HicksBiz Blog

Category: Oil + Gas

Oil + Gas

Hicks on Biz: Expecting a decent 2018 by GRAHAM HICKS, first published Edmonton Sun, Dec. 30, 2017

You have to be careful, sticking your head out of the foxhole to gaze out on 2018. The odds on said head being blown off are fairly alarming. Nobody ever gets this prediction game right. But, fingers crossed, luck being with us, global events giving us tailwinds, 2018 should be a reasonably decent year for business, employment and quality of life in northern Alberta (for our purposes, Edmonton and everything north of Edmonton). “Reasonably decent” is highly contextual.  For the province as a whole, the Alberta government’s forecasters are looking at a 2.5 per cent growth rate for 2018. Which will be less than the four per cent growth rate being left behind in 2017. Don’t forget three big factors. It’s terrific the economy did well this year, and will keep growing (hopefully) at 2.5% for 2018. But the previous two years were awful, a negative four per cent economic growth in 2015, and another negative four per cent growth in 2016. We have not caught up to ... Read the rest of entry »

Hicks on Biz: No coal in Edmonton's stockings this year BY GRAHAM HICKS, first published Edmonton Sun, December 21, 2017

Santa, you have already given Edmonton the best gift we could have asked for. In 2017, Metro Edmonton somehow avoided slipping into recession. Business-wise, things weren’t great, but they weren’t bad … and way better than 2016 which was an annus horribilis year. The oil patch has learned to live with $50 a barrel oil (the benchmark $50 US for West Texas Intermediate). Of late, oil prices have looked positively balmy, floating up to $55 to $60. Residential construction surprisingly picked up strength as the year went by … pent-up demand, confidence on the part of home-buyers, more young couples with good jobs, readying for kids. As the Stantec and JW Marriott towers reach ever skyward, the Ice District construction employment has been a saving grace. The Valley LRT has also dented the unemployment ranks with that project now in its intensive construction phase. The impact, or lack thereof, of oil and gas on Northern Alberta’s economy is increasingly complex. ... Read the rest of entry »

Hicks on Biz: Is Edmonton headed for an economic rebound? By GRAHAM HICKS, FIRST PUBLISHED EDMONTON SUN November 10, 2017

One really shouldn’t be so foolish as to predict Edmonton’s economy. It’s like predicting how the Oilers will do. Who, six months ago, would have predicted our hockey team’s current dire straits? This column has been all gloom and doom on the future of Edmonton and Alberta’s economy. I’ve been arguing that the now-three-year crash in oil and gas prices shows no sign of let-up, that construction is slowing, that “carbon restraint” is clamping down on global demand for our oil and gas and at the same time raising Alberta’s electricity costs: That sky-rocketing provincial debt and a perceived anti-business bias from the current provincial government has scared off investment in Alberta. Not a pretty picture. But in the past few weeks a flurry of economic forecasts are painting a more optimistic future – at least for 2018 and 2019. The basic theory seems to be that things have been so bad — a 3% drop in Alberta’s economic output ... Read the rest of entry »

Hicks on Biz: Red October hasn’t happened…yet BY GRAHAM HICKS FIRST POSTED EDMONTON SUN: THURSDAY, OCTOBER 19, 2017

Happily, I’m on the hook to pay for a fancy dinner with my former boss John Caputo, now the Sun/Postmedia’s head of advertising for Western Canada. In June, Hicks on Biz predicted a serious financial downturn in Edmonton by the end of October, i.e. this month. Financial blood would be running on the street, I said, caused by the slowdown in the oilsands, the slowdown in all Northern Alberta construction and manufacturing, higher income and corporate taxes, minimum wage increases and the enormous debt being run up by this free-spending provincial government. It would all hit home, I said, with a sudden, thudding recession starting in October. Caputo, ever the optimist, took issue with the forecast. So we made a bet: A fine dinner, to be paid for by whoever was wrong. That was me. Hooray! Today, most credible economic forecasters – the Conference Board of Canada, Edmonton Chief Economist John Rose and others – are predicting a higher-than-average 4% growth this year ... Read the rest of entry »

Hicks on biz: Cheers to Alberta's oilsands! BY GRAHAM HICKS FIRST POSTED EDMONTON SUN: FRIDAY, SEPTEMBER 29, 2017

I once interviewed former Edmonton mayor Steve Mandel, just as he was considering running for mayor. It was a ho-hum interview, not much to remember. But he made one point I will never forget. “Doesn’t matter how much the city’s economy grows,” he said, using his hands to make a widening circle. “If there’s any contraction,” he said, bringing his hands closer together, “no matter what, it’s going to hurt like hell.” No truer words have ever been said. Which is why most of us are mystified by the non-negotiable, end-of-fossil-fuel stance espoused by many in our midst. These environmental “progressives” are willing to risk a major drop in Alberta’s standard of living by ending our major industry … no matter how minimal its contribution to global warming may be. Here we are, celebrating 50 years since the opening of the first commercial oilsands mine in Fort McMurray. The Sun’s excellent six-part series on the oilsan ... Read the rest of entry »

