By Alexa Huffman, Grande Prairie Daily Herald-Tribune
Thursday, February 19, 2015 7:54:06 MST PM
Oil and gas production kicked off the second and final day of the Growing the North conference. Pat Carlson, the CEO of Seven Generations Energy, an independent petroleum company and Jackie Forrest, vice-president and energy research at ARC Financial Corp. took the stage during the first presentation on Feb. 19, each covering oil and natural gas production, as well as prices. Forrest spoke about the future of oil and gas prices, based on a large supply of tight oil, a light crude oil that comes hydraulic fracturing with horizontal wells. “The vast majority of the new supply in the United States has been called tight oil,” said Forrest. “We have conventional oil in North America, but the growth has really been coming from tight oil, it’s actually been happening here in Western Canada as well, but to a much lesser extent. During her speech, Forrest said since the Organization of the Petroleum Exporting Countries (OPEC) has not made cuts to this supply of oil, it would be up to the market to balance the prices. “That would take the better part of this year to get us into a position where we start to get prices recovering,” said Forrest. “But not nearly close to the $110 level we saw the last three years, prior to the downturn this summer.” Forrest said the levels would be closer to the $75 to $80 range, a price also forecasted by Alberta Energy Minister and Peace River MLA, Frank Oberle at the conference yesterday. “For the next couple of years, prices will potentially be 30% lower than we’ve had over the next three or four years,” said Forrest. To support production in Alberta and in other countries, Forrest says the oil prices need to rise. At the current price level, she says in Western Canada, industry revenues will be down around 40% and cash flows down as much as 80%. “It’s really unsustainable, this type of price level for oil because the world is still needing more oil each year and we don’t have the price signal to incent supply,” said Forrest. Natural gas prices were also discussed in the morning presentation. Forrest says natural gas prices are challenging because of the large supply of low-cost natural gas in North America. “Because we got fairly strong prices at the beginning of the year, we had this surge of new supply, more than what North America needed,” said Forrest. “That’s going to lead to prices that are in the range of $275 per MMBTU, potentially even lower, in order to incent new demand from switching coal-fired power generation to natural-gas fired power generation.” Carlson also spoke about natural gas, particularly in the province of Alberta. He gave an update to the audience about Seven Generation’s Kakwa River Project, a natural gas property in the early stages of development 100 kilometres south of Grande Prairie. “We announced that we were more than 40,000 barrels per day of production now and we have more than 30 wells producing,” said Carlson. “We have the potential to bring about 30 to 40 wells that have already been started but have been finished.” To stay competitive in oil and natural gas production, Forrest and Carlson said it is important to keep up with new technology. “There are world-class plays, but the challenge is that they’re far from market so we have this extra transportation cost associated with getting our oil and gas to markets in North America,” said Forrest. “It’s important that we stay below of the cost of the average in North America.” Carlson says this means businesses can improve operating efficiencies and pursue innovation. “It’s difficult to imagine what innovative people will come up with but it happens,” said Carlson. “What our job is to communicate what the needs and challenges are so that they have the chance to put those minds to work.” Mayor Bill Given was on hand for the presentation and others throughout the conference. Based all the presentations Given attended at Growing the North, he says the region has to recognize Grande Prairie’s economy is influenced by the price of oil but isn’t directly tied to it. “We’re hearing right now about forestry and forestry is having a very successful time from all indications,” said Given. “We heard yesterday that agriculture is doing very well and there’s lots of great opportunity offered by the lower Canadian dollar. All of that says Grande Prairie is perfectly positioned to be able to weather any of these macroeconomic storms that we’re seeing on the horizon.”
