- Joined
- Aug 22, 2008
- Messages
- 428
The plummeting price of oil threatens to derail so many projects in Alberta`s oil sands that as many as 10,000 construction jobs could be lost over the next year, stalling the engine that has long driven the province`s economy. Many energy companies are now seeking cheaper ways to build their projects or even deferring their plans altogether. These changes will likely slash the number of construction jobs in the oil sands by almost one-third, industry observers say. "There`s still billions of dollars of expenditure, but the frenzied pace of development is slowing down," said Richard Cooper, leader of Deloitte`s Canadian energy department. "The pent-up heat that was in the system is being driven out, and things are returning to some sort of equilibrium."
Just three months ago, record oil prices of US$147 a barrel meant it was full speed ahead to develop the oil sands, despite the upward pressure that put on the price of labour, materials and services. Now, the price of oil is just over $63 a barrel, as fears that the financial panic will cause lower oil demand. But with construction in Alberta continuing and costs still through the roof, only a few new projects will be viable if prices stay at that level. Oil sands projects that include a mine and an upgrader, which processes the bitumen produced by a mine so that it can be processed by more refineries, need a long-term oil price of $100 a barrel, according to UBS Securities analyst Andrew Potter. Those that use steam injection to extract crude and don`t include an upgrader require $70 a barrel. Without certainty that prices will hit those levels, some companies have already cut back their multibillion-dollar oil sands plans. Suncor Energy, Petro-Canada, Nexen/OPTI Canada and BA Energy have already said they`ll slow, remodel or postpone their projects, and others could follow. Those deferrals mean that while the oil sands was expected to need 44,000 construction workers in 2009 and 2010, the region will now need only 26,000, Potter said. The oil sands now employ about 36,000 construction workers.
(Globe and Mail 081028)
Just three months ago, record oil prices of US$147 a barrel meant it was full speed ahead to develop the oil sands, despite the upward pressure that put on the price of labour, materials and services. Now, the price of oil is just over $63 a barrel, as fears that the financial panic will cause lower oil demand. But with construction in Alberta continuing and costs still through the roof, only a few new projects will be viable if prices stay at that level. Oil sands projects that include a mine and an upgrader, which processes the bitumen produced by a mine so that it can be processed by more refineries, need a long-term oil price of $100 a barrel, according to UBS Securities analyst Andrew Potter. Those that use steam injection to extract crude and don`t include an upgrader require $70 a barrel. Without certainty that prices will hit those levels, some companies have already cut back their multibillion-dollar oil sands plans. Suncor Energy, Petro-Canada, Nexen/OPTI Canada and BA Energy have already said they`ll slow, remodel or postpone their projects, and others could follow. Those deferrals mean that while the oil sands was expected to need 44,000 construction workers in 2009 and 2010, the region will now need only 26,000, Potter said. The oil sands now employ about 36,000 construction workers.
(Globe and Mail 081028)