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Why Rachel Notley’s refinery pitch won’t solve the oilpatch’s problem

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Considering the recent oil price crash in Western Canada and the fact a provincial election is expected in the spring, the Alberta government is trying to pull out all the stops to lift the oilpatch out of the doldrums​.

Buying railway oil tank cars, subsidizing petrochemical plants and mandating oil production cuts are some of the NDP’s moves to spur activity in the industry or to increase oil prices.

Those moves have all received relatively strong support. 

But the government’s latest announcement aimed at aiding the industry, to look at building a new refinery in Alberta, is being met with significant skepticism. 

The Alberta government is issuing a request for expressions of interest from the private sector to build a refinery in the province that would use oil extracted here.

Experts say Alberta already has more refinery capacity than it needs and the biggest problem facing the province’s oilpatch remains unsolved — a lack of export pipeline space.

“It sounds, if I may be so blunt, like a little bit of desperation,” said Roger McKnight, chief petroleum analyst with En-Pro International.

“What is the market? Where is it going? How does it get out of the country?”

The only refinery to be built in Alberta in the past 30 years was the North West Sturgeon Upgrader, north of Edmonton, which was constructed with help from the Alberta government. The refinery’s price tag swelled from an estimate of $5.7 billion in 2013 to $9.5 billion. The facility has also faced criticism for only processing up to 50,000 barrels per day and only producing diesel, of which there is already ample supply in the province.

“It’s hard to be polite here. That’s an awful lot of money for very little return,” McKnight said. “I think it was a bit of a mistake.”

The Alberta government argues a new refinery would create jobs and create more wealth for the province by exporting a higher-value product. The Sturgeon refinery employed 8,000 people during construction and will employ around 400 full-time workers when it ramps up to full capacity.

The last refinery to be built in Alberta was the North West Sturgeon Upgrader, which was over-budget and delayed. It’s not yet operating at full capacity. (CBC)

Ian MacGregor, chairman of North West Refining, which is part-owner of the Sturgeon facility, says more refineries is exactly what Alberta needs. 

“I believe that refining is the future,” he said. “What we have to start doing is we got to quit selling raw material. We’ve got to sell finished goods.”

Constructing a refinery would likely take between five and 10 years, according to experts. Alberta has five refineries with a total capacity of more than 475 million barrels per day. The province has the largest refining capacity in the country, amounting to about 25 per cent of Canada’s total processing volume.

Calgary-based petroleum industry analyst Michael Ervin doesn’t expect there will be much interest from industry to build a new refinery in Alberta without a sizeable subsidy.

“I doubt that the private sector will really see a business case for this unless the Alberta government was willing to ante up close to the entire cost of building a refinery,” said Ervin, who estimates the cost of constructing a typical refinery at around $15 billion.

Considering the long-term trend of more electric vehicles on the road, Ervin said the business case for a new refinery “just doesn’t seem to be there.”

‘A wish and a dream’

Duane Bratt, a political scientist at Mount Royal University in Calgary, sees Tuesday’s announcement as pre-election rhetoric, much different from more recent actions targeting Alberta’s oil price woes.

“Whether that’s convincing the feds to buy Trans Mountain, or announcing the rail car purchase, or the curtailment of oil production — those are actually concrete things that have happened,” Bratt said. “[The refinery] is just a wish and a dream.”

The NDP has long favoured constructing more refineries in the province and did campaign on the issue during the last election.

If you were looking at investments you could make as a government in industries that are labour intensive, refining would be way at the bottom of that list.– Andrew Leach, University of Alberta

Submissions from the private sector will be accepted until Feb. 8. Depending on interest, the government may issue a formal request for proposals.

Refineries are often built near high-demand centres and also where labour and construction costs are relatively low, such as in parts of the U.S. and overseas.

University of Alberta economist Andrew Leach said there aren’t many details about how committed the government is to seeing a refinery built, or how the proposals would be evaluated.

