anybody worried about the Alberta Economy?

[tjinaz]

With Oil dropping below $40 a barrell? What is the breakeven point to extract oil from the sands per barrell?

[Jayems]

I thought the break even was somewhere in the $50s

[Slava]

I think that we are well below break even at this point...but the question is how long it will last.

[burn_this_city]

$55 Canadian for SAGD

[Sylvanfan]

The company I work for does a lot of Oil sands projects (pretty much all our work from last year)...and we just had our busiest month here in November trying to get projects that had started in the summer competed. In January we're going to have to cut our staff from like 22 to 6 because there is no new work being done. Everything has been put on hold. Right now it's scary how fast this thing came to an end. Even then....we will likley have to go after other types of work and thats going to be hard to find too. This is the third bad downturn I've seen in the economy in my working life, but this one is the worst instant downturn yet by far. I'm about the second last guy on the layoff list...but come February good chance I'll be on EI if something doesn't turn around here. It's great depression like bad right now.

But I have to think that these companies will use this downturn to lean on contractors to get some better rates by threatening to do nothing. If they wait for the price to come back...they'll end up trying to get everything done when theres no labour to get it done again and will have to keep paying premium prices. They'd be smart to use this downturn to steady out their work flow and get contractor rates to a more reasonable level. Right now the cost of doing things is expensive, or had been.

[burn_this_city]

Originally Posted by Sylvanfan

The company I work for does a lot of Oil sands projects (pretty much all our work from last year)...and we just had our busiest month here in November trying to get projects that had started in the summer competed. In January we're going to have to cut our staff from like 22 to 6 because there is no new work being done. Everything has been put on hold. Right now it's scary how fast this thing came to an end. Even then....we will likley have to go after other types of work and thats going to be hard to find too. This is the third bad downturn I've seen in the economy in my working life, but this one is the worst instant downturn yet by far. I'm about the second last guy on the layoff list...but come February good chance I'll be on EI if something doesn't turn around here. It's great depression like bad right now.

A lot of the companies hit pause.. We see plenty of shop space for fabrication opening up which means there will be opportunities for us to take advantage of some lower costs. Once the companies realize there are opportunities to save you'll see the capital start flowing again.

[Slava]

Originally Posted by burn_this_city

A lot of the companies hit pause.. We see plenty of shop space for fabrication opening up which means there will be opportunities for us to take advantage of some lower costs. Once the companies realize there are opportunities to save you'll see the capital start flowing again.

I think that this is the case and of course also hope that this is the case sooner rather than later!

[The Goon]

I think you have to be worried regardless of what industry you work for. The speed at which things have changed is shocking.

[burn_this_city]

Originally Posted by Slava

I think that this is the case and of course also hope that this is the case sooner rather than later!

My employer is currently looking long and hard at advancing plans we had shelved only a month ago. We will be making a decision before Christmas on whats going to happen through 09. I can't see them not going ahead, very rarely in construction do things get cheaper by putting them off.

[burn_this_city]

Only hookers, the mob, and government jobs are safe in a really bad recession.

[DFO]

nm

[DFO]

There is no way the SAGD project I'm currently on is economic at these prices. The saving grace may be that we are just in the drilling/construction phase with first steam not coming till 2011. Hope things rebound by then.

Some of the smaller oilsands players are shatting thier pants right now cause they can't find capital to do anything right now.

[DFO]

Originally Posted by fotze

http://www.calgaryherald.com/Hunting...679/story.html

North BC is set to see a crapload of cash poured in hue to these shale finds...

This and the Montney play are getting a little over-hyped IMO. Everyone wants to jump on the 'resource play' bandwagon but I don't think the geology is as easy as many make it out to be. That being said the area will benifit from a surge in drilling activity till they figure out the play isn't as attractive as originally thought.

[Rerun]

Definitely worried here. The company I work for sells valves to the oil & gas industry.

[flamesfever]

I think companies that are in reasonable shape will hunker down by reducing activity, cutting costs, and paying down debt with the cash flow they have left after the new Provincial Royalty takes a chunk on Jan.1.

Over time costs will ratchet down, the world economy will pick up and we'll start all over again. However, IMO, until the Alberta Government starts listening to the needs of the Industry, and developing trust and long term stablility for investment, our province will continue to lag.

[DFO]

Originally Posted by fotze

I'm pretty sure those committing to spend the billions of dollars have looked it over a little more carefully than you have though.

You would think so. Some companies have probably done a better job working up the regional picture but I can guarantee you there are a couple that really don't know whats driving the play or the facies distribution. They'll drill the piss out of it, frac it, and cross their fingers.

[Claeren]

I have a lot of friends preparing for post-christmas layoffs. Companies that can wait til the new year are waiting, but after that I think we really see how bad this all is.

Perhaps more unsettling is that I believe home prices have just started their plunge and I think Calgary's boom has as much to do (or more) with real estate as it did with energy prices. About 71% of citizens are already home owners, that pool has to shrink by 5%-10% to restore longer term averages -- all in the face of both massive supply and massive capacity-to-supply. It is not going to be pretty regardless of what propaganda you hear from those with a hidden agenda (including trade organizations, home builders, banks, the government - which just took on what, $75 Billion in highrisk mortgage debt? -, realtors, other home owners/speculators, and the newspapers themselves who depend on all of that real estate industry ad revenue in the face of plunging subscribed readership levels.... ).




The one silver lining in plunging oil prices is that the lower they go now the more consumers forget about high prices and the more they spike again when demand picks up.

Long term $150 oil only means that everyone stops using oil in every way possible from that point forward as soon as they can (painfully) adjust. You don't get that demand back ("demand destruction").

Now because people put off those painful permanent adjustments, that demand will come back, even if it takes 2-20 years.




Claeren.

[Dan02]

Originally Posted by Claeren

The one silver lining in plunging oil prices is that the lower they go now the more consumers forget about high prices and the more they spike again when demand picks up.

I've been doing some reading which suggests that a drop of this severity is likely the make the next bubble even higher due to the fact as evidenced in this thread, new exploration is put on hold when oil is this cheap so while the demand will increase supply might actually be decreasing in the short term.

[Claeren]

^ Which is evidence I am sometimes bullish on things!! lol



Claeren.

[Flames in 07]

Originally Posted by fotze

I'm pretty sure those committing to spend the billions of dollars have looked it over a little more carefully than you have though.

No kidding. Look at the +5 yr price of Oil.

The price in the news is just for today, investments in oil projects will look at strip. And on the weekend OPEC has signalled large production cuts so my guess is the prompt price will pop up a bit next week.