Alberta Premier Jason Kenney warned Wednesday that job cuts are expected to hit the province’s oil and gas sector in the comings weeks as a struggling industry grapples with a sharp plunge in crude prices.
“Energy companies, as a result of the price collapse, are massively cutting their capital budgets for 2020. This is going to have a very negative effect on working women and men in the energy services sector,” Kenney said.
“Unfortunately, [we] do expect to see a number of layoff announcements coming from the energy sector in the next two or three weeks.”
Kenney made the comments in Calgary as he prepared to fly to Ottawa to attend the first ministers’ meeting.
The meeting in Ottawa comes as officials in Canada and around the world develop plans to cope with the health-care challenges and economic impact of the spread of COVID-19.
The premier met with executives from Alberta’s oil and gas sector on Tuesday to discuss the impact of the plummeting oil prices, which have seen some of their biggest losses in years this week.
Meanwhile, the list of oil and gas companies slashing their spending plans continues to grow.
Oilsands producer MEG Energy announced it is cutting its 2020 capital spending plan to $200 million from the $250 million it announced in November 2019.
MEG also trimmed its full year 2020 production guidance range to 93,000-95,000 barrels per day compared with its earlier guidance for 94,000-97,000 barrels per day.
Calgary-based Seven Generations Energy is lowering its 2020 capital investment budget by $200 million — or 18 per cent — to $900 million.
A day earlier, oilsands giant Cenovus Energy announced it was cutting its capital spending by 32 per cent to between $900 million and $1 billion, down from between $1.3 billion and $1.5 billion.
With oil production also expected to fall in the province, Kenney said he anticipates the amount of crude shipped by rail to also fall from an expected 500,000 barrels per day in March to 100,000 barrels a day next month.
“That may backup inventories to tank tops and then that stands the risk of blowing out inventories,” he said.
“We will not allow that to happen. We will use the curtailment tool responsibly to ensure at least a survival price for our producers to get through this period.”
The Alberta government implemented a production curtailment program, limiting oil output, last year.
Tristan Goodman, president of the Explorers and Producers Association of Canada, said earlier on Tuesday that if oil prices stayed low for a prolonged period, the results could be “catastrophic.”
“It’s an incredibly serious situation,” he told the Calgary Eyeopener.
“It’s going to take some time here, a few weeks at least, to figure out exactly what’s happening here as we’re caught in the middle between two countries.“
Crude prices dropped dramatically this week as Saudi Arabia and Russia began an oil price war and concerns grew about the impact of COVID-19 on the world economy.