Oct. 5, 2018

Jobs report

Canada

  • Canada gained 63,000 jobs in September, unemployment rate 5.9% versus 6.0% M/M.
  • Increase driven by part time jobs, gain of 80,000, full time jobs declined by 17,000.
  • In Alberta, unemployment rate of 7.0% vs. 6.7%, a decrease of 2,900 jobs.
    • Edmonton added 3,000 new jobs, unemployment rate is 6.3%.
    • Calgary added 5,000 jobs; however labour force increased by same amount keeping unemployment rate at 8.2%.

US

  • Unemployment fell to 3.7% from 3.8%, lowest since Dec, 1969.
  • Average hourly earnings up 2.8% M/M versus 2.9% in August. Q2 2018 up 3.8% Q/Q, highest since Q3 2008.
  • Non-farm payroll rose 135,000 for Sept vs. forecast of 185,000.

Susannah Pierce, Director External Relations, LNG Canada (Global Business Forum, Banff)

  • Canada is 10 days closer to Asia than natural gas from Gulf of Mexico.
  • 20 of 20 indigenous groups on the pipeline route support the TRP pipeline.
  • LNG Canada is a joint venture among Shell (40%), PETRONAS (25%), PetroChina (15%), Mitsubishi (15%) and KOGAS (5%).
  • Facility requires 140 hugely complicated steel structures, each as tall as a 10 story building and weighing up to 20,000 tonnes.
  • Prime Minister Trudeau assured Shell that project won’t be hindered by steel import duties, as most of the steel will be imported from China.
  • “We already have the highest standards in the world for both oil and natural gas…we all lose when we start off-shoring our emissions to other jurisdictions”.

Oil

Trinidad Drilling

  • Precision tops Ensign’s hostile $1.68 all-cash offer with a friendly $2.11 all-stock offer.
  • Pro-forma entity should have 390 rigs, 348 in North America, 200 in Canada.
  • 602 registered rigs in Canada; this would give Precision a market share of 33%.
  • Average industry utilization in Canada hasn’t crested above 55% since Q1 2014.
  • Oilfield decline rates doubled from 3% in 2014 to 6% in 2016. For big oil firms, rates went from 1.5% to 2% during same period.
  • The world is in need of more long-term cycle investments given the accelerating base declines observed in global projects.
  • New project awards will likely accelerate in 2019 and 2020.
  • Our Alberta discount (WCS) is nearly –US$28 barrel.

Tidbits

  • Canadian government plans to double its staffing resources allocated to the Trans Mountain pipeline project and is redoing consultations with 117 Indigenous groups. Frank Iacobucci (former Supreme Court of Canada justice) will design and supervise consultations.
  • Researchers at Harvard found that transitioning to wind and solar energy will require 20x times more land than previously thought; AND large scale wind farms would warm surface temperature of continental US by 0.24°C.
  • According to a Moody’s Analytics forecast, Edmonton remains “the most undervalued metro area in the country” by about 20%.

Happy Thanksgiving to you and your loved ones.