Liveblogging a REIN meeting – Part 2

(I set out to liveblog a REIN meeting. What I didn’t plan for is how long a meeting is and how long they run. At about 4.5 hours, I wrote nearly 4,000 words and my batter died with 45 minutes or an hour left. I’ve broken things in to four parts: Part 1, Part 2, Part 3 and Part 4. Enjoy!)

7:05 Don’s introducing Jerry from Alberta’s Industrial Heartland, a part of Strathcona County Economic Development and Tourism. He was out last year and was great. They’ve invited him back because he’s a great speaker and there’s been a whole bunch of negative press with upgraders being delayed and similar problems.

7:07 “I want to give you an update of what’s been happening in Alberta’s Industrial Heartland. (I’ll call it AIH for brevity) Jerry’s got a 7 point agenda and the last one is a 13 point to do. The first slide is about the price of oil. Today’s spot price is $61.02 for a barrel of oil. Is this a long term? No, the real price is about $95 a barrel. He also mentioned the currency premium we’re getting because the difference between the USD and CAD.

There’s a slide up for OPEC revenues. US GDP revenue is 72% consumer spending. UK and Italy has 60%, but Canada’s way down around 56%. Ergo consumer spending is a much smaller effect in Canada compared to the US.

AIH was formed in 1998 to facilitate heavy industrial projects….mega projects. Keeping the value in Alberta has been a long-term goal. He’s got a cool picture of the Shell upgrader projects.

Jerry’s got heaps of great stats on the projects, but there’s also a couple places where he’s realistic and says when they’re not sure. For example, the next phase of the Shell expansion which is waiting on BOD approval.

7:14 BA’s upgrader is on hold. Why? It’s a merchant project that was waiting on funding. What’s going to happen? Jerry thinks another group will just buy the access. Total E&P Canada Upgrader in Fort Sask, but they’re going to be moving forward in Alberta. They need to have bitumen to put in their upgrader. Total actually hired one of Jerry’s employees away to work on their team.

The problem common to a couple companies is raising capital and people are being more cautious with moving forwards and the potential costs. In particular the merchant upgrader projects have been the ones that get put on hold [but not cancelled!]. Interesting stats: each project has an impact evaluation that has to be done. This includes a population and housing impact. The bottom side of the population impact of the upgraders is going to be 10,000 as of the start of the week. Shell’s housing projection requirement for one project is about 2,000 houses.

He’s got some great numbers and some good commentary about the challenges. He’s got some info addressing the question of if Alberta can support a world class cluster. There’s 5 big companies including CP and CN rail and Air Liquide with major projects to support the expansion.

He’s got a shot of the ‘batman’ curve of employement demand. “Investment still proceeding but over a longer term than originally projected”. I agree with Jerry that this is a good thing for stability.

Impacts on the environment; there’s some major $$$ being invested in environmental projects. He says about 85-92% of the CO2 from oilsands is emitted by the end user. He’s reviewing some stats that I’ve seen before about the relative emissions by country and by industry within Canada. He’s also got some good stats on building permits in Strathcona County.

7:28 He’s got good lease rates from Colliers and Cushman showing lease rates are up in 2008 over 2007. Now he’s showing Sherwood Park house prices from 2006 onwards broken by month. There was a crest in mid-2007 over $500k and now the average is around $430k. It’s pretty flat. Don’s piping up saying that sales stayed constant and the overbuild was pushing listings and caused the variance in the price.

Don gave Jerry a copy of the Goldmine score card after his last presentation and he’s got some bullets to fill out the score card. One good one is the population increase of 14% over the provincial average of 10%.

It’s 7:32 and he’s closing with a Darwin quote and said a copy of his proposal will be on REIN and on EDT at

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