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Canadian oilsands player calls for government to mandate production cuts

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One of the country’s largest oilsands players, Cenovus Energy, is urging the Alberta government to implement “temporary” production cuts across the oil sector as Canadian crude prices continue to struggle.

A shortage of pipeline capacity is contributing to a huge gap between the price for Canadian crude and the American benchmark, costing some companies and the provincial government dearly.

Cenovus says the magnitude of the price gap is causing significant losses for many producers — and that the provincial government has the power to enforce output cuts and “alleviate the wide differentials.”

Earlier this month, the Calgary-based company said it would limit its oil output by an unspecified amount. 

“We think there is a strong case for the government to temporarily mandate reduced production for the industry,” Cenovus said in an email statement to CBC News.

“Our inability as a country to build critical new pipeline projects means we are now in a situation where we can’t get our growing oil production to market. This has resulted in a market failure.

“This market failure is the result of policy failures at the federal level that impacted pipeline projects, and in the short term it can only be fixed by the Government of Alberta through temporary mandatory industry-wide production cuts.” 

Cenovus said the market can’t fix a problem that is “inherently political.”

The company pointed to legislation used by the Alberta government nearly 40 years ago that curtailed oil production.

Alberta Premier Rachel Notley called on the federal government last month to increase the capacity to transport oil by rail. (CBC)

In 1980, Premier Peter Lougheed enforced output cuts during a dispute with Ottawa over the National Energy Program.

“Legislation exists, and has been used previously by the Lougheed government, to require all producers to temporarily cut production to alleviate the wide differentials,” said the Cenovus statement. 

“Government has a duty to protect the value of its oil resources on behalf of Albertans.”

Peters & Co., an energy-focused investment bank, recently estimated that if the price gap remains at around $40 a barrel for 2019, it would cost the Alberta government about $5 billion in oilsands royalties for the year.

According to Peters & Co.’s report, the situation could result in substantial revenue loss for the government.

Its estimate does not include the impact on conventional oil or condensate royalty revenues, which are also affected by wide differentials. Nor does it factor in the impact of a slow-down in economic activity.

“The Alberta Government has a lot at stake with the wide differentials, and should be motivated to improve the situation in the near-term,” said the report from Nov. 9.

Last month, Premier Rachel Notley called on the federal government to buy more rail cars to transport Alberta oil.

“The oil price differential right now is absurd, and exactly why Premier Rachel Notley is fighting to build new pipelines and pushing Ottawa to step up and help fix the backlog in rail shipments,” said Mike McKinnon, spokesman for the province’s minister of energy, said in an email statement.  

“We continue to engage industry leaders on a number of different approaches and look forward to having more to say soon.”

A driver inspects his vehicle before starting his shift at the Shell Albian Sands oilsands mine near Fort McMurray, Alta., in July 2008. (Jeff McIntosh/Canadian Press)

Martin Pelletier, portfolio manager at TriVest Wealth Counsel in Calgary, said “desperate times call for desperate measures,” but he would rather see industry come up with a solution than the government impose one.

Where the province could play an important role, is in getting oil executives in a room and helping mediate an industry-led agreement, Pelletier said.

“It has to start with industry,” he said.

However, he said he was not surprised to hear Cenovus’ suggestion because “we have to get the conversation going” about solutions to a “made-in-Canada” energy crisis.

Warren Mabee, director of Queen’s Institute for Energy and Environmental Policy, said it would be hard to get companies to agree to cuts, given competing interests and agendas. 

Large integrated companies, like Suncor, would not be affected like companies without refineries or other options for their oil productions, he said.

“I think it’d be very difficult to come up with an agreement,” Mabee said. “It’s a tough thing unless everybody really does come on board with it.”

Mabee also thinks governments — federal or provincial — would be reluctant to get involved in mandating cuts.

“To put a mandate into place means that you’re actually playing with the market, and if you’re playing with the market as a government then you’re opening you’re opening yourself up on the trade front,” Mabee said.

“Given that our trade with the U.S. is a little fraught right now… I just can’t see government wanting to do it​.”

Enbridge workers weld pipe for the Line 3 pipeline project just west of Morden, Man., in August 2018. (John Woods/Canadian Press)

Cenovus is not the only company to announce that it would limit its own oil output.

