<a href=www.canada.com>Canadian Press James Stevenson Friday, March 28, 2003

CALGARY -- The United States slurps up more oil and natural gas from Canada than any other foreign country on Earth.

And with war raging in the Middle East, civil uprisings in other oil producing countries and a recent decision not to drill in a sensitive U.S. Arctic wildlife refuge in Alaska, even greater demand for Canadian energy is expected.

The daily flow of Canadian oil to the U.S. has increased dramatically over the last few years and almost double the quantity from a decade ago.

Canada is now second only to Saudi Arabia as a source of imported oil for the United States, which imported 1.8 billions per day from the Saudis in January and 1.6 million barrels per day from its northern neighbour.

When imports of natural gas are included, the importance of Canada as an energy source for the United States becomes even more apparent. Canada supplied about 94 per cent of American gas imports last year.

Yet with all the volatility in global energy markets, talk of future U.S. energy supplies rarely focus on Canada.

"I don't think Canadian oil production comes first of mind to Americans when they think of where their gas, diesel and jet product comes from," said Rick George, president of oilsands giant Suncor Energy.

But a recent U.S. media attention to the massive energy reserves in the northern Alberta oilsands -- and the synthetic crude created from its bitumen -- suggests awareness is quickly growing, he said.

"My belief is it will be positive," said George.

For the first time, a recent report by the Oil and Gas Journal on global oil reserves included 177 billion barrels of reserves from the oilsands -- a number that dwarfs estimated reserves of Canadian conventional oil.

Greg Stringham, a vice-president of the Canadian Association of Petroleum Producers, says political stability is also a key ingredient for energy trade between the U.S. and Canada.

Despite a recent disagreement between the Bush administration and the Chretien government over the handling of the Iraqi crisis, the energy-trading business has been very open and free, Stringham said.

"They're a good market, we're a good supplier. (The United States) is close and it's connected by pipeline. So all of those things add to our attractiveness as a potential producer," Stringham said.

Meanwhile, recent political problems have made several of the world's other large energy producers less-than attractive as an energy source for the United States.

Vince Lauerman, a global energy strategist with the Canadian Energy Research Institute, says a "relatively long and brutal war" in Iraq would greatly enhance demand for Canadian energy.

"The worse the war goes, and the more the Middle East boils, the higher energy security becomes as an important issue to Washington," Lauerman said.

"And with that comes benefits to Canada."

But the Middle East is not the only trouble spot for global oil production.

About 40 per cent, or 800,000 barrels per day, of Nigeria's oil production was cut off this week as major energy companies evacuated staff amid tribal fighting that has killed at least 100 people in the African country in the past two weeks.

And Venezuela is still struggling to recover from a two-month strike that failed to oust President Hugo Chavez and paralysed the South American country's lifeblood oil industry, costing about $9 billion.

Venezuela is still only producing about two-thirds of its three million barrels per day total it had before the strike and the situation remains volatile as Chavez continues to seek revenge on strike leaders.

Still, geopolitical turmoil does not necessarily mean greater demand for Canadian oil, said one U.S. energy company spokesperson who asked not to be identified "There's lots of sources out there and a well-developed oil infrastructure all over the world."

But a recent political decision in Washington -- overshadowed by Iraqi war coverage -- has the potential to increase U.S. demand for Canadian energy in future.

Last week, the U.S. Senate narrowly rejected a budget provision that would have allowed oil drilling in the 77,000-square kilometre Alaska National Wildlife Refuge.

Development of the refuge had been a key part of President George W. Bush's energy plan -- despite opposition from environmentalists who fear that drilling would jeopardize the delicate ecosystem and its wildlife.

Stringham said he doesn't believe attempts to drill in the wildlife refuge will go away. "The administration down there has been quite adamant in trying to put it forward and I'm not sure if they're ready to just drop it at this point in time."

