situation on the Oil boom in Calgary

[BigMass]

anyone have any rumors on upcoming projects? I heard a lot of new ones are getting axed and there could be a massive slowdown in Calgary very shortly. This could be bad for everyone.

Anyone have any info, rumors or speculation?

[CUG]

Yep, I've heard nothing but rumors and speculation for the last 20 years living in this place... often in the form of people saying "I heard we're gonna be dead soon"... then joe schmo comes along who knows nothing about the situation, reads a post like yours and now thinks he knows something about the situation. The next time he's in a conversation about the current situation, he says "I heard we're going to be slowing down".. any other unknowing ears pick that up, and the cycle continues.

[2.2vtec]

Everyone duck the sky is falling down!!!

[The Cosworth]

Even if it does slow down, I know a lot of industries (electrical especially) are really behind on maintenance and have a real shortage of people.

So even if new growth does slow it down then we will have lots of other work to keep us busy.

[adam c]

Hey I heard we're slowing down.. does that mean we will all be laid off soon?!?!?!

:rolleyes:

[Unknown303]

If it's slow someone should tell Shell that before they pin cushion northern Alberta and BC.

[sputnik]

Oil was $50/barrel before the start of the last boom.

Oil is now over $100/barrel.

Use your brain.

[rc2002]

If you research the F&D costs and other costs needed to bring oil to market, you'll see that a lot of companies aren't profitable with Oil at $70/bbl let alone $50/bbl.

I think the election results will have a huge impact on Alberta's economy. Oilsands development is a hot topic and that is one of the major job makers here.

[Kloubek]

It's true though. Whether it be due to environmental concerns, or easier/cheaper oil tapping elsewhere (Sask?), or the fact that people can no longer afford to live here, there WILL come a time when Calgary will die down. Oil is by far what moves our industry, and when it no longer does, this city will fall apart to at least some degree.

Look at what happened to Detroit: Over 30% of the city is completely vacant. Crumbling infrastructure, buildings, and economy. I'm sure people were once saying the same thing. "They will always be a market for vehicles". Well, look at Detroit now. Nothing is written in stone in a variable economy.

If you think for a second we are "protected" due to the strength of oil prices, or whatever your reasoning, think again. It can and will happen - it's just a matter of when.

With that said, there is absolutely no cause for panic. Calgary will continue to thrive for quite some time and I am not making any decisions based on what will happen some indefinate time down the road.

[adam c]

Originally posted by Kloubek
It's true though. Whether it be due to environmental concerns, or easier/cheaper oil tapping elsewhere (Sask?), or the fact that people can no longer afford to live here, there WILL come a time when Calgary will die down. Oil is by far what moves our industry, and when it no longer does, this city will fall apart to at least some degree.

Look at what happened to Detroit: Over 30% of the city is completely vacant. Crumbling infrastructure, buildings, and economy. I'm sure people were once saying the same thing. "They will always be a market for vehicles". Well, look at Detroit now. Nothing is written in stone in a variable economy.

If you think for a second we are "protected" due to the strength of oil prices, or whatever your reasoning, think again. It can and will happen - it's just a matter of when.

With that said, there is absolutely no cause for panic. Calgary will continue to thrive for quite some time and I am not making any decisions based on what will happen some indefinate time down the road.

shut your mouth... your scaring people:nut:

[BigMass]

Originally posted by sputnik
Oil was $50/barrel before the start of the last boom.

Oil is now over $100/barrel.

Use your brain.

nice math Sputnik. I’m glad you took the time to insult me when you obviously know jack shit.

A lot of new development is running at around $100/ barrel to remain profitable. So unless you’re Suncor, Syncrude or Shell, who have established their business up north prior to the boom, a lot of these new developments are axing their plans to develop. This could be temporary or permanent.

Word from a few EPMC management types are layoffs immanent as projects either get axed or shifted back to Huston. This is from first hand info, not joe blow’s internet posting.

So enough with the sky is falling bullshit, I was just looking to see if anyone else had a pulse on the industry first hand.

[Crymson]

Originally posted by Unknown303
If it's slow someone should tell Shell that before they pin cushion northern Alberta and BC.

Unknown knows what he's talkign about.

This next decade is going to see massive unconventional gas projects in NE BC, it'll be like the oil sands in scale and scope.

[kertejud2]

Well I was under the impression that an NEP-esque depression would hit when Special Ed changed the royalty rates last year, so we're just going to have to dig ourselves out of that hole when it comes first.

[gkAeris]

Originally posted by BigMass

A lot of new development is running at around $100/ barrel to remain profitable. So unless you’re Suncor, Syncrude or Shell, who have established their business up north prior to the boom, a lot of these new developments are axing their plans to develop. This could be temporary or permanent.

Word from a few EPMC management types are layoffs immanent as projects either get axed or shifted back to Huston. This is from first hand info, not joe blow’s internet posting.

So enough with the sky is falling bullshit, I was just looking to see if anyone else had a pulse on the industry first hand.

:werd: i've been recently hearing the same news.....

