Thursday, July 6, 2006, 4:15 PM EST (Thomson Financial Corporate
Services): Bay Street felt uneasy today after Shell Canada announced that
its costs for the Athabasca Oil Sands Project had been massively
underestimated. Meanwhile, all eyes will be on the monthly employment
reports from both sides of the border due out tomorrow morning.
* The S&P/TSX Stock Exchange Composite Index fell 24.43 points, or
0.21%.
* During his first official visit to the White House, Prime Minister
Stephen Harper declared "The softwood lumber deal is going ahead,"
indicating that his government does not plan to heed the objections of
western lumber producers and the Government of British Columbia about the
April agreement's termination clause. 80% of the US$5 billion paid in
tariffs since 2002 will be returned. International Trade Minister David
Emerson indicates the deal will be put before Parliament in the fall
without further editing.
* The energy sector ebbed as Shell Canada revealed that its Athabasca
Oil Sands Project's costs had climbed 50% in one year, increasing the price
of the first phase from C$7.5 billion towards C$11 billion. Minority
partner Western Oil Sands described the problem as an "intense demand for
labour, materials, and supplies" in the oil fields of northeastern Alberta
that is driving up costs for all the projects in the region. The total
costs for the three-phrase project is now estimated at C$20 billion rather
than the $13.5 billion predicted last year.
* Another ambitious energy project making the news is Enbridge's idea
of a US$3.6 billion direct Alberta-Texas pipeline, unveiled today at the TD
Securities Oil Sands Conference in Calgary. There is no direct Canadian
route to Texas at present, and Enbridge wants to move at least 400,000
barrels/day to the Houston area, a distance of 3300 km. Enbridge is already
proposing the Clipper and Gateway pipelines from Alberta to other regions.
* Railpower Technologies Corp. cut down its production estimate on
locomotives from 90 to 100 units to 60 to 65. It also announced that
expenses and fixed costs would rise in the last two quarters as it
purchased new inventory and increased design and procurement tasks.
* U.S. oil inventory figures were released as well, with crude supplies
falling last week, while gasoline stock unexpectedly rose. The price of
crude ebbed slightly.
* As North Korea continued to promise to test as many as four more
missiles, nervous investors continued to seek a refuge in the yellow metal;
gold held well above the US$600 mark, closing at US$636.30.
* On the economic front, Statistics Canada released surprising figures
today: Municipalities issued 6.9% more building permits in May than in
April, the third-highest rise on record. The worth of the issues was C$5.4
billion, and economists had predicted only a 1.3% rise. The agency pointed
to desirable mortgage rates, low unemployment, and a strong gain in
disposable income as factors, and noted that activity was mostly in the
non-residential sector.
* More mixed statistics were posted south of the border. The U.S.
Labour Department said weekly unemployment claims were down, dropping by
2,000 instead of rising by 2,000 as predicted; 313,000 applications were
filed last week.
-- Carolyn.Crapo@contractor.Thomson.com; Thomson Financial Corporate
Services
This is Thomson Financial Corporate Services Canadian Commentary, which
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SOURCE Thomson Financial Corporate Group
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