Links between oil activity, Alberta quakes studied November 14, 2009
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Dave Eaton, a geophysics professor, is looking for links between oil and gas activity and earthquakes in Alberta. (CBC)
A Calgary scientist is looking for links between oil and gas activity and earthquakes in Alberta.
Alberta isn’t known for its tremors, but small ones do happen and can be missed because of a lack of monitoring equipment in the province.
Dave Eaton, a geophysics professor, is leading a project that will see a decommissioned station near Priddis upgraded and eight more set up across the province. The equipment will be able to detect earthquakes that humans can’t.
Eaton wants to know whether blasting liquids underground to extract natural gas or storing carbon in the earth to reduce greenhouse gas emissions can cause an earthquake.
“Earthquakes have been produced that are just on [the] threshold of causing damage to homes and infrastructure and are felt over a large region. So we would really like to understand the nature of those earthquakes better and really make a more solid connection between the types of fluids being injected and earthquake activity,” he said.
No clear link between carbon capture, quakes
The study could have a big impact on the emerging carbon-capture industry in the province. Alberta has set aside $2 billion to fund such projects.
“There’s no proof right now of any causal link between CO2 injection and earthquakes, but that’s one of the reasons we would like to investigate it more,” Eaton said. “We need to be very careful and aware of all the earthquake risks, especially when we are contemplating these sorts of really long-term storage of materials inside the earth.”
Little is known about the possible connection between earthquakes and carbon capture, said John Harper, a geologist with the Geological Survey of Canada.
“Not a lot of research has been done relative to carbon capture and storage and earth movements so it is the kind of research that is extremely valuable,” he said.
Eaton is also interested in what’s happening deep underground.
“We are also hoping to understand better the deep geology of this region and some of the forces that cause the North American plate to move.”
The University of Alberta in Edmonton also has earthquake research stations, but the University of Calgary’s stations will be online, accessible through the Geological Survey of Canada. Researchers have to go to the U of A stations in person to collect the information.
Rising exports narrow Canada’s trade deficit November 14, 2009
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Higher exports to the EU helped narrow Canada’s trade deficit to $927 million in September, Statistics Canada said Friday.(Jason R Zalasky/Associated Press)
Canada’s exports were 3.5 per cent higher in September, narrowing the trade deficit to $927 million from $2 billion.
Statistics Canada says exports rose by $1 billion to $30.3 billion in September, as volumes increased 4.5 per cent. Imports were largely unchanged, edging down 0.1 per cent to $31.2 billion.
Exports have been on a downward trend since July 2008 and reached a low point in May 2009 before increasing in three of the past four months.
Automotive products, industrial goods and materials, and machinery and equipment were the main sources of growth for exports. Energy products mitigated the gains.
Higher exports to the European Union were largely responsible for the overall increase in exports.
“The big story in this report was Canada’s diversification away from the United States,” BMO economist Benjamin Reitzes said.
Exports to the EU and other OECD countries jumped 34 per cent and 15 per cent respectively, he noted. “As U.S. consumption is likely to lag the global recovery, a shift towards other markets will be a key to Canadian exporters’ success,” he said.
Exports to the United States increased 0.5 per cent while imports grew 1.7 per cent. As a result, Canada’s trade surplus with its largest trading partner shrank to $2.1 billion in September from $2.3 billion in August.
“With the U.S. still Canada’s largest customer, trade deficits are likely to persist,” Reitzes said.
Caisse to issue $8B in bonds November 14, 2009
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The manager of Quebec’s public pension fund will raise up to $8B in debt. (Canadian Press)
Quebec pension giant Caisse de dépôt et placement said Friday it will issue up to $8 billion in bonds in Canada, the U.S. and Europe by the end of 2010, with the amount depending on market conditions.
The debt issue will replace short-term credit instruments with longer-term debt to increase the stability of the financing of the public and private pension plans the Caisse manages.
The refinancing is the latest move to bolster the financially beleaguered Caisse, which manages one of the largest capital pools in Canada — $120.1 billion as of the end of 2008.
In August, it announced it would revamp its real estate arm and abandon riskier commercial loans after $5.7 billion in losses wiped out other gains during the first half of 2009.
