Editorial: Black Gold
As the Ides of April approach, we still find the oil price hovering around the $50 to $60 per barrel mark, a position the industry has found itself in since December 2014.
Seven months of consecutive oil prices below breakeven levels in many arenas of operation have taken their toll – in the US alone 75,000 have lost their jobs to the price rout, with service companies accounting for 80 per cent of that figure.
One of the emerging stories of crisis is developing in an unlikely place: the federal parliamentary constitutional monarchy of Canada.
According to the IMF, Canada is the world’s eleventh largest country by GDP, sitting one rung behind India and just outside of the exclusive "Two Trillion Dollar Club". Much of the prosperity that has enabled the Canadian exchequer to expand by 250 per cent in the past 15 years is down to the growth in, and propitious market conditions for, the Athabasca Oil Sands.
Speaking in 2008, two years after Suncor produced its billionth barrel of crude, the Premier of Alberta, Ed Stelmach, said: "The economy of Canada is dependent in large part on the economy in the province of Alberta." Seven years later, that same province is forecast enter a recession.
Although the Canadian Energy Research Institute (CERI) have projected that oil would have to hit lows of $30 to $35 for six months before operations are reined back, breakeven prices of $60 to $80 a barrel for crude reclaimed by steam-assisted gravity drainage (SAGD) and $90 to $100 per barrel for conventional oil sands mining are scything profits in Wild Rose Country. Oil revenue is set to drop by 37 per cent this calendar year. Some 32,000 jobs are expected to go before the end of 2015.
And as the oil industry nosedives, so does the Canadian "loonie", and dashed are projections of growth for the wider Canadian economy.
Such is the dependency on the Black Gold, the promise of dice in a gambler’s palm….
LEARN MORE ABOUT THE OIL AND GAS INDUSTRY:
- The Top 10 Oil & Gas Companies in the World
- Oil & Gas Industry: An Introduction
- Oil and Gas Production - An Introduction
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