[Ntense_SpecV]

Originally posted by kertejud2
Well I was under the impression that an NEP-esque depression would hit when Special Ed changed the royalty rates last year, so we're just going to have to dig ourselves out of that hole when it comes first.

But most companies don't just do business in only one province...Saskatchewan has tons of business right now and they have a cheaper royalty fee currently.

[cet]

We have 2 canadian projects going into detailed design at the moment. One of the was rumored to be getting cut back/cancelled but so far is it still going on as normal.

[rc2002]

Originally posted by BigMass


nice math Sputnik. I’m glad you took the time to insult me when you obviously know jack shit.

A lot of new development is running at around $100/ barrel to remain profitable. So unless you’re Suncor, Syncrude or Shell, who have established their business up north prior to the boom, a lot of these new developments are axing their plans to develop. This could be temporary or permanent.

Word from a few EPMC management types are layoffs immanent as projects either get axed or shifted back to Huston. This is from first hand info, not joe blow’s internet posting.

So enough with the sky is falling bullshit, I was just looking to see if anyone else had a pulse on the industry first hand.

Why the big change in attitude all of a sudden? Up until now you've been preaching about how much opportunity remains in the oilsands and about how housing is cheap now in Calgary because of all the future oilsands development coming down the pipe.

I worked for years in EPCM and last year is when I saw the slowdown coming. If you look at the productivity of the company (or even just the team you work for) you can see why the development costs are so high. They need to start hiring good competent employees instead of seat fillers for a start.

[BigMass]

Well to be honest, engineering is the cheapest part of a project. The costs are pretty much all in construction and operation.

Also, I’m not saying this slowdown is a sure thing, but anything can happen. All it takes I one big project to be approved or one big project to get cancelled.

My bet is a slowdown in the rush, but a constant influx of projects. The current infrastructure up north cannot sustain anymore development. New grassroots billion dollar plants will require nuclear generators to sustain their energy needs. There is not enough water in the Athabasca river.

There are major issues that need to be take care of quickly, and we all know the government is far from quick at anything.

These developments will still occur, but IMO at a slower more sustainable pace.

Anybody have word on what BPs intentions are up north?

[zarge]

Original Post Removed. (Please read the Forum Rules and Terms of Use (http://forums.beyond.ca/articles.php?action=data&item=1) before posting again, or risk getting banned).

[BigMass]

well, even if you're stocking shelves at Superstore for $14/hour you should care because the oil industry is the reason you have that job and the reason you get paid what you do.

[cet]

The only think I've heard about with BP is their joint venture with Husky

[Unknown303]

Originally posted by Crymson


Unknown knows what he's talkign about.

This next decade is going to see massive unconventional gas projects in NE BC, it'll be like the oil sands in scale and scope.

I only try to say things when I know. I've been working up there with Shell for a while now and on the few projects currently going that started with maybe 5-6 wells feeding a reciprocating compressor to 50 wells feeding the same compressor and a large Turbine compressor.

Everyone things that Alberta about oil. Seems to me that we've always been more about the gas. Oil projects are just larger and bring more attention.

Plus anything that happens in NE BC is probably going to reflect well on Alberta as a large portion of the working force in Northern BC actually are contractors that live in Alberta.

[Crymson]

Well, Shell's acquisition of Duvernay has put them into a massive uncoventional land play there, with full exploitation being 1000's of deep, long legged horizontal wells. Couple that with what Enacna and friends are doing in the Horn River, and it's going to be huge.

[Jlude]

Originally posted by 2.2vtec
Everyone duck the sky is falling down!!!


I've got an umbrella... no worries!

[Perfect Dark]

Originally posted by Crymson


Unknown knows what he's talkign about.

This next decade is going to see massive unconventional gas projects in NE BC, it'll be like the oil sands in scale and scope.

We have 400 holes to punch in northern BC by 2012 I believe...lots of work still around from what I see.

[Antonito]

Where I work there have been a couple projects getting put on hold or cancelled, of course that could either be a sign of an overall slowdown, or it could just mean that those specific jobs are being shelved in lieu of others

One thing that is surprising is that one of the jobs got axed because of a lack of manpower, which is weird because they always used to push those through anyways and just let everyone charge tons of overtime.

[The Cosworth]

well if you guys have any education that is relevant, this is Enmax's postings as of right now.

