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Alberta’s OPEC-style cuts draw down oil backlog, analysis firm says

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Concerns with the fallout from Alberta’s OPEC-style cuts may persist, but an energy data analysis firm says the mandatory oil curtailment appears to be drawing down crude inventories.

The province this month imposed an 8.7-per-cent oil-production cut on industry, or roughly 325,000 barrels a day, in order to clear a huge backlog of crude that was punishing Alberta oil prices.

Government officials haven’t released statistical updates on the effectiveness of the strategy, but a senior oil analyst at Genscape Inc. said its research indicates the curtailment is working as intended so far.

“We are seeing it through January 19th roughly in line with what the government has stated as their goals to draw down inventories,” Mike Walls said in an interview.

“For the most part, we saw significant builds [in inventories] basically throughout 2018, and now we are starting to see draws. So I can say that they are having an impact already.”

Premier Rachel Notley has pointed to the narrowing gap between Canadian and American benchmark oil prices as evidence of the impact of the government’s strategy. (Jason Franson/Canadian Press)

On Twitter Friday, Genscape said inventories in Western Canada fell 603,000 barrels to 34 million barrels for the week ending Jan. 18, pointing to it as “further evidence that Alberta production cuts continue to impact the market.”

The privately held U.S.-based firm uses both public data and proprietary research to gather information for clients on storage hubs, pipeline flows and crude-by-rail shipments in Western Canada.

The province did not confirm Genscape’s figures. The government gets its data from a third party and the information is not publicly available.

“We’re currently reviewing how much has been drawn down from all storage levels across Alberta,” government spokesperson Mike McKinnon said in an e-mail. “More information, including the next steps, will be available soon.” 

Alberta is matching its production levels to what its estimated export capacity is while also encouraging a drawdown in storage levels. For January and February, this production limit is 3.6 million barrels a day of raw crude and bitumen, which is slightly lower than the province’s estimated export capacity.

Premier Rachel Notley has pointed to the narrowing gap between Canadian and American benchmark oil prices as evidence of the impact of the government’s strategy.

Peter Tertzakian, executive director of the ARC Energy Research Institute, said he believes the province’s policy is working. (Monty Kruger/CBC)

On Friday, the difference was under $10 US a barrel. In the fall, it spiked to over $50.

Energy economist Peter Tertzakian, executive director of the ARC Energy Research Institute, said he believes the policy is working and that the price is a good gauge. 

“The differential has rebounded,” said Tertzakian.

“I’m optimistic we’re through the worst of it and hopefully we won’t need government intervention in the future. But the extraordinary action that they took at that time was appropriate.

“We were facing catastrophic layoffs had the situation gone on for several more weeks. I believe that was averted. Now, the situation is still not healthy, but I believe the government prevented something far worse from happening.”

Alberta announced in early December that it would temporarily impose production cuts on the industry in 2019.

The decision followed calls from some oil company CEOs — and United Conservative Party Leader Jason Kenney — for the province to enact a mandatory curtailment to bolster prices, improve cash flow and stem job losses.

But opponents of the policy — including Suncor, Husky Energy and Imperial Oil — said the market was working and that taking such a step could have implications for future investment in Alberta.

Hundreds of oil tank cars are waiting to be loaded at a terminal near the border of Alberta and Saskatchewan. For January and February, Alberta’s production limit is 3.6 million barrels a day of raw crude and bitumen, which is slightly lower than the province’s estimated export capacity. (Dave Rae/CBC)

Conference Board of Canada chief economist Pedro Antunes wrote this month that intervening in industry production plans “could hurt the province’s attractiveness for future investment over the long term.” 

But he also said the near-term solution “will likely be effective in shoring up prices and heading off a decline in royalties and a larger pullback in activity in the oilfield services sector.”

Industry and government will also be mindful of any significant interruption to rail or pipeline movement, which could have major impacts on the effort to reduce the oil glut if they occurred. 

Kevin Birn, an oilsands analyst with IHS Markit, said Alberta’s curtailment policy is probably something that’s going to be judged over a longer period of time.

“Yes, differentials have narrowed and that’s a positive metric because the prices we saw prior to Christmas were unsustainable,” Birn said. “But curtailment needs to be measured over a longer period of time.”

