Category: Economic

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Alberta Economic Ft Mac

Flying Westjet Between Fort McMurray and Calgary Means Fewer Options Now

Fort McMurray and Wood Buffalo residents who want to get to Calgary using Westjet now have fewer options available since the airline has reduced the number of normal scheduled flights between the two locations. Westjet has announced the cancellation of flight 3145, which travels from Calgary to Form McMurray, and flight 3148 which travels in the opposite direction. Both of the flights were operated on a Monday through Friday schedule, and could carry 78 passengers. Lauren Stewart, the spokesperson for Westjet, discussed the changes in an email. “With the downturn in t. We appreciate and recognize that this is unfortunate news for the communities involved. We will continue to evaluate the situation and make changes as necessary.” Due to competitive reasons the airline would not release the passenger load numbers on the flights canceled.

It is no secret that the passenger numbers at Fort McMurray International Airport are not what they once were, and a 16% drop in passenger numbers in the last year shows the need for caution. Westjet will cancel both flights effective March 5, and these are not the only flights that the airline has canceled. Direct flights on Westjet going to Kelowna, B.C. will be stopped on February 15, 2016. Scott Clements, the CEO of the Fort McMurray International Airport, called the latest flight cancellations understandable but disappointing. Clements explained that “Westjet just can’t sustain the flight at the current price of oil.” This leaves Wood Buffalo residents who want to get to Calgary with fewer options available.

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Alberta Economic Ft Mac

$800 Million in Spending Cuts Planned by Husky Energy

A recent announcement by Husky Energy shows that the company plans to implement $800 million in spending cuts in 2016 with capital spending targeted. In addition the stock dividend for the company will be suspended, at least in part because of the low oil prices currently seen. In December the company announced a capital spending plan that included between $2.9 billion and $3.1 billion, and these numbers have been revised downward since then. The latest announcement shows that the company plans on capital spending that totals between $2.1 billion and $2.3 billion instead. The company is hoping that Western Canada drilling deferment and a schedule adjustment for offshore drilling rig mobilization will help save money and cut costs down to manageable levels. If oil prices continue to drop on the global market even these steps may not be enough and further cuts in spending may be announced as the year goes on.

Husky Energy CEO Asim Ghosh weighed in on the spending cuts in a recent energy update report from the company. Ghosh explained “We continue to take decisive action in this period of persistent supply-demand imbalance. Our fundamental goal remains unchanged – the steps we are taking will see Husky emerge from this cycle as a more resilient and more profitable company.” The goal is to make the transition into lower priced oil easier and less disruptive. Ghosh also stated that “Within the updated capital plan, the transition into a low sustaining capital business continues unabated. Deferral of capital is in those areas that can be quickly switched on as commodity prices recover.”

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Alberta Economic Ft Mac

Fort McMurray Leading the Real Estate Decline in Alberta

According to the Canadian Real Estate Association Fort McMurray saw the worst of the real estate decline in Alberta in 2015, leading the market in the worst price fluctuations and housing sales in the entire province. The CREA report was compiled using data in the Multiple Listing Service database. Once oil prices started dropping in 2015 home sales in Fort McMurray also saw a decline of about 43.5%. In 2014 there were 1,724 home sales in the fort McMurray area while in 2015 there were only 974. Housing prices during the same time dropped 6.2% in the area. Only one other housing market saw any sale price decrease during the same time period and that was Calgary, which only saw a price decrease of 1.5% by comparison.

What does the real estate decline mean for Fort McMurray homeowners and purchasers? If you own your home you may see the value start to decline as prices go lower. Buyers who want to purchase a home in Fort McMurray may get prices that are lower than expected, but this could be offset by a lower overall home value as well. In the past when the oil industry was booming and prices were at high levels the prices and values of homes in the area have gone up to almost unbelievable numbers. Some have found that home ownership in the Wood Buffalo region in the past has been unaffordable because of the high demand for housing but that may no longer be the case with the recent real estate decline.