High oil prices don't translate into profits Friday March 28, 2003 By John M. Biers Energy writer

Common sense suggests high oil and natural gas prices should mean robust profits and lofty prices for energy stocks. But as energy companies of all persuasions know all too well, the reception on Wall Street has been stingy of late.

Share prices of leading oil-service companies, more than 30 percent below the level of their mid-2001 peaks, have shown little sign of recovery over the past six months, according to the widely watched Philadelphia Oil Service Sector Index. Independent oil and gas companies -- which explore for and produce energy but don't operate their own refineries -- have fared somewhat better but are hardly trading at boom-time levels. And some companies, including supermajor ChevronTexaco, are actually trading below their value when oil prices languished near $10 in late 1998.

On one level, analysts say, the anemic pricing of shares reflects the stock market's overall slump following the demise of the so-called technology bubble, a global recession and numerous corporate scandals. Merrill Lynch estimates the stock markets -- or equity markets -- have lost more than $100 billion since mid-2002, with investors directing more money to preferred stock, land, income trusts and other investments.

"We have replaced the equity cult with the income cult," said Merrill Lynch chief economist David Rosenberg. "Investors are paying up for the assets that can deliver the upfront income."

With earnings season approaching, the question for many companies concerns just how much money they're going to make. Earnings are expected to rise 168 percent for the current quarter, compared with the 90 percent increase forecast earlier this year, said Joe Cooper, a research analyst with First Call, which tracks analysts' estimates.

"In the grand scheme of things, energy is expected to be the top performer for the first quarter," Cooper said of the earnings.

But exceptional profits don't necessarily mean exceptional share prices, as current stock performance illustrates. Multinational ChevronTexaco closed Thursday at $65.20, down from $103.56 in 1999. Lafayette independent Stone Energy Corp. closed at $32.03, less than half the level it held in 1999. New Orleans oil service company Tidewater Inc. closed at $29.30, compared with $52.15 two years ago.

Analysts point to the peculiarities of the recent price run-up, especially with crude oil. Oil prices soared in the weeks leading into the Iraq war, driven up by uncertainty over the Middle East, labor strife in Venezuela, and, more recently, the suspension of some production in Nigeria.

The cumulative effect is that oil supplies remain low by historical standards. However, many experts believe crude will still retreat soon due to a number of factors, including the sluggishness of the world economy. Predicting a speedy end to the war, some experts foresee oil potentially dropping to the high teens as the world assimilates millions of barrels of extra oil from Saudi Arabia and Kuwait pumped in case of a disruption.

"The prevailing belief is that oil is going under $20," Rosenberg said.

The outlook for natural gas generally is considered to be firmer. Although this winter's price spike was caused in part by the unusually cold weather, gas storage levels remain low by historical standards. Many energy companies only now are beginning to increase drilling, which likely portends a tight supply market even if the weather moderates in 2003.

Wall Street analysts predict a 2003 average natural gas price of $4.71, up from the $3.30 average in 2002. Analysts foresee natural gas trading at $4.27 in 2004, Cooper said. Higher natural gas prices are especially beneficial to energy independents and oil service companies because these firms can enjoy the profits that can come with higher gas prices but don't operate chemical plants and refineries that would require more of the costly fuels.

Houston-based Burlington Resources on Thursday cited lofty natural gas production volumes in alerting investors to potentially higher earnings. The company is using $79 million to repurchase 1.7 million shares. Following up on the news, Merrill Lynch raised its earnings projections and set a 12-month pricing objective of $50, up from $45.56.

Instead of the gas-rich shallow-water Gulf of Mexico, Burlington's production is coming from Canada, onshore U.S. sites and a variety of other prospects. The company sold most of its assets from the Gulf's continental shelf last year.

The count of natural gas land-based rigs jumped by 22 to 776, the highest level since November 2001. The pickup offshore has been far more sluggish, with the Gulf rig count near a 52-week low, according to a rig count by Baker Hughes, an oil service company.

Many analysts expect the offshore market to improve in the coming months.

