Connect with us

Business

Say goodbye to hopes of a quick economic ‘turnaround’ in Alberta

Published

 on


TORONTO, ONT.: March 9, 2020 — People walk by a screen displaying devalued stocks and the TSX outside of Bank of Montreal at King and Bay Streets. Toronto, Ont., March 9, 2020. (Nick Kozak for Postmedia News).


Nick Kozak / PST

It was less than two short weeks ago the Alberta government was predicting the province was on the verge of an economic “turnaround” in 2020.

Scratch that.

With the stunning drop in global oil prices, pushing crude down by more than $10 on Monday to US$31.13 a barrel, Alberta — and the country — will be lucky to avoid another punishing downturn.

The dramatic weekend action by OPEC heavyweight Saudi Arabia to ramp up production and slash prices sent stock markets into a tailspin Monday. It left Canadian energy companies preparing for another punishing price correction for the third time in five years.

“It’s like we’re already down on the ground and now we’re getting this,” said Bob Geddes, president of Calgary-based Ensign Energy Services, the country’s largest driller.

“I’m just waiting for the Bow River to turn red here to top it all off.”

Alberta and the energy industry were anticipating a comeback year after a lousy 2019.

Oil prices above US$60 a barrel for West Texas Intermediate (WTI) crude have been cut in half since early January, with the outbreak of the coronavirus cutting global demand for energy.

The COVID-19 outbreak pushed prices down into the $40-a-barrel range last week and many analysts expected it would have a significant, but relatively short-term impact.

Today, the unexpected collapse of the partnership between the Organization of Petroleum Exporting Countries (OPEC) and Russia over production cuts has triggered another major shock to global oil markets — triggering a fierce battle for market share between two of the world’s largest producers.

On the weekend, Saudi Arabia served noticed it would crank up output and lower its official prices, creating pain for producers around the world.

“The Saudis have now fired their first shot in an oil price war,” said Judith Dwarkin, chief economist with RS Energy Group, a part of Enverus.

“The problem is the markets were already contending with a demand shock. Now they’re contending with a supply deluge, potentially another million-plus barrels per day coming to market.”


A trader walks by beneath a stock display board at the Dubai Stock Exchange in the United Arab Emirates, on March 8, 2020. – Gulf markets tumbled to multi-year lows at the start of trading after OPEC and its allies failed to clinch a deal over oil production cuts. (Photo by GIUSEPPE CACACE / AFP)

GIUSEPPE CACACE /

AFP via Getty Images

For Alberta, another player caught on the sidelines of a bigger turf war, the fallout could be significant.

It harkens back to the collapse in crude prices five years ago, which triggered layoffs and brutal spending cuts. It also kickstarted what the provincial budget recently called “the longest recovery from a downturn on record in Alberta.”

Yet, it’s not just an Alberta phenomenon that’s unfolding, but a Canadian one as well. The energy sector accounted for 11 per cent of the country’s GDP in 2018 and more than 269,000 direct jobs, as well as billions of dollars in revenues and royalties for governments.

Alberta’s economy, mired in a mild recession last year, was projected to grow by 2.2 per cent this year thanks to rebounding investment and higher oil and gas production, according to a Conference Board of Canada report last month.

That rosy outlook will likely disappear as oil and gas companies are expected to pull back on spending if oil prices stay low for an extended period of time.

Matthew Stewart, the board’s director of economics, said oil will likely remain below $35 a barrel until at least May.

“We (expected) to see a small rebound in energy investment late in the year, but there’s no doubt this puts a lot of that at risk,” Stewart said.

Indeed, the one-two punch of coronavirus and an oil price war makes it difficult to see a meaningful economic turnaround with so many unpredictable geopolitical and economic factors falling outside the province’s — and the country’s — control.

Premier Jason Kenney told reporters Monday the oil price drop could hardly come at a worse time for Alberta, arriving on the heels of a prolonged period of economic stagnation.

“Economic fragility, combined with a global recession and a collapse in prices, constitutes a profound challenge for Alberta and for Canada,” he said.

[embedded content]

The profound challenge is already squeezing energy producers. The S&P/TSX Capped Energy Index plummeted by 27 per cent on Monday, with Cenovus Energy falling 52 per cent, while MEG Energy was off by almost 56 per cent.

Whitecap Resources CEO Grant Fagerheim noted most Canadian petroleum producers are wrapping up their first-quarter winter drilling programs and will soon enter a period of less activity during the spring.

He expects many companies will assess the situation in the coming weeks, but cut capital spending plans later in the year if prices remain low.

Fagerheim was meeting staff on Monday to “talk about what this really means … Then, we are going into a review process, which we just initiated on the weekend,” he said, adding jobs at the company are safe.

“We are going through all of our assets to say, ‘If we’re going to spend capital…what should we be spending capital on?’”

Oilfield services firms, which rely on customers to spend capital to generate activity, will also be facing the pressure. Crude prices this low will inevitably lead to more spending reductions by producers and cost-cutting in the industry, said Geddes.

