HicksBiz Blog

Category: Oil + Gas

Oil + Gas

Say goodbye to upgraders: Hicks on Biz column, originally published Edmonton Sun, April 13, 2013

BY GRAHAM HICKS ,EDMONTON SUN Wave goodbye to the bitumen upgrader. Hold a funeral for the giant “pre-refineries” that, until 10 years ago, were still expected to dot Alberta’s Industrial Heartland around Fort Saskatchewan, each employing thousands of construction workers for years on end, each pumping $7 billion or more into the Alberta economy. Upgraders are so dead that oilsands giant Suncor has walked away from a staggering $3 billion – that’s 3,000 million dollars – it had already invested in its on-site Voyageur upgrader. Suncor officially cancelled the project last week. New Suncor President Steve Williams couldn’t justify spending the additional $7 billion needed to complete the upgrader, not with better “opportunity costs” elsewhere in the oilsands, i.e. using the $7 billion to expand bitumen production. Upgraders made sense right up to the building of Shell’s Scotford complex in the late ‘90s. Running molasses-like b ... Read the rest of entry »

Premier Alison Redford is smart: HIcks on Biz, originally published in Edmonton Sun, Feb. 23, 2013

He’s mad! He’s mad! This Hicks on Biz chap has gone clear off his rocker! He is suggesting Alison Redford is smart! Super smart! A superb politician! I am indeed. It’s fashionable these days to verbally pound Alberta’s premier at every turn. In Wednesday’s Edmonton Sun, four columns, one editorial and one news story were all over Redford and Finance Minister Doug Horner for not anticipating a huge drop in energy royalty revenues, a drop creating $4 billion government revenue shortfalls for the current and next fiscal years. You read it here first. By the time Redford heads into the next election, likely April 2016, she could have a balanced budget, no provincial debt, and a start on building the Heritage Fund ($16 billion) to the size of Alaska’s Permanent Fund (now at $41 billion). Why am I not a madman? The current free fall in government revenue is all about the “bitumen bubble,” the massive discount on the pr ... Read the rest of entry »

Alberta's Industrial Heartland is getting there: Hicks on Biz in the Edmonton Sun, Feb. 2, 2013

We take so much for granted. Most urban regions would kill to have an industrial “park” like Alberta’s Industrial Heartland. Canada’s largest petro-chemical and hydrocarbon (oil and natural gas) processing region embraces 582 square kilometres of land covering five municipalities around Fort Saskatchewan, including the still-virgin Edmonton Energy and Technology Park within Edmonton’s northeastern boundaries. Some 40 companies produce products made from oilsand and natural gas feed stocks. It’s all about keeping the jobs and the knowledge and the downstream wealth creation from the raw bitumen, crude oil and natural gas of northern Alberta in Alberta, for Albertans. At least half those companies work at global levels with an estimated $30 billion of investment as of 2012, 7,000 knowledge-based jobs and $77 million a year in municipal taxes alone. Intermunicipal squabbling is usually a quicksand in which regional economic development plans are swallo ... Read the rest of entry »

Oilsands oil versus the world: Hicks on Biz, originally published Edmonton Sun Jan. 26, 2013

So what about this "differential" or $50 gap difference between the price of crude in the Excited States, and the price of our heavy oil?It’s quite simple. Most of our “Canadian Select Crude” is exported to heavy-oil refineries in the American mid-west or all the way to the Louisiana coast.Number one, the pipelines to Louisiana, where huge refineries pay $100 a barrel for Mexican heavy oil that arrives by boat, are so full that heavy oil is backing up through the system. The storage “tank farms” east of Edmonton are just about full.Everybody knew a pipeline capacity crunch was coming, especially with delayed construction of the mighty Keystone XL pipeline from here to Louisiana. But the crunch has happened much earlier and with more ferocity than was expected.Number two, the mid-west refineries are running at full capacity.Number three, our oil now competes for mid-west refinery and pipeline space with new American crude oil from North Dakota.Which means, since early December, the price of our ultra-heavy oil ... Read the rest of entry »

The future of Alberta's economy is crystal clear: Hicks on Biz column originally published in Edmonton Sun, Jan. 5, 2013

The crystal ball doesn’t really need any polishing, because rarely have the opportunities/challenges for Edmonton’s and northern Alberta’s economy been so clear.It’s about extracting and shipping hydrocarbons (oil, natural gas and coal) in a way that keeps the forests green, the water pure, the air pristine, the pipelines and transmission lines as unobtrusive as possible.It’s about compromise, because millions of barrels of oil a day squeezed out of vast sand deposits to our north can’t be done without some disruption to Mother Earth. It’s a question of how much, and how the land is left once the mining is done.It’s about a Goldilocks economy. Not too hot, not too cold, trusting that a combination of market forces and government regulation keeps the energy juggernaut at just the right temperature.Pipelines are on the top of every agenda: Before, building pipelines to get our oil and gas out to the teeming masses of Asia or the thirsty refineries of Louisiana was rather abstract, an issue years away as the oil ... Read the rest of entry »

