Industry Overview: Alberta Oil Sands
Alberta’s Volatile Oil Industry
Alberta has been enjoying the boom of the oil industry for the past decade. However, this changed over the course of a night when oil prices dropped. This caused a chain reaction in other industries which has caused a series of problems for the province.
Around October 2014, the falling prices of crude oil made everyone in the industry and province nervous about the future. These dropping prices were a reminder of bitter memories of the financial crises of 2009 in which Alberta had to shelve or cancel projects up to $90bn. To some, it is déjà vu.
Investors had already reduced the profit forecasts and this was affecting the share prices of many energy companies.
Energy prices are extremely important to the whole Alberta economy, falling prices were risking a fall out far beyond just the oil and energy industry. BMO Nesbitt Burns, the investment wing of BMO had pegged the profitability at $90 per barrel – the current price for crude oil per barrel is at $50. Quite a leap from the projected profitability rate.
There were fears that the unstable market of crude oil would affect the investor and consumer confidence, and be an obstacle in the job growth and real estate market of the province that is now a home to four million people.
Large Oil Companies Affected
As November came in, Canadian crude oil manufacturers were forced to tighten budget and operate on lower profits as OPEC’s decision to not cut global oil supplies amid lower prices. Oil producers clamored to find ways to keep costs lower and reduce spending. While a lower Loonie did help cushion the falling prices of oil, it wasn’t enough.
It was holiday season, but not in the oil industry, tensions rose as fear of job cuts started looming.
Around February, the grim news had arrived. Cenovus had posted a net loss of $472 million compared to a $58 million in the previous year. Husky and Precision both posted a net loss of $603 million and $114 million – all due to falling crude oil prices that in term slowed down or halted further development of future projects.
Cenovus cut its workforce by 15 % – 800 positions and it was just the beginning. Statistics Canada reported a total of 14,000 jobs lost in the province of Alberta. These were jobs all ranging from highly technical to and specialized positions like geologists, geophysicists, engineers and more. It should be noted, despite the jobs lost, employment in the province was up by 1.9% on a year to year basis. Overall a total of 18,000 jobs were lost in Alberta, Saskatchewan and Newfoundland and Labrador.
Investors and Financial Forecasters Eye British Columbia
In comparison, the province of British Columbia is expected to have an exceptionally strong year in terms of economic growth. This is despite the LNG projects being delayed. There have been talks of repatriation of talent back to BC from Alberta, these would be the talent that left BC for the oil sands projects and now are returning back.
The lumber market is expected to perk up with construction ramping up in the United States after a slump. This coincides with two job openings that we currently have in the lumber industry.
British Columbia is forecasted to bump up its contribution to the GDP by 3.1% in 2015 and 2.8% in 2016.
A lower loonie helps in exports to the US, of both Lumber and LNG – however it should be noted that the LNG industry is often met with protests and fears that the projects won’t go through.
Additionally, the advent of Microsoft, Amazon and Sony Pictures Imageworks into Vancouver could boost jobs in the province. Jobs in transportation are looking up as well with the new Evergreen line and talks about expansion of Translink’s current transit network.
We at Goldbeck Recruiting are quite excited of this projected future for the province of British Columbia and are here to help with your recruitment or job search needs.
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