We contract to Enmax and FortisAb so I know how involved in industry they are. Maybe Enmax didn't get the layoff memo :dunno:


POSTINGS
Administrative Assistant - Limited Term - (Closes 09/30/2008)
Apprentice Power System Electrician - (Closes 12/31/2008)
Client Account Specialist - (Closes 10/02/2008)
Credit Risk Specialist - (Closes 09/26/2008)
Design Engineer, Developers & Utilities - (Closes 09/26/2008)
Electrical Engineering In Training - (Closes 10/14/2008)
Electrical Engineering Technologist - (Closes 09/25/2008)
Energy Management Technical Specialist - (Closes 09/26/2008)
Environmental Specialist - (Closes 09/29/2008)
Event Team Representative - On-Call - (Closes 10/01/2008)
Field Representative - Limited Term - (Closes 09/30/2008)
Financial Analyst - (Closes 09/25/2008)
IT Business Analyst - (Closes 09/25/2008)
Journeyman Power Lineman, Delivery - (Closes 12/31/2008)
Journeyman Power Lineman, Distribution - (Closes 12/31/2008)
Journeyman Power System Electrician - (Closes 12/31/2008)
Legal Counsel - (Closes 10/03/2008)
Mechanical Engineer In Training - (Closes 10/14/2008)
Project Manager - (Closes 10/01/2008)
Team Lead, Customer Contact Centre - (Closes 10/02/2008)
Temporary Utility Worker - (Closes 12/31/2008)





There is a couple at the City too:



Job Postings List - Click the Column Title to Sort
Date Opened Closing Date Posting Title Job Category Department Reference Job Basket
2008/09/23 2008/10/31 Weight Room Monitor Leisure Services RC-VSLC Program Services 108728
2008/09/19 2008/09/29 Customer Service Attendant Administrative/Business Serv RC-VSLC Program Services 108721
2008/09/19 2008/09/29 CPIC Operator (Shift) Administrative/Business Serv PS-CPIC Warrant Unit 108719
2008/09/22 2008/09/30 Customer Service Rep -Dispatch Administrative/Business Serv AB-Administration 108718
2008/09/18 2008/10/09 Supervisor, Concession Ops Administrative/Business Serv RC-SLC Concession Operations 108714
2008/09/17 2008/09/25 Planner 1 Planning DB-Legislative Services 108713
2008/09/17 2008/10/02 Designer/Facilities Planner PS-Tenant Services 108712
2008/09/22 2008/10/10 Signing Inventory Technician Science/Technical RD-TFO-Assets Management 108706
2008/09/15 2008/09/23 Secretary Parks PARIS Project Administrative/Business Serv PK-PARIS Project 108705
2008/09/19 2008/10/03 Tenant Assistance Officer Social Science/Services CP-Central Housing 108703
2008/09/17 2008/09/26 In-House Agency Personnel Administrative/Business Serv TE-Temp Employment Serv Agency 108702
2008/09/18 2008/10/02 Trainee Electro-Mechanic Trades CT-LRV Light Repair Days 108699
2008/09/16 2008/10/07 Pilates Instructor Leisure Services RC-Aquatics Products Services 108697
2008/09/18 2008/09/26 Records Management Clerk Administrative/Business Serv LA-Administrative Services 108694
2008/09/22 2008/10/03 Asphalt/Crusher Plant Tech Science/Technical RD-Plants and Paving-Lead 108692
2008/09/23 2008/10/02 Journeyman Electrician Trades CT-Buildings-Lead 108688
2008/09/22 2008/09/30 Corporate Billing Analyst Administrative/Business Serv FN-Corp Billing - Accounts Rec 108687
2008/09/16 2008/09/30 Assessment Data Officer Administrative/Business Serv AS-Assessment-Director 108683
2008/09/17 2008/09/25 Admin Services Assistant Administrative/Business Serv LA-Claims Admin 108680
2008/09/17 2008/10/01 IT - Senior Programmer Analyst Information Technology IT-IC- Information Management 108674
2008/09/18 2008/09/29 Plant Maintainer 1 Labour/Operations Support CT-Buildings-Lead 108673
2008/09/15 2008/10/06 Community Recreation Coord. Leisure Services RC-Strategic Planning - Pol 108672
2008/09/22 2008/09/30 Performance Measurement Tech Science/Technical RD-Maintenance Projects 108671
2008/09/11 2008/10/17 Rec Ldr 2 - Badminton Monitor Leisure Services RC-VSLC Program Services 108664
2008/09/18 2008/10/09 Customer Care Supervisor Administrative/Business Serv WB-Customer Care Coord-OSS 108663
2008/09/12 2008/10/17 Recreation Leader I Leisure Services RC-VSLC Program Services 108660
2008/09/15 2008/09/23 Senior Process Accountant Finance/Taxation FN-AMCW OPB-R 108656
2008/09/17 2008/10/01 Planning Analyst - Amended Administrative/Business Serv PS-Research - Development Sect 108654
2008/09/23 2008/10/07 Ice Marshall (On-Call) Leisure Services RC-VSLC Arena Operations 108653
2008/09/15 2008/09/29 Administrative Assistant Administrative/Business Serv HR-HR Service Centre-Mgr 108652
2008/09/11 2008/09/30 Rec. Leader 2 - Youth Leader Leisure Services RC-SLC Program Services 108650
2008/09/10 2008/10/31 Journeyman 1 HD Mechanic Trades CT-Spring Gardens Garage-Lead 108649
2008/09/15 2008/09/29 Data Entry Ticket Control Administrative/Business Serv PS-Field Data Unit 108646
2008/09/10 2008/09/24 Tech Training & Support Coord Information Technology RC-Business Services-CLASS 108642
2008/09/15 2008/09/30 ITS Specialist Planning TP-Transportation Optimisation 108638
2008/09/19 2008/10/03 Telecommunications Engineer Information Technology IT-IC-TC-Voice Network 108633
2008/09/18 2008/09/29 Team Leader Administrative/Business Serv PS-Records Processing Unit 108631
2008/09/15 2008/09/29 Management Systems Analyst Information Technology IT-O-Desktop Services 108630
2008/09/10 2008/09/24 Senior Buyer Administrative/Business Serv FN-Transportation-Fleet Transi 108629
2008/09/09 2008/09/23 Communication Strategist-Amend Communications/Marketing WA-UEP Communications 108626
2008/09/08 2008/09/23 Web Editor Communications/Marketing RD-Support Services 108624
2008/09/04 2008/09/29 Executive Director Legal PS-Calgary Police Commission 108617
2008/09/18 2008/09/29 Administrative Assistant Administrative/Business Serv PS-Professional Standards Sect 108615
2008/09/08 2008/10/31 Journeyman 1 Autobody Man Trades CT-Spring Gardens Garage-Lead 108605
2008/09/11 2008/09/25 Communications Strategist Communications/Marketing DB-Business Operations 108603
2008/09/09 2008/09/23 Eligibility Specialist Social Science/Services CT-Eligibility Assessment 108599
2008/09/08 2008/09/26 District Manager - Amended Engineering Services RD-District 3 108591
2008/09/03 2008/09/24 Fitness Instructor-Older Adult Leisure Services RC-Aquatics Products Services 108570
2008/09/03 2008/09/24 Martial Arts Instructor 1 & 2 Leisure Services RC-Aquatics Products Services 108567
2008/09/17 2008/10/01 Bird School Program Specialist Administrative/Business Serv PK-Education 108552
2008/09/09 2008/09/30 Engineering Graphic Tech. II Science/Technical LI-Knowledge Doc Mgmt 108530
2008/09/08 2008/09/29 Chief Dev. Control Planner Public Sfty/Regltry/Enforcmt DB-Development Compliance 108497
2008/08/08 2008/12/31 Preschool/Out-of-school Inst Leisure Services RC-VSLC Program Services 108381
2008/07/15 2008/10/03 Sports Official - Volleyball Leisure Services RC-SLC Program Services 108159
2008/06/11 2008/11/28 EMT - Ambulance/Paramedic Public Sfty/Regltry/Enforcmt EM-Staffing Operations 107952
2008/06/25 2008/12/24 Plant Operator 1 Science/Technical WB-Secondary O-M 107891
2008/05/29 2008/12/22 Swim Instructor Leisure Services RC-Aquatics and Fitness 107845
2008/04/09 2008/10/08 IT - Mgmt Systems Analyst Information Technology IT-AD Business Solutions 107306
2008/04/02 2008/10/31 Sailing Instructors Leisure Services RC-Glenmore Reservoir Ops 107121
2008/01/09 2008/12/31 Concession Attendant Administrative/Business Serv RC-VSLC Concession Operations 106375
2008/01/09 2008/12/31 Sr Concession Attendants Administrative/Business Serv RC-VSLC Concession Operations 106374
2008/01/09 2008/12/31 Cook Administrative/Business Serv RC-VSLC Concession Operations 106373
2008/01/09 2008/12/31 Firefighter Amended Public Sfty/Regltry/Enforcmt FI-Recruitment 106360
2008/01/24 2008/09/30 Equip Op/Truck Driver-Amended Labour/Operations Support WB-Calgro 106277