Earlier this month, Canadian Natural Resources said it has already cut production by up to 15,000 barrels per day and could increase that figure to as much as 55,000 this month and in December.

Canadian prices crashed in September because of a backlog of oil in Alberta.

The Fort McMurray region has increased production throughout this year, but export pipelines are full and several refineries in the U.S. which process heavy oil from Alberta, shut down for maintenance.

Some industry experts now expect low prices for Canadian heavy crude could persist into 2020.

More export pipeline space is expected once Enbridge’s Line 3 replacement project is complete in about 12 months.

With files from Kyle Bakx

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Window repair or replacement is the responsibility of the condo corporation

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If the windows in your condo are hazy, drafty, or have rotting frames, it’s an indicator that they need repairs or outright replacement.

However, under the Condominium Act, it is the responsibility of the condo’s board to carry out such changes as a replaced window is a common element.

“Under the Condominium Act, a declaration may alter the maintenance or repair obligations of unit owners and the corporation but cannot make unit owners responsible for repairs to the common elements,” said Gerry Hyman is a former president of the Canadian Condominium Institute and contributor for the Star.

“A declaration for a high-rise condominium invariably provides that the unit boundary is the interior surface of windows. That means that the entire window — whether it is a single pane or a double pane — is a common element. Necessary repairs or replacement of a broken pane is the obligation of the corporation.”

According to Consumer Reports, selecting an installing windows replacement can be very overwhelming for homeowners. Therefore, if you aren’t covered by your condo’s corporation, it would be necessary to hire professional hands.

Wood, vinyl and composite windows need to be tested on how they can withstand various natural elements. For wind resistance, a window can be very tight when it’s warm but get quite cold too—especially when it begins to leak a lot.

Whatever the case may be, the bottom line remains that replacement windows can save you heating and cooling costs, but it’s best not to expect drastic savings.

Additionally, while getting a new window might help you save on your electric and gas bills, due to their expensive cost, it may take a long time to offset their cost.

Mid-last-year, the government withdraw a $377 million Green Ontario program that provided subsidy on windows to installers and repairers. Window companies had to install energy-efficient windows in order to qualify for the government subsidy that pays for up to $500 of a $1,000 to $1,500 window.

Due to the largely generous subsidies from the government under the Green Ontario program, a lot of window dealers were fully booked for months—even after the program had ended.

“We’re fine with the program ending, we just need more time to satisfy consumers,” said Jason Neal, the executive director of the Siding and Window Dealer Association of Canada, the industry group representing window dealers in a report.

According to Neal, the Progressive Conservatives acted hastily, making massive changes with no prior notice.

“No notification was given to us by anyone,” he said, noting he learned about the change through one of his dealers.

“It’s created a ripple effect.If they had just given us notice we would have pushed that down the line from the manufacturer right into the dealer right down to the consumer.”

Neal noted that he wasn’t particularly sad to see the Green Ontario program end, as it was “the worst rebate program in the history of the window industry.”

“It’s been horrible,” he said. “$500 a window has created such hysteria.”

However, despite the program ending about a year ago, numerous homeowners have been contacting window dealers consistently with concerns that they might not be able to afford replacement windows without the government’s subsidy.

“I understand their concern,” said window dealer Chris George. “I would suggest they reach out to their local representative of the government in their riding and let them know about their concerns.”

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7 Vancouver Real Estate Buying Tips

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The real estate market in Vancouver is turning around for good for everyone looking to purchase a home.

Previously soaring prices are now beginning to ease up, making it a perfect time for buyers—with real estate agents already getting ready for a very busy spring and summer season.

However, before splashing cash on a new property, there are some very important tips you need to know to ensure you make the most of the buyer’s market.

Here are some few expert tips that would guide you when purchasing a home in the sometimes frustration Vancouver seller’s market.

  1. Get adequate financing

It is very important that before you make the move to purchase a property, you put into careful consideration your credit score.

Normally, home buyers with lower scores use the secondary mortgage market to finance their purchase, as they’re more likely to pay a higher interest rate.However, it is advisable to get loan approval long before purchasing the house. This way, you are fully aware of how much you are able to spend—but never be tempted to borrow the maximum amount of money available.

“What’s your mortgage payment that you’re comfortable with? And take into the fact the taxes you’re going to have to pay, if it’s a strata – what the maintenance fees are, if it’s a home what type of maintenance are you going to have to pay in the future?” said Phil Moore, president of the Real Estate Board of Greater Vancouver in a report.

