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  #21  
Old Posted Jan 10, 2014, 7:22 PM
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Originally Posted by MalcolmTucker View Post
It may be sunny in the winter, but the amount of energy making it to the ground is low. Our demand profile in Alberta is very baseload heavy, we don't swing nearly as much as lets say Ontario and California. And our highest demand days are in the winter, and the highest demand hours are after the sun goes down.

Even after the price per kilowatt hour for solar reaches grid parity it isn't worth installing, because you need to pay for the capital cost of the backup power supply to meet the same demand, but producing power over less of the year. Solar with storage to have grid parity you need to reduce generation costs by a fair bit again.
Oh
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  #22  
Old Posted Jan 10, 2014, 7:29 PM
Allan83 Allan83 is offline
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Originally Posted by MalcolmTucker View Post
It may be sunny in the winter, but the amount of energy making it to the ground is low. Our demand profile in Alberta is very baseload heavy, we don't swing nearly as much as lets say Ontario and California. And our highest demand days are in the winter, and the highest demand hours are after the sun goes down.

Even after the price per kilowatt hour for solar reaches grid parity it isn't worth installing, because you need to pay for the capital cost of the backup power supply to meet the same demand, but producing power over less of the year. Solar with storage to have grid parity you need to reduce generation costs by a fair bit again.
I’m no expert in the area, but it seems to me that if we’re tied into the grid the seasonal impacts can be managed. For example, we can export power to the southern US in the summer when their air conditioners are blazing, and they can export power to us in the winter when we have less sunshine.
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  #23  
Old Posted Jan 10, 2014, 7:35 PM
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Sounds pretty fancy. In all honesty I have no knowledge on the technical engineering side of the business, I'm a real estate guy and only really know the overt and latent demand drivers in the markets I operate, one of which happens to be Alberta.

I fully anticipate innovation in the sector to reduce per barrel costs, however I can't envision a scenario where they are able to compete dollar for dollar with basic well extraction so I would still think demand shock will continue to disproportionately effect the oil sands. That said I don't see demand going anywhere but up in the next decade with your standard dips and boosts along the way of course.
Remember that other sources have other additional costs. The US spent $1 trillion on the Iraq war, for example, and who knows how much they spend to maintain all their military bases in the Middle East. Those bases aren’t exclusively there for the purpose of controlling the oil in the region, but that’s a large part of the reason. And China is now dependent on places like Angola for its oil, which can’t make them feel too secure. Canadian oil offers many benefits, which is why both the US and China want to buy our oil instead of the oil they’re currently importing.
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  #24  
Old Posted Jan 10, 2014, 8:10 PM
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Yes but all those other uses don't make petrol worth $100 a barrel.

If it wasn't used for energy it would be worth a couple bucks a barrel and Ft Mc Murray wouldn't even exist.
The complete opposite is equally true, though. Fuel oil represents half of all oil revenues (typically the heavier grades). Chemicals represent half of all oil revenues (typically the lighter grades). The energy market is almost exactly the same size as the chemical market with regards to oil; to say one dominates the other is entirely incorrect.

We're not talking about a small, fringe industry here. We're talking about Dow, 3M, Pfizer, and Intel.
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  #25  
Old Posted Jan 10, 2014, 8:18 PM
MalcolmTucker MalcolmTucker is offline
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I’m no expert in the area, but it seems to me that if we’re tied into the grid the seasonal impacts can be managed. For example, we can export power to the southern US in the summer when their air conditioners are blazing, and they can export power to us in the winter when we have less sunshine.
The cost of moving around that much power is huge. There is already lots of controversy over increasing Alberta's import capacity from around 7% of peak demand to around 20%. Lots of people fretting over exporting 'our' power from a market with relatively higher prices, to markets with relatively lower prices.

The fact remains, you are paying for two power plants, and the infrastructure to transmit between them, instead of one. So your plants have to be super cheap compared to a local reliable source like a hydro dam.

But to get back on topic, we aren't going to be a literal power house. We will have our massive skilled workforce that specializes in designing, building, and maintaining specialized plants and equipment. We will have a business community that knows how to derive value from those businesses.