A little chicken little for ya

http://disney-clipart.com/Chicken-Little/Disney-Chicken-Little-Sky-Falling.jpg

[Xtrema]

Originally posted by Antonito
One thing that is surprising is that one of the jobs got axed because of a lack of manpower, which is weird because they always used to push those through anyways and just let everyone charge tons of overtime.

It's just analyst's view on price of oil. When they are bullish, all projects are go. Now price has retreated, things can wait.

Warren Buffett didn't think there is enough profit in oilsand unless it's consistently at $120/barrel and we close at $106 today and as low as $91 last week. You do the math.

Other plays will continue outside of Alberta after 09. Shouldn't affect us much since most of the players are in Calgary anyway. It will only affect Alberta government's royalty.

The only risk down the road is the energy prices keep on going south which we force consolidation and optimization of the industry.

[drew_goring]

I work in the service industry and they are gearing up for a very busy winter.

[Darkane]

There's lots of projects and expansions happening up north. I forgot the web page but I read about all the current projects and upcoming projects. Insane still.

[johnboy27]

Originally posted by Crymson


Unknown knows what he's talkign about.

This next decade is going to see massive unconventional gas projects in NE BC, it'll be like the oil sands in scale and scope.
I work in the service side and we did some record breaking work this past winter for Apache in North eastern BC and were contracted to do about 10x as much work this year for them and it all got pushed until next fall. We were supposed to stay busy through breakup with them.

