Alberta oil sands project cancellations

Over 200 billion to be lost in Alberta oil sands investment

As more and more projects are halted on a daily basis in the Alberta oil sands, estimates of $97 to $241 billion will be loss in investment. (read article: http://www.financialpost.com/story.html?id=1258599) A loss of this magnitude will affect the investment environment in Alberta and the Canadian economy. With a big loss will also come a reduction in the amount of labour employed by the Alberta oil sands companies and loss revenue to the province of Alberta. The figure of 200 billion may seem arbitrary but this would represent 1/3 of the proposed investments in the Alberta Oil sands over the next decade. Imagine the loss in revenue to the Alberta and Canadian government and all the well paid Alberta oil sands jobs that will never be started. Alberta oil sands investments may seem to be risky in light of this figure and the potential of even bigger numbers to come. Depending on the severity of the global financial crisis and the ability of Alberta oil sands companies to survive the Alberta recession, we may see Alberta oil sands investments become the jewel once again in Canada.

Alberta oil sands project cancellations

BA Energy became the first Alberta oil sands company to file for bankruptcy in 2009. Imperial Oil and Exxon and Husky Oil are all slowing down existing projects or have project cancellations and postponements. If a project cancellation occurs there is an indeterminate amount of time before it may be started. The effect on labour is huge as many existing workers are laid off and no new labour is required or forecast. This will inevitably lead to an Alberta Recession as the Alberta oil sands projects account for a significant share of the labour demand. Alberta oil sands project cancellations are not a bad thing on the other hand. If you think about it, the Alberta oil sands have been running at near full capacity for the last five years. The impact can be felt by the labour force through increased injuries and WCB claims and increased job dissatisfaction as a result of over work and too much stress. The other big impact is the environment and Alberta oil sands negative image as dirty oil or tainted oil. With a slow down in production the Alberta oil sands companies including the Alberta government now have the resources to invest in improving the processes that are used in developing the tarsands. Perhaps we will not hear the word dirty oil or tainted oil in the following decade.

US Oil Prices and Alberta oil sands

US oil prices have a big impact on the Alberta oil sands. It seems that no matter how high the price of US oil we all need to drive. When the price of US oil reached $4 a gallon there was a revolt in many parts of the World including the US. But people still drove their SUVs and trucks still delivered their goods. The oil companies made record quarterly profits silently in the background of all the outrage. With low US oil prices we see a shift in production of the Alberta oil sands and a reduction in production and new projects. The Alberta oil sands companies must make a profit as like any other business and when the profits are low or negative then it becomes survival mode. The large Alberta oil sands companies have been around for up and down markets and realize that the prices will fluctuate 2 to 3 times during the expected life of their projects. These Alberta oil sands companies keep large cash reserves and tightly guard this as their strategic weapon in times such as these. It is sometimes a blessing for them to be in a global financial crisis as they get to pick up distressed junior oil and gas companies without the financial resources at bargain prices.

Alberta Oil Sands Bust – Is the end really over?

Alberta recession and the Alberta Oil Sands

What is happening in Alberta these days? With so much happening with the world including the global financial crisis, global credit crunch, and US $33 a barrel oil, it’s no doubt that Alberta would suffer along with the rest of the world. The Alberta Oil Sands was the best thing to happen to Canada in the last ten years. It gave Canada a national treasure that was poised to bring it to the forefront of being a global energy leader. With the high US oil prices at even $50 US a barrel, the Alberta Oil Sands could not have been a safer investment. The Alberta oilsands had many players and investors over the last decade. As with many of the Canadian Industries, Alberta oil and gas industry is also filled with a majority of junior oil and gas companies. The Alberta recession, or what may be just a few negative quarters of growth, may bring a halt to the boom of the last decade. Could we see an Alberta Oil Sands Bust in the near future??? With a global recession, anything is possible and speculation is everywhere. Many of the large Alberta Oilsands companies are finding this an ideal time to go bargain hunting and picking the jewels to add to their portfolio of Alberta oil sands companies and assets.

Global Credit Crunch and Junior Alberta Oil and Gas companies

A global credit crunch means that major financial institutions will not be as willing or able to lend money to fund company projects. Whether the project is to start a new franchise or fund the daily operations of a Junior Alberta oil and gas company, the decisions that are being made these days are quite dire. No major or minor financial institution has been unharmed by the global credit crunch due to the interrelated nature of the business. Junior Alberta Oil and Gas companies are tied to the global credit crunch as their financing is tied to one of the major financial institutions. Another source of their usual financing, the equity markets or stock markets have also been unavailable during this time of global financial crisis. It is for such a reason that the major Alberta Oil sands companies are shopping for the bargains that are starting to pile up as one after another Junior company starts to feel the crunch. Instead of filing for bankruptcy, the next alternative is to sell at a loss and lose all your equity. While some of the Alberta Junior oil and gas companies may make it with some federal and provincial government funding from Canada, this will not help many of them soon enough.

US $33 a barrel Oil and Alberta Oil Sands

With US $33 a barrel oil prices we are seeing a halt in any new Alberta Oil Sands projects. Alberta oilsands projects that are just started or announced to be started are now currently on hold until further notice. Of course no one knows when oil will go up so the timeframe can stretch longer than anyone is comfortable with. Current US $33 a barrel oil seems like an enigma in todays society. With the bustling growth in population in India and China alone, the price of US $33 a barrel oil would seem silly as the current supply of oil is insufficient to meet global demand. The current $33 US a barrel oil price is more of overreaction to the global financial crisis and once confidence builds up we should see a spike in oil prices again. With a spike in oil prices even to a stable $50 US a barrel oil we will see the commencement of a lot of projects overnight.