By Alexa Huffman, Grande Prairie Daily Herald-Tribune
Wednesday, February 18, 2015 6:31:52 MST PM
The impact of falling oil prices on the Alberta economy was one of the main topics discussed during the first day of the Growing the North conference. During the conference’s second presentation on Feb. 18, J.P. Gervais, chief agricultural economist at Farm Credit Canada, outlined what he predicted a drop in oil prices and the Canadian dollar could mean provincially and nationally. “I think for the entire province of Alberta, we’re likely to see a decline in GDP, which is a measure of income that we use to evaluate the strength of economy,” said Gervais. Besides a drop in the GDP, Gervais also told the people who attended his presentation that the province could see a few layoffs and a slight rise in unemployment. However, he also said the individual economic status of Albertans could help to counter the negative effects of the drop in oil prices. “One thing that helps, though, is this lower oil price will actually act as sort of a tax cut for consumers,” said Gervais. “If you look at the ratio at the consumer debt to income, it’s a little bit better in Alberta than anywhere else. I just don’t think the impact is going to be as negative as we fear by the spectacular drop in oil prices.” Gervais further analyzed the oil prices and its relationship to agriculture during his talk, saying he expects the price of oil to not top US$60 per barrel until the end of the year. He also said business investment in the oil and gas sector are projected to go down by 30% in 2015. “From a negotiable standpoint, I think oil going down has actually brought the value of the Canadian dollar down,” said Gervais. “I really do think that really is positive for agriculture in general. If you look at crop receipts, livestock receipts, they’re likely to be supported by the drop in the Canadian dollar.” A further prediction by Gervais is a drop in interest rate by the Bank of Canada on March 4. The Bank of Canada first lowered Canada’s trend setting rate in January from 1% to 0.75% to deal with falling crude prices. For Alberta, Gervais said an interest-rate cut would bring relief to businesses in Alberta. “By lowering interest rates, you want to send a signal to businesses to not cut investment rates as much,” said Gervais. “You also want to bring a little bit of relief to consumers, so with lower oil prices, lower inflation. You hope that all of the effects combined are going to support the economy and lead the economy beyond low energy prices.” Gervais says different sectors of the Canadian economy can also benefit from the United States economy doing well right now. Despite the positive economic state in the United States, Gervais thinks this could change as other countries including the United Kingdom, Japan, China and Canada are facing slow economic growth. Representatives from different sectors in Alberta attended Gervais’ talk on the economy, including County of Grande Prairie Reeve Leanne Beaupre. “I think he was very realistic in his expectations of what he said but we’ve been here before and we’ll come out the other end as strong because we’ve been through a turn down in the economy,” said Beaupre. The Growing the North conference runs Feb. 18 and Feb. 19 at the ENTREC Centre in Evergreen Park.
By Tom Bateman, Grande Prairie Daily Herald-Tribune Staff
Wednesday, February 18, 2015 6:19:59 MST PM
While the annual Growing the North conference features attendees from many of the largest corporations and organizations in Alberta and beyond, it’s some small-scale enterprises that took the spotlight during the conference kick-off on Tuesday night. Taste of the Peace, which has run for the last five years – one fewer than the conference itself, has become renowned for giving local food producers a chance to tout their wares before conference goers. Organizer Shari Johnston says the evening hits two important goals; it offers producers the audience of many of Alberta’s movers and shakers, and it also gives those attendees a unique environment to start networking (another focus for this year’s conference). “It’s used as a way for conference delegates to network, but we’ve also opened the door over the past couple of years, for the public and we also invite some VIPs — grocery store managers, restaurant managers, chefs, those types of people — to come in and meet our producers,” said Johnston. “It’s turned into a showcase of our local producers,” she said. “And then all the delegates come in, get a drink and have a great time, eat some food.” Vendors this year included booths like organic meat producer First Nature Farms, Broken Tine Orchard — a berry producer in Beaverlodge, Lake Saskatoon Winery, Peace Gourmet Honey, organic tea, cocoa and salt producer The Hedgerow, and natural levain (sourdough) producer Loaves from the Grande Prairie Farmer’s Market. Another vendor was Heather Porrill, who operates Buttery Bites Caramel from Bay Tree, Alta. She’s been a part of every iteration of Taste of the Peace. “I love this event because I get to reconnect with other people from the province that come here,” she said. Kristin Harding and Natalie Linnell were representing the Prairie Mall in Grande Prairie. They said their customer base appreciates local content in the mall, so they were trying to pursue more local kiosks and partnerships with Peace-area vendors. “We try to pride ourselves on being a community mall, we’re trying to be more involved in community events: having events brought into the mall that are community fundraisers, community awareness,” said Harding. “You’re supporting local 100%, and I think that’s really important,” Linnell added.
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