There are plenty of businesses with pretty conservative risk models that are making 50 year investments in the province right now. Boom and bust in the oil sands is very difference than from when it was oil and gas juniors out wildcatting. Encana can very easily go from drilling 1800 wells a year for gas to less than 150, but you can't ramp up or down oil sands operations like that (save for issues like the financial crisis and hits to peripheral companies like the BA upgrader)
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  #26  
Old Posted Jan 10, 2014, 8:21 PM
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Unless we develop viable fusion reaction technology that can power said ships. Or unless companies want to risk putting nuclear fission reactors on board commercial ships.
The United States, Russia, Japan, and Germany have all experimented with nuclear powered civilian vessels. What we've determined in that time is that the 'risk' of nuclear powered civilian ships is not engineering risk - failure, safety, or the environment. Its financial risk. The simple fact is that a nuclear powered ship is a lot more expensive to operate and insure. Even in military contexts, the UK revised the Queen Elizabeth Class aircraft carriers to run on conventional fuel for cost reasons.

Most nuclear powered civilian ships have either been scrapped, or converted to conventional power. The major exception is Russia's nuclear icebreaking fleet, which seems to be an effective use of the technology. Icebreakers need a tremendous amount of power, making the scale of nuclear reactors more reasonable, and arctic seawater is a much more effective coolant, reducing operating costs.
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  #27  
Old Posted Jan 10, 2014, 8:48 PM
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Absolutely... but what about with new methods being developed, such as Steam Assisted Gravity Drainage? Apparently that will not only reduce production costs significantly, but will also allow us to tap into the majority of our 1.7 trillion barrels of oil reserves, rather than just the current 10% that we have access to.
That "10%" is the sort of nameplate number for what is economically recoverable through surface mining, and is the basis of Canada's/Alberta's official oil reserves. However, in situ methods like SAGD have been in use for decades (for SAGD, the first research well was drilled in Alberta in the mid 80s). SAGD and CSS represented about a fifth of oil sands production back in 2005, and has been growing pretty consistently representing the majority (in terms of bbl/day) of projects approved or under construction.
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  #28  
Old Posted Jan 10, 2014, 9:14 PM
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The cost of moving around that much power is huge. There is already lots of controversy over increasing Alberta's import capacity from around 7% of peak demand to around 20%. Lots of people fretting over exporting 'our' power from a market with relatively higher prices, to markets with relatively lower prices.

The fact remains, you are paying for two power plants, and the infrastructure to transmit between them, instead of one. So your plants have to be super cheap compared to a local reliable source like a hydro dam.

But to get back on topic, we aren't going to be a literal power house. We will have our massive skilled workforce that specializes in designing, building, and maintaining specialized plants and equipment. We will have a business community that knows how to derive value from those businesses.

There are plenty of businesses with pretty conservative risk models that are making 50 year investments in the province right now. Boom and bust in the oil sands is very difference than from when it was oil and gas juniors out wildcatting. Encana can very easily go from drilling 1800 wells a year for gas to less than 150, but you can't ramp up or down oil sands operations like that (save for issues like the financial crisis and hits to peripheral companies like the BA upgrader)
There would probably be some significant losses as well moving electricity 3,000 kms as well, but maybe something could be done with a DC transition line, which I believe has lower losses. Dunno. A lot depends on how much solar technology improves and how cheap it becomes. If we had enough hydro that could be used with solar as well. You could use solar during the day and hydro at night. I’m not sure how quickly you can turn a gas power plant on and off but maybe that could be used intermittently as well.

I’m sure oil and gas will continue to be strong for quite some time, but I’m also very much in favour of diversifying. We’re knee deep in engineers here, and I think that’s something that can be built on. Maybe we could even induce the Transrapid Maglev people to relocate here? Perhaps as part of a BOOT contract to connect Edmonton and Calgary with a maglev train? I have no idea if that’s even a possibility, but it would be nice if those stars aligned. Then if this one worked well they could build one from Toronto to Montreal, and then develop a more economical system to connect Calgary with Vancouver, and then ...

Last edited by Allan83; Jan 10, 2014 at 9:37 PM.
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  #29  
Old Posted Jan 13, 2014, 8:03 PM
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Is Edmonton's growth picking up while Calgary's is remaining the same? Between 2011 and 2012, the metropolitan areas grew thus...


Edmonton: 33 400
Calgary: 40 500

If this growth continues, once the 2013 StatsCan estimates come out, the populations will be about...

Edmonton: 1 264 000
Calgary: 1 350 000

The gap between the two is widening... but according to the labour force estimates discussed on the Canada section, Edmonton is seriously catching up to Calgary in growth, so perhaps the gap widening could start to reverse this estimate period.
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  #30  
Old Posted Jan 14, 2014, 6:49 PM
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Remember that other sources have other additional costs. The US spent $1 trillion on the Iraq war, for example, and who knows how much they spend to maintain all their military bases in the Middle East. Those bases aren’t exclusively there for the purpose of controlling the oil in the region, but that’s a large part of the reason. And China is now dependent on places like Angola for its oil, which can’t make them feel too secure. Canadian oil offers many benefits, which is why both the US and China want to buy our oil instead of the oil they’re currently importing.
Interesting point, but keep in mind that oil cos don't pay for any of that nonsense, so it doesn't factor into their cost/barrel at all. That's just the federal govt. doing them a solid I guess... keeps those campaign contributions flowing for sure.