[urban.one]

Delays Loom in Oil Sands as Small Cos Eye Market Turmoil
by Hyun Young Lee
Dow Jones Newswires 9/19/2008
URL: http://www.rigzone.com/news/article.asp?a_id=66893

CALGARY (Dow Jones Newswires), September 19, 2008

While plummeting oil prices have unnerved Alberta's oil sands industry, it is the fallout from the banking crisis that is keeping company executives awake at night.

Fears of a clampdown on credit availability surged after two of Wall Street's biggest investment names disappeared last weekend, with Lehman Brothers Holdings Inc. (LEH) suddenly filing for bankruptcy and Merrill Lynch & Co. (MER) due to be sold to Bank of America Corp. (BAC). Morgan Stanley (MS) could also be swallowed up by Wachovia Corp. (WB).

Meanwhile, the seemingly unrelenting rise in crude oil futures has skidded to a halt, shedding more than $50 from July's record $145.29 a barrel.

"If the credit markets are a disaster, we're going to have to slow down," said Richard Gusella, president and chief executive of the small oil sands developer Connacher Oil & Gas Ltd. (CLL.T). "When the banks have trouble, we all have trouble."

Until recently, banks and other investors have been eagerly pouring their dollars into Alberta's vast oil sands, the world's second-biggest reserves behind Saudi Arabia's trove. Rocketing crude prices have more than compensated for spiraling cost inflation and a growing regulatory burden, and many analysts reckon only a sustained dip toward $70 a barrel will affect most major projects proposed by major oil companies. The more costly developments, however, may flounder well before then, with implications for production growth forecasts that have already been scaled back this summer.

"There's a whole mix of projects - some of them candidly wouldn't make it even with a very high oil price," said Peter Tertzakian, chief energy economist at ARC Financial, a Calgary-based private-equity firm. "The cost of capital going up combined with the price of oil going down makes it more likely that already weak supply expectations (for non-Organization of Petroleum Exporting Countries) aren't going to be met. Is this going to be a problem? Yes."

But if oil prices do go down and stay down, the full impact likely won't be felt for a while yet.

"It's not like natural gas prices, where we see an immediate reaction in gas drilling rates - for the oil sands there'll be a two- to three-year lag," said Chris Seasons, president of Devon Energy Corp.'s (DVN) Canadian arm. "Developing an oil sands project is quite a long and involved process... and they last for 25 years on average. Once you're into it, it's pretty rare for someone just to stop."

Skinnier Economics

While the oil majors ride out the storm, smaller companies reliant on outside financing and investor confidence could find themselves vulnerable to a takeover.

Would-be oil sands developer UTS Energy Corp. (UTS.T) has had a particularly rough few days. The Calgary-based company owns a 20% stake in the massive Fort Hills oil sands development in northern Alberta with its much-bigger partners Petro-Canada (PCZ) and Teck Cominco Ltd. (TCK).

After the weekend's carnage on Wall Street, investors hammered UTS' stock on the Toronto Stock Exchange on growing doubts the company could raise its share of project costs, previously estimated at around C$1.5 billion. Then on Wednesday, the Fort Hills partners hiked estimated project costs by more than 50% to nearly C$24 billion, more than doubling UTS' funding needs and prompting a flurry of target price and rating downgrades from analysts.

UTS shares closed Thursday at C$1.60, just above half of last Friday's close.

Petro-Canada and Teck Cominco's bulk could still power Fort Hills through to completion, despite market concerns that the increase pinches already skinny economics. Other projects by small developers may struggle to get off the ground entirely.

"Very marginal projects that are being driven by companies that can't get easy access to capital in the current credit environment are either going to be delayed, deferred or canceled," Tertzakian said.

Full Steam Ahead

Not only has easy credit evaporated, inflation has pushed up average break-even costs. Analysts previously pegged crude prices around $70 a barrel to support new oil sands projects, but this could now be in the $90-$95 a barrel range to generate returns of around 10%, reckons Chris Feltin, vice-president and director of institutional research at Tristone Capital Corp. Tertzakian believes some projects may need $100 oil.

Of course, not all oil sands projects are created equal. Digging the sludgy oil sands bitumen out of the ground in vast open pit mines usually costs more than using steam to soften the bitumen and pumping it to the surface. Building an upgrader, which processes the bitumen into refinery-ready crudes of varying quality, is another major expense.

Fort Hills, for example, is an integrated mining project planning an initial development phase of 140,000 barrels a day. Connacher's modular project, which uses the steaming technology, is working in bite-sized chunks of 10,000 barrels a day.

"Oil at $60 a barrel does it for us," Connacher's Gusella said. "That covers all our operating costs, royalties, interest on debt and 15% return on investment."

But current conditions aren't yet enough to prompt another downward revision to oil sands output projections next summer, said Greg Stringham, vice president of markets and fiscal policy at the Canadian Association of Petroleum Producers, which publishes the widely watched annual forecasts.

Even if falling crude prices push some higher-cost projects off the table, the oil sands themselves could prevent a long-term slump to unsustainable levels, Tristone's Feltin said.

As the marginal non-OPEC barrel, break-even costs for the oil sands may form a natural floor to crude prices.

