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Loonie Storm Alert Is Sounded With Oil Poised to Swamp Demand

One of Wall Street’s favorite short bets looks ready for a comeback after the Canadian dollar plunged to its lowest point in more than two months. The currency’s fall Monday undoes all its gains since the Bank of Canada first expressed hope at its April interest-rate decision the economic fallout from crude oil’s price collapse would be short-lived. Crude prices had stabilized in recent months and helped the currency recover, but Brent crude fell below $60 a barrel Monday for the first time since April. The renewed pressure on crude prices comes after signs the fallout from their first leg down wasn’t as short-lived as the Bank of Canada thought. A report last week showed the economy contracted for a fourth straight month in April, bringing annualized growth to the slowest in two years. That’s raised doubts about the central bank’s forecasts for a strong rebound in the second […]

Posted On : Published By : Tom Whipple
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Canada Surprise April Contraction Opens Door to 2nd Rate Cut

Canada’s economy shrank for the fourth straight month in April as oil and mining slumped and a rebound in manufacturing remained elusive, opening the door to a second interest-rate cut from the central bank this year. Output shrank 0.1 percent to an annualized C$1.65 trillion ($1.33 trillion) in the month, Statistics Canada said Tuesday, confounding economists’ expectations for a 0.1 percent expansion in a Bloomberg survey. Oil and gas, mining and quarrying fell 2.6 percent in the month, the sixth consecutive decline as crude’s slide continued to hammer Canada’s resource-rich economy. The data failed to show the strength in non-energy exports and consumer spending the Bank of Canada was counting on to take over as drivers of growth after output shrank at an annualized 0.6 percent in the first quarter, and raises the pressure to cut interest rates again at the July 15 meeting. “They shouldn’t wait any longer, […]

Posted On : Published By : Tom Whipple
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Canadian oil producers back lower emissions

Canadian oil production group said it has a commitment to lowering emissions. Alberta government expected to raise carbon taxes on industry struggling to navigate weak crude oil market. Photo by Pattie Steib/Shutterstock CALGARY, Alberta, June 26 (UPI) — An industry group in the Canadian oil sands sector said it was committed to playing a greater role in the effort to reduce greenhouse gas emissions. The Canadian Association of Petroleum Producers said that, since 1990, the sector has spent more than $1 billion on technologies needed to produce oil with a lower environmental footprint. With climate action moving to the forefront of the global conversation, the industry group said it was prepared to do more . "We developed the technology to get the oil out of the sand – and we are just as committed to getting our carbon out of the air," CAPP President Tim McMillan said in a […]

Posted On : Published By : Tom Whipple
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Quebec Becomes Latest Hurdle to Canada’s Plans for Oil Exports

Protesters hold a banner that reads, “Don’t flow near us,” in French. Photographer: Rebecca Penty/Bloomberg Across Quebec, cardboard signs are popping up on lawns depicting a broken pipe gushing black crude. “Don’t flow near us,” they warn in French. That sums up Benoit Pigeon’s feelings about TransCanada Corp.’s proposed C$12 billion ($9.7 billion) pipeline that would traverse the province on its way to connect Alberta oil-sands fields with the Atlantic Coast. In addition to his yard sign, Pigeon has marched with street protesters and helped rally opposition to the project on Facebook. “This investment should be in renewable energy instead,” Pigeon, 51, said in an interview at his home. For a resource-rich nation eager to expand crude exports from the oil sands, Canada has been striking out lately. TransCanada’s Energy East marks the fourth time this decade an oil-sands pipeline has been mired in environmental opposition. Keystone XL, which […]

Posted On : Published By : Tom Whipple
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Canada’s Weaker Dollar Helps to Blunt Oil Shock, Schembri Says

A weaker dollar is helping Canada’s economy cope with a drop in crude oil prices, central bank Deputy Governor Larry Schembri said. Regions such as Alberta, Saskatchewan and Newfoundland are hurting from the drop in crude oil prices over the last year, Schembri said in response to questions after a speech Thursday in Windsor, Ontario. Other parts of Canada are benefiting from the currency’s drop against the U.S. dollar and signs of an accelerating recovery south of the border, he said. “We are seeing more strength in Ontario to compensate for the fact that oil production and investment is declining in Alberta,” Schembri said. “That kind of adjustment is facilitated by the flexible exchange rate.” Canada’s dollar has depreciated by 13 percent against its U.S. counterpart over the last 12 months, making exporters more price competitive. It traded at C$1.2340 at 1:12 p.m. Toronto time. West Texas Intermediate is […]