"You're going to see activity strong this year and you're going to see oil service stocks doing well," predicts Bryan Dutt, a money manager with Ironman Energy Capital, a Houston hedge fund. . . . . . . . John Biers can be reached at jbiers@timespicayune.com or (504) 826-3494.

<a href=www.ctv.ca>Canadian Press

CALGARY — The United States slurps up more oil and natural gas from Canada than any other foreign country on Earth.

And with war raging in the Middle East, civil uprisings in other oil producing countries and a recent decision not to drill in a sensitive U.S. Arctic wildlife refuge in Alaska, even greater demand for Canadian energy is expected.

The daily flow of Canadian oil to the U.S. has increased dramatically over the last few years and almost double the quantity from a decade ago.

Canada is now second only to Saudi Arabia as a source of imported oil for the United States, which imported 1.8 billions per day from the Saudis in January and 1.6 million barrels per day from its northern neighbour.

When imports of natural gas are included, the importance of Canada as an energy source for the United States becomes even more apparent. Canada supplied about 94 per cent of American gas imports last year.

Yet with all the volatility in global energy markets, talk of future U.S. energy supplies rarely focus on Canada.

"I don't think Canadian oil production comes first of mind to Americans when they think of where their gas, diesel and jet product comes from," said Rick George, president of oilsands giant Suncor Energy.

But a recent U.S. media attention to the massive energy reserves in the northern Alberta oilsands -- and the synthetic crude created from its bitumen -- suggests awareness is quickly growing, he said.

"My belief is it will be positive," said George.

For the first time, a recent report by the Oil and Gas Journal on global oil reserves included 177 billion barrels of reserves from the oilsands _ a number that dwarfs estimated reserves of Canadian conventional oil.

Greg Stringham, a vice-president of the Canadian Association of Petroleum Producers, says political stability is also a key ingredient for energy trade between the U.S. and Canada.

Despite a recent disagreement between the Bush administration and the Chretien government over the handling of the Iraqi crisis, the energy-trading business has been very open and free, Stringham said.

"They're a good market, we're a good supplier. (The United States) is close and it's connected by pipeline. So all of those things add to our attractiveness as a potential producer," Stringham said.

Meanwhile, recent political problems have made several of the world's other large energy producers less-than attractive as an energy source for the United States.

Vince Lauerman, a global energy strategist with the Canadian Energy Research Institute, says a "relatively long and brutal war" in Iraq would greatly enhance demand for Canadian energy.

"The worse the war goes, and the more the Middle East boils, the higher energy security becomes as an important issue to Washington," Lauerman said.

"And with that comes benefits to Canada."

But the Middle East is not the only trouble spot for global oil production.

About 40 per cent, or 800,000 barrels per day, of Nigeria's oil production was cut off this week as major energy companies evacuated staff amid tribal fighting that has killed at least 100 people in the African country in the past two weeks.

And Venezuela is still struggling to recover from a two-month strike that failed to oust President Hugo Chavez and paralysed the South American country's lifeblood oil industry, costing about $9 billion.

Venezuela is still only producing about two-thirds of its three million barrels per day total it had before the strike and the situation remains volatile as Chavez continues to seek revenge on strike leaders.

Still, geopolitical turmoil does not necessarily mean greater demand for Canadian oil, said one U.S. energy company spokesman who asked not to be identified "There's lots of sources out there and a well-developed oil infrastructure all over the world."

But a recent political decision in Washington -- overshadowed by Iraqi war coverage -- has the potential to increase U.S. demand for Canadian energy in future.

Last week, the U.S. Senate narrowly rejected a budget provision that would have allowed oil drilling in the 77,000-square kilometre Alaska National Wildlife Refuge.

Development of the refuge had been a key part of President George W. Bush's energy plan -- despite opposition from environmentalists who fear that drilling would jeopardize the delicate ecosystem and its wildlife.