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Montreal real-estate prices climbing much faster than Toronto or Vancouver: study

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MONTREAL — The cost of housing per square foot has skyrocketed in Montreal while other cities saw little change over the last year, according to a new national survey.

The study found that condominium prices in downtown Montreal are up 13.5 per cent from last year to, on average, $805 per square foot.

That’s not as high as other cities, but it’s catching up — and Montreal’s rate of growth is outpacing other major Canadian cities.

Toronto’s condo prices grew to $1083 per square foot, an increase of just under 10 per cent, according to the study. In Vancouver, where you can find some of Canada’s most expensive condo prices, rates are down 4 per cent to $1192 per square foot.

To make the comparisons, Canadian real estate giant Century 21 collected data from real estate boards across the country to calculate the home costs per square foot.

“It’s important to compare apple to apples,” said Todd Shyiak, the company’s vice president of operations.

Montreal’s rise was even more explosive for detached homes and townhouses.

Detached houses in Montreal’s downtown and southwest rose to $958 per square foot, 40 per cent up from last year.

“It’s wild,” said Century 21 broker Angela Langtry. She says the pandemic raised demand.

“People had a lot of time to figure out they don’t like the home they’re in,” she said. “They all want pools.”

There was a big spike in sales, she noted, following a pause in brokerage during the spring, at the peak of the pandemic.

Experts say the pandemic will push people into the suburbs as they search for affordable housing and home office space.

“A huge portion of our society’s housing needs changed overnight,” said Shyiak. People “no longer need to be 10 minutes from the office.”

He says that could mean less demand for condos in the future. “People want their own front door,” he said.

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Carttera buys prime downtown Montreal development site

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Carttera has acquired a prime downtown Montreal site at 1455 De La Montagne St. which will mark its third development on the thoroughfare.

“We think it’s probably one of the best, if not the best, locations in the whole city,” Carttera founding partner Jim Tadeson told RENX. “We’ve had great success on De La Montagne.”

The two earlier projects are: L’Avenue, a building with 393 residential units, 84,000 square feet of office space and 34,000 square feet of retail that was developed with Broccolini and occupied in 2017; and Arbora Residences, a two-phase development with 434 rental and condominium units in three buildings being built in partnership with Oxford Properties.

Thursday’s latest acquisition, for $48.5 million from 630745 Ontario, is a 31,750-square-foot surface parking lot with flexible mixed-use zoning on the corner of De La Montagne and De Maisonneuve Boulevard West.

The site is near the Vogue Hotel Montreal Downtown, the new Four Seasons Hotel Montreal and high-end retail.

“It’s zoned for up to 203,000 square feet of density, which we’re going to take advantage of,” said Tadeson. “Our vision for the site is a condominium project with some retail.”

Since there is no demolition required and no heritage issues to contend with, Toronto-based Carttera plans to move ahead quickly with the luxury project.

It’s in the concept design phase and Tadeson said it could take six months or more before it’s prepared to make a submission to the city.

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Montreal Has the Hottest Real Estate Market in Canada Right Now

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If you thought Toronto’s real estate market was on fire, it’s time for a second take, because the market in Montreal is the hottest in all of Canada right now.

A newly-released annual report from CENTURY 21 Canada reveals that, following an early-spring decline due to the COVID-19 pandemic, sales numbers are bouncing back and house prices across the country are maintaining their strength. The study compared the price per square foot of properties sold between January 1 and June 30 of this year, compared to the same period last year.

In Toronto and Vancouver, unsurprisingly, prices remain high. But while regions across the country are seeing varied stories when it comes to their housing market fluctuations, Montreal stands out — there, prices have increased dramatically since 2019. While the numbers remain lower than Toronto and Vancouver, that housing market is proving to be the country’s strongest right now.

In Quebec’s largest city, prices have increased significantly since last year, particularly in the downtown detached house and townhouse markets. For example, the price of a detached house in Montreal’s downtown and southwest rose 42.14% to $958 per square foot, while townhouses went up 44% to $768, and condos, 13.55% to $805. Comparatively, in Toronto and Vancouver, prices saw more modest increases or, in some cases, even declines.

“Even though real estate in Quebec was not considered an essential service, we have seen strong demand and a jump in prices in 2020,” said Mohamad Al-Hajj, owner of CENTURY 21 Immo-Plus in Montreal.

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