. These projects require significant capital in order to run its daily operations and would require funding from its credit facilities. Credit facilities for BA Energy Inc. are secured via a $507 Million US$ loan from Credit Suisse and due to the worsening financial crisis, this credit line is not guaranteed to be around for 2009. What this means for BA Energy Inc and its Alberta Oil Sands Upgrader projects is that there could be a callback of their loans in 2009 which would lead to credit protection. This has lead BA Energy Inc. to be the first Alberta Oil Sands developer to file for credit protection in 2009.

Financial crisis and BA Energy

How has the financial crisis affected BA Energy Inc. and other Alberta Oil Sands companies and what further developments will come in 2009? The financial crisis is a worldwide event that resulted from defaults in asset backed securities and the housing crisis in the US. Because there has been a dramatic default and loss as a result of the Financial Crisis and defaults of loans, the worldwide credit markets have literally been frozen. BA Energy Inc. and other Alberta Oil Sands Companies depend on vast amounts of credit to fund their daily operations. The funds that BA Energy Inc. require are provided by global credit facilities offered through banks such as Credit Suisse. Because of the mounting defaults in the US and the exposure that these global credit facilities companies including Credit Suisse has, the need to recall existing loans has been created. The global credit companies will recall loans with the highest risk first. Alberta Oil Sands projects including BA Energy Inc.’s Heartland Upgrader project are now considered high risk because of the drop in oil prices to sub $50. Not only have BA Energy Inc. filed for credit protection but it has also been one of many Alberta Oil Sands companies to postpone projects indefinitely. This will be a continuing theme while we are in the middle of the financial crisis and oil prices remain low.

Are more Alberta Oil Sands companies needing credit protection

Which Alberta Oil Sands companies will survive the financial crisis? Or more to the point which Alberta oil sands companies will have a strong enough balance sheet to weather out the financial crisis storm for 2009. Afterall, it is a result of the lower oil prices in Alberta that have created the lower profit expectations of all the companies. With Alberta oil sands companies projects being viable at a stable oil price of over $50, the current level is going to create significant problems for some of the smaller firms to survive. Large Alberta Oil Sands companies such as Suncor have significant cash reserves set aside to ride out rough patches including a short term lower oil price. However smaller companies such as BA Energy Inc. will need to file for credit protection. The forecast in 2009 will probably see a consolidation of the smaller Alberta Oil Sands companies with the larger ones and thus avoiding credit protection. However for existing shareholders of these smaller companies the outlook is poor that they will receive much value from their existing shares.