How to stop Calgary from becoming the next Detroit

[polak]

This article posted in the oil thread doesn't fill me with optimism about Calgary's situation, we have basically no control over our own situation at this point unless someone discovers a way to make new oil sands projects dramatically cheaper....

http://www.telegraph.co.uk/business/...-a-standstill/

Scott Sheffield, the outgoing chief of Pioneer Natural Resources, threw down the gauntlet last week - with some poetic licence - claiming that his pre-tax production costs in the Permian Basin of West Texas have fallen to $2.25 a barrel.

...

Consultants Wood Mackenzie estimated in a recent report that full-cycle break-even costs have fallen to $37 at Wolfcamp and Bone Spring in the Permian, and to $35 in the South Central Oklahoma Oil Province. The majority of US shale fields are now viable at $60.

[GGG]

Originally Posted by polak

This article posted in the oil thread doesn't fill me with optimism about Calgary's situation, we have basically no control over our own situation at this point unless someone discovers a way to make new oil sands projects dramatically cheaper....

http://www.telegraph.co.uk/business/...-a-standstill/

We can make new capital projects at $60 per barrel. It will be slow and measured but $60 oil will have small expansion in the Alberta Industry. For example Shell Carmon Creek, which might have been the most expensive project ever proposed on a per flowing barrel basis only needed about $80 per barrel to be economic. We are competitive with the non-premium areas of the US and if we can close the differential between WTI and WCS we become very viable.

[Bill Bumface]

^How much of that is built of the back of service companies taking work for cashflow, just trying to survive?

Either way, it will be a slow grinding away until companies go under, these sectors shrink, and people refuse to reinvest without better return because of it. I think talk of break even in the $30s is temporary unless technology plays a part. Technology investment isn't exactly big right now in the O&G sector.

[Lubicon]

Originally Posted by Bill Bumface

^How much of that is built of the back of service companies taking work for cashflow, just trying to survive?

Either way, it will be a slow grinding away until companies go under, these sectors shrink, and people refuse to reinvest without better return because of it. I think talk of break even in the $30s is temporary unless technology plays a part. Technology investment isn't exactly big right now in the O&G sector.

I would say a lot, and that is my major worry right now seeing as I work for one. Yes costs are coming down but so far it has been largely on the backs of the service providers who are now barely hanging on. And some won't be able to hang on. We're cutting costs as best we can but other than reducing staffing levels and salaries there is not a lot we can do. And of course the energy companies continue to use service companies like a bank account by stretching out payments as long as they possibly can which further adds to the financial stress.