“So, first pass, certainly nervous about it and not enough detail yet to tell you exactly why,” Leach said of the announcement.

Not enough jobs 

But if one of the big arguments for building the facility is jobs, that’s not enough, Leach said.

“If you were looking at investments you could make as a government in industries that are labour intensive, refining would be way at the bottom of that list,” Leach said.

Why Rachel Notley’s Alberta NDP is still considering building an oil refinery

Leach said there’s also the economic question of whether the financial return from refining is worth it.

“And the distinction there is, are we creating a product that’s more expensive enough to justify all of the labour and capital we’d have to put in to do it?

“And for the most part, in Alberta, the answer has been ‘no’ for a lot of the previous decades, which is why the commercial interest isn’t there.”

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Couple from Toronto buys dream home in Mushaboom

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MUSHABOOM – A couple who lived and raised a family in downtown Toronto developed a five-year plan in 2015 to purchase their dream home.

In September they moved into the home – located on Malagash Island in Mushaboom on Nova Scotia’s stunning Eastern Shore – that met and exceeded their best dreams for their retirement.

The Camerons, Bruce and Tanya, decided in 2019 they would explore the Maritimes to see what real estate was available to become their potential retirement home. In the spring of 2020, during a global pandemic, the real estate boom hit their city, and they were hearing the same for Nova Scotia. Our province was their first-choice for attaining their desire for an entirely different lifestyle – away from the busyness of the city.

“We had $300,000 to $350,000 as a home value in mind to buy. Our semi-detached located off Danforth in Toronto was priced at $850,000. We wanted to come out ahead, so we would be secure in retirement,” Tanya said.

Their century-old home had prime location near the subway and GO Transit Line for a great 13-minute commute downtown.

“We enjoyed our community,” explains Bruce “… we had great neighbours, young children around and street parties – lots of social activity.”

Bruce says, “Our agent suggested a starting quote of $899,000. We did not do any renovations and only some staging. Fifty couples went through and we received four significant offers. Six days later we sold – with zero conditions – and a price of over a million dollars. We just requested a closing of September 2020 to get the kids off to school – which we got.”

The couple got more than they had anticipated.

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Rabobank Announces Leadership Changes in U.S., Canadian Offices

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NEW YORK, Dec. 16, 2020 /PRNewswire/ — Rabobank, the leading global food and agribusiness bank, has appointed two of its top executives, Tamira Treffers-Herrera and Robert Sinescu, to become Co-Heads of North American Client Coverage, positioning the Bank for future growth in the region.

Treffers-Herrera has also assumed the role of Vice Chairperson and Head of the Atlanta office, where she additionally oversees Rabobank Mexico, which is led by Eduardo Palacios. Sinescu is the Head of the Chicago office, and also oversees Rabobank Canada, led by Marc Drouin, who was recently appointed as Canada’s General Manager.

Treffers-Herrera and Sinescu report to David Bassett, Head of Wholesale Banking North America, the Bank’s corporate and investment banking business for the region based in New York.

“Both Tamira and Robert have a demonstrated history of strong leadership, operational excellence and passion for our clients,” Bassett said. “Their broad experience and deep sector expertise will be invaluable in delivering dynamic results for clients while accelerating our growth trajectory in North America.”

Each office will have an even greater focus on key Food & Agribusiness sectors and clients: The Chicago office will drive growth in sectors including Dairy, Farm Inputs and Grains & Oilseeds, which are also key areas of focus for the Canada office. The Atlanta office will focus heavily on sectors such as Animal Protein, Beverages, Sugar, and Supply Chains, which are important sectors in Mexico as well.

“Rabobank is fully committed to our clients throughout North America, and we believe our new sector-focused coverage will improve our ability to provide knowledge-based, value-added solutions that benefit our clients,” Bassett said.