Learning to love Alberta's pipelines: Hicks on Biz originally published in Edmonton Sun, Dec. 1, 2012

Former premier Ed Stelmach used to call it 'the invisible industry." Even excluding urban water/sewer lines and residential gas lines, we have more pipelines running through the extended Greater Edmonton neighbourhood than just about anywhere else in the world. Maps attempting to illustrate all of central and northern Alberta energy pipelines are just about useless. If the colour blue is used to show all the pipelines, that map would be near solid blue from Red Deer to Fort McMurray. All of Alberta – excluding urban services – has about 400,000 kilometres worth of pipeline. Collector lines are everywhere in conventional oil/gas producing areas; from wells to mini-hubs, mini-hubs to bigger hubs, to major pipes heading to rural primary processing plants, to even bigger pipes transporting crude oil or natural gas into local refineries, or to the super-highway pipelines that send raw or processed hydrocarbons out of province. Thanks to the oilsands northeast of Edmonton, and oil an ... Read the rest of entry »

AIMCo: A fabulous Edmonton Success Story: HIcks on Biz, originally published in Edmonton Sun, Nov. 24, 2012

AIMCo is a fabulous Edmonton business success story. We’re not talking about its rate of return on $70 billion worth of assets - a healthy 7.9% return that assures provincial and municipal employees their pensions are secure. We’re talking about what AIMCo has done, in four short years, to create new wealth in Edmonton. Rewind to 2008, when the Ralph Klein government, spurred by indomitable cabinet minister Shirley McClellan, gathered up its piggy-banks – its pension funds, the Alberta Sustainability Fund, the Alberta Heritage Savings Trust Fund and others – to create one arm’s length investment management firm. AIMCo, the Alberta Investment Management Corporation, is a crown corporation with its own board of governors and only one mandate: That it make money. There is no directive that AIMCo must invest (or not invest) in Alberta. In fact when AIMCo did make a multi-million dollar investment in Calgary-based Precision Drilling, there was momentary uproar ... until ... Read the rest of entry »

The Oil Sands are Fine: Hicks on Biz, originally published in the Edmonton Sun Nov. 17, 2012

Doom! Suncor is hauling on the reins, slowing oilsands expansion plans to a walk, if not a crawl. Gloom! With no Keystone XL pipeline to the south and no Northern Gateway pipeline to the west, our bitumen and synthetic crude oil is stranded in Fort McMurray. Toil! North America is awash in oil. There’s more of the stuff thanks to new discoveries and new recovery technology in the USA. Consumption is dropping as the American economy remains stagnant and vehicles use less fuel. The price is dropping. Gasoline is below a buck a litre at the pumps. Great for Martha and Henry's day-to-day budget. Not so great if Henry loses his oil-services job. Trouble! The new, improved Environment Canada watch on Fort McMurray is reporting oilsand residue contamination in lakes 100 kilometres from oilsands activity. Double trouble! The Chinese have conquered us with their money. The Communists are taking over the oilsands. If you were determined to paint a grim picture of ... Read the rest of entry »

Alberta over a barrel? Hicks on Biz, originally published in Edmonton Sun, Aug. 25, 2012

By Graham HicksHopefully this is a Chicken Little column, harking back to that little piece of poultry, who, certain the world was coming to an end, ran around crying, “The sky is falling, the sky is falling!”Chicken Little was wrong, of course.But something doesn’t feel right about the soothing words we are hearing from Alberta’s economic forecasters, that good times will roll along in Alberta for the foreseeable future, i.e. at least for another 12 months.It is, surprise, surprise, all about the price of oil.About 2.5 million barrels a day are sucked out of Alberta ground and exported at a price ranging between $70 to $100 a barrel, creating $200 to $300 million in new wealth every day.No other industry employs as many people, no other industry pays half as well, no other industry earns as much revenue for government, no other industry has anywhere near oil’s impact on our standard of living.Our energy wealth continues to shower goodness upon us, despite the fact the once-mighty natural gas industry is on i ... Read the rest of entry »

Defending fossil fuels from Toronto attack: Hicks on Biz originally published Edmonton Sun, Aug. 11, 2012

By Graham HicksMy cousin’s husband looked as me as if I was just what he thought I was — an right-wing, oil-snortin’ Alberta redneck.“Don’t tell me about how good fossil fuels are,” growled the Torontonian. “I grew up breathing (fossil-fuel) pollution that drifted over from Detroit and Chicago. I’m done with that stuff.”I wouldn’t worry if said husband had no influence.But he’s a top Canadian architect who designs energy-efficient office towers … and he didn’t want to even hear about the greening of fossil fuels!This deep, stubborn, near-hatred of the cheapest, most efficient and abundant energy source in the world is irrational, but is deeply engrained in the mindset of the chattering classes.Yet the exact opposite is true.Thanks to the power of new technology, Alberta’s hydro-carbon energy industry is cleaning up its act at a breath-taking pace.Energy produced from the burning of oil and natural gas is fast becoming environmentally competitive, at a much cheaper cost, with alternative energy sources like so ... Read the rest of entry »