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Alberta Economic Ft Mac

More Job Losses Expected in Construction Industry in Alberta in Coming Years

The construction industry in Alberta is expected to face even more job losses in coming years according to a recent BuildForce Canada report that was published last week. The report showed that oilsands construction labor demand is expected to drop by an additional 28% by the year 2020. At the root of the additional job losses is the decline in oil prices and a global market that seems saturated right now. The report spells out that “The oil price decline is driving employment lower across all construction sectors.” BuildForce Canada Executive Director Rosemary Sparks explained “Alberta has been through construction cycles before, but nothing this complex. That’s why it’s crucial for industry to stay focused on recruiting young people and attracting and keeping those skilled trades that are, or will be in the most demand. Shifting demographics and market conditions require a construction workforce with the flexibility to move with the times and the jobs. The reality is that in many provinces, the local workforce may not be enough to counter rising retirements and fill the jobs, especially when major projects gear up.”

On top of the job losses the construction industry in Alberta has seen in the last few years the added jobs which will be lost add up to a significant impact on the oilsands economy. Some positions in the industry are still strong in spite of the decreasing oil prices though. Maintenance is still needed by energy industry companies and projects regardless of what the economy is doing. This may be good news foe skilled workers, a category which includes welders, pipe fitters, and boiler makers. These workers will still be needed to sustain the current levels of production, to provide routine maintenance and plant upkeep duties, and to handle certain aspects of plant shut downs.

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Alberta Economic Ft Mac

Low Oil Prices Mean Oilsands Projects Lose Money but Continue to Pump

In spite of low oil prices the oilsands projects continue to pump, even though these companies are often taking a loss on each barrel that they manage to produce. In fact analysts say that these companies don’t really have any other options. Canadian heavy oil fetches even less on the market because this oil is typically heavier and it requires more refining. Energy companies that operate in the oilsands typically sink millions and even billions of dollars into each project, with a project lifespan that can cover decades. According to analyst King “I know it sounds contradictory, but just given the long time span over which these things are supposed to operate, they have to keep them running. They just don’t really have a choice.”

Another consideration with low oil prices that affect oilsands projects is that these operations can be incredibly technical, and stopping operations could cause damage to the area or the equipment. King stated “Our grind back to even something around US$60 a barrel is going to take a number of years. There’s still too much supply in the world.” OPEC has also continued to keep the same output in the hopes that competitors will be squeezed out. In spite of taking a loss on the oil being produced companies who are engaged in oilsands projects really have no alternative, and this may not change any time soon because analysts predict that low oil prices will continue for some time. Citigroup commodities global head Edward Morse is still optimistic though, saying “The oil industry has proved to be remarkable adaptive with pain. The combination of adaptation, waiting it out and a bit of consolidation are the way to go. Markets tend to balance more quickly than you think they’re going to do when you’re in the worst part of the market.”

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Alberta Economic Entertainment Ft Mac

2018 Alberta Winter Games Will be Hosted by Regional Municipality of Wood Buffalo

It is official. The 2018 Alberta Winter Games will be hosted by the Regional Municipality of Wood Buffalo. Many expect these games to boost the local economy and bring in large crowds in 2018, although not everyone was fully behind bidding on the games in the beginning. One of the initial naysayers was Fort McMurray Mayor Melissa Blake, who was concerned that a successful bid might not be possible with the time available. After the amount of community support Mayor Blake changed her vote to approve the bid. Blake discussed Wood Buffalo being the official host of the games and said “We have got just exactly what council was looking for, and I know that I have got just exactly what I was looking for today.”

As the official host of the 2018 Alberta Winter Games the Regional Municipality of Wood Buffalo will receive $370,000 from Alberta Sport towards the cost of hosting the games. Since the stadiums and arensa necessary are already available in the region Wood Buffalo is a good choice. The games allow kids between 11 and 17 to compete in a competition of winter sports, and participants come from all over the region. The final bid that was submitted, and which won, includes a budget of $6.8 million $2.3 million of the budget is allotted for accommodations, and another $1.7 million has been set aside to cover staffing costs associated with the games. The only councillor who voted against the final bid package was Coun. Tyran Ault.