"It's a thesis I'm using to justify long-term oil prices north of $100 a barrel," Feltin said. "Realistically, when international oil companies are looking for easy-to-access oil reserves, the oil sands pop up first."

Others are less convinced of an explicit link. While the oil sands may play a role, some analysts reckon OPEC will start agitating for production cuts if crude slips too far, and the markets could switch their current focus on slumping demand back to tightening supply conditions. Both could kick crude prices back above $100 at some stage.

For the major producers, though, it's largely business as usual.

"Big companies have the staying power to go through the sags in the market," said Bob Skinner, a senior vice president at StatoilHydro ASA's (STO) Canadian unit. "If the industry reacted to every little - well, this is a big one - drop or fluctuation in price there wouldn't be any oil sands projects. As far as we're concerned, we're going full steam ahead."

[Eleanor]

Will it slow down? Yes

Will it bust? Probably not

There's still billions being invested in Alberta/Saskatchewan/BC

[The Cosworth]

Originally posted by Eleanor
Will it slow down? Yes

Will it bust? Probably not

There's still billions being invested in Alberta/Saskatchewan/BC

I always wonder what this means, considering we are so busy we can't actually get our work all completed, does it mean if it slows down that projects that get started actually finish?

[broken_legs]

Maybe you guys should be worrying about the price of Nat Gas. Conventional Natural Gas exports and industry STILL accounts for more of Albertas GDP than oil.

Think about the royalties going into effect.

Think about the price of nat gas.

Think about the huge shale gas discoveries around dawson and now north of Ft Nelson. Think about the massive supply coming online from the Barnett, from the Haynesville, from the Fayettville and the marcelus shale in the US.

i'll post this bad boy again:

http://i274.photobucket.com/albums/jj259/broken_legs/GDP_oilGas.jpg

[gkAeris]

bump for more talks....

i'm seeing some lay offs now........

[The_Rural_Juror]

Originally posted by gkAeris
bump for more talks....

i'm seeing some lay offs now........

Details please.

[rmk]

Originally posted by The_Rural_Juror


Details please.

[Crymson]

I have heard nothing of layoffs in the exploration side of things.

[cosmok]

Lots of SAGD projects scaling back to 1/6th the size, 1/4 the size, etc.

[msommers]

Wouldn't the progress of exploration be the deciding factor if the sky was going to fall?

[kutt3r]

I would think that unconventional (like SAGD) would slow down as it is less profitable, but I think it is still profitable for conventional plays... Unless labour is that ridiculas...
When you hear of stories about construction companies trying to charge $100k to level out a flat plot.... no wonder... I almost feel sorry for the O&G industry... almost.

[Darkane]

Originally posted by cosmok
Lots of SAGD projects scaling back to 1/6th the size, 1/4 the size, etc.

Proof? Links?

[Proyecto2000]

Originally posted by broken_legs
Maybe you guys should be worrying about the price of Nat Gas. Conventional Natural Gas exports and industry STILL accounts for more of Albertas GDP than oil.


My boss was talking about the low natural gas prices and how it could effect us in the service industry. However its a good thing that I work at a "small" tool company, so layoffs might not be in order for us. :dunno:

How about the price of oil being down to $50?
http://money.cnn.com/2008/10/07/news/economy/oil_prices/?postversion=2008100813

[Xtrema]

Originally posted by Proyecto2000
How about the price of oil being down to $50?
http://money.cnn.com/2008/10/07/news/economy/oil_prices/?postversion=2008100813

Don't think OPEC will let that happen. Especially if $US is going to devalue.

[Supa Dexta]

But the saudi's left opec.. I expect big changes.

[broken_legs]

Originally posted by Darkane


Proof? Links?

Just some related headlines from the last week



Market woes hit oil sands projects October 8, 2008
By NORVAL SCOTT
CALGARY -- The global financial crisis is threatening new Alberta oil sands processing projects, as tighter credit lines and lower oil prices cause companies to look for cheaper alternatives.

Most at risk are upgraders, the sprawling facilities where heavy crude, or bitumen, is processed into a lighter synthetic product that can be handled by more refineries.

Upgraders can cost up to $12-billion. Financing woes aren't the only roadblock: The price difference between bitumen and synthetic crude has narrowed, leaving less value for upgraders to capture.

While North American demand for heavy crude has increased as refiners seek to take advantage of Canadian supplies, oil sands production has lagged expectations.

At least 10 new upgraders are being built in Alberta or are under consideration, backed by major companies including Statoil ASA, Royal Dutch Shell, Canadian Natural Resources Ltd., and Total SA.

But some plans may be revised. One company, privately-held BA Energy Inc., has already pushed back its proposed $5-billion upgrader, arguing it's too expensive to raise money now and that market fundamentals don't support the project at this point. Others could follow suit, meaning that processing work that would have taken place in Alberta is instead carried out by refiners in the United States and many of the economic benefits of oil sands development - including well-paid jobs - would migrate south.

