2012 Review - Paradoxes and Surprises

December 31, 2012

Today marks one year of publishing this webpage. More than 300 articles have been posted and some positive feedback received. Readership has risen every month. The website aims to highlight key economic events north of 56 (the northern third of the continent). A few large events and themes stand out.

Paradoxes

• Natural gas prices fell from around $4.25 to $3.25 MMBtu over the past year. Canadian exports to the US are down 19%. Drilling activity for natural gas is way down. The paradox is that 5 projects are advancing in northern BC to export LNG to Asia. Poor prices yet more than $25 B in LNG projects planned for Prince Rupert and Kitimat.
• Oil sands production continues to increase, yet pipeline capacity is now max-ed out. Producers are receiving sometimes less than $50 per barrel for bitumen when the oil hovers near $90.
• Japan and Germany, the world’s third and fourth largest economies have announced steps to move away from nuclear energy. Uranium prices fell through 2012. Yet, the outlook for uranium is more positive then before the 2011 Japanese earthquake and disastrous Fukushima-Diichi reactor meltdown. Saskatchewan emerged as one of the world’s preeminent producers, with 1/4 of the world’s production. 
• Alaska is the only producer of coal north of 56 and it uses coal to generate about 9% of its electricity. Paradoxically, Alaska is a leader in renewable energy, cutting over a number of wind energy facilities in 2012, most notably the Fire Island wind farm near Anchorage.
• Nunavut has high unemployment, around 17%, yet has had a very robust rate of economic growth.

Surprises

• The advance of uranium mining projects in Nunavut and Greenland. The governments in these jurisdictions have weighed the pros and cons and allowed exploration to proceed.
• The difficulty of the mining industry, especially juniors, to raise capital. Most mining company share prices fell in 2012. Companies found it extremely hard to raise funds. The gold price for example is higher than a year ago, but investors are very cautious. In Nunavut, Newmount walked away from the promising Hope Bay project. Agnico Eagle wrote off some of its Meadowbank gold mine.
• The major Alaskan gas producers and Trans-Canada announced the price tag for a gas line from the North Slope to south-central Alaska and an LNG export terminal- $45-65 B. The surprise was such a high price tag. It is doubtful the line would get built at such an astronomical figure.
• P3 projects in northern BC. AltaGas has three significant projects on the go or being planned.
• A geo-thermal energy project at Ft.Liard. It’s large enough to meet the community’s total electrical energy needs.
• The Norwegians sent an LNG tanker through the north-east passage to Japan.
• Active Chinese investment in Yukon, Alberta and Nunavut, yet not at all in Alaska.
• The shear number and size of the iron ore mining projects being contemplated in Quebec and Nunavut.

Commentary

The north is the land of opportunity on many levels.

Sources

• a)http://www.eia.gov/naturalgas/weekly/#tabs-prices-2