Caisse managers said $4 billion of these unrealized losses were in real estate, and they booked $1.7 billion in declines of other illiquid investments — $1.3 billion in private equity and infrastructure, and $400 million on asset-backed commercial paper.
U.S. trade deficit grows 18.2% November 14, 2009
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Rising oil prices widened the U.S. deficit in September, the Commerce Department reported Friday.
The value of imports surpassed those of exports by $36.5 billion US, a rise of 18.2 per cent and the most in nearly a year.
Boeing manufacturing plantAircraft, autos and industrial machinery helped the U.S. to increase exports in September(The Boeing Company)
Still, exports were up 2.9 per cent to $132 billion, their fifth monthly increase. The biggest gains were in sales of autos, aircraft and industrial machinery.
Imports rose 5.8 per cent to $168.4 billion, pushed up by a 20.1 per cent increase in oil prices, which rose to their highest levels in nearly a year.
That benefited Canada, the No. 1 supplier of U.S. petroleum imports, with sales of two million barrels a day to the U.S.
The trade deficit for the first nine months of this year now totals $366 billion. That’s about half its level for all of last year.
The deficit with China rose 9.2 per cent to $22.1 billion, the highest imbalance in 10 months.
Alberta lifts ban on sour gas projects November 14, 2009
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The government agency that regulates Alberta’s oil and gas industry lifted its ban on new sour gas projects Friday.
The Energy Resources Conservation Board (ERCB) suspended the issuing of licences for sour gas drilling, pipelines and other projects on Nov. 3, after an Alberta Court of Appeal ruling.
The ERCB says companies planning sour gas projects will still have to determine whether more residents need to be included in public hearings(CBC)
Sour gas contains hydrogen sulphide, which can be fatal, even in small concentrations. It occurs naturally as a result of the decay of organic matter, and is present in one-third of Alberta’s natural gas wells.
The court decided on Oct. 28 that the ERCB erred by not following its own regulations when it denied three women living near Drayton Valley, 140 kilometres southwest of Edmonton, their right to participate in public hearings on the drilling of two sour gas wells by Calgary-based Grizzly Resources Ltd. The board had said the three women did not live close enough to the well site to be affected by any leak.
The board said it has now corrected its error, but the changes will be controversial. Previously it had required oil and gas companies to identify two zones, one within which a gas leak would cause death, injury or damage, and a wider one in which sour gas could still drift from wind but in lower concentrations.
It said the larger zone will be reduced and be the same size as the smaller one. Although the court ruling requires that the public hearing be held again, and that the three women who won the court ruling be consulted. The change means they would still be excluded from a similar future hearing.
‘Public safety has been in no way lessened or compromised’—Dan McFadyen, Chairman, ERCB
“Public safety has been in no way lessened or compromised at any time,” said ERCB chairman Dan McFadyen. “The ERCB still has the most stringent sour oil and gas regulations in the world.”
Board spokesman Bob Curran told CBC News the risks outside the smaller zone are “negligible” but “in any situation it’s impossible to get down to a risk of zero.”
One of the women who won the case, Lillian Duperron, told CBC News earlier that she was concerned that the sour gas even at low concentrations would affect her asthma or the large number of school-aged children in the area.
The suspension by the board affected applications for 69 wells, pipelines and other facilities. Curran said all companies will have to review their applications to determine whether more residents need to be included in public hearings.
“There’s going to be some work for industry to do on that front,” he said.
Regulators put rule changes on hold November 14, 2009
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Canada’s provincial securities regulators put on hold Friday plans to change the country’s corporate governance rules.
Corporate governance refers to the regulations that compel corporate directors to ensure managers protect the interests of shareholders.
Corporate governance deals with issues such as executive bonuses.(CBC)
An example would be the rules under which executives receive bonuses. The Canadian Securities Administrators announced in Dec. 2008 plans to revise the rules but have now reversed course, saying several companies said they were too busy dealing with the financial crisis.
The CSA was considering moving toward what’s called a “principles-based” approach. This means moving away from hard-and-fast rules about the conduct of managers and toward practices that conform to community expectations about ethics. Such principles tend to become more demanding over time.
