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Brewster
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Aug 1 2015, 09:28 AM
Post #1
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Brewster
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- Edmonton Journal
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These are dark days for Alberta’s energy industry. If anything, the outlook seems to grow more depressing by the week.
After posting the steepest monthly decline of 2015, benchmark grade U.S. light oil prices ended July at just $47.12 US a barrel, a full $60 below the June 2014 peak and 26 per cent below the short-lived May high of $64.
Industry giants Cenovus Energy and Shell Canada announced further job cuts this week. About 11,400 Alberta workers — nearly three-quarters of them in the oilpatch — have been shown the door in mass layoffs this year, the Calgary Herald reports.
Share prices for many of Alberta’s big producers are at their lowest levels in years. It’s no better south of the border. Shares of Exxon Mobil and Chevron were hammered Friday, after the two biggest U.S. energy companies posted poor quarterly results.
Any lingering hopes for a quick rebound in oil prices have been crushed by a persistent global supply glut, a surprise recent uptick in the active U.S. rig count, and the prospect of Iran resuming crude exports.
Meanwhile, Alberta’s fledgling New Democratic government is forging ahead with a review of energy royalties and an assessment of the province’s climate change strategy. Talk about godawful timing.
Although the moves fulfil key NDP campaign promises, both could pile additional costs on an industry that’s literally fighting for its life.
With Saudi Arabia, Russia, the U.S. and other big producers pumping crude at or near record levels in a global fight for market share, there’s bound to be little relief any time soon.
“We’re not going to bounce off the bottom and be back to $80 or $90 oil in a year,” says Frank Mitton, who recently retired as the Houston-based vice-president, North America, of Schlumberger’s project and asset management group. “I just don’t see it. There are too many issues out there.”
“Clearly, if you can’t expect prices to bail you out then the only other way is to increase margins. You have to bring down the break even point at which you can operate through new technologies,” says former Alberta Investment Management Corp. (AIMCo) chief Leo de Bever.
What’s needed, both of them say, is bold, visionary leadership from Alberta’s new government, and a set of aspirational goals for the oil industry akin to then U.S. president John F. Kennedy’s legendary 1961 vow to put an American on the moon by the end of the decade.
“I’m talking about strategic goals, not little micro objectives — something big,” says Mitton.
“In 1961, Kennedy didn’t have a clue how they’d get a man on the moon, but he had a vision. That kind of inspirational challenge, supported by government, could really move things along” in Alberta, he says, by accelerating the rollout of new technologies to cut costs and address oilsands environmental issues.
To advance the cause, they met recently at the Calgary offices of an innovative oilsands junior, Oak Point Energy — where de Bever is chairman — to map out a game plan.
Besides de Bever — who has been trying to advance the state of tech commercialization in Alberta for years — the group included veteran Calgary oilman Jim Gray, University of Calgary president Elizabeth Cannon, Ernst & Young Orenda chief Barry Munro, and James Cleland, global general manager of General Electric’s GE Heavy Oil Solutions division.
“It’s going to take a different approach,” says Cleland. “We have to change our mindset on how we can continue to extract value from this incredible resource we have here in Alberta. Now is a good time to look at how we can do things differently.”
Judy Fairburn, chair of Alberta Innovates Technology Futures, attended the meeting in Calgary. De Bever says she understands the issues and is keen to encourage more collaboration between government, industry, academia and financial sources of support.
But time is of the essence here. The clock is ticking. While Alberta’s major industry is bleeding red ink and jobs, the provincial deficit will only get deeper, and the new government’s spending commitments will only get harder to meet.
Ontario’s shrunken auto industry provides an object lesson for Alberta in what happens when a province sees its primary economic driver decline as capital and plants move to other jurisdictions.
“If the government can get their head around the idea that this is an industry we are going to help transform to be more creative, innovative, and more thoughtful about the environment, it just sends a tremendous signal to everybody that this is a government we can work with,” says Mitton.
“So I think it’s a unique opportunity, but whether or not there’s enough political will to step up and do it remains to be seen.”
"more creative, innovative, and more thoughtful about the environment"
They say the words, but they don't really understand. It's too late for creativity within fossil fuels. Those days are numbered - take the profits and run - to Wind, Solar, Geothermal, Tidal Power - whatever renewable you can find!
Edited by Brewster, Aug 1 2015, 09:31 AM.
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corky
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Aug 1 2015, 10:07 AM
Post #2
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Brewster
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Aug 1 2015, 10:19 AM
Post #3
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Telcoman
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Aug 1 2015, 10:58 AM
Post #4
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