11-010-XIB
Canadian Economic Observer
January 2008

Canada

RoyalDutchShell applied to add 100,000 barrels a day of bitumen production from its existing Jackpine mine and to build a new mine called Pierre River. Petro Can will spend $1.2 billion in 2008 to determine whether to start its $8.5 billion Fort Hills megaproject. British BP and Husky Energy announced plans to invest $5.5 billion over the next seven years to develop the first stage of the Sunrise project and to refit a Toledo refinery to handle more bitumen. Husky Energy boosted its 2008 spending budget to $3.7 billion, mostly at its White Rose field off Newfoundland. Enbridge announced plans for a new $3 billion Illinois-Texas oil pipeline with ExxonMobile to be completed in 2010 that will carry oil from the Canadian oilfields to US refineries.

Xstrata PLC revealed plans to expand production at its Raglan nickel mine in Northern Quebec to 1.3 million tonnes a year by the end of 2008 and to 1.5 million tonnes by 2011.

The Bank of Canada cut its key interest rate to 4% from 4.25%.

The Ontario government announced the elimination of the capital tax for manufacturing and forest product companies effective January 1, along with $1.4 billion in infrastructure spending and extending the land-transfer tax refund to resale homes.

The federal and provincial governments will provide $2.3 billion in secured loan guarantees to the livestock sector and accelerate access to $1.5 billion in support programs.

World

The Federal Reserve, in a joint move with central banks in Canada, Japan and Europe, provided $40 billion in funds to US banks to stimulate lending. The Reserve also made $24 billion available to the ECB to increase the supply of dollars in Europe, while the Bank of England increased the amount of funds in its money-market operations.

The Federal Reserve cut its federal funds rate by a quarter point to 4.25%. The Bank of England cuts its key rate by a quarter point to 5.5%, the first decline in two years.