Treffers-Herrera was most recently based in London as CEO of Rabobank’s European Region from 2016-2020, where she took the organization through Brexit. Prior to that, she worked in the Atlanta office from 2002-2016. During her tenure in Atlanta, Treffers-Herrera served as Global Sector Head – Consumer Food & Beverages, and prior to that she was a senior banker for a portfolio of large beverage and consumer foods clients. She holds a Bachelor of Arts degree from the University of Kentucky, a Master of Arts from the Patterson School of Diplomacy and International Commerce and has studied at The University of Chicago Booth School of Business and Harvard Business School.

Sinescu has been with Rabobank for over 21 years and was previously General Manager of Rabobank Canada, where he oversaw all operations, business development, commercial strategy and relationships with regulators. In addition, he continues to serve as CEO of Rabo Securities Canada Inc. Prior to Canada, he was a senior banker, Head of Corporate Banking, European Sector Head for Sugar, and a member of the Management Team for Rabobank France. He holds a Bachelor of Science in Business from the Bucharest School of Business, a Master of Business Administration & Management and a Master of Science in Banking and Corporate Finance from Sorbonne University in Paris, and has studied at Brown University.

Drouin has worked with Rabobank’s Canadian team for more than nine years and most recently served as a senior banker, Head of Rabobank Canada’s AgVendor Program and a member of Rabobank Canada’s Management Team. He brings extensive wholesale banking experience within the Dairy, G&O, CPG and Supply Chain sectors. Drouin holds a Bachelor of Arts degree from McGill University and a Master of Business Administration in International Finance, Marketing and Management from the Schulich School of Business at York University.

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Real Estate

Greybrook Realty Partners & Marlin Spring Brand Jointly Owned Asset Manager – Greyspring Apartments

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TORONTO, Dec. 14, 2020 (GLOBE NEWSWIRE) — Greybrook Realty Partners and Marlin Spring are pleased to announce the new branding of their jointly owned investment and asset management firm, Greyspring Apartments. With a portfolio of more than 2,000 units and CAD$375 million in assets under management, Greyspring Apartments is focused on the acquisition and repositioning of multi-family assets throughout Canada.

The new name and branding is an important step in Greyspring’s evolution as an independent operating business. Formed in 2018 by long standing-partners Marlin Spring and Greybrook Realty Partners, Greyspring Apartments was established with the goal of building a leading asset management firm with a robust portfolio of residential rental real estate assets in primary and secondary markets across Canada.

Greyspring’s talented team of real estate, asset management and finance professionals is overseen and guided by the Management Board, whose members include Benjamin Bakst, CEO, Marlin Spring; Elliot Kazarnovksy, CFO, Marlin Spring; Sasha Cucuz, CEO, Greybrook Securities Inc.; Peter Politis, CEO, Greybrook Realty Partners; Chris Salapoutis, President & COO, Greybrook Realty Partners; Ashi Mathur, President, Marlin Spring; and Karl Brady. In addition to his role on the Management Board, Karl Brady leads Greyspring Apartments as its President. 

“We are pleased to announce the official name and branding of a business we formed with our partners at Marlin Spring a few years ago,” said Peter Politis, CEO, Greybrook Realty Partners. “Greyspring has been diligently focused on the execution of strategic value-add programs across its portfolio that are improving the quality of housing for tenants and overall asset values. For Greybrook investors, expanding from our core business in real estate development to the value-add space through Greyspring, has allowed us to provide our clients with investment opportunities that diversify their real estate investment portfolios.”

“Marlin Spring and Greybrook have partnered on many residential real estate projects in recent years,” said Benjamin Bakst, CEO and Cofounder, Marlin Spring. “To a great extent, Greyspring illustrates our approach to partnerships. We believe in, and strive for, responsible growth through deepening our relationships with our trusted partners. With Greyspring, we’ve formalized our focus on providing better and more affordable living experiences for Canadians. This vision aligns with our mission to deliver exceptional real estate value to all our stakeholders with an uncompromising adherence to our core values.”

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