Always be careful of the type of loan you secure and ensure that you can comfortably afford it over a long period of time.

  1. Get a real estate agent

Buying a property without professional help is a very risky move and can be likened to choosing to represent yourself in court without a lawyer. While you might trust your negotiation skills, only realtors are permitted to present offers directly.

Therefore, it is necessary to get a professional real estate agent in the area to represent you. So, screen a few agents and select the best one who has in-depth knowledge of the markets and has a great reputation.

“They’re there to protect you. They’re there to walk you through each step of the process,” Moore said.

  1. Sign up for automated alerts

Most—if not all—realtors have access to the Vancouver real estate board’s database which is updated approximately two days before the public MLS website.

Therefore, you can request from your realtor to sign you up for automatic real-time alerts of all new listings. Doing this gives you an edge as you’re among the very first to know about new properties.

  1. Do a thorough inspection

After receiving an alert for a new listing, it is necessary to push almost immediately for an inspection from your realtor. In this current market, buyers now have time to make an inspection.

Making a quick inspection eliminates any surprises—as there could be major maintenance or repair issues that could spring up. Therefore, you can now table your offer based on the outcome of the inspection, with clauses about claiming your damage deposit back if everything isn’t as was advertised.

Additionally, if you notice that renovations were done, you need to be sure that it was permitted work and carried out appropriately. Failing to do this would ultimately lead to further cost down the line and simultaneously affect the resale value.

  1. Have a back-up plan

There’s always the possibility that everything may not go as smoothly as you’d want. From the inspection being a failureto the property not living up to your expectations—or not being able to agree on the closing date that matches with your needs.

However, a professional real estate agent will definitely help you get past all of these things. If you plan on selling the property as you buy, you can table that and make it part of the deal.

“You’ve got an option, especially in a buyer’s market: you can put in an offer subject to selling your place. So maybe you want to have a place lined up,” Moore added.

Additionally, building contingencies into your buying plan is necessary. Things such as unexpected delays in closing the deal, closing cost and moving costs that could result in added living expenses if that’s your permanent home.

  1. Don’t fall for the buyer frenzy

The Vancouver market buying frenzy that caused a serious climb in the prices a couple of years ago has ended. Thus, it is important not to get caught up in bidding wars with properties that have been deliberately under-priced—with the hope of initiating multiple offers.

“Some of the sellers have been on the market for over a year and they’re eager to sell. So what I’m saying to consumers is: you have a lot of choices, you’re in the driver’s seat, let’s go out and take a look at what’s available,” said Moore.

  1. Never be wary of multiple offers

When purchasing a property, don’t be afraid of multiple offers as you have the same opportunity as anybody else.

Typically, there are just a few offers below the asking price: a couple priced fully, and two or three above the asking price—depending on how close the fair market value is from the asking price.

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Do you know what kind of condo you’re buying?

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(NC) Condominiums can come in all shapes and sizes. But it’s important to know that not all condos are created equal when it comes to warranty coverage.

Whether you’re buying a condominium townhouse, loft-style two-bedroom or a high-rise studio, they are all classified as condominiums if you own your unit while at the same time share access (and the associated fees) for facilities ranging from pools and parking garages to elevators and driveways, otherwise known as common elements.

The most common types of condos are standard condominiums and common elements condominiums. The determination of how a condominium project is designated happens during the planning stage when the builder proposes the project and the municipality approves it.

When you’re in the market to buy, you need to know how your chosen condo is classified because it affects the warranty coverage under the Ontario New Home Warranties Plan Act. Standard condominiums have warranty coverage for units and common elements, but common elements condominiums only have unit coverage.

How could this affect you as the owner? If your condo complex has underground parking and, for example, there are problems with leaks or a faulty door, the condo designation will determine whether there’s warranty coverage.

If your unit is a standard condominium development, then the common elements warranty may cover the repairs. If it’s a common element condominium development, then repairs might have to be covered by the condo corporation’s insurance, which could impact your condo fees or require a special assessment on all the owners.

To avoid surprises, you should have a real estate lawyer review the Declaration and Description attached to your purchase agreement to be sure that you know the designation and boundaries of the unit you’re looking to purchase. Find more information on the types of condos and their coverage at tarion.com.

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