“Based on the comments received, we do not intend to implement the proposal as originally published. We do not believe that now is the right time to make such changes,” said Jean St-Gelais, CSA chair. “We are reconsidering whether to recommend any changes to the corporate governance regime.”
Any changes now won’t take effect before 2011 at the earliest.
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.
U.S. bill pitches total regulatory overhaul November 12, 2009
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U.S. Senator Chris Dodd has brought forward an ambitious bill that would strip the Federal Reserve and Federal Trade Commission of much of their powers to punish companies and hand them over to a new government agency.
From left to right, Barney Frank, Christopher Dodd and Barack Obama have all pushed for greater regulation of financial firms in the wake of the economic downturn that began in late 2008.(Gerald Herbert/Associated Press)
“When consumer protections are handled by regulators whose primary responsibility is to safeguard the profitability of the companies they regulate, consumer protections don?t get the attention they need,” the Connecticut Democrat said in a draft version of his proposed legislation.
“The Federal Reserve ? has repeatedly failed to act despite repeated demands from Congress [and] the Federal Trade Commission is responsible for consumer protections ? but lacks the authority and capacity to examine them,” he said.
The proposed body, the Financial Institutions Regulatory Administration, would eliminate the alphabet soup regulators that have led to weak, confusing regulation where problems fall through the cracks, Dodd said.
“We must restore responsibility and accountability in our financial system to give Americans confidence that there is a system in place that works for and protects them.”
Executive bonus caps
Among numerous stipulations, the bill would provide shareholders with a say on pay and corporate affairs with a non-binding vote on executive compensation and director nominations, Dodd said.
And hedge funds with values in excess of $100 million would be required to register and disclose financial data. Currently there are no such stipulations on the shadowy institutions.
The bill, inspired by last year’s financial meltdown, will minimize ?economic turmoil and protect the interest of taxpayers,? Dodd said.
It calls for the creation of the Consumer Financial Protection Agency that could curtail or ban a host of dubious ? but lucrative ? bank practices such as ballooning mortgages, excessive credit card interest rates and surprise overdraft fees.
Fed fights back
Though in favour of cracking down on the nation’s lending practices, the Fed has repeatedly bristled at the idea that it might be supplanted as the country’s dominant financial regulator.
“The Federal Reserve has the resources, the structure and the experience to execute an ongoing comprehensive program for effective consumer protection in financial services,” Federal Reserve member Elizabeth Duke told Congress in July.
“We believe that replicating in another agency the deep expertise and full array of functions embedded within the Federal Reserve and used to support our consumer protection program would be enormously challenging.”
‘The Federal Reserve ? has repeatedly failed to act’? Connecticut Senator Chris Dodd
The bill comes in response to a request made by U.S. President Barack Obama earlier this year that lawmakers overhaul financial regulation to make it more transparent, less open to abuse, and more resilient against the tsunami of perils that swept over the U.S. economy in the past year.
Critics counter that more bureaucracy would be unlikely to fix any problems and would merely add more layers of red tape to the process of consumer lending.
The Senate Banking Committee will review the legislation next week, paving the way for a floor vote by early next year.
U.S. lawmakers have brought forward numerous bills this year aimed at cracking down on unscrupulous lending practices and excessive interest rates.(Mark Lennihan/Associated Press)
Some of the proposed changes are already making their way through Congress as part of a bill brought forward earlier this year by the House financial committee chair, Massachusetts Democrat Barney Frank.
A key difference between the two bills is that Frank’s bill would actually grant the Fed more power to ensure banks don’t become “too big to fail” whereas Dodd’s legislation seeks to hand some of the central bank’s power over to a new body.
If approved, the new FIRA agency would be the ultimate governing body for U.S. financial firms. It would assume some of the roles currently held by the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation.
The Frank bill is scheduled to be voted on next month.
Box office bonanza helps Cineplex buck recession November 11, 2009
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Cineplex Galaxy Income Fund posted higher revenue and profits based on heightened demand for movies in the third quarter.