Stringham said he doesn't believe attempts to drill in the wildlife refuge will go away. "The administration down there has been quite adamant in trying to put it forward and I'm not sure if they're ready to just drop it at this point in time."

Canada has long lobbied for a U.S. ban on drilling in the wildlife refuge and has taken a more prominent role recently in promoting Canadian energy to its larger neighbour to the south.

Some Canadian oil executives, however, say further lobbying efforts are not needed to increase U.S. demand for energy.

"I think what we've got to show is steady supply, good quality product and reliable outcomes," said Suncor's George. "And then the market will come."

<a href=www.journalpioneer.com>Journal PioneerMar. 26, 2003 by STAFF, Journal Pioneer

Although it came as no surprise that electricity rates were going up, the shock and awe that followed the amount by which it would actually increase has most people picking their jaws up off the floor.

Maritime Electric has been given the go-ahead to increase its rate by 13.34 per cent after a Halifax-based consultant hired by the Island Regulatory and Appeals Commission concluded that the rate hike is justified. Reasons for the increase were blamed on global uncertainty, a shortage of electric power and high oil prices.

So let’s regroup.

According to Development Minister Mike Currie, he too a power consumer, agreed that while no one likes to see the rates increase there is nothing that can be done. He also said that for most households, the rate increase will only amount to about $10 more a month.

Anna Duffy, president of the P.E.I. Seniors federation has tremendous concerns.

She said for those seniors on a fixed income, it may mean the choice between paying the electric bill or paying for medication or groceries. Not much of a choice.

Add that rate increase to the high cost of oil and that is a serious financial situation.

Since the uncertainty in Venezuela, Iraq and now Nigeria, the oil prices have skyrocketed, and many people claim their oil bills are higher than their mortgage payments.

Cutting back in the dead of winter, with -40 degree nights is not an option.

Oil, electricity and heat are vital to life here in the Maritimes, and increased prices are going to hurt.

Small businesses, restaurant owners, farmers, fishers and other self-employed entrepreneurs will certainly be feeling the pinch as prices increase. And there is really no recourse. Or is there?

Will Islanders blame the provincial government for its high oil and electrical rates?

Will Pat Binns and his members feel the brunt of Islanders wrath when they call an election this year?

Will Islanders remember that the provincial government allowed Fortis Inc., the parent company of Maritime Electric, to hook its prices to those in New Brunswick?

There is no doubt that the world is in crisis.

The war for oil in Iraq is just one example of how vital resources are, and how hungry we as consumers are for the fuel to heat our homes, drive our cars and run our lives.

For years, alternative methods have been sought to move away from our reliance on fossil fuels, but the convenience and tradition of oil and electric power have made us suspicious of other methods.

Maybe now, the price may force us to look at other means of conserving energy.

Keeping the thermostat low, turning off the lights, going to bed early may all be the way many of us deal with cold winter nights.

It won’t make the rates go down, but it might keep us from freezing to death in the dark.

slate.msn.com By Daniel Gross Posted Tuesday, March 11, 2003, at 2:43 PM PT

Enron's collapse provoked—at least in those who didn't own stock—a delightful case of schadenfreude. It was pleasant to watch the humiliation of Enron's mean, bullying executives—see CEO Jeffrey Skilling—as its arrogant corporate culture imploded.

But how to interpret the humbling of once-mighty utility AES Corp., which was in many ways the anti-Enron? Founded in 1981 by Dennis Bakke and Roger Sant, the massive utility had an anti-capitalist corporate culture—its core values included "fun." When it went public in 1991, AES explicitly stated that service and social responsibility were more important than profits. And despite its hippy-dippy worldview, AES grew to be one of the largest global utilities in the '90s. The soaring stock turned its founders into billionaires.

But AES has crashed and burned just as surely as the utilities, such as Enron and Dynegy, run by craven, greedy executives. In the end, the company's I'm-OK-you're-OK management philosophy and blasé attitude toward planning left it overextended, over-indebted, and overexposed to some of the world's most notoriously volatile markets.