Canadian oil offers a certain security, no doubt, but in the end the dollar always reigns king and when exxon has to shut down/hold projects due to demand shocks you can bet their prime analysis will be one of profitability.

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The complete opposite is equally true, though. Fuel oil represents half of all oil revenues (typically the heavier grades). Chemicals represent half of all oil revenues (typically the lighter grades).
I have a tough time believing that the energy sector only accounts for half of crude demand, but like I said I'm not an expert on the subject.
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  #31  
Old Posted Jan 14, 2014, 7:09 PM
MalcolmTucker MalcolmTucker is offline
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Demand shocks, these companies aren't stupid. They are making decade long investment decisions into capital intensive facilities. Is there a risk a wundertech will make them obsolete in the payoff timeframe? Always. But they are pricing 60$ per ton of CO2 into their models and still proceeding with projects.
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  #32  
Old Posted Jan 14, 2014, 7:22 PM
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Hey like I said I don't see it happening either, all im saying is if something unforeseen does happen, oil sands would be one of the first hit. It's important to keep in mind too that oil is a futures contract, not based on the current demand, so if something were to happen to the future demand expectation of oil, say economic crash/political upheaval in China, it could drastically effect the futures price of a barrel of oil and bring investment in the oil patch to a screeching halt.

Trans formative techs do happen too. KodakEastman wasn't a stupid company but they got absolutely decimated. Oil is king now but if the cost structure gets too out of whack or if someone has a eureka energy moment things could change quickly.

Unlikely scenarios for sure, but don't take oil demand too for granted... nothing in business is ever risk free.
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  #33  
Old Posted Jan 14, 2014, 8:00 PM
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According to this PDF, it looks like the municipality of Edmonton is projected to surpass 1 million people by about 2025. That would make the metro area about 1.5 million by that time (my own estimate about the metro)


http://www.edmonton.ca/business_econ..._2012-2013.pdf
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  #34  
Old Posted Jan 15, 2014, 6:15 AM
Allan83 Allan83 is offline
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Interesting point, but keep in mind that oil cos don't pay for any of that nonsense, so it doesn't factor into their cost/barrel at all. That's just the federal govt. doing them a solid I guess... keeps those campaign contributions flowing for sure.

Canadian oil offers a certain security, no doubt, but in the end the dollar always reigns king and when exxon has to shut down/hold projects due to demand shocks you can bet their prime analysis will be one of profitability.
.
In China the government and the oil companies are one and the same, and in the US there’s a lot more communication between the oil companies and the government than people typically think about. Access to oil is a matter of national interest in the US, after all, and they’re not just going to put that in the hands of the oil companies. I have no doubt that the US government passes on intelligence, and advises the companies on the government’s plans. If the US plans on pulling back from the ME militarily, as Obama has suggested, I’m sure they would tell the oil companies well in advance, and essentially tell them to find other sources of oil. Or if the US government feels Venezuela will become progressively more unstable I’m sure they would pass that on to the oil companies as well, and also effectively tell them to find other sources of oil. Remember that Obama was backing the Keystone pipeline before all the “environmental” activists moved in. (And also note that it’s fairly easy to see that the protests have nothing really to do with the environment and everything to do with protecting these third world oil interests.) There is a reason why both the US and China want to switch to Canadian oil.
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  #35  
Old Posted Jan 15, 2014, 6:25 AM
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Originally Posted by Chadillaccc View Post
Is Edmonton's growth picking up while Calgary's is remaining the same? Between 2011 and 2012, the metropolitan areas grew thus...


Edmonton: 33 400
Calgary: 40 500

If this growth continues, once the 2013 StatsCan estimates come out, the populations will be about...

Edmonton: 1 264 000
Calgary: 1 350 000

The gap between the two is widening... but according to the labour force estimates discussed on the Canada section, Edmonton is seriously catching up to Calgary in growth, so perhaps the gap widening could start to reverse this estimate period.
I know anything's possible, but to me, it looks like the days of Edmonton being Alberta's largest city are long over. At least for a long while. The gap might fluctuate here and there, but I think Calgary is poised (perhaps destined) to be Alberta's prime metropolis for the foreseeable future and thus over the long term these fluctuations will be meaningless. Even if Edmonton were to catch back up to Calgary, I doubt it would have much of an effect on the psyche of the city or interest in the city like it did from becoming the provincial capital in 1905 until the '88 Olympics in your neck of the woods.

