Oilsands delays mixed bag for Alberta economy
The postponement of some oilsands projects in Alberta is not terrible news for a previously overheated economy, some experts said Thursday.
Joseph Doucet, a professor in energy policy at the University of Alberta, said the tradespeople who would have worked on oilsands projects can still find employment in Alberta, which is good news for municipal infrastructure projects that had been struggling with cost overruns and delays partly due to labour shortages.
"It certainly might make things a little bit easier for Edmonton and other municipalities when they think about major road construction because there is some overlap in terms of expertise workers, engineering firms and so on," Doucet said.
Canadian Natural Resources Limited (CNRL) announced earlier in the day that it is cutting spending on its Horizon oilsands project near Fort McMurray, putting a proposed expansion on hold.
"We are not on time and we are not on budget," CNRL president Steve Laut said while discussing the company's third-quarter results.
The company is cutting its budget by $4 billion next year, because oil prices have dropped too low and the cost of building is too high.
"Horizon does not meet our criteria for success," Laut said.
The CNRL announcement followed news that one of the partners in the Fort Hills project, Calgary-based UTS Energy , may postpone an upgrader planned for Sturgeon County northeast of Edmonton due to high costs.
Suncor Energy is delaying the completion of its Voyageur heavy oil upgrader by one year, and Royal Dutch Shell PLC announced last week it is delaying the expansion of its Athabasca oilsands project because of falling crude prices and turmoil in the world financial markets.
'Slowdowns are not a terrible thing'
The mayor of the area that is the epicentre of Alberta oilsands development — the municipality of Wood Buffalo, which includes the city of Fort McMurray — isn't concerned either.
"On the surface, slowdowns are not a terrible thing for the municipality because we've been experiencing tremendous growth over the past decade," said Melissa Blake. "So anything that gives us some time to get our infrastructure demands met and caught up and better prepared for the future is not a bad thing."
But Blake said the delay in projects has a dark side for Fort McMurray. A drop in tax revenue could make it harder for the municipality to provide services to its residents, she said.
The slowdown in the oilsands is also putting the future of the workers who commute to Alberta from Newfoundland and Labrador in question.
A man who said he was just laid off as a pipefitter in Fort McMurray told CBC News the industry is in upheaval, and many workers are getting laid off.