“They can’t make money at $30 oil,” he said in an interview. “We have a hiring freeze and we have a capital freeze across our company that we just initiated here this morning.”

For Canadian producers who endured oil sinking below $30 a barrel in February 2016 and a spike in the price discount for Western Canadian Select heavy oil in late 2018, this is yet another challenge to endure. Western Canada Select closed Monday at US$17.80 a barrel.

However, several analysts and investors point out many oilsand operators have aggressively cut costs since 2014 and, while clearly affected by any price downturn, they are less vulnerable than many of the U.S. shale oil producers.

“Generally speaking, if you have top-quality oilsands projects, you are going to be amongst the best-protected of oil producers in the world to weather this storm,” said Adam Waterous, CEO of Waterous Energy Fund, which acquired Pengrowth Energy Corp. last year.

“(But) it is going to be very bumpy until this sorts itself out.”

Source:- Calgary Herald

Source link

Business

Alberta reports 411 new cases of COVID-19 and two more deaths in last 24 hours – CBC.ca

Published

 on


On the one-year anniversary of the first COVID-19 case reported in Alberta, 411 new cases were reported around the province on Friday.

This brings the total of active cases up to 4,639, after 10,559 COVID-19 tests were completed in the last 24 hours. Two new deaths in Alberta linked to COVID-19 were also reported on Friday.

Across the province, there are currently 243 in hospital with the disease, and 44 in intensive care.

On Friday, the province also reported 22 new cases of the COVID-19 variant that was first detected in the United Kingdom. The total number of active variant cases in the province is now 563.

The regional breakdown of active cases on Friday was:

  • Calgary Zone – 1,654
  • Edmonton Zone – 1,101
  • North Zone – 1,005
  • Central Zone – 527
  • South Zone – 341
  • Unknown – 11

Since the first case hit Alberta one year ago, 135,196 Albertans have tested positive for the virus, and nearly 2,000 have died.

Alberta’s vaccine rollout will soon expand the province announced on Thursday, with people under age 75 eligible to book appointments beginning March 15. The province expects all adults in Alberta will receive their first dose of the vaccine by the end of June, if vaccine shipments arrive as scheduled.

Alberta Health will also soon start using the AstraZeneca-Oxford vaccine. They plan to offer the first 58,500 doses to healthy adults between the ages of 50 and 64. Bookings for this vaccine will begin next week on March 10.

On Friday, Health Canada announced it had approved the use of Johnson & Johnson’s COVID-19 vaccine in Canada, providing a fourth vaccine to provinces and territories.

Let’s block ads! (Why?)



Source link

Continue Reading

Business

Ontario Ready to Rollout Phase Two of COVID-19 Vaccine Distribution Plan – Government of Ontario News

Published

 on


Ontario Newsroom | Salle de presse de l’Ontario

We’re sorry but Ontario Newsroom doesn’t work properly without JavaScript enabled. Please enable it to continue.

Let’s block ads! (Why?)



Source link

Continue Reading

Business

Alta. reports 411 COVID-19 infections a year after its first case – CTV Edmonton

Published

 on


EDMONTON —
On March 5, 2020, Alberta reported its first case of COVID-19. On the same day a year later, the province added 411 infections of the disease it now knows so well.

Alberta has counted 135,196 since that first case in the Calgary zone. Of those, 128,644 have recovered, 4,639 are active, and 1,913 have died.

There are currently 243 Albertans in hospital, including 44 in ICU.

VYING FOR VACCINES

The difference between then and now is what could put an end to the pandemic: vaccines.

On Thursday, the province announced its next phase of vaccinations as well as details for the AstraZeneca rollout, and on Friday morning, Health Canada approved the Johnson & Johnson shot.

READ MORE: Alta. expects to give 1st dose of COVID-19 vaccine to all adults by end of June: health minister

READ MORE: Canada authorizes one-shot COVID-19 vaccine from Johnson & Johnson

READ MORE: 8M vaccine doses to land in Canada by end of March after Pfizer moves up delivery

With Pfizer-BioNTech, Moderna, Oxford-AstraZeneca, and soon, Johnson & Johnson, Alberta is aiming to give a first dose to all adults by the end of June.

University of Alberta Hospital Dr. Lorne Tyrell, like Health Minister Tyler Shandro and Chief Medical Officer of Health Dr. Deena Hinshaw on Thursday, said any vaccine would be effective against COVID-19.

“I think any one of these vaccines is going to help to give us protection and to help improve immunity for the individual, but also improve herd immunity for the community,” he said.

“I see absolutely no reason why someone would turn down a vaccine that has been this well-developed and this well-scrutinized.”

It’s still unclear how many Johnson & Johnson doses Alberta will get, but Shandro confirmed they will be added to Phase 2A once logistics set.

Alberta Health Services had administered 275,719 doses as of Thursday, and fully immunized 90,486 people.

Let’s block ads! (Why?)



Source link

Continue Reading

Trending