In the beginning, AES's founders created a company that would oppose the basic model of modern capitalism. "All of us who had been in government together saw business repeatedly fight any socially responsible thing every step of the way," said Sant, who headed the Office of Conservation and the Environment in the Federal Energy Administration in the '70s. "We knew we wanted to be different."

Sant had met Bakke at the Federal Energy Administration. In 1981, intent on stimulating both conservation and energy production, they raised $1.2 million and formed AES. At AES, values and social responsibility were intended to trump profits. When AES built a coal-fired plant in Hawaii, for example, it gave $2 million to help conserve 225 square miles of forest in Paraguay. When AES went public, its prospectus stated: "If the Company perceives a conflict between [its] values and profits, the Company will try to adhere to its values—even though doing so might result in diminished profits or foregone opportunities." SEC lawyers suggested that the language be included in the "Risk Factors" section.

This social responsibility wasn't simply a pose. Each year, AES surveyed employees to measure how well the company was sticking to its core values and based compensation for top executives in part on the results. In 1992, when the company was fined $125,000 after workers at the company's Shady Point, Okla., plant falsified emissions reports, Sant and Bakke cut their own annual bonuses by more than half.

AES's reputation came in handy when entering markets that were traditionally suspicious of large U.S. companies. In the early '90s, AES expanded into Latin America. Later in the decade it pressed into China, Pakistan, Kazakhstan, Hungary, and a score of other Second- and Third-World countries. At a press conference in Brazil, Bakke, who became the sole CEO when Sant stepped down at the end of 1993, brought a picture of Mother Teresa "to illustrate what I meant by serving." Profits, he told Business Week, "are in fact not the goal of the company, but they are the just and fair reward that needs to be paid to investors who invest in your enterprise."

As late as 1999, AES claimed to have no central business strategy, yet it continued to enjoy tremendous growth. That year it started or bought plants in New York, Panama, Brazil, Venezuela, and Mexico. In 2000, AES purchased Indiana utility IPALCO in a deal worth more than $2 billion.

AES's revenues soared from $635 million in 1996 to $3.252 billion in 1999 and doubled to $6.7 billion in 2000. When the stock peaked at $70 in October 2000, the stakes of those reluctant capitalists, Sant and Bakke, were worth $2 billion and $1.7 billion, respectively. AES was poised to become the largest private generator of electricity on the planet.

But things started to go badly in the new millennium. AES was overly reliant on the dominant positions it had built in Latin America. In 2001, Latin America provided 51 percent of the company's pretax earnings. And so the devaluations in Argentina and Brazil, the strife in Venezuela, and the general deterioration of the region's economy took a heavy toll on the parent company. AES found that its good citizenship couldn't spare it from emerging-market politics or the obligation to meet debts. Its Brazilian unit has, for example, missed debt payments to Brazil's national development bank.

Nor did domestic markets provide a buffer. Even though AES was not involved in the energy-trading scandals or the California energy crisis, its U.S. operations were still damaged by the problems of confidence, surplus supply, and botched deregulation that have ravaged the industry. The debt that AES took out to finance its expansion was sapping more and more of the company's revenues. In 2002, interest payments of $1.7 billion would eat up virtually all operating income. AES's fuzzy, warmhearted overexpansion proved just as foolhardy as Enron's mendacious, aggressive strategy.

The post-Enron meltdown cost Bakke much of his fortune as the stock slid from $70 to the single digits. And last June it cost him his job.

Bakke's successor, a company veteran named Paul Hanrahan, is now engaged in a triage operation. The company has been restructured into two broad units, instead of the decentralized regional organization that Bakke had championed. And AES is furiously writing off or selling assets. The cause of management has suddenly morphed from instilling values to instilling financial discipline. Enron's casualties may be doing their own gloating now: In this energy industry collapse, it doesn't matter if you're a saint or a scumbag.