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Originally Posted by Chadillaccc View Post
According to this PDF, it looks like the municipality of Edmonton is projected to surpass 1 million people by about 2025. That would make the metro area about 1.5 million by that time (my own estimate about the metro)


http://www.edmonton.ca/business_econ..._2012-2013.pdf
Wouldn't surprise me to see high growth like that, especially if we get the green light to annex part of Leduc County up to and including YEG. After all, most of Edmonton's regional growth will be contained within the city limits. We're already at 812,000 as of 2011 and growing fast. Wouldn't surprise me if we've hit 850k already. If Metro Edmonton is around 1.5 million in 2025 (which I think is realistic), I'm guessing Calgary would be pushing 1.6 or 1.7 million, perhaps even 1.8 million if the gap widens enough.
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  #36  
Old Posted Jan 16, 2014, 9:07 PM
geotag277 geotag277 is offline
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The gap might fluctuate here and there, but I think Calgary is poised (perhaps destined) to be Alberta's prime metropolis for the foreseeable future and thus over the long term these fluctuations will be meaningless. Even if Edmonton were to catch back up to Calgary, I doubt it would have much of an effect on the psyche of the city or interest in the city like it did from becoming the provincial capital in 1905 until the '88 Olympics in your neck of the woods.
I don't think it's a given that Calgary is destined to be Alberta's prime metropolis. The growth of either city will largely hinge on the economic growth. I believe conditions are right in Edmonton to potentially enter a break neck pace of growth, especially if they can attract more corporate offices and headquarters to the city with more commercial developments.
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  #37  
Old Posted Jan 16, 2014, 9:20 PM
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Wouldn't surprise me to see high growth like that, especially if we get the green light to annex part of Leduc County up to and including YEG. After all, most of Edmonton's regional growth will be contained within the city limits. We're already at 812,000 as of 2011 and growing fast. Wouldn't surprise me if we've hit 850k already. If Metro Edmonton is around 1.5 million in 2025 (which I think is realistic), I'm guessing Calgary would be pushing 1.6 or 1.7 million, perhaps even 1.8 million if the gap widens enough.
I don't expect to see the gap widen that much... it's currently at about 85 000, so I'd say that the max we will see by 2025 would be 150 000. That would still put Calgary between 1.6 and 1.7 million which is awesome to think. Regardless, in any scenario I wouldn't want to see either city's growth slow before that time frame. Both cities are going to feel completely different by that year. Edmonton's Cultural and Arena districts should be fully up and running, Calgary's East Village, Eau Claire redevelopment, 8th Ave Subway, and West Village should be up and running, and both cities will have their sights set on 2 million. We're in a very exciting and pivotal point in the development of this province. I'm anxious to see how all of these megadevelopments pan out
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  #38  
Old Posted Jan 16, 2014, 10:19 PM
MalcolmTucker MalcolmTucker is offline
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I don't think it's a given that Calgary is destined to be Alberta's prime metropolis. The growth of either city will largely hinge on the economic growth. I believe conditions are right in Edmonton to potentially enter a break neck pace of growth, especially if they can attract more corporate offices and headquarters to the city with more commercial developments.
There is no real cost savings to be made by locating a headquarters in Edmonton versus Calgary. It is hard for a company to stay away from the cluster economies, which is why you see companies brand new to Alberta with no operations nearer to Calgary than Edmonton setting up shop in Edmonton.

It is hard to reverse that without a big cost advantage.
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  #39  
Old Posted Jan 17, 2014, 3:21 AM
geotag277 geotag277 is offline
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There is no real cost savings to be made by locating a headquarters in Edmonton versus Calgary. It is hard for a company to stay away from the cluster economies, which is why you see companies brand new to Alberta with no operations nearer to Calgary than Edmonton setting up shop in Edmonton.

It is hard to reverse that without a big cost advantage.
Well Edmonton does have it's own business cluster, I wouldn't count it out yet. It would only take a couple of big wins to level the playing field and make it anyone's game. If corporate competition gets too intense in Calgary there could be real cost savings in attracting Edmonton-based talent as well with a headquarters.
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  #40  
Old Posted Jan 17, 2014, 3:49 AM
MalcolmTucker MalcolmTucker is offline
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This isn't 15 years ago, I haven't seen huge salary differences for similar jobs between the cities. The biggest difference for engineers as but one example I have found is in Edmonton eventually you are doing a stint in a fab yard with shift work whereas in Calgary you can fly a desk forever.
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