"Today's financial environment is very difficult," said Columba Yeung, chief executive officer of Value Creation Inc., BA Energy's parent company. "The oil price is still quite strong but the differentials are low. That's discouraging people from considering upgrading."

Value Creation hasn't shelved the BA Energy upgrader, but it will prioritize the development of its oil sands steam extraction project, bringing bitumen production on stream first. It will still look to build its upgrader and is seeking a partner, but the project could be delayed for between 18 months and three years, Dr. Yeung said.

Other companies are feeling the pinch too: Last month, the partners behind the Fort Hills mine and upgrader said the project would now cost as much as $23.8-billion, more than 50 per cent over previous estimates. The consortium says it is now looking at retooling the project.

"It's pretty tough to justify building an upgrader in Alberta today ... when the bitumen price and the capital costs are so high," said Justin Bouchard, a Calgary-based analyst with Raymond James.

Instead of building an upgrader such as at Fort Hills, which needs an oil price of around $90 a barrel to create returns, the returns are better if companies find a U.S. refining partner to take their bitumen production, he added.

But even companies with a U.S. outlet are facing the same pricing pressures. "[The situation] does appear more fragile, based on cancellations, suspensions, [new] cost estimates and a very shaky capital and credit market," said Richard Gusella, CEO of Connacher Oil and Gas Ltd., which yesterday cancelled plans to expand its small refinery in Montana.




AND




[b]Oil price drop tarnishes fortunes of oil sands October 7, 2008
By SHAWN McCARTHY

GLOBAL ENERGY REPORTER
OTTAWA -- Canada's oil sands companies are facing a rough ride as crude prices continue to fall, putting a squeeze on high-cost producers around the world, and the crises in credit and equities markets make it difficult to finance expansions.

Reflecting dire concerns about a global economic slowdown, crude prices plunged more than 6 per cent yesterday, dropping below $90 (U.S.) a barrel for the first time since last February.

In New York, crude contracts for delivery in November closed down $6.07 to $87.81 (U.S.) a barrel, its lowest close since Feb. 4. Shares of oil companies slumped further, signalling investors expect crude prices to continue to retreat from record highs this summer.

"The stocks are telling us the oil prices are inflated; they do not reflect market fundamentals," Fadel Gheit, an analyst with Oppenheimer & Co. Inc., said yesterday. "Investors are dumping their oil stocks. Why? Because they think oil prices are artificially high and are going to come down."

Analysts are watching China, India and other emerging economies to see if their crude oil demand will offset weakness in the developed world.

In the stock market, Mr. Gheit said there is a "flight to quality" occurring in the oil sector, as integrated giants like Exxon Mobil Corp. and Chevron Corp. experience smaller losses than pure production companies. Yesterday, Exxon shares fell 0.8 per cent, while Canadian oil sands producer Suncor Energy Inc. fell 13.6 per cent.

"Oil sands will get hurt the most," he said. "Unconventional will get squeezed out first because they are higher cost. So things are going to get rough and ugly."

But so far, the Canadian producers are moving forward with their expansion plans.

"Companies involved in oil sands development use very long times frames," said Andrew Boland, managing director for research at Peters & Co. in Calgary. "When a lot of these projects were initially contemplated, oil was not at $90."

Cost pressures are easing - steel costs are down 10 per cent from their peak, which will reduce the break-even price for future projects, he said.

He pointed out that crude prices were as low as $90 just last February - although at the time the market perceived that as a high price. However, many analysts - including Mr. Gheit - expect the price to continue to decline as Asia and Latin America markets feel the full force of the economic crisis.

Mr. Boland said a bigger issue for smaller companies - or those without production to provide cash flow - is financing their expansion plans. "Companies have got to be self-financing for the next two to three years at least," he said.

Analysts are reducing their 2008 and 2009 oil price forecasts to reflect the slumping world economy, though many expect prices will average above $100 through 2009.

UBS Securities Inc. lowered its 2009 forecast price to $105.10 a barrel from $120. It said pure oil sands producers could see their cash flow per share drop as much as 26 per cent next year. But they would still be making healthy profits.






'Armageddon' in the oil patch
NORVAL SCOTT
21:12 EST Wednesday, Oct 08, 2008


CALGARY — Jeffery Tonken has lost a fortune over the past six weeks.

“It's Armageddon out there,” Mr. Tonken, the chief executive officer of junior oil and gas company Birchcliff Energy Ltd., said Wednesday.

“I've lost millions. Everyone has.”

The value of Canada's energy companies has been devastated since oil plunged from record levels in the summer. Among the 58 companies in the S&P/TSX capped energy index, about $110-billion in market value has been wiped out in the past six weeks, calculations show.

Despite being one of the success stories of 2008 – Birchcliff has capitalized on the B.C. gas rush – the company's shares have plunged from almost $16 in July to just over $6 today.

Mr. Tonken is far from alone. While the price of oil has fallen from $147 (U.S.) a barrel in July to below $90, the value of Canada's energy firms has been hit disproportionately as hedge funds and other investors liquidate their positions in sectors in which they had bought heavily, such as energy.