Cineplex Galaxy Income Fund saw record attendance at its cinemas in the third quarter of 2009.(Canadian Press)
Revenue totalled $257.5 million, up 7.7 per cent or $18.4 million from $239.1 million in the same period last year.
Attendance at movies in Canada hit 18.8 million, up four per cent from 18 million last year.
Cineplex said its box office sales for the quarter, reported at $155.9 million, was the highest-ever box office revenue for any given quarter.
“From a box office perspective, [the recession] has been fantastic,” Cineplex Entertainment CEO Ellis Jacob said.
The Toronto-based income trust also reported higher net income of $20.4 million for the third quarter, up from year-ago profit of $18.4 million.
Revenue met a consensus estimate of four analysts compiled by Thomson Reuters.
That a screener of movies would fare well during a recession even as other businesses dependent on discretionary income have suffered is not necessarily surprising, economists note.
Three-month stock chart for Cineplex Galaxy Income Fund on the TSX.(CBC)
“People still spend money during recessions; they just spend it on different things,” TD Economist Derek Burleton said.
“The entertainment sector has done well in general, and for people who are used to going to restaurants and spending $100 or $150, [movies] are a cheaper alternative.”
The company attributed the box office bonanza to screening a wider variety of films.
Cineplex said the quarter was boosted by films catering to a wider range of audiences, including premium-priced 3D features like Ice Age: Dawn of the Dinosaurs and IMAX products like Harry Potter and the Half Blood Prince.
The company was buoyed by a strong lineup of family films, because such films often lead to increased purchases of concessions. But the company is well positioned to keep customers even if the calibre of releases slip, Jacob said.
‘We set the table; we don’t serve the steak.’? Cineplex CEO Ellis Jacob
“I always tell people, we set the table; we don’t serve the steak,” he said.
For comparison’s sake, the third quarter of 2008 included the release of The Dark Knight, the second-highest-grossing movie of all time in North America.
The company earned an average of $4.15 worth of concessions from every paying customer during the quarter. That was up 4.5 per cent over last year and set a new record, but it wasn’t achieved by jacking up prices, Jacob said.
“One thing we’ve been very conscious of during the past year is we have not raised any of the prices on concessions,” Jacob said.
Cineplex is the largest motion picture exhibitor in Canada with about 10,000 employees at 1,328 screens and annual attendance of 63.5 million.
With files from The Canadian Press (more…)
Looming oil crunch played down: IEA whistleblower November 11, 2009
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A whistleblower at the International Energy Agency has accused the organization of deliberately underplaying the seriousness of a looming oil shortage.
The whistleblower, identified by the Guardian newspaper in the U.K. only as a senior IEA employee, told the paper the world is much closer to running out of oil than official estimates admit but that the agency has toned down its warning to avoid triggering panic buying.
A senior official with the International Energy Agency is accusing the group of downplaying a looming shortage of oil. (CBC)
The official claimed the agency is responding to U.S. pressure to downplay how fast existing oilfields are being depleted while overplaying the chances of finding new reserves.
Both the unnamed current employee and a former staff member quoted by the Guardian raise concerns about the ability of the world to increase oil output. The IEA predicted in its latest report that demand will increase to 105 million barrels a day by 2030 and that the world’s energy resources are “adequate to meet the projected demand increase through to 2030 and well beyond.”
The two dissenters question whether production can be raised from its current level of 83 million barrels a day. Even in the oil industry, there are those who say world production has already reached its peak.
One of them, Matt Simmons of Simmons & Co. International, told CBC News he agrees. Simmons is the author of Twilight in the Desert:The Coming Saudi Oil Shock and the World Economy, in which he argued that Middle East reserves have been overstated.
Simmons said it’s impossible for the world to meet expected demand, and once India and China return to normal growth rates they “will drain up every scrap of oil we’ll ever be able to produce.”
Predicts the end of globalization
He predicted the world will be forced into conservation measures including a reversal of globalization, and changes will include curtailing long-distance commuting, growing food near where it’s consumed, and carrying goods by truck only where ship or rail transport cannot reach.
Even that, he said, will reduce consumption by at most 25 per cent over the next 10 years, and this means the world will have to find a substitute for transportation fuel.