Posted On : Published By : Tom Whipple
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Alberta to Double Carbon Tax in Step to Toughen Environmental Policy

CALGARY, Alberta—The recently elected government of Alberta said Thursday it will double a carbon tax on industrial emissions of greenhouse gases by 2017, calling it a first step in toughening this oil-rich province’s environmental policies. In a move closely watched by Canadian oil and gas producers, the left-leaning New Democratic Party, or NDP, government said the policy is part of a broader review of environmental policies that will result in additional measures to reduce greenhouse-gas emissions in time for a year-end United Nations climate-change conference in Paris. Alberta implemented its current carbon tax—the first in North America—in 2007, but that was set to expire at the end of this month. The new policy will increase levies on large-scale emitters of carbon dioxide to 30 Canadian dollars ($24.19) a metric ton by 2017, up from C$15. Alberta’s energy industry has been shaken by the NDP’s win, and has warned about […]

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Canada files charges for Lac-Megantic disaster

Canadian government files federal charges in relation to the Lac-Megantic oil-train disaster, which in 2013 left more than 40 people dead. Photo by Steven Frame/Shutterstock OTTAWA, June 23 (UPI) — The Canadian transport authority said it filed legal charges in connection with the Lac-Megantic oil-train disaster in 2013 under two federal acts. The federal Transport Canada said charges filed for violations of the Fisheries Act relate to the release of crude oil in and around the site of the 2013 derailment into fish-bearing waters. Charges under the Railway Safety Act relate to insufficient application and testing of handbrakes on the locomotive. Montreal, Maine and Atlantic Railway, the train’s operator, blamed the air brakes on the locomotive holding the freight for the Lac-Megantic incident and later filed for bankruptcy protection. The disaster left more than 40 people dead. "The actions taken by the government of Canada in response to this […]

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DOE Study Finds Elevated Greenhouse Gas Emissions From Canadian Crude

A new peer-reviewed study funded by the U.S. Department of Energy says Canada’s oil sands greenhouse gas emissions are an average of 20% higher than U.S. conventional crude, adding ammunition to opponents of the Keystone XL pipeline and other critics of surging Canadian crude production. The study, conducted by DOE’s Argonne National Laboratory in collaboration with researchers at Stanford University and the University of California-Berkeley’s Institute of Transport Studies, calculated greenhouse gas emissions from oil field extraction to the tail pipe in a so-called well-to-wheel analysis. Noting oil sands output is projected to more than double in the next 15 years and that much of that crude could wind up in the U.S., the study said “higher [well-to-wheel] emissions for gasoline and diesel production in the U.S. are expected when oil sands products become a larger fraction of the U.S. fuel mix.” “All crudes are not created equally,” Hao […]

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Oil-Sands Megaproject Era Wanes as Suncor Scales Back

Oil sands in Alberta. Photographer: Ben Nelms/Bloomberg The era of the megaproject in Canada’s oil sands is fading. Crude’s price slump, pressure to get off fossil fuels and tax increases in Alberta are adding to high costs and a lack of pipelines, prompting producers from Suncor Energy Inc. to Imperial Oil Ltd. to accelerate a shift to smaller projects. Companies are deferring new mines in favor of cheaper, bite-sized drilling programs that deliver quicker returns and require less labor. The moves will help reduce cost overruns and make Canadian companies more competitive with U.S. shale producers. The trade off will be reduced production growth and a smaller economic boost for the country’s oil patch. “Capital likes certainty and it’s a bit of an uncertain world at the moment,” Steve Williams, Suncor’s chief executive officer, said June 10 in an interview at Bloomberg’s Calgary office. With crude about 46 percent […]

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WoodMac: Western Canadian liquids production on upward trajectory starting in 2016

Wood Mackenzie Ltd. believes the economics of core areas within shale plays in western Canada will yield comparable returns to key producing plays in the US Lower 48. “Our western Canadian liquids production forecast is underpinned by an increasing commodity price environment and growing demand for oil sands diluent. We anticipate an upward trajectory in volumes beginning in 2016 and peaking in 2021 with the Montney, Duvernay, and Cardium formations driving volumes,” said Peter Argiris, WoodMac upstream analyst in Calgary. While WoodMac’s liquids growth outlook remains positive, there is a potential downside to the forecast. “One factor that is currently front of mind is the supply-infrastructure constraints from the lighter end of the NGL stream,” Argiris said. “Propane supply is at historic levels and we have seen material price declines as a result. How this affects the remaining NGL stream (apart from diluent) from a pricing-infrastructure capacity perspective could […]

Posted On : Published By : Tom Whipple