“There's some chaos and panic selling, and people have lost sense of the fundamentals,” said Harvest Energy Trust CEO John Zahary.

Harvest's unit price has fallen from $26 in June to below $11, also a hit for Mr. Zahary, who said he owns about 100,000 units.

“Clearly I've participated in the downturn – there's a reduction in my net worth, and that of other employees and shareholders,” he said.

“It's a substantial sum of money that is no longer there,” Mr. Zahary said.

Given the financial climate, Harvest is now unlikely to proceed with a $2-billion project to expand its refinery in Newfoundland unless it finds a partner, because that would consume too much of the company's capital, he added.

Since Labour Day, the value of the S&P/TSX capped energy index has been cut almost in half, in comparison with the 25-per-cent loss made on the S&P/TSX composite index in the same period.

The precipitous drop isn't just affecting trusts and juniors; oil sands giant Suncor Inc., for example, has seen its market capitalization fall from just under $70-billion in May to just over $27-billion.

“Hedge funds are selling anything off their shelves that they can,” said Bill Andrew, CEO of Penn West Energy Trust. The valuation of the trust – one of Canada's largest – has been halved since June, and is now just over double its annual cash flow.

But fundamentally, and despite the panic, oil and gas prices are still strong enough for companies to make profits, Mr. Andrew said. “It changes nothing at our operations.”

One concern for investors – especially in the junior side – is that banks will reduce or even refuse to renew revolving lines of credit, stymieing the ability of companies to expand, Birchcliff's Mr. Tonken said.

While Birchcliff doesn't have any debt to pay back in the short term, the company, like other juniors, will likely just spend its cash flow or even less in 2009, he added. Juniors often spend up to five times their cash flow as they chase rapid growth.

Calgary's analysts, many of whom maintained that companies were comparatively undervalued when oil was at $140 a barrel, say there is little by rational explanation for the collapse, which means Canadian oil patch assets now appear to be hugely underpriced.

“Buy some ammunition, go to the hills and hide,” said William Lacey, an analyst at FirstEnergy Capital Corp.

“We've gone beyond doomsday scenarios. There's no logic any more and this is an outright capitulation. Investors are simply throwing up their hands and saying ‘I'm out,'” he said.

According to Mr. Lacey, the drop means that companies will be re-evaluating their future strategies, and will now increasingly buy back their own shares because “those are the cheapest barrels out there right now.”

Nexen Inc., which historically hasn't bought many of its own shares, has snapped up stock worth $300-million since the beginning of August.

Analysts are also watching plans by EnCana Corp., Canada's largest energy company, to split itself into two separate entities, one focused on gas, the other on oil sands.

Floating an oil company in the current climate means EnCana's oil sands assets, rated among the highest quality in Alberta, could be quickly poached by a larger oil company at a very low price, Mr. Lacey said.

EnCana spokesman Alan Boras said that while the company is watching the situation, it's still moving towards completing its split early next year.

[BlackArcher101]

And yet, my company has never been busier.

[Xtrema]

Originally posted by BlackArcher101
And yet, my company has never been busier.

It won't hit the workers for another 2 years at the very minimum. Just like home builders, most the trades people are idle now but the project/design people were lay off at least 8-12 months ago.

Projects that started will finish due to contract obligations which will keep everyone busy to at least 2011/12. But do not expect anything new to come down the pipe unless oil reach $120 again before 2011.

Juniors will be swallowed up and that Ecana oil/Suncor buyout (hostile or not) scenario isn't that far fetch. Consolidation usually means less people.

[Crymson]

Everyone is still making money, it's just the jr's will flop because they won't be able to secure their financing. The medium to large guys will be fine, they just scale back their spending to match their cashflow and hope oil stays north of 50$ a barrell. Good time to buy large cap oil companies, it's like free money.

[BlackArcher101]

Originally posted by Xtrema


It won't hit the workers for another 2 years at the very minimum. Just like home builders, most the trades people are idle now but the project/design people were lay off at least 8-12 months ago.

Not all projects in Alberta are oil sand projects. I'm in project/design and things are actually getting busier for me. It's all about what area you are in and what product/service as well. All I'm saying is don't assume all of the Alberta oil industy is in the shitter because of large projects being held back by large companies.

[broken_legs]

Originally posted by Crymson
Everyone is still making money, it's just the jr's will flop because they won't be able to secure their financing. The medium to large guys will be fine, they just scale back their spending to match their cashflow and hope oil stays north of 50$ a barrell. Good time to buy large cap oil companies, it's like free money.


I will second the Jrs Flopping.

I work for a certain OFS company and our outlook was to be super busy this winter.

We always have our steady rigs running from the big guys:
- Shell
- Petro Canada
- Suncor
- talisman

etc...


However, we had three pre-spud meetings last week that ALL canceled. They were smaller companies that I wont mention, but it highlights that things are not all peaches n cream throughout the industry right now.

Some small cap oil/gas companies have had their market caps cut in half or worse. This is obviously going to affect their ability o raise capital for new projects.