Wednesday, June 11, 2014

'Alberta Tories won't push 'panic button' after Total shelves $11 billion project' - Because they have already pressed it

Alberta Tories won't push 'panic button' after Total shelves $11 billion project
Finance Minister Doug Horner said Tuesday the government "isn't pushing any panic buttons" after Total E & P decided to shelve an $11-billion megaproject and the Canadian Association of Petroleum Producers issued sour projections for Alberta's oilpatch.

"There's always a concern when you see one of these large projects that is going to be moved to another jurisdiction; we're still concerned about the high cost of investment for megaprojects in our province, (but) we are seeing a lot of interest in other sectors and other projects that we think will still come to fruition," Horner said in an editorial board meeting with Postmedia News.

"It is still the No. 1 resource in the world that is not state-controlled, so it is still a very good place to invest."

Last month, Total E & P Canada president and chief executive Andre Goffart said the company has put the Joslyn North oilsand mine on hold indefinitely. The project was expected to cost $11 billion and generate 100,000 barrels of crude a day.

Shortly after the Total announcement, CAPP projected crude oil production from Alberta's oilsands will reach 4.8 million barrels per day by 2030, 400,000 fewer barrels per day than in last year's forecast.

Horner highlighted positive developments, noting the European Union appears to be backing away from plans to label oilsands "dirty" as a result of fierce lobbying from provincial and federal governments alongside oilsands producers.

Horner also acknowledged that Alberta continues to be a high-cost business environment.
The Alberta government is going to play this card until the cows come home (or die). They're bought and paid for to sell you the oilsands. Of course they're not pushing the panic button, because internally the government has been raising the alarm on this for years.
A confidential government memorandum obtained by CBC News warns that soaring costs of developing the Alberta oilsands could put the brakes on the massive project, stalling one of the main engines of the Canadian economy.
The booming oilsands industry supports tens of thousands of Canadian jobs, and pumps billions of dollars a year into the national economy.

The memo written by Mark Corey, one of the highest-ranking officials in the federal Department of Natural Resources, warns that if the current trend of spiralling labour and other costs continues, investors may start to turn off the tap on the massive amounts of money needed to develop the oilsands.

"Although current crude prices promote oilsands development, ever-increasing capital and operating costs could make this price insufficient to support oilsands development at forecast levels," Corey writes.


Cost increases are currently "the biggest risk to investment in the sector," and could jeopardize the viability of some projects, he says.
 
Rising labour costs

The memo estimates that operating and capital costs to extract a barrel of oil from the tar-like sands have both more than doubled over the past decade.

It blames a chronic shortage of workers and resulting sky-high labour costs as the main cause of increased operating expenses.

Corey's memo reflects a growing concern inside government over the future of the oilsands, and specifically the massive amount of capital investment that will be needed to fuel their continued development.
Natural Resources Minister Joe Oliver recently estimated the oilsands would need $650 billion in capital investments in the next decade alone — almost five times what's been spent there over the past 50 years.

The memo written in April this year was obtained under the Access to Information Act and appears to have been prepared for Natural Resources Minister Joe Oliver.

The document pre-dates the Harper government's current review of foreign takeovers of two Canadian energy companies.

It nonetheless bolsters the contention of many in industry and government that Canada can hardly afford to turn away foreign investment in the oilsands.
They're fucking desperate to get to Asia, but Asia isn't going to change anything. The alarm has been raised. Just look:

Jim Prentice says he's leader Alberta needs to build Northern Gateway pipeline to B.C. coast 

It's such utter bullshit that I'm not going to bother pasting anything from it outside of one paragraph but go ahead and take a gander. Remember this is the same Jim Prentice who has also been saying Alberta really needs to take out debt to support oilsands growth and you know paying that debt back "might depend a bit on oil prices".
Former Alberta premier Alison Redford coined the term "bitumen bubble" to refer to the price spread between oilsands crude and conventional North American oil caused by Alberta's reliance on the United States as its sole consumer.
We're not selling conventional oil, we're selling low quality bitumen. It's not oil. It's bitumen. It's the "bitumen bubble". It's not the "Alberta's light sweet conventional crude oil bubble". It's the "bullshit bubble" is what it is and seriously folks it's looking like it's getting pretty hard for the department of the management of public perception to cover up the downward spiral they've put us on in the name of short-term profits.

They're just such true believers. From the days of Ralph Klein who believed if we just defer the majority of the costs of "growth" into the future we'll eventually be able to afford them. Or now, believing catching up our infrastructure on the backs of our children when things are projected to get worse, not better. Exactly what wages are our children going to pay this debt off with as "high labour costs" and the "coincidential" TFW explosion are driving down wages even further.