Hicks on Biz: Cold Lake an example of Alberta pain BY GRAHAM HICKS FIRST POSTED EDMONTON SUN: FRIDAY, AUGUST 04, 2017 08:58 AM

“The environmental agenda has hijacked Alberta’s resource industry and our politicians,” wrote Craig Copeland, one of many readers responding to last week’s Hicks on Biz column entitled “Alberta’s economic suicide.” “It gained traction in the early 2000s but has escalated lately with the new provincial and federal governments,” Copeland continued, “even though Alberta already had some of the strictest industrial environmental policies in the world. I fear we could be witnessing one of the greatest economic tragedies in Canadian history.” Just another redneck opinion to be ignored, Alberta Premier Rachel Notley and her advisers would likely say. The current New Democrat government appears to put a higher priority on its climate change action plan than on the dismal state of the provincial economy, everywhere other than Edmonton. Copeland, however, is no redneck. He’s the long-time mayor of Cold Lake, one of Alberta’s more ... Read the rest of entry »

Hicks on Biz: Alberta’s economic suicide BY GRAHAM HICKS FIRST POSTED Edmonton Sun: SATURDAY, JULY 29, 2017

Will Albertans continue to sit on our hands and do nothing while national and provincial politicians - goaded by a vocal minority - plunge this province, and all Canada for that matter, into what is politely termed "de-industrialization" but ought to be called economic suicide? Are desperately needed new pipelines to carry the lifeblood of the Canadian economy - oil and gas - never to be built? Earlier this week, any thought of exporting Canadian liquefied natural gas (LNG) to Asia died when the proposed $36 billion Pacific NorthWest LNG project was declared dead by its principal backer, Malaysia's Petronas oil company. Goaded by environmental groups, Canadian governments piled delay upon regulatory delay upon this and other major energy projects. By the time the NorthWest LNG project was actually approved, Asian demand for natural gas was being met by Australian and American LNG exporters. Canadian LNG is considered no longer economically viable on world markets. The companies and the investors behi ... Read the rest of entry »

Hicks on Biz: CRNL deal with Shell a good thing BY GRAHAM HICKS FIRST POSTED EDMONTON SUN: FRIDAY, MARCH 17, 2017

All eyes are focused on the Alberta 2017/18 provincial budget – the spending side of the equation. But good news is happening in the oil and gas sector – where most of the money comes from. This is a tad ironic. According to the headlines, the sky is falling on the oilsands. A few months ago, international energy giants ExxonMobil and ConocoPhillips announced a $4.4-billion write-down in the value of their oilsand reserves (the value of oil still in the ground). The sky is falling! Earlier this week, oil giant Royal Dutch Shell announced it was leaving the oilsands, selling its Athabasca Oilsands (Albian) mine, the Scotford upgrader and smaller oilsands holdings to Canadian Natural Resources Limited (CNRL) for $12.7 billion. Locally, Shell will continue to own Redwater’s Scotford refinery alongside the upgrader, and will continue to operate both plants. The sky is falling! All the world players who piled into the oilsands from 1990 to 2014 are getting out! Whoa! The write-d ... Read the rest of entry »

HICKS on BIZ: Alberta has to clean up its environmental act BY GRAHAM HICKS FIRST POSTED EDMONTON SUN: FRIDAY, MARCH 03, 2017

So here we go, folks. The Notley government’s Climate Leadership package has descended upon us. Your home heating bill has a new carbon levy charge. Your price per litre of gasoline now has a 5 cent a litre carbon levy built in. Environment Minister Shannon Phillips has announced the broad outlines of a $645-million program (over five years) to promote energy efficiency in Alberta homes and businesses. About $36 million is being made available this year to subsidize home solar panel installation, and $21.5 million for free home upgrades for energy-efficient products. At the mega-level, i.e. in the billions, this government has decided to eat all the costs of a long-term deal with utility companies to get rid of coal in the current 2016-17 budget. That decision adds another billion dollars to a provincial deficit now predicted to hit $10.8 billion by the end of March. There’s no middle ground. Either you are all for this kind of government spending for the greater good, or you are ag ... Read the rest of entry »

Hicks on Biz: We mustn’t count our chickens BY GRAHAM HICKS FIRST POSTED EDMONTON SUN: FRIDAY, DECEMBER 16, 2016

Never count your chickens until they hatch. But as the beaks of the baby chicks break through their shells, things look promising. Two new petro-chemical plants have been announced in Alberta’s Industrial Heartland – the enormous industrial park around Fort Saskatchewan. One will be in Sturgeon County, the other in Strathcona County. These are economic development monsters – a total of $5.6 to $6 billion spent over the next four years, 4,000 skilled-trade construction jobs through 2021. Dozens of local fabrication plant bosses aren’t sleeping these days, wondering where new business will come from as the Sturgeon Refinery and Suncor’s Fort Hills oilsands plant finish up construction. Two new petro-chemical plants will be a God-send. But we mustn’t count our chickens quite yet. The boards of the two energy companies involved – Pembina Pipelines (with Kuwaiti partner Petrochemical Industries) and Inter Pipelines – have not yet officially approved ... Read the rest of entry »
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