Simmons predicts it won’t be high prices that kill demand for oil but the industry’s heavy use of water, which will become so scarce worldwide that it will be priced like other commodities.
The Guardian report came as the IEA released its annual World Energy Outlook on Tuesday, warning that the worldwide financial crisis has led to a dangerous drop in energy investment, which could stifle any hope of economic recovery.
The agency is a policy adviser to 28 mostly industrialized, oil-consuming nations. It estimates investment in finding oil and gas has dropped by $90 billion US this year, down 19 per cent from 2008. As a result, the IEA said, future supplies of oil and electricity could be constrained and “undermine the sustainability of the economic recovery.”
Natural gas glut seen to 2015
The IEA’s prediction about natural gas, which represents two-thirds of the activity in Canada’s energy industry, also has potentially serious consequences. The agency expects new supplies of natural gas from previously untapped shale formations will create a glut that will extend until 2015.
However, Simmons dismisses the idea that shale gas will create a sustained glut as the “single biggest illusion in the industry in the last 40 years,” saying it overestimates by 20 to 25 years how long shale gas wells will be able to keep producing .
The IEA report came a month ahead of the UN Copenhagen conference, where world leaders will discuss measures to reduce carbon dioxide emissions. Among the agenda items is an initiative for developing countries to switch from fossil fuels to renewable energy such as wind and solar.
The IEA report said investment in renewable energy sources has been hard hit, falling by a fifth this year compared with 2008.
With files from The Associated Press (more…)
Apple passes Nokia as most profitable cellphone maker November 11, 2009
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iPhone maker Apple Inc. has become the world’s most profitable cellphone maker, a prominent tech consultancy suggests.
Backed by strong sales of the iPhone, shown above, Apple Inc. has surpassed Nokia as the world’s most profitable cellphone maker, tech consultancy Strategy Analytics suggests.(Associated Press)
“With strong volumes, high wholesale prices and tight cost controls, the [computer] vendor has successfully broken into the mobile phone market in just two years,” Strategy Analytics analyst Alex Spektor said.
The Cupertino, Calif.-based company raked in $1.6 billion US in profits out of iPhone sales during the third quarter of 2009, Spektor’s analysis suggests. That bested the $1.1 billion in profits he found Swedish telecom giant Nokia earned during the same period.
Although profitability of the iPhone units remains a closely guarded secret in Apple’s quarterly results, the consultancy has tracked profitability among cellphone sellers since 2007, and the third quarter was the first time Nokia was supplanted at the top of the list, Spektor said.
“It really comes down to the product mix,” he said in an interview. “Nokia phones average about $90, globally, while Apple averages about $600 globally.”
“So for every phone Apple sells, Nokia has to sell six or seven,” just to keep up in revenue ? never mind profits, Spektor said.
The per-unit revenue the companies earn does not necessarily correspond to the retail price consumers pay for the phones.
Nokia slipped into second place as margins have been hit hard by both the economic downturn and a stagnant presence in the United States, Spektor said.
It remains the dominant phone maker in much of the developing world, where profit margins are much slimmer. Media reports estimate that Apple’s Chinese partner, China Unicom, has only sold 5,000 iPhone units since the device was unveiled in China.
“The vast majority in China will be looking for imitation products because of the price point, so if you have something that looks like [the iPhone and] offers comparable features, you’re going to do well,” Spektor said.
But a rebound in the key U.S. market is key to Nokia’s long-term strategy, the consultancy says.
“A successful fight on Apple?s high-profit home turf can simultaneously help to revitalize Nokia?s margins and to put a check on Apple?s surging growth,” Strategy Analytics director Neil Mawston said.
Apple has leapt to the top of the profitability list among phone sellers despite the fact that the computer-maker only entered the cellphone market roughly two years ago with the release of the first iPhone in June of 2007.
Worldwide, Nokia sold 108.5 million wireless devices in the third quarter of 2009, down 8 per cent from last year’s level.
In the same period, Apple Inc. sold 7.4 million iPhones worldwide, company data reveals, a seven per cent increase over the same period last year.