The "alarm" was pressed long ago, and they've been responding to it (with your money of course) but not in your interest. They want to sell more, faster, now, but no matter how much they sell they will not overcome the 5:1 energy return on energy investment ratio as we slowly destroy ourselves in the process.

Without a long term economic benefit rapidly producing these things makes absolutely no sense what-so-ever. Whether you're left or right, if you have any business sense what-so-ever you would be stupid to not realize that the oilsands are an economic sinkhole.

It's "jobs" for you, and "growth" for them

I may live in Alberta but when I say we I am talking about all Canadians as Alberta's problems and the collateral damage caused by them will be your problem too. For instance, take Harper's recent joint announcement's on climate change. He thou declare!
Stephen Harper insists he won’t be pressured to alter his business-friendly climate-change policies, saying the Conservative government is simply more upfront than leadership in some other countries about its intention to avoid abatement measures that hurt jobs and economic growth.

“No matter what they say, no country is going to take actions that are going to deliberately destroy jobs and growth in their country. We are just a little more frank about that,” the Prime Minister said.
He's right, no country (or rather those that control the monetary systems of those countries) is going to purposely crash their ponzi-conomy and so we definitely can not interfere with infinite economic growth. Of course infinite economic growth is tightly coupled to fossil fuel consumption and it's not really like things are getting cheaper... right?

So, knowing this, what would you believe? That the government is working to fix the TFW program? Or that they've actually orchestrated the entire ordeal?

Open your wallet, pull out your S.I.N. card and read that number to yourself. That's you. That number, to the government, is all you are. What is a S.I.N. card anyway? It identifies you, or to be more specific: your labour, as collateral to the private banks for the privilege of borrowing from them at interest and if the country can't pay? It's the citizens who suffer. "Social Insurance Number", don't you get it? YOU'RE THE INSURANCE! Or "security" if you're an American.

"Jobs" and "growth" always go together because it is the "jobs" which support "growth" which supports currency expansion, which supports taxes and paying private debt, which supports other taxes or the public debt to private banks which use fractional reserve lending or just simply print the currency from nothing and charge interest on top of it.

So no, we won't be getting in the way of the fantasy that infinite economic growth is possible even as the cracks start to show in the foundations of that assessment. The promises of the future will be bigger, not smaller. Grander, even. Like floating fucking houses! hell yea! I mean who didn't love Waterworld?

Unfortunately while "jobs" and growth go together they do not necessarily mean jobs for you and if you look at the way energy is driving up costs and is likely to continue doing so I think you'll quickly come to the realization the growth isn't either.

You know, there was a time that something called "competition" drove wages. Employers had to compete usually by offering higher wages to entice people to work there. As we discussed the other day with the Restaurant CEO's declaration that even if these places offered $100 per hour Canadians wouldn't take the job. Not couldn't, wouldn't. Oh yea, sure, the pitiful state of wages in Canada has absolutely nothing to do with it right?
The OECD says Canada’s urban housing markets are overvalued, making owning a home too difficult for many Canadians and increasing inequality.

In the first major survey of the Canadian economy in two years, the Organization for Economic Co-Operation and Development takes particular aim at risks in the housing market, while also chiding the country's environmental record, the oilsands and skills training.
IMF sounds global housing alarm
The warning from the IMF shows how an acceleration in global house prices from already high levels has emerged as one of the major threats to economic stability, with countries making limited progress in keeping them under control.

Min Zhu, the IMF's deputy managing director, said the tools for containing housing booms were "still being developed" but that "this should not be an excuse for inaction".

House prices "remain well above the historical averages for a majority of countries" in relation to incomes and rents, Mr Zhu said in a speech to the Bundesbank last week, which was only released on Wednesday because it clashed with a European Central Bank announcement.

"This is true for instance for Australia, Belgium, Canada, Norway and Sweden," he said.

In the wake of the global recession central bankers have cut interest rates to record lows, pushing house prices to a level that the IMF regards as a significant risk to economies as diverse as Hong Kong and Israel.

In Canada, for example, house prices are 33 per cent above their long-run average in relation to incomes and 87 per cent above their long-run average compared with rents. The figures for the UK are 27 per cent relative to incomes and 38 per cent relative to rents.
It's not like people are finding themselves priced out of more and more items the west used to take for granted. Again, look at that S.I.N. card of yours, low interest rates - cheap loans - are here not for you the sucker holding devaluing currency but for the banking sector.

Whether we're selling the future generations' resources, destroying free market wages by subsidizing cheap labour so corporations can skirt competition, or pricing first time home buyers out of permanent security for their family, it's being done because things are not nearly as stable as those in power would like us to believe. My suggestion? Don't believe them.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

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