In Canada’s oil sands, a boomtown starts feeling the chill

The city of Fort McMurray, Alberta, is seen in an aerial view in this file photo taken September 17, 2014. CREDIT: REUTERS/TODD KOROL/FILES

(Reuters) – The boomtown in the heart of Canada’s oil sands region is getting nervous.

Fort McMurray, surrounded by the boreal forest of northern Canada, has long drawn thousands with jobs that paid six-figure salaries to a region that produces more crude than anywhere else in the Western Hemisphere.

But a slide in oil prices since June has fueled a sense of unease in the community of nearly 73,000 which for over a decade has rarely known anything but the good times.

So far, it has been spared mass layoffs at the huge mining and thermal oil facilities that surround the city and produce 2 million barrels per day, roughly two thirds of Canada’s exports.

Yet for a city whose junior hockey team is called the Oil Barons and where nearly half of the jobs are in oil, gas or construction, a nearly 50 percent slide in crude prices is plain bad news.

“We are not far off 2008, that’s in recent memory, a major slowdown, and everybody is waiting for that to come back,” said Chris Martin, a boilermaker from Nova Scotia, relaxing at the Wood Buffalo Brewing Co., a popular local brewpub.

Suncor Energy Inc, Total SA and Statoil ASA had already canceled or deferred major high-cost oil sands projects before the price slide, with Total’s Joslyn mine alone worth C$11 billion ($9.44 billion).

Consultancy Wood Mackenzie estimates new mining projects require a U.S. crude price of $115 a barrel to break even, while new thermal projects need oil in the $50-$70 range. U.S. crude benchmark, hit $55.34 a barrel on Monday…

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  • Waffle

    Smart, self-sufficient people adjust to changing circumstances. They don’t do go around crying in their cups and blaming somebody else for their problems, like some Lieberals who I can think ofl

    • Unfortunately, their lives ARE in someone else’s hands, whether Saudi oil princes or Tom Steyer or paid shills or the Chinese.

      • Waffle

        Yes, to a great extent you are correct, however, it is hard not to feel that that the entrepreneurial spirit is alive and well in the fertile soil of Alberta. Or perhaps the grass looks greener elsewhere because things are so awful here.

        • They may be better off than most but their economic fate should not be determined by outside interests.

          • Waffle

            The Prentice-Smith “marriage” should produce some very interesting results.

          • Exile1981

            bastard love child?

          • Waffle

            LOL!!

          • She let Wild Rose supporters down and I don’t think Prentice is all that he is cracked up to be.

          • Waffle

            That certainly seems to be one theory, however, I think that the crash in oil prices dictates that some out-of-the-box thinking is needed sooner rather than later. True conservatives are nothing if not practical.

    • Freedom

      Agree 100 %, get lean and mean, and work to win.

  • Exile1981

    Most of the workers will just go back to the maritime and collect the dole.

    • Pete_Brewster

      And go back to voting Liberal.

      • Exile1981

        My experience in the sands has been that the maritime workers are eager to collect the money but they don’t like to pay taxes on it but they also tend to go home for the slow times and collect dole. They never stop voting liberal, they see Alberta as a cash cow to support them. I’ve had more than a few say they never married their spouse so they could have her collect welfare as a single mom while they collected the big $$ working in Alberta. More than one said they had a house with a rental suite in the basement and they “rent” the upstairs to the mother of their children and “live” in the suite when home. it’s so they collect rent money from the government as well as the wife keeping her welfare.

        • @$$holes.

          Make it so they cannot send all of that cash home or scrutinise to whom they rent.

          • Exile1981

            For a long time Alberta has been forced by federal law to not count days in camp as residency for paying provincial taxes.
            If I moved to another province and lived (even in a hotel) more than 50% of the year I would be classified as a resident of said province and would have to pay income tax to said province.

            In Alberta’s case people living in oil sands camps for 45 weeks out of 52 are still classified as living in the province they reside the other 7 weeks in. If the laws applied to other provinces were also applied to Alberta then those workers would pay income tax in Alberta and the maritime and quebec provincial gov’ts would take a huge loss of income. As a plus those same people having “spouses” in other provinces would loose the benefits of having a rental property since it would be taxed as out of province.

          • A girlfriend shacking up with this guy is not a spouse. Change that definition and then re-adjust migrant worker laws.

          • Exile1981

            They refure to them as a spouse but go to lengths to never legally be a spouse as it makes them the extra money if she is classified as an unwed mother.

          • What a bunch of scammers!

          • Exile1981

            It’s why I think the province of Alberta needs to crack down and say if you spend that long in camp you pay provincial taxes to Alberta, the other provinces will scream and cry but hwy should they get special rules. It’s just another way for the other provinces to stick it to the west.

          • Not that I want the government to take from an honest worker but these guys are just scammers all-around.

          • Exile1981

            It’s the way of the Maritimers; I had a very nice co-worker who explained how her fellow mariners gamed the system to me. It was very enlightening and sickening at the same time. She didn’t have a “spouse” or any kids so she was not able to play the game the way others did.

            A new Brunswick’er I worked with told me that when he was a week out from heading home (he worked 8 week long shifts then home for 2 weeks then back for 8 again) he would call his “spouse” to remind her that he was coming home so she could clean up any evidence of her “male friends” before he got home. They had 2 kids together – which he was mostly sure were his but not positive – and it seemed to work for them. Personally the idea of not being faithful to your spouse is totally alien but he figured that as long as he didn’t see any obvious evidence of her cheating it was ok and it wasn’t like he wasn’t cheating when in camp.

            The east coasters that end up in oil sand camps are a special breed.

          • These people are just disgusting all around.

          • Exile1981

            I can’t speak for all sites but at the two I worked at the construction workers from the maritimes were very similar.

            Other sites may attract different individuals as every site has a different feel to it.

            I remember once being asked by a group of neufies and a group of TFW from ireland, which group was pronouncing the name of the site correctly. I broke down laughing, shook my head and walked off knowing that was a no-win question. It falls into the same category as “does this dress make me look fat?”

          • But their accents are so whimsical!

  • Pete_Brewster

    I’m sure laughing at Pootpoot will make it all worthwhile. Never mind that democracy is in worse shape in Alberta than Russia right now.

    Oh, and there’ll be fewer chances to move west and tell Chairman Kate to pay for her own Christmas cards.

    • David

      “Never mind that democracy is in worse shape in Alberta than Russia right now.”

      There’s some way to go before that’s true.

      • Clausewitz

        Pete is the crown prince of hyperbole.

  • dance…dancetotheradio

    Silver lining: Alberta temporarily becomes a have not province putting more pressure on Ontario and Quebec to get their houses in order.