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The oilfield services sector in Canada – an indicator of the state of the oil situation – is starting to see job losses, the impact of sharp cuts on oil in Alberta impacting the sector.
According to the Financial Post, Trican Well Service has fired 70 people out of 2,200 this week, which suggests a planned slowdown in activity next year, due to lower prices in the United States. energy and reductions on Canadian crude oil.
The news comes amid warnings of job losses in the sector if the glut of oil weighing on Canadian crude oil prices does not improve quickly.
The oilfield services sector is at the forefront of energy development and has been hired for the drilling, production and maintenance of oil and gas wells. They also participate in the manufacture of equipment and supplies for the oil sector, such as steel piping. The company and its workers flourish when the oil sector is busiest.
But with Canadian crude prices well below US standards, industry spending plans are now under scrutiny – and those in the oil services sector are preparing for bad news.
Pro-pipeline protesters gather and chant slogans in front of a location where federal Finance Minister Bill Morneau spoke in Calgary on Tuesday. (Jeff McIntosh / Canadian Press)
Murray Mullen, president of the Mullen Group, which employs about 1,800 people in its oilfield division, said his clients were canceling projects "left, right and center".
Meanwhile, it seems that banks and investors are worried about the direction industry is taking, he said.
"So, all of us who hold leadership positions, we go:" Well, we have no choice but to be defensive, which usually means, you know, I'm going have to fire people, "said Mullen.
"We try not to panic, but I can tell you that my senses are very, very intensified."
When oil prices collapsed in 2014, oil services companies were hit hard by the slowdown in oil activity and the removal of thousands of jobs.
Recently, no such deep cuts have been reported, although the province claims to have been notified of seven layoffs of 50 or more in the energy sector since April 1.
While Canadian oil is selling very heavily because of the overabundance of supply and the production companies are reviewing their spending, there is renewed concern about what the future holds for us.
Economist Peter Tertzakian recently warned that if the glut of oil is not addressed in the "next few weeks," workers could be fired and lose the winter drilling season.
The leader of the unified Conservative Party of Alberta, Jason Kenney, told CBC Calgary Eyeopener On Thursday, industry leaders described the situation as "five-alarm fire".
"Companies are reducing their capital budgets for next winter, including their drilling budgets," said Kenney, "which would seriously undermine the service sector that exists across the country." Alberta – all of these small businesses and thousands of employees We are seeing a potential wave of layoffs.
Earlier this month, the Petroleum Services Association of Canada (PSAC) predicted that a total of 6,600 wells would be drilled in Canada in 2019, a decrease of about 5% per year. report to this year. The badociation said it would reduce exploration and production capital spending by up to $ 1.8 billion.
Jason Kenney, leader of the United Conservative Party, said that he had been told that the industry was facing a "five-alarm fire". (Darren Calabrese / Canadian Press)
PSAC President Duncan Au said in an interview this week that the sector is "extremely concerned" by the levels of activity in the oil industry and the cuts to Canadian crude oil.
Like others in the energy sector, according to Mr. Au, the problem is the lack of transportation capacity for Canadian oil, for both pipelines and railways. This has aggravated the overabundance of oil, which weighs heavily on prices.
The situation means that some oil and gas companies do not know their normal cash flow and can also be challenged to raise funds from investors.
"This translates into a slowdown in our services business and we have seen it significantly here in November," said Au.
If the companies had not yet downsized, many would be planning, he said.
Au is also president of CWC Energy Services, a large Calgary-based service platform company. He said his business has grown over the past four years, peaking at 770 employees earlier this year.
Now it has fewer than 700 employees.
"You can not say it was cut off overnight," Au said. "But it's the number of employees … based on the level of activity we're currently seeing in our pool."
Au travels to Ottawa next week to seek government support for a new PSAC-led strategy to strengthen support for the energy sector in Canada. They want to create a brand that promotes all Canadian energy.
"And this brand for Canadian energy will go beyond oil and natural gas," said Au. "It goes in the solar, wind, hydro, nuclear – all that makes Canada excellent in energy."
Premier Rachel Notley announced Wednesday that her government would purchase two new unit trains that could carry an additional 120,000 barrels a day. (Matthew Brown / AP Photo)
For weeks, the price of Western Canadian Select (WCS) has been around US $ 40 a barrel less than West Texas Intermediate (WTI). In more favorable times, it could be around 15 USD.
Analysts do not know exactly how long the situation will last, even though some believe that the price differential will improve over the next few months and normalize at about the same time next year.
Premier Rachel Notley announced Wednesday that her government would purchase two new unit trains that could carry an additional 120,000 barrels a day, increasing the amount of oil transported by rail in Canada by one-third.
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